Research shows that as revenue from standard set-top box sales declines, along with waning demand for aging STBs during the next few years, set-top vendors will initially rely on DBS, IPTV and digital terrestrial television (DTT) boxes. However, according to a new study from ABI Research, by the end of the decade even those sectors will be under pressure from alternative technologies to facilitate “the connected home.”

In response, the research firm says STB vendors will have to add new features and functions in order to revive flagging shipment numbers. “The development of two-way digital-cable-ready TVs, residential gateways, media centers, and even video capabilities on gaming systems will put the set-top’s status at risk,” says research analyst Paulhwa Lee.

ABI says STB manufacturers are responding in several ways, starting with the addition of new features like increased hard-disk space, DVD players, DVD burners, home-audio solutions. The developments will help to make traditional STBs more relevant to consumer demands, improve electronic program guides and incorporate more web-based services and video gaming, the firm says.

Set-top box vendors are also moving more aggressively into the hybrid STB market, ABI said, as hybrid boxes offer a single solution to a number of possible problems caused by the multiplicity of video sources and distribution platforms.

Said Lee: “No one video or television technology will be a ‘killer’ in the next few years. So as this market flattens towards the end of our forecast period in 2012, STB vendors would be well advised to incorporate as many of those technologies as possible into their products.”