Pace climbs ahead in STB market

RENO, USA: Just four years ago, Pace, a little known maker of digital set-top boxes (STBs), was facing the prospect of bankruptcy for the second time in four years. Since that time however, the UK-based firm has exploded from being the eighth largest set-top box maker in 2006, to third place in 2008, and rose to the leading vendor of digital set-top-boxes shipped to pay-TV customers worldwide as of 2009.

It captured this spot from Motorola, with Technicolor (formerly Thomson) in third place, Scientific Atlanta/Cisco in fourth, and Humax rounding out the top five suppliers.

Most recently Pace has agreed to acquire enterprise networking technology firm 2Wire for $475 million which will give it access to IPTV providers and help round out its ability to provide IP-based video services, while further extending Pace's presence in the US market.

Also, other recent partnership announcements of HD roll outs for Benelux satellite operator M7 Group and Malaysian satellite operator Astro are added to Pace's more than 100 partnerships with pay-TV operators around the globe. These include regional leaders such as BSkyB and BT Vision in the UK, DirecTV in the US, Viasat, the largest commercial TV operator in Northern Europe, and Cablevisión; the largest cable operator in Latin America.

In a time frame of less than a couple years, Pace has managed to further increase its revenues and profitability, move into new markets, expand its global customer base, develop new technologies, and drive efficiencies.

It was able to achieve this amazing growth by betting that the future of TV would be HD in late 2007 when it first purchased the revenue losing STB division of Philips. This bet on HD has paid off for Pace, and for the STB market as a whole, as customers continue to move rapidly from analog to digital television and, in the process, upgrade to high definition and PVR services.

Top vendors such as DirecTV sell an average of 2.8 set-top boxes per US household to consumers used to the HD in the living room demand the same experience in other parts of the home. In fact, across all regions, except in Asia Pacific, high-definition STBs are growing as standard definition STBs gradually decline.

However, Asia Pacific, thanks to its very low penetration and booming HD TV market, will experience a surge in HD STB growth over the next few years, in conjunction with strong IP-TV STB growth. While the highest growth in unit volume may come from these emerging markets, additional value is being added across all markets, driven by a shift towards high-end HD and PVR boxes.

2009 and 2008 Worldwide Set-Top-Box Revenue Share by SupplierSource: Databeans Estimates, Company Reports.