Apple TV & Other Set-Top Boxes Doing Better Than Expected

The Apple TV and similar set-top boxes (STBs) like the Roku and Chromecast are doing much better than had been expected in the past. The reason has to do with the content strategies used. IHS, which tracks shipments, explains.


According to a new report from IHS, these retail set-top boxes are set to "overtake shipments of IPTV STBs used for pay TV services in 2015." The IHS analysis continues with quotes from Daniel Simmons director of connected home research at IHS.

OTT STBs were initially written off as a temporary measure for consumers to bring OTT video to TV screens. It was assumed that smart TVs, Blu-Ray disc players and gaming consoles would eventually take the place of STB devices; however, while consumer adoption of smart devices has grown considerably, OTT STBs have still managed to flourish.

...the success of OTT STBs can be attributed to the content strategies of their respective vendors. Apple, Google and Roku have been much more aggressive in adding new content sources and apps to their STBs than TV and gaming console vendors have to their devices. “Ultimately buying a dedicated box enables viewers to choose the OTT services they watch on their TV, rather than simply living with the pre-installed options.”

OTT, over-the-top, services, "refers to delivery of audio, video, and other media over the Internet without the involvement of a multiple-system operator in the control or distribution of the content."

The report says, "This year, 31 million retail OTT STBs will be shipped, compared to 30 million IPTV STBs shipped by telcos."

All this relates to the choices that customers want, the willingness of the set-top box makers to provide it, the box design, by its nature, being amendable to to direct Internet service to the content provider and likely conflicts of interests by the cable/telcos. This competition from the set-top boxes is driving the traditional providers to imagine new services. The report says, "This level of functionality has become a consumer expectation for pay TV services. Some Belgacom, Dish Network, Virgin Media and other pay TV operators have even started providing access to Netflix and other OTT video providers’ services."

In January, 2015 Tim Cook told investors that Apple had sold 25 million Apple TVs over the lifetime of the product. Annually, just the device hardware is now a billon dollar business.

With the surge in the popularity of the Apple TV, perhaps all Apple needs to do right now is to solidify its OTT arrangements in lieu of anything more dramatic. It could well be that surging sales combined with a waiting game (and a nascent cord-cutter mentality) will be more effective than any dramatic, ground-breaking product. That is, until the time is right strategically.