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TV, the Next Big Internet Application?

Posted by Mort Greenberg on March 7, 2008

Source: eMarketer.com

MARCH 7, 2008

The other way of using the Internet to watch TV.

Ok, so IPTV isn’t exactly television delivered over the Web. It is usually delivered over a closed network and not the public Internet, and connected to a standard TV set, not a PC.

Still, it’s television content sent through broadband, and its popularity is rising as Internet connections get ever-faster. AT&T and Verizon are offering IPTV to many subscribers of their fiber-based Internet service.

Internet service providers are eager to offer more than just commoditized broadband connections, and IPTV fits the bill.

As a result, IPTV service revenues will approach $14 billion in 2012, from $694 million in 2007, according to Strategy Analytics‘ “US IPTV Forecast and Outlook” report.

“The two major US players reached critical mass in 2007 in terms of subscriptions,” said Ben Piper, director of broadband network strategies at Strategy Analytics. “The onus is now on service providers to quantify and articulate the benefits of IPTV against `traditional’ pay TV media such as cable and satellite.”

IPTV Revenues in the US, 2007 & 2012 (billions)

Marketers could also benefit from the ability to target ads on IPTV, similar to online ad targeting.

The US and Canada are expected to drive IPTV subscriptions worldwide. ABI Research forecast more than 90 million IPTV subscriptions worldwide by the end of 2013, up from 13.5 million last year, in a March 2008 report.

“IPTV [will see] particularly substantial growth in North America and most emerging markets,” said Cesar Bachelet, senior analyst at ABI.

IPTV Subscribers Worldwide, 2007 & 2013 (millions)

TV delivered through computer networks is old hat in Western Europe, where it has been available since 1999. France has especially high penetration because many households there have fiber broadband connections. In contrast, ABI said that Germany and the UK have a lot of room for IPTV growth.

IPTV adoption in the Asia-Pacific region has been held back by regulatory issues and low broadband penetration in key markets.

“For telcos, the road to IPTV could still be rocky, because for most, video is a brand new, very sophisticated business, and they are up against incumbent pay-TV operators who have established relationships and a great deal of experience,” said Mr. Bachelet.

The eMarketer Broadband Services (IPTV and VoIP) report will be published in April 2008. Click here to be notified when it is released.  

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