Life is full of little contradictions. One that’s currently doing the rounds is the future of the set-top box. On the one hand, research from analyst firms like MRG are declaring a healthy future for the STB [1]. On the other, you have carriers like BT, Time Warner Cable, and others proudly declaring their moves to a post-STB, cloud-based world.

So which is it?

One of the advantages of my job is getting to speak with customers around the world about their plans for video services. I thought it might be interesting to share what I’m hearing from them concerning the future of the STB.

There’s no doubt that consumers can’t get enough of video [2]. On their smartphones, on their iPads, and of course on their TV sets [3]. Wherever they happen to be. Extending TV services to connected devices is an important step in a journey toward all IP delivery and cloud TV services. And to be clear, this journey also includes service delivery to the main TV in the living room. The question is this: is a STB or elaborate media gateway needed in this model?

It’s a good question that fosters a lively debate amongst STB manufacturers, analysts, network operators and IP video infrastructure vendors like us. Many people myself included, view the STB as a legacy from very vertically integrated video systems. But the world has moved on. It’s all about IP now, and the STB has been made redundant in IP video networks because the cloud and the latest generation of consumer devices have more than enough power to take care of the video rendering and storage. The delivery path for IP video is a direct IP connection from a consumer’s device to the content in the operator’s network. There is no need for an expensive STB to perform processing or recording in the home when these can be done in the cloud or in electronic devices we are purchasing today.

We have customers that are great examples of operators doing things the IP way. The content is prepared in the network cloud for the various supported device profiles. So a version for a smartphone, another for a tablet-sized display, etc. Devices such as Roku and games consoles extend this nicely to the first screen. Alcatel-Lucent’s Velocix CDN delivers appropriately formatted video to the customer’s device which then renders and displays it. There is no additional video processing in the home.

Given that global STB sales exceed $19 billion annually1, it’s no wonder this is a popular topic at conferences. But with so many operators pursuing business models that no longer rely on hardware in subscriber homes, you have to question how long that number can be sustained. Operators are looking to control and drive out costs for TV provisioning. Adding 3 to 4 times the cost by putting additional processing in the home is just another contradiction.

Anything the STB can do, the cloud can do better. Even regulated and legal requirements such as Emergency Alerts Systems can be done in the cloud thanks to our Velocix EVE (Enhance Video Experience) solution. The same applies to time-shift services with our Cloud DVR offer.

Aside from the debate, even the term “set-top box” is contradictory. When was the last time you actually saw one sitting on top of a TV set? The term has been redundant for many years, and the device itself is rapidly becoming so. There’s no contradiction and no exaggeration in that statement; I never exaggerate.

[1] Multimedia Research Group, The Worldwide Set-Top Box Market, July 2013.

[2] Bell Labs Video Traffic Study, December 2012.

[3] Nielsen Cross Platform Report, 1Q2013, Table 3