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Indian STB market to grow at CAGR of 29.3% by 2015: Frost & Sullivan

MUMBAI: The introduction of high-definition (HD) channels and smart TVs has led to an increase in digital TV viewing which, in turn, will usher in an unprecedented growth of the set-top box (STB) market.

A Frost & Sullivan study released Monday estimates that the total market for STB was 23.52 million units in 2013 and is expected to reach volumes of 39.4 million units by 2015, representing a healthy compound annual growth rate (CAGR) of 29.3 per cent.

The STB market recorded a total market of consumption at 18.4 million units, of which satellite STB accounted for 10.4 million units in 2012.

Frost and Sullivan director automation and electronic practices Niju V said, “Cumulative demand of over 100 million STBs between 2013 and 2015 highlights the immense potential this market has. This huge domestic demand indicates the need for increased indigenous manufacturing as currently the local production caters to only 30 per cent of the demand.

“Efforts underway by empowered committees such as the Core Advisory Group for R&D in Electronics Hardware, Carel to define specifications for indigenous STB and STB system-on-chip (SoC) are expected to culminate in made-in-India and/or made-for-India STBs in the near future.”

Jabil, Dixon, Quad, Nainko and Kortek Electronics are some of the EMS companies manufacturing STBs in India, though they predominantly cater to the export market. Among indigenous manufacturers, Videocon and myBox are the noteworthy names.

Meeting the demand for STBs through domestic production is not possible immediately. However, digitisation has opened up immense opportunities for domestic manufacturing to pick up. Local production of STBs is projected to rise in future, as the Cable Television Networks (CTN) Amendment Bill 2011 mandates digitisation of TV broadcasts pan India by 2014. This bill has provided the necessary thrust for driving growth of the STB market, both cable and satellite.

In addition, increase in local manufacturing of STBs is expected to ease supply chain challenges and lower the costs incurred by service providers currently. The DTH industry and cable operators are plagued by huge operational challenges.

This is due to the multiple taxes such as service tax, entertainment tax, license fee and VAT that the industry is compelled to part with. In contrast, suppliers in countries like China and Korea witness enormous support from financial institutions like EXIM banks, which offer long-term credit over three to five years at extremely low interest rates. A similar support system is needed to promote indigenous manufacturers in India. Currently, no such financing is available in the country, as this is not treated as a capital goods industry.

Frost & Sullivan adds that the STB is a product that requires very close cooperation between the operator and the STB manufacturer, and hence requires a high level of customer support as well.

Moreover, at the national level, there are organisations like the Bureau of Indian Standards (BIS), which are extremely important for implementing standardisations. This will not allow cheap, low quality STBs coming into India unlike the Free Trade Agreement (FTA) with Thailand that brought in cheap and low standard STBs to the country.