IPTV subscriptions will increase to 19.6 million this year from 12 million last year, and revenue will grow to $4.5 billion from $2.3 billion, respectively, Gartner predicted. At the end of the year, 1.1% of households worldwide will be IPTV subscribers.
By 2012, global household penetration is expected to be 2.8% and revenue will total $19 billion, according to the Gartner forecast. Driving the increase is growing consumer demand for video, as well as the entry of new content providers.
New competitors in Internet video include portal players such as YouTube and Joost, and social network sites such as MySpace and Facebook, Gartner said. In addition, device manufacturers are offering their own Internet-based offerings, such as NeuLion and AppleTV, while some broadcasters, such as the BBC, NBC, and Fox, are taking their programming directly to consumers.
On the distribution side, Internet companies, such as Amazon.com and VuDu, are offering video on demand, as well as video rental services, such as Netflix and Blockbuster. Such companies are developing or have developed a combined set-top box and video download service.
While the number of IPTV subscriptions is increasing, there are vast regional differences. Western Europe has the largest number of IPTV subscribers, but North America is the largest market for IPTV revenue, Gartner said. IPTV revenue in North America is forecast to reach $2 billion in 2008, and grow to $8 billion in 2012.
"Before 2008, the IPTV operators' emphasis had been to spread their footprint and effectively provide a 'me too' solution to cable and satellite," Gartner analyst Elroy Jopling said in a statement. "In the future, especially in the developed markets, we will see an emphasis on innovation and differentiated pay-TV services."
Gartner defines IPTV as the use of a carrier-based managed IP broadband network to deliver TV and video to the end user through a set-top box. The picture quality must be at least equivalent to existing pay-TV or free-to-air services.