|
TELECOMS AND SOFTWARE NEWS
|
|
|
IPTV in Europe: no silver bullet for success
Charlie Davies, Michele Mackenzie
IPTV in Europe: no silver bullet for success
'There is no European silver bullet for IPTV success.' T-Home's view of IPTV in Europe succinctly sums up the picture painted by our benchmark of six European IPTV markets. This sector shows more variance across Europe than broadband or mobile markets and is at a much earlier stage of development. Overall, IPTV in Ovum's benchmark countries - Belgium, France, Germany, Italy, Spain and Sweden - has made good progress, but operators still face significant challenges.Varied markets; common and unique challenges
The market impact of IPTV varies widely in the countries we looked at; from a low of around 1% penetration in Germany to a high of 17% in France. All operators face a large number of challenges: some of these are common to all; some are unique to each market. Key variables include broadband and pay-TV penetration, market dynamics, local loop unbundling conditions and competition. From a challenging pay-TV market in Germany to recent sluggish broadband growth in Italy, IPTV operators have had to shape and adapt their strategies to often unique market conditions. Hence Germany's 1% penetration is not necessarily a reflection of failed IPTV strategies. German IPTV operators face fierce competition in a market where consumers are used to low-cost TV. What is certain is that the next phase of IPTV development will make or break many operators. In order to justify the high sunk costs in IPTV rollout and significant operating costs, operators need to achieve much greater scale and grow ARPU so they can start showing either greater profitability (a few operators claim to be turning a profit on IPTV services, but this is the exception rather than the rule) or a profit from IPTV at all. The increasingly vocal presence of consumer electronics vendors and over-the-top players in the TV space will only intensify competition. The price has to be right
Pricing is critical for achieving growth, and strategies also vary widely. In France, for example, operators have aggressively pushed a €30 triple-play package, but also managed to squeeze up ARPU via incremental growth in sales of video on-demand and additional pay-TV packages. In Belgium, incumbent Belgacom launched with pricing that undercut its cable-TV rivals, which helped boost growth. In some cases, IPTV operators have even started offering basic TV services for free in order to gain scale. In Italy, the launch of standalone IPTV was both a reaction to sluggish broadband growth and in order to address a different audience less interested in Internet and much less willing to pay for a monthly subscription than Fastweb's early target base. In Germany, T-Home has reduced prices considerably to compete on a more level footing with other pay-TV platforms. The one strategy that all markets have in common is aggressive promotions. Service trends: in search of differentiation and mass-market uptake
Many services that have long been touted by the industry as the key differentiating features for IPTV are, surprisingly, not widely available today. Catch-up TV, remote programming and user-generated content channels are not available in many markets. In some, they are present but not actively promoted. While the temptation may be to roll out new services quickly, many markets are not yet ready for mass uptake of new services. Operators are - sensibly in our view - taking a more pragmatic approach to rolling out new services in order not to confuse and alienate their user base, particularly those who are targeting the more traditional TV watchers. Services need to be positioned as providing very clear, tangible benefits for the end-user and be easy to use. Alternatively, operators need to have a clear target audience in mind (younger, early adopters for example) for more advanced services and adopt appropriate marketing. Boring it may be, but price leading, aggressive marketing and strong content line-ups have been by far the most effective drivers of growth.
About:
This article is an extract taken from Ovum's Straight Talk service. This daily email bulletin provides our expert's views and opinions on important news and events in global IT and telecoms. If you have a comment or question regarding this article then please submit your details here:
If you would like to find out more about Straight Talk please contact StraightTalk@ovum.com
If you would like to find out more about Ovum services then please click
here for details
|
|
|
|
|
|
|
|
Search
|
|
|
|
|
Contact Us
|
|
|
Expertise
|
|
|
|
|
