Is it the end of the Set Top Box as we know it?

Google managed to send the industry abuzz with chatter about the TV Set Top Box being ‘on its deathbed’ after it emerged the search company would axe the STB business it will inherit from acquiring Motorola for $12.5 billion. While Google’s prime motivation is likely to be that its Android OS is not compatible with current STB chipsets and technologies, the company most certainly can also see that the market for STBs in their current format is in decline.

The question where the STB is heading is an interesting topic that seems to pop up more and more frequently not only when discussing consumer equipment, but also regularly features high on the agenda of hotel IT managers, who may question the necessity of STBs to deliver in-room entertainment in the age of content anywhere and on any device.

It’s a fair question, particularly for someone who needs to make decisions about entertainment equipment that has to last a 5-year lifecycle. 

While there is no denying that the advent of connected devices is starting to seriously challenge the dominance of STBs, to put them on the ‘deathbed’ is in my opinion a little premature. The fact is that their inherent mobility and backward compatibility are yet to give STBs legitimacy and relevance for some time to come. 

Connected TVs are often seen as a prime challenger of the STB. All models more or less provide services including full web browsing, Wi-Fi connectivity, high-resolution graphics, Android apps and even console-quality gaming experiences. But the reality is that connected TVs also still rely on the good old STB – except that it’s inside the TV, rather than attached to it. So from a cost perspective, connected TVs will not necessarily make things cheaper: you either have to pay for an external STB with a casing, or an internal STB without it. The cost of these internal STBs can certainly be driven down to a certain extend due to TV manufacturers’ economies of scale. But they have to be paid for nonetheless.

And what about the content? In the long run it is imaginable that a majority of TV viewers will receive their content from the cloud, i.e. through OTT. But this requires the precondition that all household TVs are connected TVs and run compatible versions of Content Apps for Android, or iOS (if Apple ever comes out with their TV set).  The day may come, but the changeover period will be rather drawn out. It’s similar to the mobile world, where despite the smartphone craze there are still considerable numbers of users preferring to use a mobile just for voice calling and SMS rather than watching video.

A complicating factor for the hospitality industry is that it’s a secondary market for TV panel vendors who primarily target the mass consumer market and their needs and wants. Given that different TV models with different features raise backward compatibility constraints, the STB (or another piece of hardware) is still necessary to provide TV manageability for hotels for some time to come. 

Having said that though, a more interesting trend that we are seeing right now is that the tablet eco-system is starting to invade the STB eco-system.  As tablet chipsets get ever more powerful, and certainly more powerful than STBs, the stage is almost set for tablet technologies to challenge current STB technologies. That’s the philosophy behind AppleTV, whose “STB” is essentially an iPad without touch screen, but with a network port and HDMI interface.  

While you can be forgiven for dreaming about a future where Ethernet renders any hardware obsolete, it realistically will not happen for some years to come. It’s a paradigm shift that will take time to establish itself. 

So the reality is that for the foreseeable future there will be a piece of hardware that is involved in the delivery of content, whether we’ll call it an STB or not. But it currently it looks like that there’s a fair chance that the next generation STB will be a stripped down tablet.