IPTV Revenue, Competition Heating Up

IPTV deployment strategies will most likely center on features and benefits rather than price, a recent study suggests.

A new report forecasts that the IPTV video services market will grow to $26.3 billion in 2011.

That's up from $779.2 million last year, according to figures that don't include advertising and value-added services.

Industry analyst firm iSuppli's Home Entertainment Multimedia Content and Services program released findings Tuesday from a report entitled, "IPTV Content & Services 2007: Telecom Companies Turn up the Heat." The report analyzes IPTV and reviews service tiers. It found that telecommunications companies see Internet Protocol television as a way to augment declining voice communications revenue and recapture revenue from Internet-based services. That means the IPTV video services market are expected to increase by a factor of nearly 34 from 2006 to 2011, iSuppli said.

The report also found that IPTV deployment strategies are geared toward next-generation video services, meaning competition will likely center on features and benefits rather than price. ISuppli, a market research and intelligence company, said that telecommunications companies look to high-definition programming, digital video recording services, and remote access to gain an edge. The report predicts that pay-per-view and video on demand could draw almost $300 million in revenue this year.

ISuppli also said that operators can deliver unique value to advertisers through behavioral targeting and push annual IPTV advertising revenue beyond $1 billion in 2010.

While China will likely have the most IPTV subscribers from its huge population and the government's focus on technology for the 2008 Olympics, North America will account for more than $10 billion in IPTV subscription revenue, according to the report.

ISuppli said that IPTV will offer digital music, on-demand gaming, data services, and home security, as well as video.

"Subscriber and revenue growth in the IPTV market will be awesome," iSuppli principal analyst Frank Dickson said in a statement. "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."

In other words, there will still be room for growth after 2011.

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