IPTV Gets Hot in Europe
U.S. telcos might still be a bit concerned about fiber to the home and IPTV projects. But that isn’t stopping European competitors and incumbents from charging ahead.
Iliad, using the retail brand name Free, offers a triple play package including IPTV and costing about $41 a month. It plans to offer fiber-to-the-home services across France and will launch the service in mid-September, starting in two districts in Paris.
France Telecom, which had nearly 6.6 million DSL subscribers at the end of June (a 49 percent market share), and Neuf Cegetel, which has more than 3 million DSL customers (nearly 23 percent market share), are also building out FTTH connections. At the end of June, Iliad had more than 2.6 million DSL customers, giving it a near 20 percent market share.
Elsewhere, well over 60 IPTV services operated across Europe at the end of the second quarter of 2007, with more to launch in the second half of the year. Eight services operate in France, four major operations in Spain, two in Italy and two in Germany.
About half of the IPTV consumers in Western Europe are in France, according to the consulting firm International Data Corp., which says there are 2.3 million paid subscribers to IPTV in Europe, less than 5 percent of households. By 2011, IDC expects the service to reach about 10 percent of households.
The U.K. market began 2007 with 54,000 IPTV customers, and although BT is now adding 2,000 to 3,000 customers per week, the staggered national roll-out of competitor Tiscali TV means that fewer than one in 100 U.K. households will be taking IPTV by the end of the year.
According to Screen Digest predictions, nearly one in 25 will have it in Spain and around one in ten French households will take IPTV by the beginning of 2008.
iSuppli says that subscriptions to the emerging video platform will rise 12-fold by 2010. This represents an annual growth rate of 92.1 percent, conceivably reaching 63.1 million customers in 2010.
In 2010, IPTV might generate more than $27 billion in service revenue. Others are quite a bit less sanguine. Screen Digest predicts the market will be worth $1.3 billion in 2011 in the U.S. market and Western Europe together. Of this, $720 million will be generated in the US and $572 million in western Europe. The majority of the revenue in 2011 will be taken by the studios and content owners, at $530 million in the U.S. market and $405 million in western Europe.
In all, eight different providers offer IPTV in the French market. And competition is growing heated in the U.K. market as well.
BT arguably covers the low-price market, Tiscali and Virgin the mid-range, and Sky the premium end of the market. Tiscali is rolling out nationwide with the aim of reaching ten million households by the end of the year and to have signed up 500,000 subscribers.
Deutsche Telekom for its part has cut the price of its entry-level IPTV offerings by 25 percent in expectations of signing up a total of 200,000 customers for its IPTV services by the end of this year, and 1.5 million by 2010.
And IPTV sales are accelerating elsewhere as well.
In Korea, Hanaro Telecom has 500,000 customers for its IPTV service. In Hong Kong, PCCW Ltd. has 800,000 subscribers to its IPTV service. As of the end of June 2007, Chunghwa Telecom, Taiwan’s incumbent telco, had 333,000 IPTV subscribers and an annual growth rate in excess of 100 percent.
Brasil Telecom plans to launch its commercial IPTV services in September.
The movie download portion of the business, as opposed to the linear TV portion of the business, might not be an especially lucrative business for telcos, at least not for some time.
Studio wholesale prices for movie downloads offered by service providers ranges from 70 percent to 105 percent of consumer prices on the latest new film releases. That isn’t going to leave much room, if any, for margin. Online digital movie downloads will constitute three per cent of all movie home entertainment revenues in the U.S. and Western Europe markets by 2011. IP
