Globally, IPTV market has successfully reached an advanced stage where it has been growing rapidly since the last three to four years. IPTV has grown from strength to strength from its first deployment in 1999 to 2009 in terms of number of subscribers and revenue. At the end of 2008, global IPTV subscriber base was 23 mn that grew to 26.7 mn in 2009, and is expected to grow at a CAGR of 32% to 81 mn by the end of 2013. In terms of service revenue, global IPTV market is $6.7 bn in 2009 and is expected to grow to $19.9 bn by 2013 as per industry estimates. Globally, there are around 120 IPTV service providers in over sixty countries, with Europe and the far eastern markets taking the top spots. Currently, Hong Kong, France, Taiwan, and Belgium are leading the pack in terms of IPTV penetration. By 2013, Europe and North America will generate a larger share of global revenue, due to low ARPUs in China and India, the fastest growing markets (and the biggest) in Asia.
In the last few years major developments have taken place in the global IPTV market. One of the major developments that should interest companies who are planning to foray into IPTV deployment in India, China, and other emerging markets is the deployment of IPTV services over ADSL access on telephone wire or without interest connection. Operators like Deutsche Telekom (German telecom operator) and Akash Optifibres in India are providing IPTV without Internet/broadband connection. Other major milestone for IPTV was approval of a new ITU standard that supports global rollout of IPTV services. This should definitely encourage many global IPTV service providers to look at the Indian market either to provide services directly or the cable operator route. This is another major development in the global IPTV space, wherein cable operators are providing IPTV services through their existing network. Butler-Bremmer is one such recent example of a leading cable operator providing IPTV services. Though examples like these are still few and far between, but cable operators abroad are starting to deliver IPTV services over Docsis 3.0, a CableLabs platform that bursts data in excess of 100 Mbit/s.
Indian Scenario
As stated in our earlier report that Indian IPTV market is at a nascent stage where it is being deployed over DSL, ADSL and ADSL2+ network infrastructure owned by operators like BSNL, MTNL, and Airtel. Indian market has witnessed an interesting battle where for the first time state owned companies are aggressively promoting IPTV when private players have kept a low profile. Till now state-owned telecom companies-BSNL and MTNL-were not considered formidable competitors to private telecom companies. But interestingly these two are aggressively marketing IPTV in India. Recently BSNL and MTNL along with Smart Digivision (official franchisee for IPTV) announced 'MyWay' that will be launched in over fifty-four cities, the largest IPTV launch in the country. Smart Digivision plans to offer IPTV services to 1.6-1.7 mn broadband subscribers of BSNL and MTNL in these selected cities which comprise 80% of the country's broadband subscriber base. Private players like Airtel and Reliance have not aggressively promoted their IPTV services. In fact, Reliance has quietly launched their services in some areas in Mumbai without much fuss. While on the other hand, Airtel has been going slow on IPTV, they are still in the process of evaluating more cities (Bengaluru, Mumbai, and Chennai) before launching the services aggressively. Private players believe DTH is for masses and IPTV is for the classes. However private players do realize that IPTV in the long run can become an ARPU driver. Some of the other interesting developments that took place in the Indian IPTV market in the last few months was the roll out of wireless STBs (hardware essential for accessing IPTV, digital cable or DTH services) for its IPTV services by Aksh Optifibre. Aksh has plans of commercially rolling out its wireless STBs for IPTV services. This will enable consumers to access IPTV services in any part of their home without having to physically make wire connections from the STB to the TV sets. Though this is very expensive right now (three times costlier than the a normal box for accessing digital cable or a DTH, IPTV service) but we believe if this is commoditized just like mobile handsets it can penetrate in India creating a mass consumption drive eventually resulting in price reduction.
India is not only a potential market for IPTV, but can also become a hub for innovation and the next technological breakthrough in global IPTV market. Indian IPTV market has the potential to bring new innovative technology, breakthrough business models and world class content just like the Indian wireless telecom. This is clearly evident from the amount of interest shown by biggies like Cisco, UTStarcom, CopperGate, etc. UTStarcom opened its IPTV technology center and center of excellence in India to develop and enhance standards for IPTV deployments in the country and support global development. CopperGate is also keenly looking at India as a huge market in the near future. CopperGate sets up one IPTV connection every 7 seconds somewhere in the world.
The Value Chain
India's first IPTV deployment was in 2006, when MTNL rolled out its IPTV service in Mumbai followed by BSNL. Other major players like Bharti Airtel and Reliance Communications were given the go ahead to launch their IPTV services in the Indian market in February 2008 by Trai. Airtel has launched its service in January 2009, while Reliance has launched their services in Mumbai. The scenario for IPTV market in India is driven by certain factors like interactivity, value added services, customer end benefits, and fueling broadband demand.
However, India still has a long way to go before IPTV can pick up momentum like wireless communication or DTH services. India has a lot of problems that exists as a barrier for growth of IPTV in India.
Some of the key issues are listed below:
Physical infrastructure: One of the biggest challenges India faces is the required infrastructure for growth of IPTV. India lacks the required high-speed wiring and copper cables and is still dependent on copper or coaxial cables for deployment of IPTV network. Some parts of the world have successfully shifted to optic fiber for deploying high quality IPTV services.
Broadband penetration and n/w capability: One of the biggest and most important factor for success of IPTV in any country is its infrastructure for broadband services and broadband penetration. India's broadband penetration is one of the lowest in the world and the success of IPTV is directly dependant on broadband penetration. India's broadband penetration rate is 2% (rate of Internet penetration of the total households). Although, it is expected to pick up pace in the coming years, advanced technologies like VDSL, WiMax or LTE can save the day for IPTV in India.
Network capability: IPTV requires at least 1.5 Mbps line (with MPEG-4) for basic services at a good QoS and 8 Mbps line (with MPEG-4) for HDTV services. Some part of the broadband networks, especially MTNL and BSNL networks are not ready yet. Most of the major cities like Delhi, Mumbai, Pune, Bengaluru, Chennai, etc, are SDTV compatible this is largely due BSNL and MNTL network and these are the cities where BSNL and MTNL first launched its IPTV in India.
Quality of service: India lacks the required infrastructure to support IPTV. Current subscribers have criticized the QoS offered by these companies.
Content readiness and cost: Content is critical for success of IPTV and to compete with DTH and cable operators IPTV service providers will have to provide high quality innovative content. With respect to content there are various costs which are involved and it totally depends on what route does the player take. It can be either fixed fee deal with broadcaster or Ala carte price per channel. Operators will have to offer services that are not being already provided by their competitor including live TV, video on demand (VOD) and digital video recorders (DVRs).
Cost of service for user: The cost of IPTV services offered are quite competitive but the cost of IPTV STBS is still very high. Cost of IPTV STBS will have to fall further, as they are more expensive than traditional DTH or Cable set top boxes
Regulatory framework: Some of the potential regulatory issues identified includes
advertising: targeted advertising and advertisement less content delivery to allow next generation business models; time shifted TV: legal framework to support content storage, redistribution and super-distribution (for example, access from multiple devices); privacy: protect privacy of user content (with consideration for lawful intercept); piracy: provide a framework for detection and prosecution. Alternate models: watermarking, crawling, etc
; multimedia communications: triple play, voice, video and data regulations; and content classification: larger scale production.
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