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• 08-Apr-2010 by John Moulding
• Pay TV DMAs threaten set-top box business
• Connected Home

IMS Research has identified what it believes is the biggest threat to the digital Pay TV set-top box market since its inception, as set-top box functionality is transferred into thin clients that can reside in a home network including on a PC or in the television itself. This could reduce the set-top box market by as much as 10% by late 2015. For set-top box operators there will be an opportunity to sell more complex home gateways where much of the STB intelligence can migrate but Stephen Froehlich, Senior Analyst Consumer Electronics at IMS, expects decoders themselves to become a commodity.

The technology behind the pending disruption is called ‘open-standard secure home media network’ and is built on the DLNA & DTCP-IP protocols. Froehlich says this threatens to replace the high-value interactive set-top box with inexpensive open-standard thin clients called Pay TV DMAs. Because televisions and other CE devices are also beginning to integrate Pay TV DMA functions, they should be able to displace set-top boxes entirely, he suggests.

For network operators, the key benefit is cost savings, as home gateways will be able to remove the duplication of STB functionality in multiple receivers. It is not clear how big the savings will be, according to Froehlich, because nobody yet knows what support issues will be generated by this kind of architecture and how much the new breed of home gateways will cost. But he estimates that a Pay TV DMA should cost an operator around $30-40 compared to around $150 for an MPEG-4 AVC HD interactive set-top box. Less devices should mean less failures and less truck rolls, he adds.

Froehlich says that while some of the set-top box vendors are already preparing for this change, and the major vendors already have a home gateway business, open-standard secure home media network is going to be extremely disruptive.

IMS Research is forecasting that by the end of 2015, open-standard secure home media network will displace at least 32 million set-top boxes, some replaced by a Pay TV DMA and others replaced by a thin client television. The research company predicts there will be 89 million homes with active open-standard secure media networks based on DLNA & DTCP-IP by the end of 2015, up from 1.6 million at the end of 2009.

Froehlich comments: “The ability to securely move video around a home network using open-standards opens up the architecture of the set-top box and home gateway, allowing any function to be located anywhere on the home network, or in some cases beyond it. In the US, several cable and satellite operators are using the DLNA + DTCP-IP open-standard framework to minimize the number of boxes that include proprietary technology as they roll out multi-room DVR services. Several deployments are beginning in 2010.”

Froehlich says that in the first wave, several US satellite and cable operators are looking to replace set-top boxes with what are essentially digital media adapters (DMAs) - an MPEG-4 AVC decoder with a network interface and nothing else.

“In the second wave, it appears that Samsung has taken the lead in adding all of the functions of the Pay TV DMAs (DLNA, DTCP-IP, and a remote User Interface standard such as RVU or CEA-2014) to many of their televisions, eliminating the need for a set-top box entirely. It will also be possible for most PCs to install Pay TV DMA software, allowing the PC to finally serve as the bedroom TV.”

Froehlich believes network operators that want to save money on set-top boxes by harnessing Pay TV DMA televisions will have to compromise some control over customers. “If you have a Samsung television that supports these open standards then they [Samsung] get the first customer experience and the opportunity to point people towards their own walled garden services but operators are willing to trade that for costs savings,” he suggests.

Open-standard secure home media network has worldwide significance although the major initial market is North America. The IMS Research report, ‘Secure DLNA Video: Implications for Set-top Boxes & Home Gateways - 2010 Edition’, addresses this new technology.

IMS Research has provided the following notes to help define this new technology:

Open-standard secure media network is a network that uses open-standard protocols, and only open-standard protocols to securely transmit multimedia content over a home network. The ability to support a remote user interface is optional but is required by many operators. With the exception of those IPTV operators on the Microsoft Mediaroom platform, all Pay TV operators known to IMS Research that are deploying open-standard secure media networks open standards are using DLNA for media streaming and DTCP-IP for content security.

MPEG-4 AVC is the video compression format. For all known Pay TV operators deploying in 2010, MoCA is used as the preferred physical layer protocol. Remote user interface standardization has not yet occurred, but RVU and CEA-2014 are the two protocols under consideration by the Pay TV community.

Pay TV Digital Media Adapter (DMA) is a type of set-top box that includes no platform-specific or proprietary technologies but instead can only access Pay TV over an open-standard secure home media network.

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