While early HD launches, particularly in the US, used MPEG-2 video compression, almost all new HD launches are now using the more efficient MPEG-4 Advanced Video Codec (AVC) encoding. This has created a significant new market for MPEG-4 decoding chipsets and MPEG-4 set-top boxes.

The report profiles all of the major players in the industry, including set-top box makers, AVC chipset suppliers and silicon intellectual property providers. It values the European market for AVC silicon and set-top boxes with forecasts to 2010, based on Screen Digest's HDTV models. The report also maps all current deployments of HD set-top boxes by TV operator/platform, set-top box provider, set-top box models and chipsets used.

Key findings:

• HD ready households in the top 17 European markets reaching 82m by 2010
• Of these, 17m will be 'HD watching' -- i.e. requiring an HDTV set-top box to receive hi-def content
• HD pay TV platforms had been launched in 11 European countries by the end of 2006, with many more expected in 2007
• While early HDTV launches in the US have used mostly MPEG-2 video compression, the vast majority of HD services in the rest of the world are using more efficient MPEG-4 encoding, specifically the Advanced Video Codec (AVC)
• After a slow start, AVC-decoding chipsets became readily available in the second half of 2006 from manufacturers including Broadcom, Conexant, Sigma Designs, STMicroelectronics and Texas Instruments
• AVC HD set-top boxes have been deployed by a number of manufacturers including ADB, Amstrad, EchoStar, Humax, LG, Netgem, Pace, Philips, Sagem, Scientific Atlanta and Thomson
• AVC chipsets are also needed in the much larger market for HD DVD players, Blu-ray Disc players and hi-def games consoles
• The AVC-chipset market is fast-developing: while many early chipset designs used an existing MPEG-2 chip with an AVC decoder added, single-chip designs are now emerging, with dual-decoding channels.
• Improved designs and manufacturing experience is increasing yields and reducing costs
• Support for home networking and secure transfer of HD content to portable devices is already being supported by chipset and set-top box makers, though has not been deployed by pay TV operators
• Screen Digest forecasts a European market for 8m AVC set-top boxes by 2010, worth nearly Euro 700m
• The European market for AVC chipsets, including those used in disc players and games consoles, is projected to be worth Euro 344m in 2010
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