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Mobile Subscribers Yearwise comparision

New Worldview - IPTV takes off, mobile TV set to follow suit

April 15, 2010

Media consumption habits are changing visibly. With the emergence of multiple distribution platforms and an ever-increasing number of television channels, the networked generation is increasingly migrating away from traditional media.

Simultaneously, the telecom industry's rapid adoption of the internet has led to the emergence of internet protocol (IP)- based networks, which marks the convergence of previously separate communication (fixed and mobile telephony, and broadband internet access) and entertainment (television) services. Convergence allows operators to replace multiple networks for services such as voice, data and video with a single network on which everything travels as interleaved streams of IP packets. This enables operators, faced with declining ARPUs and looking for new revenue streams to offset declining voice margins, to bundle services and provide them at lower costs.

Driven by the demand for enhanced services and migration to IP networks, services like IPTV and mobile TV have rapidly evolved over the past few years. However, while IPTV has been able to attract a significant number of subscribers, mobile TV is expected to reach a mass market level over the next few years.

IPTV market

With close to 30 million subscribers globally, the IPTV segment seems to have not only weathered the economic downturn, but, in sharp contrast to other sectors, has also witnessed growth during this period.According to US-based research firm SNL Kagan, IPTV subscribers grew by 46.9 per cent between 2008 and 2009, while revenues shot up by a significant 69 per cent, driven primarily by a marked change in consumers' viewing habits (time spent watching television shows over the internet has more than tripled since 2006). In addition, over 80 new operators have launched IPTV services since March 2009, totalling over 800 IPTV operators worldwide.

In terms of service revenue, the global IPTV market was valued at $6.7 billion in December 2009, and is likely to reach $19.9 billion in 2013 at a compound annual growth rate (CAGR) of 31 per cent. Analysts at SNL Kagan are of the view that the video business has the potential to fuel hyper-competition in the multi-channel TV segment and IPTV is poised to meet consumer expectations for channel diversity and on-demand offerings. In fact, IPTV has grown at an average annual rate of over 70 per cent since 2005 and is fast emerging as a strong market alternative in the global multi-channel space. Its growth has led to erosions in the global cable and direct-to-home (DTH) subscriber bases. SNL Kagan, Strategy Analytics and Frost & Sullivan project the number of IPTV subscribers to reach 59.7 million, 68 million and 120 million by 2013, 2014 and 2012 respectively. While estimates may vary, there is undoubtedly huge growth potential for this technology.

Regional trends

Western Europe currently leads the global IPTV market both in terms of subscribers and revenues. The region accounted for nearly 50 per cent of the market with over 13 million IPTV subscribers as of December 2009, followed by the Asia-Pacific region and North America with 9.6 million and 6 million subscribers respectively.

France is the biggest IPTV market in Western Europe and is likely to account for 28 per cent of the region's IPTV subscriber base by end-2010. The country's leadership in this segment is due to its unbundling of the local loop from an early stage. Orange (France Telecom), Iliad and Neuf Cegetel are the three major IPTV providers in the country with Iliad, which trades under the name Free, owning the largest IPTV deployment in the world with 2.4 million IPTV-enabled customers as of end-2007. Other key IPTV markets in this region include Belgium, Italy, the Netherlands, Norway, Spain and Sweden.

In an attempt to gain subscribers, telecom TV operators have been adopting different strategies such as introducing new product features and offering discounted services. The latter has been aggressively used in Sweden where TeliaSonera is offering basic IPTV services free as part of a triple-play bundle.

North America, another key IPTV market, will continue to maintain its strong position with 13 per cent of the global market by 2013.

Going forward, the Asia-Pacific region is expected to become the fastest growing market for this technology with the IPTV subscriber base reaching 19.3 million by 2012. With this, it will become the second largest market globally after Western Europe.

While IPTV is yet to become a major pay TV service in most of the Asia-Pacific region apart from Hong Kong, Taiwan, South Korea, Singapore and China, the service will see a surge in uptake with the completion of high speed broadband projects in other countries. With the increasing fibre deployments, service providers will offer services like IPTV to maximise revenue potential and return on investments.

Currently, Hong Kong and South Korea are the major IPTV markets in this region. While IPTV has 54 per cent market share in the pay TV segment in Hong Kong, video-on-demand services have been a key driver for the segment in South Korea. Hong Kong's PCCW is the world's fifth largest IPTV operator and the country's leading pay TV service provider. The telecom operator attributes its success to the right mix of premium and local content.Its effective content strategy has helped the operator to not only capture more than 30 per cent of Hong Kong's highly competitive pay TV market within the first two years of launch, but has also tripled its ARPU. In addition, subscriber churn has been minimal at less than 1 per cent.

Industry experts are of the view that the majority (over 50 per cent) of IPTV subscriber additions till 2014 are likely to come from emerging markets like China, Indonesia, Vietnam, India, Thailand and the Philippines where pay TV players are yet to make an impact. However, adoption in these countries will be restricted to urban areas where high speed broadband networks are prevalent.

Mobile TV

Mobile TV, a viable revenue generator for mobile operators and broadcasters, has so far failed to meet expectations. However, mobile operators continue to focus on it as the service can be used to promote highvalue flat-rate packages.

As the industry continues to improve broadcast mobile TV business models and develop next-generation satellite/terrestrial mobile TV networks, the mobile TV segment is expected to gain momentum over the next few years.

According to Screen Digest, the number of mobile TV subscribers currently stands at about 115 million and covers less than 5 per cent of the global mobile subscriber base of 4.1 billion. Market research firm RNOCS, in its research report "Global Mobile TV Forecast to 2013", projects mobile TV subscriptions to grow at a CAGR of over 45 per cent between 2009 and 2013 to reach 450 million by end2013. The report further predicts that the Asia-Pacific region will dominate the global mobile TV market with 67 per cent of the subscriber base by end-2013. While Japan and South Korea will continue to be the largest mobile TV markets in the region, significant growth is expected in countries such as India and China over the forecast period.

At the global level, apart from the success stories in Italy and Austria, growth is anticipated to be the strongest in South Korea and Japan where mobile broadcast TV has been a reality for over three years.In the US, where confusion over standards was an initial deterrent, growth has picked up following the concerted effort behind ATSC-MH.

Meanwhile, of the two delivery methods for mobile TV, namely, broadcast and unicast, the former is likely to become the most prevalent in taking television to mobile devices. Unicast services will become more of a niche market with operators and other stakeholders complementing them with premium and value-added services. Traditional broadcasters, who have been looking to generate revenue by reusing content, will benefit from the broadcast method as it will allow them more control over delivery mechanisms.

However, significant revenue realisation is likely only after 2011. While operators may not be able to generate significant revenues from mobile TV services over the next four years, bundling to move subscribers to contracts will help to that end.But operators who do not intend to invest in mobile TV now will risk losing out when the subscriber base finally becomes established enough to generate revenues through pay TV models and advertising.

Clearly, there is a huge growth potential for IPTV and mobile TV, and both will play a key role in augmenting telecom operators' revenues.


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