THE DEATH OF THE SET-TOP BOX: How the FCC plans to disrupt the $20 billion set-top box market

BI Intelligence

The Federal Communications Commission (FCC) is on a mission to increase competition in the pay-TV content space. To do this, the FCC plans to ultimately relieve consumers of their set-top boxes — the small box that enables cable or satellite television to be viewed — by providing TV apps that function across digital media devices.

Because pay-TV companies have faced minimal competition for their set-top box hardware, rental prices have been free to climb considerably over the last two decades. On average, US households are spending roughly $232 a year on set-top box rental fees. The new proposal would rid this cost.

Meanwhile, native tech companies have the most to gain from the proposal. Pay-TV providers would be mandated to create apps across streaming media players, further incentivizing consumers to purchase devices from Google, Apple, and Amazon, among others.

In a recent report from BI Intelligence, we break down the most recent FCC set-top box proposal, outlining the major implications for key stakeholders and how the proposal will affect the pay-TV space moving forward.

Here are some key points from the report:

• There are three key implications of the FCC set-top box proposal, which Chairman Wheeler released in early September. Pay-TV providers would be required to provide free apps to consumers, pay-TV providers would be required to provide a universal search across all video content, and the FCC would administer licensing deals between pay-TV providers and content owners.
• The rental set-top box market is worth roughly $20 billion, according to US Senators Ed Markey and Richard Blumenthal. We estimate that Comcast alone generates over $1.7 billion per year from leasing set-top boxes.
• Native tech companies like Google, Apple, and Amazon, will see a greater presence in the living room through their streaming devices, should the proposal move forward.
• In addition to saving roughly $231 per household in annual set-top box charges, the proposal offers consumers greater choice in how they obtain pay-TV content.

In full, the report: 

• Breaks down the FCC’s proposal to unlock the set-top box.
• Explores the impact the proposal has on major stakeholders.
• Forecasts the rental set-top box revenue for select pay-TV providers.
• Discusses opportunities the proposal presents for native tech companies.

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