IPTV will double its share of the Pay TV market in Europe by 2014, in both subscription and revenue terms says Pyramid Research in a new report out this week, and while it predicts that the economic crisis will have a negative impact on adoption rates in a handful of European countries, it will reduce revenue growth across the region for the next 12 months.
At year-end 2008, IPTV subscriptions accounted for only 8.2% of total Pay TV accounts in Europe, generating $3 billion or 8% of total regional Pay TV revenue, says Pyramid.
One of the problems has been a fall away in Telcos capex but this is said only to affect IPTV in countries with low broadband penetration. If the country had low broadband penetration pre-crisis, its IPTV target market will stay at low levels during and immediately post-crisis; one such example is Spain, which is currently seeing a slowdown in IPTV adoption rates, say Pyramid.
Although service quality and convenience play a significant role when the economy is doing well, price is playing an increasingly crucial role and customers are opting for more affordable options from other pay-TV providers. The researcher points out that in Poland, TVN achieved a 91% year on year growth for its IPTV service in 2009, by offering cheap deals
The report gives the rather obvious advice that if other Pay TV operators are offering cheap plans, then IPTV must ‘ oh yes, let’s create a price war. But more helpfully adds that creative bundled packages will be a way for Telcos to mitigate adverse effects of the recession. All sensible stuff. The report is called ‘Europe’s Five-Year IPTV Forecast: Mostly Cloudy, but Temperatures Slowly Rising.’
This week a US financial analyst at UBS said that the same effect was in action at AT&T in the US where it has slowed down its capex build out for its U-verse IPTV service. It will build past 4 or 5 million new homes this year whereas it has built past 9 million last year. AT&T said it has still passed a total of 17 million living units and so it still has a lot of potential customers to aim at.
Meanwhile another IPTV forecast, a global one, from MRG in Califnoria says that in 2008 actual IPTV subscribers were 1 million over its last forecast at 21.3 million, and that they will grow to 26.9 million in 2009 to over 81 million in 2013 making it a $25.6 billion business.
MRG had Q1 2009 IPTV subscriber growth at 583,000 for Verizon and AT&T compared with 114k new subs added by the two largest US Cable Operators, Comcast and Time Warner for the same period.