OTT STB shipments in China to Grew 20% in 2014

Taipei, Republic of China, January 2, 2015--China's over-the-top (OTT) set-top box (STB) market started taking off in 2012 and enjoyed a 10-fold on-year growth in 2013, but the market started seeing decline in the third quarter of 2014 because of the China government's restrictions on OTT STBs and the issue could cause the market to see only around 20% on-year growth in 2014 according to Digitimes Research.

A series of restrictions from China's State Administration of Press, Publication, Radio, Film and Television over OTT STBs are forcing OTT STB vendors to cooperate with cable TV operators and TV stations, heating the competition between OTT and cable STB vendors.

China's OTT STB shipments grew dramatically from around one million units in 2012 to 10 million units in 2013 thanks to China-based online video website's rich and free multimedia contents, and most OTT STB vendors have even integrated apps into their devices for watching contents transcribed from live broadcasting TV shows in China. These services significantly boosted consumers' demand for the device prior to the second half of 2014.

Because China's OTT STB shipments in the second quarter were doubled from the first, most OTT STB vendors were originally optimistic about product sales in 2014.

However, the Chinese government's restrictions over online video content that OTT STB platform providers can offer and the allowed number of live broadcasting channels on OTT STBs as well as its demand for a pre-evaluation before TV programs can be broadcasted and all on-line video websites' apps to be offloaded from OTT STB devices, caused China's OTT STB shipments to drop sharply by 70% sequentially in the third quarter with annual shipments expected to reach only around 12 million units in 2014, up 20% from 2013.

Nevertheless, OTT STB chip suppliers are still optimistic about the market in 2015 as they have seen demand for OTT STBs start recovering since Singles Day (November 11) shopping promotions and believe the government's management should help related players see a more clear direction.

Digitimes Research believes the policies are more in favor of enterprises such as China's TV stations and cable TV operators. As a result, OTT STB vendors will be forced to cooperate with China's cable TV operators in the future and since these operators already have partnered cable STB vendors, the competition between OTT and cable STB vendors may start soon, making China one of the earliest countries to experience such a situation.