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October 02, 2007

Report Underscores Challenge Facing IPTV Providers

By Greg Galitzine, Group Editorial Director

Do new entrants into a saturated market stand any chance of success?
 
Take for example the pay-TV market. According to a recent survey by Gartner (News - Alert), Inc., a full 82 percent of all U.S. households already subscribe to some form of pay-TV service, and this number is expected to grow two percent by 2011.
 
This means that IPTV service providers face a decidedly uphill climb as they look for subscribers, and frankly, any customers they win will have to be at the expense of cable and satellite providers.
 
Gartner tells us that “…while there are a number of households that subscribe to a telephone company for IPTV (News - Alert) services, this segment currently accounts for less than 1 percent of the total pay-TV subscriber market. This is expected to increase to almost 8 percent by 2011.”
 
“The U.S. pay-TV market is dominated by cable and satellite providers by a factor of two to one,” said Amanda Sabia, principal research analyst for Gartner. “As the availability of IPTV offerings from telecom providers increase competition in this market, understanding what consumers currently receive, and what they will want from their pay-TV provider, will be critical to gaining or protecting market share.”
 
So this begs the question, what do customers want from their pay-TV providers?
 
HDTV, interactive programming, unique content, and services that add to the customer’s overall quality of experience (QoE) are all differentiating factors that IPTV providers need to be cognizant of, are they to stand a chance of loosing cable’s hold on the American pay-TV watching public.
 
Gartner’s survey showed that nearly 40 percent of all pay-TV households have HD channels included in their monthly pay-TV service subscription, up five percent from the previous year. This includes both local and cable HD content.
 
Demand for features such as interactive program guides, and interactive channels with on-demand content and interactive advertisements, where the user can click to request information have also increased during the past year, rising from nine percent penetration to 15 percent.
 
“All the pay-TV providers will offer basically similar content, but those IPTV providers that differentiate their offerings and are attentive to qualitative factors, such as quality of service, and that provide positive customer experiences will succeed in this well-established marketplace,” said Ms. Sabia. “The U.S. consumer wants HD channels and recording capabilities within their set-top box, and is willing to experience interactive features as well. It is only a matter of time before the integration of the Internet and other communications applications with the TV will move to the forefront of the consumer’s requirement for a satisfying TV experience.”
 
The report, Dataquest Insight: U.S. Consumer Pay-TV Preferences Are Key for IPTV Market Entrants is available online.
 
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Greg Galitzine (News - Alert) is editorial director of TMCnet.


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