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Russia's Digital Set Top Box (STB) Market

October 2012

Analytical Report (full version)

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Analytical Report (full version)

Russia's Digital Set Top Box (STB) Market
Russia's Digital Set Top Box (STB) Market
October 2012

Russia's Digital Set Top Box (STB) Market

October 2012

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Below are the findings of a study by J'son & Partners Consulting of Russia's 2011 set top box (STB) market and outlook until 2016.


Russia's STB market saturation and growth outlook


The growing popularity and availability of digital TV services in the world as a whole and in Russia in particular has not only improved the quality and diversity of TV content but also contributed to a steady demand for digital TV equipment:


modern TVs with built-in turners capable of receiving and decoding a digital TV signal delivered via any of the following: satellite, cable or terrestrial broadcast;


TV receivers (STB, digital TV receiver) – external signal-decoding devices that are connected to a TV (not necessarily to a new one) via standard connectors (RCA, SCART or HDMI).

 

STB sales in Russia and the world continue to grow at a healthy pace, driven largely by the growing popularity of digital TV services: satellite (DVB-S, DVB-S2 standards), cable (DVB-C, DVB-C2), terrestrial (DVB-T, DVB-T2) and IPTV.


The biggest difference between the new and old standards (DVB-S and DVB-S2, DVB-C and DVB-C2, DVB-T and DVB-T2) lies in a more efficient bandwidth use that results in a greater variety of channels per single frequency or better image quality of existing ones.


Digital television is also driving the sales of large screen TVs. Thanks to digital technology, consumers can nowadays watch high quality digital content on a TV screen of any size without experiencing any deterioration in quality that was characteristic of analogue devices. The constant evolution of digital technology is certain to stimulate the demand for even newer technologies: HD, 3D and 4K.

 

STBs offer users a greater control over TV viewing than a conventional TV. Among the most notable advantages are: an access to video-on-demand services, availability of an internal storage unit for your favorite TV shows and movies, an option for downloading web content, and an access to various auxiliary services. Additionally, STBs are considerably cheaper than TV sets, and they can be used to provide quality digital content to users who don't own modern TV sets with built-in digital tuners.


As part of a strategy aimed at attracting new customers or increasing profit margins, broadband internet and digital TV providers offer their new customers proprietary equipment. Among the most popular STB distribution schemes used by international operators are:

 

  • European operators typically don't charge their customers for the basic equipment needed to access the Internet (customers can also rent or buy additional equipment not included in the basic service package from their operator);
  • all major UK fixed-line operators provide network equipment to their customers free of charge;
  • U.S. providers tend to provide network equipment to customers for an additional fee (e.g. provider CenturyLink sells its equipment, only offering free installation and configuration services);
  • France's SFR provides all necessary equipment to its customers for free but only for the duration of the service contract;
  • telecommunications company KDDI Corporation (Japan) leases STBs (ST1100R) to its digital subscribers, charging 525 yen per month for the entire duration of the contract.

 

A survey of Russia's TV owners and pay terrestrial TV users conducted by J `son & Partners in August 2012 (1450 respondents mainly from regions where it's technically possible to receive DTTV broadcasts), revealed the following findings:

 

1) 7% of the population prefer to watch TV programs on a computer;


2) less than 1% of the population do not have a TV in their household, considering them irrelevant to everyday life;


3) more than half of the population feel the need to buy a new TV (either in addition to the existing one due to the growing demand for TV viewing, or to replace the old one);


4) 22% of the population would like to buy a new TV with a built-in digital tuner soon;


5) 18% of respondents are willing to buy their own STB to be able to receive free digital terrestrial television channels.

 

Fig. 1 represents respondents' replies to the question "Is there any specialized equipment (TV receiver/media player) or a TV in your household capable of receiving digital channels?"

 

 

Current state of Russia's STB market

 

 

Russia's STB market has resumed growth after recovering from the crisis year 2009, with the 2010 sales figures back to the pre-crisis level of 3.45 mln units sold. In 2011, this figure was already 3.95 mln units. We expect to see the number of STBs sold in Russia in 2012 to reach 5.15 units.

 

Satellite STB


Satellite operators are expected to retain their status of STB manufacturers' main customers. After a short-term decline of the post-crisis year of 2009, sales picked up in 2010-2011 and are expected to remain buoyant also in 2012. Russian company General Satellite – main supplier of digital receivers to operator Tricolor-TV – is the largest manufacturer of STB equipment for satellite operators.


IPTV STB


The fast growth enjoyed by the IPTV market means that it's currently the second-largest STB segment behind only satellite, with the gap between the two becoming ever narrower: only 50% fewer digital receivers for IPTV than for satellite TV are expected to be sold in 2012. This gap in 2011 was 400% and in 2010, 500%. SmartLabs (INLINE Technologies Group) is the largest manufacturer of STBs for IPTV and the main supplier of digital receivers to subscribers of operator Rostelecom.


Digital terrestrial STB (DVB-T, DVB-T2)


The market of digital terrestrial receivers DVB-T and DVB-T2 is the third-largest STB segment. In 2010-2011, sales of IPTV and digital terrestrial STBs were very similar, but the gap is expected to increase considerably in 2012 as the rate of annual growth in this segment is likely to reach 16%. However, this segment has a potential to generate up to 1 mln in unit sales in 2013, provided we see more multiplex launches and a better product line-up. Among the largest producers of digital terrestrial STBs are Russian companies Stavropol radio manufacturing plant Signal, Radiozavod JSC (Penza), Promsvyaz plant (Ufa) and General Satellite (Kaliningrad region). In 2012 foreign brands increased their share of Russia's market at the expense of domestic manufacturers.

 

Cable STB


Digital cable receivers currently represent the smallest segment of the STB market, with little changes expected in the short term. In the long term, the majority of the growth in this sector will be associated with a transfer by cable operators of their subscriber base from analog to digital reception. Just as in the market of digital terrestrial STBs, the market shares held by the main manufacturers here are roughly equal.

 

Russia's STB market of terrestrial TV (DVB-T2) outlook until 2016

 

A transition of DTTV to a new standard (DVB-T2), which began in early 2012, meant that all equipment manufacturers were under pressure to develop models compatible with the new standard. This was happening against the background of increasing foreign competition.


As competition in the digital terrestrial STB segment continues to heat up and manufacturers focus more efforts on adding more models to their product slate, the importance of the low-cost segment – receivers costing under 1500 rubles – continues to grow. According to a survey conducted by J’son & Partners Consulting, this price range suites 68% of respondents, with less than 12% viewing the 3000 ruble mark as reasonable.


The second half of 2012 is expected to herald the market arrival of a large number of DVB-T2-compatible receivers, with a similar development affecting DVB-T2-compatible TVs slated to take place in 2012-2013. Both events are likely to have a significant impact on the STB market.

 

 

  • Under a pessimistic scenario, the total sales of digital STB equipment in Russia will reach 3.70 mln units in 2012-2016 (3.55 mln of which will be DVB-T2).
  • Under a moderate scenario, the total sales of digital STB equipment in Russia will reach 5.40 mln units in 2012-2016 (5.25 mln of which will be DVB-T2).
  • Under an optimistic scenario, the total sales of digital STB equipment in Russia will reach 6.35 mln units in 2012-2016 (6.20 mln of which will be DVB-T2).

 

This information bulletin has been prepared by J'son & Partners Consulting Co. We make every effort to ensure that information and forests contained in our market reviews are accurate and up-to-date. J'son & Partners Consulting reserves the right to revise the data following the publication of new official information by certain market players.

 

 

The study full findings can be found in a report titled "Russia's STB market, 2010-2016", whose table of contents is given below.


1. Introduction
2. Russia's set top box market review
  2.1. Russia's STB market by digital TV content distribution system:

  • Cable,
  • Satellite,
  • Terrestrial (DVB-T, DVB-T2),
  • IP TV.


  2.2. Russia's STB market structure, 2010-2011

  • STB manufacturer market share
  • STB equipment by country of manufacture


  2.3. Russia's STB market of terrestrial TV (DVB-T2) outlook 2012-2013.

  • Optimistic outlook (review of positive and negative factors)
  • Pessimistic outlook (review of positive and negative factors)


3. Review of Russia's STB manufacturers
  3.1. Overview of domestic STB manufacturers
Factors examined:

  • 2011 output volume
  • Models and pricing
  • Market share
  • Sales geography
  • Place of manufacture


  3.2. Overview of foreign STB manufacturers supplying their products to Russia's market
Factors examined:

  • 2010-2011 output volume
  • Models and pricing
  • Market share
  • Sales geography
  • Place of manufacture


4. Review of consumer characteristics and qualities of STB manufacturers' key products on the Russian market
4.1. Key parameters overview:

  • Support for multimedia technologies (DVB-T2, HbbTV, HDMI, etc.)
  • Support for targeted management system technologies
  • Support for the civil defense and emergency warning system
  • Access to E-government services


4.2. Optimal set of features supported by a modern DVB-T2-compatible STB.

  • Price/functionality ratio


5. STB current and prospective user demographics: gender and age structure, financial standing and region of residence:
  5.1 STB current users:

  • Independent buyers
  • Operator-sponsored STBs


  5.2 STB prospective users:

  • Interested in purchasing the equipment (including pricing categories)
  • Not interested in purchasing the equipment


6. Operator-sponsored broadband access and digital TV equipment (international experience): company info, equipment provision terms and special offers:
  6.1 U.S.

  • AT&T
  • CenturyLink
  • Verizon Wireless
  • DISH Network


  6.2 UK

  • British Telecom
  • Virgin Media
  • TalkTalk


  6.3 Germany

  • Alice-dsl
  • Kabel Deutschland


  6.4 France

  • SFR


  6.5 Japan

  • Nippon Telegraph and Telephone (NTT)
  • KDDI


  6.6 Korea

  • Olehh (Korea Telecom)


7. Conclusion



List of figures:


Figure 1. STB sales, 2010-2011
Figure 2. STB market dynamics, 2010-2012F
Figure 3. STB place of manufacture, 2010-2011
Figure 4. STB manufacturers - share of sales %, 2010
Figure 5. STB manufacturers - share of sales %, 2011
Figure 6. Digital terrestrial STB market dynamics, 2010-2012F
Figure 7. DVB-T-compatible STB sales 2010, ths units
Figure 8. DVB-T-compatible STB sales 2011, ths units
Figure 9. STB consumer base structure: current/prospective user ratio, August 2012
Figure 10. STB current consumer base structure: independent buyers/provider-sponsored equipment users, August 2012
Figure 11. Independent STB buyer distribution by gender, August 2012
Figure 12. Independent STB buyer distribution by age, August 2012
Figure 13. Independent STB buyer distribution by cars per household, August 2012
Figure 14. Independent STB buyer distribution by region, August 2012
Figure 15. Provider-sponsored STB user distribution by gender, August 2012
Figure 16. Provider-sponsored STB user distribution by age, August 2012
Figure 17. Provider-sponsored STB user distribution by cars per household, August 2012
Figure 18. Provider-sponsored STB user distribution by region, August 2012
Figure 19. STB prospective user base structure: interested/not interested in purchasing equipment consumer ratio, August 2012
Figure 20. Gender-based distribution of prospective STB users interested in buying equipment, August 2012
Figure 21. Age-based distribution of prospective STB users interested in buying equipment, August 2012
Figure 22. Distribution of prospective STB users interested in buying equipment broken down by cars per household, August 2012
Figure 23. Region-based distribution of prospective STB users interested in buying equipment August 2012
Figure 24. Gender-based distribution of prospective STB users not interested in buying equipment, August 2012
Figure 25. Age-based distribution of prospective STB users not interested in buying equipment, August 2012
Figure 26. Distribution of prospective STB users not interested in buying equipment broken down by cars per household, August 2012
Figure 27. Region-based distribution of prospective STB users not interested in buying equipment, August 2012


List of tables:


Overview of domestic STB manufacturers;
Table 1. STB manufacturer 1 key features and characteristics
Table 2. STB manufacturer 2 key features and characteristics
Table 3. STB manufacturer 3 key features and characteristics
Table 3. STB manufacturer 4 key features and characteristics
Table 5. STB manufacturer 5 key features and characteristics
Table 6. STB manufacturer 6 key features and characteristics
Table 7. STB manufacturer 7 key features and characteristics
Table 8. STB manufacturer 8 key features and characteristics
Table 9. STB manufacturer 9 key features and characteristics


Overview of foreign STB manufacturers supplying their products to Russia's market
Table 10. STB manufacturer 1 key features and characteristics
Table 11. STB manufacturer 2 key features and characteristics
Table 12. STB manufacturer 3 key features and characteristics
Table 13. STB manufacturer 4 key features and characteristics
Table 14. STB manufacturer 5 key features and characteristics
Table 15. STB manufacturer 6 key features and characteristics
Table 16. STB manufacturer 7 key features and characteristics
Table 17. STB manufacturer 8 key features and characteristics
Table 18. STB manufacturer 9 key features and characteristics
Table 19. STB manufacturer 10 key features and characteristics
Table 20. STB manufacturer 11 key features and characteristics
Table 21. STB manufacturer 12 key features and characteristics
Table 22. STB manufacturer 13 key features and characteristics
Table 23. STB manufacturer 14 key features and characteristics

Below are the findings of a study by J'son & Partners Consulting of Russia's 2011 set top box (STB) market and outlook until 2016.