There are many challenges to overcome before IPTV goes mainstream, says a new report from market research firm Infonetics Research, but many of those challenges are expected to be overcome soon enough for the number of worldwide IPTV subscribers to more than double just about every year from 2005 to 2009, when it will reach 68.9 million subscribers.

Infonetics' report forecasts IPTV service revenue and service provider capex to increase dramatically as well, and sales of IPTV equipment to skyrocket—from $371 million to $6.8 billion—between 2005 and 2009.

"IPTV is still in the 'kick the tire' phase, with service providers doing trials rather than mass deployments, but there's no question that IPTV is going mainstream," said Jeff Heynen, directing analyst for Broadband and IPTV at Infonetics Research and lead author of the IPTV Equipment, Services, and Subscribers report.

"The only question is about the timeline, because there are a lot of pieces to this puzzle, and what looked like a 1,500-piece puzzle is really a 5,000-piece puzzle that's more complicated to sort out," Heynen continued. "The technical hurdles are well known, but the regulatory issues are less predictable. Legislators are asking, 'How do we treat and regulate IPTV?' While content owners are asking, 'How do we best take advantage of these new markets?' It's complex, and depending on how the regulatory and content licensing discussions go, the timeline for IPTV taking off could either slow down or speed up."

Report Highlights

• Service providers are expected to generate significant IPTV service revenue between 2005 and 2009, with worldwide revenue increasing at a 169% five-year compound annual growth rate
• The bulk of IPTV service revenue is being generated by providers in Europe
• Service providers are dedicating rapidly increasing amounts of their capital expenditure dollars to IPTV infrastructure, including both content and transport equipment, with worldwide IPTV capex growing at a 41% CAGR between 2005 and 2009
• The number of IPTV subscribers in Asia Pacific more than tripled between 2004 and 2005, where faster forms of DSL like VDSL2 and ADSL2/2+ are stimulating subscriber growth
• The number of IP set top boxes (STBs) sold worldwide will nearly triple between 2006 and 2007, led by China-based Yuxing InfoTech and UK-based Amino Communications, who are currently the worldwide leaders in IP STB unit shipment market share

Infonetics' IPTV report provides top player analysis, current and forecasted market size, and forecasts for IPTV services revenue, subscribers, content and transport infrastructure capex, and equipment (integrated digital headend platforms, VoD servers, IPTV video encoders, IPTV middleware [content delivery platforms], and IP STBs). The report also provides market share for IP STBs .