The set-top box market suggests a dynamic that is something like American politics, in which the headlines are dominated by the extremes -- the Tea Party and Occupy movement -- at the expense of the vast middle. The traditional set-top box is barely holding its own or is receding while the two extremes -- limited capability digital terminal adapters (DTAs) and fully featured media gateways -- are expanding quickly.The sector, driven by the desire to elegantly and efficiently evolve to offer advanced video and other services to all the devices cable operators are supporting, is getting a lot more interesting than simply allocating a STB or two per home. The goals are to establish a solid and integrated home network to support advanced video and related services and to bridge the QAM and IP worlds."The total numbers are coming down," said Mike Paxon, a principal analyst for In-Stat. "That's not unexpected. We are seeing a saturation of the market. There is a reduction of the overall cable households due to competition [from telcos], and the analog-to-digital shift in North America is pretty much over."Traditional STBs only handle part of that job. A further issue limiting their success is that existing units being returned by subscribers -- who may be churning or moving up to media gateways -- are being reallocated to other subscribers. Each reassigned STB, of course, reduces by one the total number of STBs that operators must purchase.Where traditional STBs are fading, other devices are gathering steam.The changing dynamic perhaps is more important than the total sales numbers. The bottom line is that cable operators' old friend, the STB, is being redefined. Insiders describe a landscape that, like much of what is happening in the cable world, is in transition. The explosion of end points in the home and the desire to mediate and make sense out of the stew of traditional and IP-based services and applications is driving operators to more aggressively create an interconnected home network -- a real residential LAN -- that speaks with one voice to the headend.The role of the set-top box within that framework is changing, at least for the top tier of cable operators. In some cases, functionality formerly handled by the STB is a feature of a media gateway; in others, it's the function (perhaps the sole function) of the DTA. It could eventually be integrated into consumer electronics devices themselves.The bottom line is that the STB no longer is a truly discrete category. Since homes are increasingly networked -- via MoCA, WiFi and other wired and wireless standards -- services brought in via the media gateway that generally is directly linked to the main and most feature-rich TV set in the home can be passed on to other devices, including those with less functional DTAs.Rob Folk, the senior director of product management for Motorola, said the current DTAs can only accommodate standard definition MPEG-2 signals. The company -- and, presumably, others -- is working on somewhat more functional DTAs capable of handling high definition and MPEG -4 signals. "The principle purpose is to enable all the digital [services] for our customers," he said. "There still is a ways to go for full digital."In the networked home, the DTAs in essence will be subservient to the media gateways. The earliest implementation of this approach is whole-house digital video recorder (DVR) capability. There will be multiple other services deployed in this manner as time passes, experts say.The year ahead will see more of the trends that characterized 2011, observers said. "I would say that it will be a continuation of [the growth of] multiscreen video gateways," said Ken Morse, the CTO of the service provider video technology group for Cisco. "We see those picking up on the high end during 2012."Whatever the speed, the key is that the functions of the STB are changing and being dispersed to a much wider range of devices. "The residential gateway and thin client model will begin to really take hold, but not in the next few months," said Jordan Selburn, a principal analyst for consumer electronics for ISH iSuppli. "Operators will start dipping their does in the water this year, but it tends to be weighted toward the end of the year."The dynamic in which high-end media gateways and DTAs squeeze out the STBs in the middle most accurately sums up the situation in the top tier of cable operators. Tier 2 and 3 operations are more likely to take a more direct approach. These operators have a specific problem: Their infrastructures may not yet be able to support media gateways, but they need to battle against DISH Network and DirecTV today.These firms, said EchoStar Vice President of Sales and Marketing Michael Hawkey, can jump ahead by using cloud-based services that can essentially supplement any infrastructure that the operator already has. "They have digital cable plants and DOCSIS, and are providing the rest of it through the cloud," Hawkey said.The bottom line is that the definition of a STB as understood by cable operators even a few years ago is antiquated. The good news is that there are creative ways to bridge the gap between that world and the all-digital future for cable operations of all sizes.Carl Weinschenk is the Senior Editor of Broadband Technology Report. He can be reached at [email protected].
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