A slowing of demand in the UK’s digital television market has caused sales at set-top box manufacturer, Pace Microtechnology, to fall by 41% over the last year to just 1.3 million units.
Announcing its year-end financial results this morning, the group reported revenues down by 52.6% to £166.6 million for the twelve months to 31 May 2003. Pre-tax losses were £16.2 million, following a profit on the same basis of £13.1 million in 2002.
Despite the negative figures, the second half of the year saw an improvement for Pace, as it edged closer toward break-even following eighteen months of falling revenues. However, the H2 improvement is largely a result of effective cost-cutting, rather than a rise in market demand.
Pace says that growth will now be driven by the ability of digital television providers to develop their businesses and make profits from the move to digital. In terms of outlook it offers ‘cautious optimism’ at the present time.
The UK market BSkyB has continued to add to its subscriber base and the Sky+ PVR has increased its penetration, according to Pace. It says that NTL has taken and installed nearly all of the set-top boxes made in early 2002, while Telewest continued to take boxes in the second half of the year.
The company’s share of the free-to-view DTT market has declined as a result of new entrants. The sector is subject to severe competition at the low end of the market, it says.
“We expect overall that the UK market will now stabilise at its current level. Pace has a full range of products for the satellite, cable and terrestrial markets in the UK, which should result in the group retaining the largest market share in this region, but at a lower level than in the past,” it said today.
