International research firm Parks Associates explains that the growth in internet protocol (IP) services has led to a demand for the boxes to do more than simply decode digital broadcasts.
Rather, they are now coming equipped with cable connectors to perform networked functions such as accessing on-demand content via broadband links.
Set-top boxes have found significant penetration in European markets such as France, whose digital switchover is due for completion in 2011.
"The growth of hybrid set-top boxes, which offer broadcast and broadband IPTV options, is a major trend in the European video market," says vice-president and principal analyst at Parks Associates Kurt Scherf.
Mr Scherf has worked on more than 60 Parks Associates reports since 1998, either as a contributing author or analyst, or as the sole author.
