With consumers growing ever more demanding in terms of accessing content, the job for the traditional set-top box manufacturer has become much tougher. As content providers and distributors look to provide services over IP as well as satellite and cable, manufacturers face more pressure than ever to deliver next-generation units that can ingest media in all formats and serve as the centerpiece of the household viewing and media consumption experience.

With Blu-ray players as well as games consoles offering access to content on the Internet, the role of the set-top box in the household of the future is very much up for discussion. However, set-top box manufacturers are not reacting to the changes; they are trying to stay ahead of the curve. The day of old-fashioned, one-dimensional set-top box is coming to an end, with more complex, media-type gateway boxes beginning to take their place.

Even the term set-top box is outdated, says Neil Gaydon, CEO of Pace. “We need a new term to replace set-top box, which reflects the complexity of advanced devices. It is used to refer to everything from a very basic-type box all the way through to HD PVR with broadband controlling the whole home in an IP network. That is not a set-top box; it is a media gateway. The managed device products we produce for the likes of DirecTV, Sky Italia, Foxtel and Canal+ are very advanced products, and we need to rethink the terminology to reflect its complexity and scope,” he says. The role of the set-top box is beginning to change as satellite pay-TV operators begin to blend different technologies to bring different content from different sources to households. “We supply products for a managed service that not only provides numerous downloads but also delivers content that is either exclusive to the operator or is aggregated content which fits the demand of the mass market. The mixture of broadcast TV with a broadband link for on-demand services is gaining momentum. Whether via a Wi-Fi link or Ethernet cable to the set-top box, it is a powerful service that allows video on demand whilst being able to watch high-quality pictures coming down from the satellite in 3-D or HD. We will see the power of the set-top box get much stronger and evolve from a hybrid-type box doing broadcast and broadband into a media gateway which creates an IP network in the home connected to your Ethernet-linked TV, games console and other digital services,” he says.

Vince Pizzica, senior executive vice president, strategy technology and research, Technicolor, says the set-top box market is “in transition. … What was considered to be a pretty vanilla set-top box market has to now support lots of different ways to put content into the living room. What you have to do is think, ‘What is a set-top box in reality?’ It is a piece of hardware with some software on it. The software does certain functions. What we are seeing is that some of the functions of that software are being distributed to different boxes in the home, but the overall functionality and the things that are needed to be done by the set-top box, such as: ‘What are the rights of this user to view this content?’ ‘How do I render that content onto a TV screen?’ ‘How do I manage that video stream in a secure way?’ All those things need to happen. What we see is a repackaging of set-top box functionality. We see this as an opportunity, as we have some great software as well as some great hardware, so it is an opportunity for us to bring more software into more devices.”

Michelle Abraham, a media analyst at In-Stat, says a lot of “experimentation” is taking place from pay-TV operators as they try and gain an edge on their rivals. “We’re seeing a lot of experimentation with over-the-top (OTT) video coming to the TV via the set-top box as well as TV anywhere services. Pay-TV operators also want to offer subscribers the ability to customize their service via downloadable applications. All require more flexible set-top boxes than what has been used in the past.” Abraham believes the spread of home networking technologies is the most exciting transition taking place. “The ability to receive OTT video and the integration of home networking technologies like MoCA, HPNA, and powerline (are the most exciting things we are seeing right now). Wi-Fi will spread slowly as well,” she says. 

Applications

Pizzica sees an “Internet cloud” developing in the home, with the set-top box being at the center. “There is an evidence that when a home has a broadband connection, while watching TV in the living room, people will often have a second screen active and engaged with the content they are seeing on the living room TV — perhaps for Wikipedia or Facebook. Tablets and other products like that, which can be synchronized with the main screen, are a better way to provide interactivity to the main content. We are looking at how the software for the in-home cloud that needs to be somehow in the home network, can work with the broader Internet cloud, and how you can match the experience across the both of those clouds so the user can enjoy their content better. We are investing heavily in user interfaces, industrial design and software. It is this need to focus everything on giving the end user the best possible experience from this premium content.” Cloud-based services is a key focus for Technicolor. “We are working heavily on cloud services that can support operators with these OTT type models. We want to simplify it so there is a better integration of these types of experiences onto tablet products or the main screen. You will find there are a lot of people who want to watch content on any device, but we need to enable better delivery models — so an integration of a NetFlix or iTunes type model — and have them delivered to set-top boxes, tablets and other screens in a more cost-effective way,” he says.

Set-top box vendors will look to provide the equipment that will enable a myriad of applications on their boxes. “We believe back-end monitoring is probably as important as the set-top box itself. You will also see us working with application development partners in much the same way as the iPhone has developed. We want to get as many fun and utilitarian applications as possible on the box — social media applications like Facebook and Twitter but also gaming. With these processors, you can deliver high-quality fast gaming as well as social gaming. You will also see us working with providers of energy monitoring, so your set-top box will be able to monitor how your energy is being consumed within the home,” says Andrew Burke, CEO, Amino Communications, a set-top box manufacturer that cut its teeth in the IPTV arena. 

Solution-Based Approach

Satellite pay-TV operators also are having to adapt to this new OTT world. “You are seeing satellite providers putting an Internet connection to deliver more choice. The next step is to go full OTT. I still think people will subscribe to mainstream content, but I believe niche content, which traditionally has not been economically viable to deliver in a pay-TV environment, may now be satisfied by OTT. I also believe social media will be an important part of the satellite pay-TV proposition going forward and using an open Internet connection for that,” says Burke. “Delivering hardware is not enough. … It is now more about a solution-based approach. We have to manage those boxes when they go out people’s homes and understand how well they perform, how to upgrade them remotely and monitor those upgrades, provision remotely, and have an insight into how the hardware is performing.

Amino has been working with Intel on its next generation of boxes. “Intel came up with the Sodaville CE4100 chip. What we liked about that, is that being Atom-based, it would allow you with the right software layer to go on to the open Internet and access OTT content in the same way as on a PC or a Netbook, so we worked with them to produce a product that we showed at IBC (in 2009). At the start of this year, we were fortunate enough to win a Western European telco contract to supply a hybrid DVB-T/OTT set-top box, based on the Intel CE4100, for their retail channel. Basically, it’s a home media center but with all the power of a netbook, so it has the Intel processor, a USB hub, a Wi-Fi card with 802.11 N, Bluetooth, a DVB-T twin tuner, SD card reader and a CI slot for encoded broadcasts over the DVB-T transport layer,” says Burke.

The rise of Internet video services is having a profound impact on set-top box manufacturers. “Perhaps most intriguing will be how the set-top box manufacturers and operators respond to the spread of connected devices and Internet content. With every rumor about where online service like Hulu might end up, there are those who expect pay-TV as we currently know it to start its decline. This, however, is likely premature and considerably too aggressive. Most consumers still subscribe and pay for TV service, and there is little indication of consumer behavior dramatically changing in the near future,” says Michael Inouye, a media analyst at ABI Research. Inouye expects networking to be at the heart of set-top box strategies going forward. “Perhaps the most significant departure from the usual (e.g. spread of HD, digital, etc) is home networking. Strategically speaking, the set-top box vendors will increasingly have to support a wider range of connectivity solutions and related services/initiatives. In other words flexibility will be key. It is highly unlikely an entire region will select only one type of networking technology, nor will one initiative or platform be the only solution to bring broadband content with broadcast,” he says. 

3-D TV

The momentum behind 3-D TV has taken many by surprise, and while many existing high end set-top boxes already can handle 3-D TV, the next generation of boxes will be able to relay 3-D TV transmissions even better. “We view 3-D TV as a very exciting experience for the consumer and, although still in an early phase of its evolution, we believe consumers will begin to expect 3-D TV as standard within three to five years. To really take off, it needs more 3-D content, and the cost of the 3-D-ready flat panels to come down to a price point for the mass market,” says Gaydon. “Current generation set-top boxes can handle half resolution 3-D TV and the next generation, likely to be shipped by mid-2011, will see the move to full resolution. At IBC, Pace will show development platforms for full resolution 3-D TV. Obviously, 3-D TV is a lot more bandwidth hungry, so operators need to get the business models right and use technologies that will combine HD and 3-D TV — rather than run separate streams, one HD and one 3-D, as that would be prohibitively expensive for operators.” Gaydon expects 3-D TV to come quicker than HD. “The appetite for high-class home entertainment and convergence of content across TV, PC and mobile is increasing. If you go out to 2017, you are then looking at Ultra HD, which is 16 times the quality of HD.”

Pizzica adds, “When people say they have a simple 3-D-ready set-top box, all they have pretty much done is support the menu in 3-D. In the future, we would expect to enhance the 3-D image a lot more than that. We will try and give more end-user control of the 3-D experience and increase the quality of the 3-D depth. We are not just interested in supporting the 3-D image coming to the set-top box. We are interested in every aspect of the 3-D TV experience. You have got issues in the content creation to be optimized for TV, issues of how you would manage the delivery of the broadcast centre, and things you need to do to improve the workflow in the playout center. Then, once you get into the home, there are ways to improve the quality of the 3-D delivered at the set-top box.”

Anna Hunt, a senior analyst at IMS Research, says the growth of 3-D TV presents some unique challenges for set-top box manufacturers. “Set-top box manufacturers are faced with some decisions on what types of frame compatible formats to integrate into HD set-top boxes. This capability falls more on the chipset manufacturers, and many of these companies are trying to offer platforms that support as many frame compatible formats as possible so they will support a wide array of broadcast deployments. Many existing and installed HD set-top boxes can be firmware updated to support frame compatible formats and communicate with 3-D TV sets. In terms of developing true 3-D set-top boxes, once that are capable of supporting two 1080p video streams (one for each eye), set-top box suppliers are not likely to move forward with any type of standard, mainly because there are no standardized 3-D broadcast standards. So unless a specific operator makes a requirement to a set-top box supplier to build a box designed around a specific format for, the set-top box manufacturers are not likely to move forward with many new designs until we see some standardized formats from groups such as MPEG and DVB,” she says.

“I think that over the next five years, you will see us specializing in the delivery and management of feature-rich, fast, multi-purpose connected media center in peoples’ homes,” says Burke. “I think the opportunity to innovate on that platform with different software approaches is extremely exciting. We are going to see a lot of new stuff that we haven’t even thought of today. Again, it could emulate the iPhone. I don’t think any of us could have predicted the huge growth in applications on that phone, but I think it is time for the same type of innovation to take place on the television.”.
 

Mark Holmes is Via Satellite’s Associate Editor.