IPTV gears up for primetime

Despite rosy forecasts for Internet Protocol television (IPTV) some years back, the technology met with obstacles in the Asia-Pacific region and its growth was limited. However, with more high-speed connectivity and improved strategies by market players across the region, IPTV can still live up to its potential, say industry watchers.

Analyst forecasts about five years ago painted a bullish growth for IPTV. In 2006, market research firm iSuppli predicted that IPTV subscribers worldwide would reach 63 million in 2010, a more than 26-fold increase from 2005. Closer to the region, IDC predicted IPTV signups in Asia-Pacific excluding Japan would grow from 1.2 million in 2005 to nearly 30 million by 2010, reflecting a six-year compound annual growth rate (CAGR) of 89 percent.

Newer figures, however, indicate that the optimism did not pan out as expected. At the macro level, TeleGeography reported last month global IPTV subscriptions grew 38 percent year-on-year to reach 45 million in 2010.

Current statistics from IDC also shows a more conservative pattern. In an e-mail interview, Ryan Tay, research manager at IDC Asia-Pacific's telecommunications research, said subscriber numbers in the Asia-Pacific excluding Japan region will grow at a CAGR of 20.8 percent from the current 11 million to 23 million subscribers in 2014.

Broadband, regulatory barriers
Khin Sandi Lynn, research associate of broadband at ABI Research, told ZDNet Asia in an e-mail that IPTV was at its infancy in 2005, and the barrier for deployment in many countries then was low broadband penetration rate and lack of sufficient infrastructure.

Adeel Najam, senior industry analyst at Frost & Sullivan's Asia-Pacific ICT practice, noted that high-speed broadband networks did not exist in 2005 in the region, except in some developed markets. IPTV providers, he added, also faced regulatory constraints and content acquisition issues even in countries with advanced broadband infrastructure such as South Korea.

According to IDC's Tay, Singapore and Hong Kong are the leaders in IPTV service in Asia. South Korea and China, he acknowledged, had been held back by regulatory issues, but these have been resolved and IPTV and mobile TV services in the two markets are growing aggressively.

Over in South Korea, Korea Telecom and local regional Korean cable TV companies have a regulatory framework to work with, while China Telecom, China Unicom and local content providers have joined forces to grow China's IPTV market, he explained.

Turning tide
Tay added that for IPTV to pose itself as a real competitor to cable TV, infrastructure and quality content are imperative.

When IPTV was first introduced, it was mainly delivered through "live TV" or "Web cast" via DSL broadband, he noted. Over the years, service providers gradually developed more content for the masses and were able to offer video-on-demand services as fiber optics became a more reliable and mainstream technology.

In order to compete with cable and satellite television, IPTV needs broadband networks with at least 3 Mbps or 4 Mbps as a bare minimum, with interactive features, high-definition (HD) programming and multi-STB (set-top box) support requiring higher bandwidth, said Frost & Sullivan's Najam.

To that end, the Asia-Pacific region has become the region with the highest fiber broadband penetration in the world with national fiber broadband deployments and FTTx deployments in the various countries, he pointed out.

Content providers are also partnering network players to offer a more compelling proposition, said Najam. Malaysian satellite TV operator Astro's partnership with Time dotCom (TdC) launched earlier this month, he noted, was an example of integrating the two key elements.

"The deal is good because Astro has the content while TdC has the broadband infrastructure," said Najam.

Over in Singapore, StarHub has begun offering IPTV services to commercial customers in the hospitality sector, with plans to offer a residential service to harness Singapore's next-generation national broadband network, according to Irise Wee, the telco's vice president for home solutions and content.

While StarHub is not the first IPTV provider in Singapore, Wee said the company will be able to provide more service delivery options to customers as it is an existing cable TV as well as broadband service provider.

Rising upstart of pay TV
While analysts are unanimous on the growth of IPTV in the region, they were divided on the impact on more traditional TV modes.

ABI's Lynn noted that IPTV is "a fast growing platform of today's pay TV market", and the future of the service win remain bright as long as there is an increase in global broadband penetration and network upgrades. However, she argued that IPTV will not phase out cable or direct-to-home platforms in the next few years.

IDC and Frost & Sullivan, on the other hand, begged to differ.

IDC's Tay said: "The rise of IPTV will come at the expense of cable and satellite TV, more so than serving to expand the entire market."

The market analyst firm expects IPTV revenues to rise at a CAGR of 16.8 percent, reaching US$3.4 billion in 2014 from US$1.8 million in 2010.

Najam of Frost & Sullivan added that all content players are expected to migrate to an IP-based offering in future. Some TV manufacturers, he pointed out, are already making TV sets with Internet connectivity and access to content online.

Daryl Chiam, principal analyst at Canalys, noted that in today's digital age where quality free-to-air content is easily available, IPTV players must bundle services to attract subscribers as consumers' resistance to change and pay for content is high.

"To stay ahead of the market, service providers must be able to cater to consumers looking for instant gratification through 'bite-sized' consumption of media through securing popular content and offering them as video-on-demand at affordable prices," he said.