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Product Views
Set-top Boxes: Be a Licenser, not a Manufacturer
I heard lots of discussion and debate at the recent National Association of Broadcasters show in Las Vegas about set-top boxes. If you spent any time at all walking around the miles and miles of exhibits and vendor booths at the show, you might have gotten the impression that set-top boxes for digital broadcasting is where all the action is. I saw all sorts of boxes and applications—for over-the-top video, for download services, etc.— and lots of talk about the "über" set-top box with HD, DVR, networking, storage and so forth.
But look: the numbers just don't add up. Consumers have already voted on this matter. If you look at Slingbox, Apple TV, TiVo and others, sales and market share are not going to set any Chief Financial Officer's heart aflutter.

I just do not believe there should be any second set-top box in the home. That’s not where the money is. Consumers want the services but they don't want to spend more.

Where should companies be looking instead? Look to embed creative applications in existing boxes instead of trying to compete as a manufacturer. Do you want to be in the manufacturing business and hassle with factories and workforce issues and inventory and returns? Or do you want to ride on the top of someone else and charge a percentage?

A certain entrepreneur named Bill Gates used that licensing model to produce some pretty impressive business results. I think the future of set-top box functionality is heading down that path, too.

By Greg Douglass, managing director, Accenture Media & Entertainment practice
June 2008
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