IMS Research’s report Market Opportunities for Internet Video to the TV reveals demand for connected CE devices are being driven by increased bandwidth, the evolution of content delivery methods and the convergence of media industries. These market drivers are resulting in new delivery methods, new content and evident changes in consumer behavior.

Adoption of over-the-top content will become an extension of subscription packages, but OTT on the TV will not become a ubiquitous solution until at least 2015, as it is still emerging in most countries. IMS Research Analyst Rebecca Kurlak says, “Many companies are making the OTT connection. Accedo Broadband is an example of a vendor that offers interactive and long tail VOD content for both IPTV services and connected TVs. BT, PCCW, CHT, and OTE are all examples of tier one telcos that are casting a wider and deeper net.”

Should pay-TV operators be concerned?

“Not necessarily,” Kurlak concludes. “Pay-TV operators garnered 57% of global TV households at the end of 2009. They are changing their strategies to stay abreast of changing viewing habits. We have already seen numerous operators who are future-proofing their set-top boxes (STBs) with internet connectivity to enable future streaming services.”

The IMS Research study IPTV: A Global Market Analysis reveals that nearly 13% of global IP set-top box (STB) shipments in 2008 were operator-deployed hybrid boxes with the ability to receive content via IP or digital terrestrial broadcasts. Of these 1.6 million hybrid STBs deployed, 87% were shipped to Western European TV households.

Kurlak continues, “Not only will hybrid STBs experience a surge from operators, but in the retail market as well. IP Vision and Fetch TV are just two examples of operator-free TV service business models available to Western Europe households.” The boxes supply à la carte VOD offerings, DVR functionality and digital multichannel TV capabilities in tandem with free-to-air (FTA) DTT channels.