JULY 10, 2007 -- Telcos increasingly are looking to IPTV offerings to augment their declining voice communications revenue, causing the market for IPTV video services to rise by a factor of nearly 34 from 2006 to 2011, iSuppli Corp. (search for iSuppli) predicts.
The market for IPTV video services will rise to $26.3 billion in 2011, up from $779.2 million in 2006. This figure does not include advertising and value-added TV services.
Telcos view IPTV as an opportunity to recapture the revenue generated by many of the Internet-based services that have bypassed them by traveling through their broadband pipes. However, IPTV will deliver significantly more than just video services, offering access to digital music, on-demand gaming, data services, home security, and other items. These value-added offerings will boost the global IPTV video revenue stream by more than $1 billion by 2010.
While this represents huge growth, IPTV still will have significant room for expansion in the years following 2011.
"Subscriber and revenue growth in the IPTV market will be awesome," said Frank Dickson, principal analyst with iSuppli. "However, to put things into perspective, Comcast had 2006 pro-forma cable revenue of more than $26 billion. It is very likely that the entire worldwide IPTV industry in 2011 will not be as large as Comcast alone is."
iSuppli also found that:
- Many IPTV deployment strategies are focused on next-generation video services. Because of this, competition for services is likely to focus on features and benefits, rather than price. Features such as high-definition (HD) programming, digital video recording (DVR) service, and remote access are the main features that telcos are focusing on to gain a competitive advantage. Pay-per-view (PPV) and video on demand (VoD) service will combine to generate nearly $300 million in revenue in 2007.
- Advertising promises to be another significant revenue source to augment IPTV video. iSuppli believes IPTV operators have an opportunity to deliver unique value to advertisers through behavioral targeting and interactivity. This will drive IPTV-based advertising revenue to surpass $1 billion annually in 2010.
- In 2011, China will lead the world in IPTV subscribers. The massive size of the population, combined with the government's technology emphasis for the 2008 Olympics, are the principal reasons for the growth. Revenue, however, will be driven by the United States. North America will account for more than $10 billion in IPTV subscription revenue by 2011.
iSuppli's report, "IPTV Content & Services 2007: Telecom Companies Turn up the Heat," provides an analysis of IPTV and reviews the various tiers of service. The report then takes a look at the telco-delivered IPTV market from a value chain perspective including content providers, service providers, broadband portals and aggregators, Internet VoD, Internet TV and "over-the-top" offerings, platforms, BSS and OSS, and CE equipment and technology. The customer premise equipment implications of IPTV are examined in terms of set-top boxes, modems, gateways, home networking, digital rights management (DRM) and conditional access, middleware, and client software. Finally, the IPTV content and services market is forecasted by geographic region for the IPTV video services market (including VoD, DVR, and HD), advertising models in IPTV, value-added services, community and personalization, and by region.