IPTV, or the distribution of a television service over broadband access lines, will take a turn towards full commercial deployment in 2005. The 2004 launch of services such as Maligne TV and CanalSat DSL in France, FastWeb in Italy, and the announced 2005 TV-over-DSL launch by BellSouth, SBC and Verizon in the United States have propelled this new technology onto the front page of industry attention. The Business of IPTV: Global Analysis & Forecasts, a new study from TDG Research, suggests that the majority of global IPTV growth will be fueled by hybrid deployments that combine digital satellite or terrestrial TV services with IP-based TelcoTV offerings.

“The television markets around the world vary greatly in terms of incumbent pay television offerings and broadband penetration,” says Hervé Utheza, consulting analyst with TDG Research and a digital media industry executive. “The chances of TelcoTV’s success will vary greatly depending upon the extent to which these two services have penetrated individual geographic markets. In other words, when it comes to identifying the real opportunities for IPTV on a global basis, understanding the specificities of the regional markets is paramount. Hence, our new study covers three specific geographic regions and 28 countries.”



Other important findings of the study include:

• Worldwide IPTV subscribers will pass the 20 million mark around 2010, a volume dominated by hybrid architectures deployments as opposed to stand-alone TelcoTV VoDSL solutions. IPTV-generated revenue will experience a compound annual growth rate (CAGR) of approximately 102% between year-end 2004 and year-end 2010.
• The cross-over point between MPEG-2 video transmission bandwidths and sustained broadband access bandwidths in volume deployments has now been reached, making it possible to deliver a quality digital video service to consumers over a broadband connection. Moreover, more efficient video codec chipsets are now starting to be available in ASIC technology thus making it possible for consumer premise equipment (CPE) to reach low-cost, volume-deployment level prices.
• The power of IP as a digital video transport technology will rapidly expand beyond TelcoTV operators to affect multiple network topologies. Satellite operators will augment their broadcast offerings with IPTV-based “on-demand” services in order to compete with cable TV players. Additionally, Digital Terrestrial Television or DTT adoption will also benefit greatly from IPTV-based premium offerings.
• For satellite TV service operators, IPTV will provide a means of extending their current broadcast offering to including on-demand movies and programming, thus allowing them to compete with cable’s new video-on-demand services. IPTV and its more efficient codec technologies are also expected to facilitate the continued growth of HDTV channels, while being poised to enable an extension of their core DBS service beyond the satellite set-top box – for example, to mobile consumer devices connecting to the main satellite receiver.
• For cable operators, IPTV technologies will play a determining role in the advent of cheaper set-top boxes (STBs), network equipment, and multiplexing devices. In the United States, the New Generation Network Architecture (or NGNA) effort led by CableLabs will be the foundation for the extension of IP-based core networks, able to indifferently deliver video, data and voice over the same network equipment, as close as possible to the consumer home, thus reducing the “last-mile” plant investment.
• The primary competitive determinants for consumer adoption will be (1) breadth of content offerings, (2) pricing of services, and (3) creation of unique compelling bundled offerings.
• Early IPTV differentiators will include an “a la carte” pricing model, a move that will put pressure on the traditional business practices of incumbent PayTV operators.
• TelcoTV adoption around the world will vary greatly, as the penetration of PayTV and broadband differs. In markets such as the United States where PayTV penetration approximates 80%, careful attention must be given to program pricing and packaging, as well as identifying specific target markets.
• Despite the increased use of IP-based video transport technologies, independent web sites and Internet-based IP TV and video services will remain a niche proposition and may be aggregated or acquired by the larger IPTV operators.

TDG’s new IPTV competitive analysis and forecast, The Business of IPTV: Global Analysis & Forecasts, is the most comprehensive treatment of global IP-video opportunities available today. The analysis combines a critical examination of the business of IPTV, deconstructing more than fifteen existing IPTV service vendors, the economics of various network and CPE configurations, and detailed forecasts for 28 countries in North America, Europe, and AsiaPac. The report also includes provisional profit/loss analyses using three different incumbent PayTV and broadband penetration models.


About TDG Research –

TDG Research is a “think tank” of consumer technology analysts charged with providing timely, actionable intelligence designed to best position new consumer technologies for rapid diffusion. Our team is committed to providing market research and strategic consulting services based on conservative, real-world analysis and market forecasts grounded in consumer research. For more information about TDG Research, visit our website at www.tdgresearch.com or email info@tdgresearch.com.