DTV requires big investments in set-tops, IDC says

FRAMINGHAM, Mass. /PRNewswire -- Digital set-top boxes are revolutionizing television worldwide. According to IDC, set-top box shipments will reach over 24 million in the United States and nearly 70 million worldwide by 2004. However, TV service providers will have to make large investments if they want to tap into this growing opportunity.

"Demand for digital TV exceeds - and will continue to exceed - the expectations of many large digital TV service providers," said Mary Joy Scafidi, senior analyst for IDC's Consumer Devices program. "However, digital cable services cannot be implemented without hybrid fiber/coax network replacement from the cable head end to local nodes. This process requires a rather large investment on behalf of the cable operators, who then have to pick up the additional costs of deployment."

IDC believes investing now in new digital architectures will open up exciting new revenue streams for TV service providers. "New interactive TV software added to the digital set-top box and the head end will enable many new applications, such as video on demand, television commerce, email, enhanced programming, online gaming, and unified messaging," Scafidi said.

Although the market outlook for digital set-top boxes is positive, TV service providers have been somewhat limited in deployments to the mass market because of high manufacturing costs. As a result, set-top boxes are now being designed at the lowest possible cost along with the ability to support revenue-generating applications and upgraded applications.

"Digital TV service providers will also need to make considerable investments in educating consumers about digital TV and its functionalities," Scafidi said.

IDC's recently published report, Digital Set-Top Boxes: Worldwide Forecast and Analysis, 2000-2004 (IDC #B23670), examines the subscriber-based digital set-top (STB) market. It describes digital TV systems, the evolution of the digital set-top box, and expected future developments of network operators, consumer electronic manufacturers, and new product and service offerings. U.S. and worldwide installed base and shipment forecasts are provided through 2004. To purchase this report, contact Patrick Steeves at 1-800-343-4952, extension 6787, or at psteeves@idc.com.

About IDC
IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in- depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.