Multichannel video households and revenue will grow steadily, with global telco TV (defined as telcos delivering multichannel video services across all platforms, including DBS) connections rising from 114 million in 2011 to 163 million in 2016, while IPTV household connections are expected to increase from 54.5 million in 2011 to 116 million in 2016, according to a forecast and market report from Ovum.
Telecompetitors and broadband network operators shouldn’t be overly fixated on IPTV as a “non-traditional business opportunity,” according to Ovum. Broader telco TV offerings produced revenue of $28.3 billion in 2011, accounting for 25% of all global TV service revenues. IPTV accounted for less than half the total, and Ovum expects its share of revenue will only rise to 60% by the end of the forecast period.
An Unhealthy Preoccupation with IPTV
A preoccupation with gaining a foothold in the IPTV market can distract telcos and broadband network operators from taking advantage of other internet TV alternatives open to them. “It is important to remember that many telcos already have significant experience in delivering TV via other platforms,” Ovum says. Its research findings show that telcos “have a substantial share of the multichannel and pay-TV markets, one that is much larger than the IPTV segment with which they are typically associated.”
An additional line item included in Ovum’s latest research report estimates the number of homes in which consumers are viewing long-form video content over the Web. “This reveals the potential for hybrid service developments that might create opportunities and expand the competitive playing field for both telcos and ‘traditional’ pay-TV operators,” according to the London-based market research firm.
A number of factors have held back IPTV implementation globally, Ovum notes, including “a handful of sizable legacy telco cable operations (in Australia, Denmark, and South Korea, for example).” Competition from cable and satellite deployments in less developed markets where IPTV has been constrained financially, such as in Hungary and Romania, and regulatory obstacles – in South Korea and much of Latin America – have also limited IPTV expansion.
“This has caused several operators to rethink their TV strategies, with many retrenching their IPTV rollouts in favor of a more pragmatic approach using alternative platforms” according to Ovum analysts.
Migration to all-IP Internet TV networks
While Ovum expects the present, varied landscape of Internet TV delivery networks to be ‘homogenized’ and dominated by IPTV, the migration from dual-platform and hybrid telco TV offerings to all-IP networks will take time.
“Operators such as Orange and Magyar Telekom are taking a multiplatform route, using DTH to fill their IPTV network coverage gaps. Others, including BT Vision and FastWeb, offer hybrid services that provide an entry-level basic access offering via DTT, with higher-value interactive and VoD services delivered over IP.”
Ovum also foresees a “substantial rise in Internet TV adoption, although growth rates will vary substantially between geographic regions, with uptake so far driven mostly by over-the-top (OTT) VoD services, such as Hulu, LoveFilm, Netflix and BBC iPlayer. IPTV network operators are also distributing Internet TV content through multi-screen pay-TV offerings, however.
“We’re still a long way off an all-IP distribution environment for network-based multichannel TV,” Ovum asserts. “However, just as telcos have explored diversity in platforms to gain a foothold in the TV market, so traditional pay-TV operators are looking to IP as the logical next step in distribution technology choice. Most cable operators have a long-term roadmap towards IP migration, but players such as BSkyB, Time Warner Cable, and DirecTV are looking at hybrid options.”
Hence, use of connected set-top boxes (STBs), along with retail CE devices will likely continue as a strong means of providing in-home and off-network OTT services. Carriers including Telstra in Australia and Telecom Italia “are rolling out such solutions as a cost-effective alternative to closed network IPTV,” and Ovum expects many more of these types of deployments over the forecast period along with rapid growth in the adoption of smart TVs and media tablets.
