IPTV Takes Root in Central and Eastern Europe, IDC Says

PRAGUE — The growing popularity of IPTV services offered by a number of leading service providers in Central and Eastern Europe (CEE) bodes well for the region’s telecoms industry, as it searches for ways to diversify its voice and Internet access businesses. A recent study published by International Data Corporation (IDC) indicates that despite relatively limited uptake of IPTV in previous years, total IPTV subscriber connections in CEE are poised to grow more than 100% in 2008, from approximately 290,000 connections in 2007.

“While demand for basic broadband Internet connectivity services remains strong, operators cannot expect to maintain some of the high double-digit or even triple-digit broadband growth rates experienced in the past,” said Joshua Budd, Program Manager of Telecommunications at IDC CEMA. “Operators must diversify their services portfolios. Offering value-added services over broadband Internet, such as IPTV, is a natural move that can pay off – if implemented under the right conditions.”

IPTV is not new to the region. Operators launched services in some countries as early as 2003. Initial response to IPTV in some markets, however, proved tepid. But as operators have boosted bandwidth levels, expanded coverage, and offered advantageous prices for bundling the service with voice and Internet access, IPTV’s popularity has picked up.

Thus far, 2008 has been an important turning point for the industry in markets such as the Czech Republic and Croatia, each crossing the 100,000-subscribers milestone. Other markets, however, are moving more slowly, faced with strong competition from existing pay TV providers.

“Despite higher demand for IPTV in the region, competitive challenges will make the launch of IPTV an uphill battle in some country markets,” Budd cautioned. “In Romania and Bulgaria, for example, there is relatively high cable TV penetration. Competition from existing pay TV providers in these countries and other countries with high cable penetration will leave new IPTV entrants little room to maneuver.”

Technological innovations, particularly in the area of IPTV middleware, should help IPTV providers differentiate their services from more established pay TV players. Developments in IPTV middleware are enabling greater interactivity for users, as well as personalized recommendation and content services that better suit individual subscribers’ tastes and viewing habits.

IDC’s Central and Eastern Europe IPTV and Pay TV Services 2008-2012 Forecast (IDC# EW01Q) takes a look at the current state of IPTV and other pay TV services such as cable television and Direct to Home (DTH) in the CEE region, with highlights and trends from individual markets. It sizes and forecasts the market for pay TV services in terms of subscriber connections and end-user spending in 11 country markets. The study provides an overview of key deployments in the region, examines drivers and inhibitors for pay TV services, analyzes the unique challenges CEE operators face when offering IPTV services, and recommends how to overcome these challenges based on proposed strategic options and experiences of operators in other regions.

For more information on IDC research, please contact Tatiana Hinova (thinova@idc.com, +420 221 423 140) or John Gole (jgole@idc.com, +420 221 423 140).