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The set-top box market is expected to flourish in the near future. According to the research firm, IHS, this market will continue to improve through 2015. This is primarily attributed to increasing deployment of HD set-top boxes, multimedia home gateways and several other forms of digital set-top boxes in the customer premises by the cable TV operators.

In the U.S., cable operators are facing fierce competition from online video streaming service providers. Leading video streaming operators like Netflix Inc. (NFLX - Analyst Report), and YouTube etc. have become a severe threat to cable TV operators. These online videos provide an extremely cheap source of TV programming unless the customer is eager to see real-time programs like sports events. This business model is gaining momentum, especially in the ongoing economic uncertainty.

In order to counter the threat by the online video streaming providers, cable TV operators are gradually offering multi-screen video services. Video services are now available in PCs, laptops, tablets, smarphones and other pocket digital devices. For this, the cable TV operators mainly depend on superior quality set-top boxes or video gateways.

IHS estimated that the global set-top box shipment will grow 8% year-over-year to 269 million units in 2013 from 250 million units in 2012. This is further expected to increase 6% in 2014 to 286 million units and another 1% in 2015 to 290 million units. Moreover, IHS also estimated that the global set-top box revenues will reach a record-high $22.2 billion in 2013.

According to research firm, Infonetics, the worldwide video gateway market size may leap from a mere $97 million in 2012 to around $3.6 billion in 2017. Cisco Systems Inc. (CSCO - Analyst Report) is a major player in the video infrastructure market. However, recently, Arris Enterprises Inc. (ARRS - Analyst Report) has become a major competitive threat to Cisco after its acquisition of the set-top box business of Motorola Mobility, a subsidiary of Google Inc. .

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