According to ABI Research report "Global Set-Top Box Markets Forecast Update," shipments of set-top boxes are expected to peak this year, at least in mature markets, and then commence a gradual decline. However, the rolling series of analog TV shutoffs in countries around the world, combined with the strong uptake of HDTV sets, indicate that HD set-tops will form a growing fraction of the total market. HD set-tops are expected to account for about 30 percent of all set-top shipments as soon as 2010.

This is accompanied by a progressive movement from MPEG-2 to MPEG-4 for content delivery. In a statement, ABI Research industry analyst Michael Inouye said: "Closely related to MPEG-4 is a growing affinity for HD boxes over SD. As more HDTVs find their way into homes, the demand for HD content grows in kind. Anticipating this demand, some countries and operators have elected to support the more efficient standard up front or to begin deployments of upgraded CPE. The price points of boxes are converging; MPEG-4 and in some cases HD are getting sufficiently inexpensive that some operators will be providing them to their customers by default."

Some set-top vendors feel that demand for standard models will be around for a long time, but some of the infrastructure vendors report seeing a push towards MPEG-4 encoders. So vendors will have to support MPEG-4. In markets primarily served by digital terrestrial broadcasts where most sales of set-tops are retail, especially those with a large MPEG-2 installed base, this suggests that vendors may have to encourage consumers to switch by reducing the prices of upgraded boxes.

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