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Global Market Trends: Strong growth in IPTV, mobile TV poised to take off

April 29, 2011

The world of media has witnessed major changes in the past decade with global economies shifting from analog to digital formats. The average time spent watching media content on the internet is in-

creasing every year, reflecting a change in user viewing habits. This has enabled services like IPTV and mobile TV to evolve as attractive mediums of entertainment.

IPTV, which created a buzz in the field of entertainment, has seen continuous growth globally over the past decade. The number of markets and operators offering IPTV has been increasing with a worldwide rise in the penetration of high speed broadband.

The global mobile TV market has been experiencing reasonable growth over the years, driven by its ability to stream television content on the move. However, in the current scenario, mobile TV services are available only in a limited number of countries and cater largely to the needs of the premium segment. The target audience is projected to increase in future with a fall in subscription fees, as a consequence of greater mobile TV rollouts across the globe and the resulting competition.

Subscriber and revenue growth

The global IPTV market recorded strong growth during 2009 and 2010, emerging as one of the few industries to defy the financial downturn at a time when most other sectors were facing sensitivity over declining consumer spends.

According to market research and consulting firm Pyramid Research, the number of worldwide IPTV subscriptions increased by 38 per cent between 2009 and 2010 to 46.2 million, and are expected to reach 131.6 million by the end of 2015 at a compound annual growth rate (CAGR) of 23 per cent. IPTV penetration is anticipated to increase from 0.7 per cent of the global population in 2010 to 1.8 per cent in 2015.

Moreover, according to Global Industry Analysts, the worldwide IPTV market is estimated to generate $78.9 billion in service revenues in 2015. This highlights the growth potential of the sector and an opportunity for telecommunication companies looking for new revenue streams beyond data and voice services.

Over the years, IPTV has also evolved to play a bigger role in the larger pay-TV sector. According to ABI Research, IPTV’s share of the overall pay-TV market is projected to increase from 6 per cent in 2010 to 11 per cent in 2015.

Though the IPTV segment witnessed marginal deceleration in growth in some regions owing to the economic downturn of 2008, overall, the sector escaped relatively unscathed. A host of factors acted as growth drivers during the crisis years. Falling incomes and reduced household wealth resulted in people spending money on low-cost home entertainment. IPTV services, being one of the cheapest forms of home entertainment, became a desirable option during the credit crunch. Other factors like the level of broadband penetration, innovative and affordable service bundling strategies, and creative offerings such as on-demand services and channel diversity enbaled the sector to counter the global economic slowdown.

Regional trends

Asia-Pacific to foster future growth

With a share of 46 per cent, Europe remained the biggest and most active market for IPTV, with countries like France, the UK and Germany leading the growth in this region. France maintained its leadership position with a 30 per cent share in worldwide IPTV subscriptions.

Going forward, the emerging markets of Eastern Europe are forecasted to become IPTV hotspots. Countries like Croatia, Slovakia and Slovenia have seen rapid IPTV growth in the past due to significant capital expenditure and a robust network infrastructure. On a countrywide basis, Russia also experienced substantial growth in its IPTV market. However, it is still at a nascent stage of development in countries like Romania and Poland because of poor network infrastructure and competitive pay-TV markets.

The Americas have been a viable IPTV market globally on account of strong existing pay-TV penetration, stiff prices and strong competition. In Latin America, though the IPTV market is still in its infancy, there is significant growth potential. The platform has found a highly receptive audience in countries like Colombia, where telcos are permitted in the pay-TV space. In terms of service revenues, Europe and North America control the market, accounting for a larger share of global revenues due to very low ARPUs in Asia.

Although IPTV has gained momentum in developed countries, the biggest opportunities for it in the long term are in emerging markets, where pay-TV penetration in households remains low. Asian markets like China, Japan, Taiwan and South Korea are expected to dominate the global IPTV sector in terms of subscribers, service revenue and infrastructure. Broadband penetration in the Asian region is also expected to fuel growth in the IPTV industry. According to IMS Research, subscriber growth in China, Latin America and Eastern Europe would double the number of worldwide IPTV subscribers over the period 2010-15 to 70 million.

As per market research and consulting services company RNCOS, the Asia-Pacific region is forecasted to account for around 45 per cent of the global IPTV subscribers by 2014.

At the country level, China is expected to experience continued strong IPTV service growth, led by fast expanding broadband infrastructure, decrease in service prices and an ever-expanding middle class. From a subscription perspective, China is projected to replace France as the world’s largest IPTV market, maintaining this position till 2015, as per forecasts by Pyramid Research.

Taiwan, Korea, Singapore and Japan are pioneers in technology adoption in the Asian region with a relatively high penetration of broadband. Going forward, these countries show enormous potential for IPTV to become a comparable pay-TV platform.

Other markets including India, Malaysia and Thailand would also fuel growth in the Asia-Pacific IPTV market. In addition, countries such as Indonesia, Australia and New Zealand are also expected to roll out IPTV services in the near future. A host of factors are driving subscriber growth in these regions including the prevalence of low-priced, bundled services like triple play, and greater adaptability of the population to new technologies, given the benefits of IPTV over traditional TV.

Mobile TV

Mobile TV is coming up as a format with tremendous potential in terms of its appeal for the larger mobile subscriber audience. Change in consumer demand towards content and VAS, steady growth in the level of smartphone penetration and the launch of 3G services in most major markets have resulted in a surge in mobile data traffic. As per the Cisco Visual Networking Index, the global mobile data traffic is estimated to grow 26 times during the period 2010 to 2015, reaching an annual run rate of 75 exabytes by 2015.

Industry analysts forecast that the number of mobile TV subscribers worldwide will grow at a CAGR of over 47 per cent between 2010 and 2013, to reach 570 million by the end of 2013. The high growth potential in the mobile TV segment presents huge opportunities for various industry players including mobile operators, content providers and handset manufacturers. Operators’ service pricing models, coupled with the availability of handsets that support good picture quality at high data transfer rates, will be a key driver for the success of mobile TV providers.

Global mobile TV revenues, which totalled $3.2 billion in 2009, are expected to reach $7 billion by 2015, with a major part of the growth taking place in streamed TV services that currently account for a substantial proportion of mobile TV revenues. Broadcast TV services, on the other hand, will undergo slight but steady growth.

At the regional level, APAC countries like South Korea and Japan which were early adopters of the technology, hold a controlling share in the mobile TV market at 45 per cent of the estimated users worldwide as of end-2008. Countries like India and China are being seen as the growth drivers for mobile TV subscriptions in the future.

Other regions like Western Europe and North America have also deployed mobile TV technology in recent years, surpassing Asian countries in terms of revenue. However, in terms of subscriber numbers, the Asia-Pacific region will continue to lead the global mobile TV market, owing to rapid development in countries like China, Japan, South Korea and India. It has been projected that the Asia-Pacific region will constitute around 67 per cent of the global mobile TV subscriber base by the end of 2013. 

IPTV and mobile TV have the potential to become the platforms of the future. The IPTV sector offers immense opportunities for growth, with most IPTV markets yet to attain saturation levels, and with more consumers switching to fibre for their broadband needs. Further, mobile TV usage would be fuelled by the growing mobile data traffic as a consequence of rising consumer smartphone access, launch of 3G services and increasing focus on VAS.


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