IPTV becomes a reality as worldwide subscribers reach 3.6 million

Western Europe leads, with growth expected in emerging markets in 2007

READING, UK — The latest worldwide IPTV research from Canalys shows how the number of commercial IPTV launches escalated in 2006, and suggests that IPTV services are now moving into the mainstream. Most major incumbent telecoms providers have launched commercial services and the market is becoming increasingly competitive with the entry of alternative operators, such as ISPs and energy companies.

“2007 will see the competitive landscape become even fiercer as IPTV services from established service providers will be challenged by aggressively priced alternatives from Web TV, cable, satellite and content companies. These are all contenders for a share of the limited wallet of most consumers,” said Canalys senior analyst Nadia Griffiths.

Canalys estimates that the total number of IPTV subscribers worldwide reached 3.6 million by the end of 2006, with Western Europe leading the way and accounting for 2.4 million of those. The sheer number of operators in the region provides its IPTV scale, and major investments in backbone infrastructure are being made as providers rush to build substantial subscriber bases. The IPTV market is highly fragmented. The top five providers account for over 60% of all subscribers, but the rush of service launches by new entrants in 2006 means that there are numerous companies with only a few thousand subscribers each. The top three providers globally according to Canalys are PCCW on 18.2% share, France Telecom with 16.8% and Free Telecom on 14.0%. These are joined in the top five by Telefonica and Fastweb.

One of the major threats for many IPTV service providers is the quality of networking once IPTV services become fully fledged. “IPTV networks will quickly become the most complex and bandwidth intensive that have ever existed,” said Alessandra Fitzpatrick, Canalys vice president. “Many service providers have invested millions of euros on network upgrades, but it remains unproven whether IPTV networks can scale into the millions without performance degrading and response times slowing, or even collapsing altogether. Another infrastructure challenge is that service providers will quickly have to learn how to manage multiple billing systems and content across large server farms and SANs, while maintaining the highest quality of service.”

The future, however, looks promising. In 2007, Canalys predicts significant uptake of IPTV in the Asia Pacific region. Hong Kong is already a mature IPTV market, and growth will come from emerging markets such as China and India, following large investments into IPTV deployments there. Australia is also finally moving into the commercial phase of its IPTV offerings, which will lead to fast roll-outs of services in 2007. North America will be another major growth area, with AT&T and Verizon already pushing nationwide roll-outs of IPTV services. Western Europe though will continue to lead and set the pace globally for the IPTV industry in the year ahead.

About the IPTV Analysis Worldwide service

The market estimates in this release come from the Canalys IPTV Analysis Worldwide continuous advisory service. Through regular reports, database releases and direct analyst contact, Canalys sizes the IPTV market and examines and advises on the issues facing service providers, hardware vendors, software, content and services companies active in the IPTV sector. It looks at the key market trends globally, service provider business models, opportunities for hardware and software vendors, and end-user behaviour.