New data from TeleGeography’s GlobalComms Pay-TV Research Service show that IPTV penetration of telcos’ worldwide broadband subscribers reached 15 percent in Q1 2012, equivalent to 67 million subscribers and 8 percent of the world’s 812 million pay-TV subscribers. However, widely differing IPTV and pay-TV penetration rates by region point to radically different IPTV growth prospects.
North American telcos, led by Verizon and AT&T, have succeeded in selling IPTV service to almost 40 percent of their broadband subscriber base. However, with over 80 percent of households subscribing to some form of pay-TV service, North America’s market is saturated, and subscriber growth is at a standstill. Western Europe’s pay-TV market is also nearing saturation despite having a penetration rate 20 percentage points below that of North America. Market slowdowns here, as well as in Eastern Europe, can be attributed to the continued prevalence of free-to-air service in many countries. In these three regions, telcos will be hard pressed to extend their IPTV subscriber base much further, as success will depend on taking subscribers away from other operators in highly competitive markets.
IPTV and Pay-TV Penetration Rates, Q1 2012
Three other regions will also see IPTV growth stymied, but for different reasons. IPTV opportunities in Latin America are tightly constrained by market structure and lack of a supportive regulatory regime, while the prevalence of free-to-air services and wide-scale piracy are barriers to growth in Africa and the Middle East.
In contrast to the mature markets, the Asia-Pacific region has a pay-TV household penetration rate of only 46 percent, and telcos have sold IPTV services to just 12 percent of their broadband subscribers thus far. This leaves plenty of room for market growth, while the 987 million households in the region present a huge opportunity for IPTV.
IPTV subscriber growth over the past three years has been impressive. Although the number of IPTV subscribers has grown by 36 percent in the last year alone, some operators are now seeing subscriber declines. Most of the remaining growth in IPTV will come from the Asia-Pacific – the region is expected to account for two thirds of global subscriber growth over the next five years.