IPTV to Drive Global Pay TV Market Growth, But Challenges Remain for Providers

08 April 2015

The growth of Internet Protocol Television (IPTV) is shaping up to be one of the game-changing trends in 2015, creating opportunities for cloud-based content providers, as well as IPTV pure-plays.  Exponential growth in Internet content and the proliferation of advanced mobile devices are radically changing the way consumers around the world interact with digital content.

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The growth of Internet Protocol Television (IPTV) is shaping up to be one of the game-changing trends in 2015, creating opportunities for cloud-based content providers, as well as IPTV pure-plays.  Exponential growth in Internet content and the proliferation of advanced mobile devices are radically changing the way consumers around the world interact with digital content.

The so-called “TV Anywhere” movement is driven by two key factors: consumer demand for a more satisfying viewing experience and the proliferation of over-the-top (OTT) entertainment services such as Netflix, Hulu, Amazon Fire TV and other cloud-based or multi-screen alternatives to traditional pay TV.

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Although IPTV is delivering a better consumer experience, the technical challenge of delivering on-demand video services can be daunting for service providers, who must reinvent themselves to offer personalized content and value-added services.  These trends have put pressure on the business models of incumbent Pay TV operators, who must ramp up to compete with OTT subscription growth, while coping with higher levels of subscriber churn.

Look for a growing share of Pay TV suppliers to seek solutions from their middleware vendors that can help transform the OTT threat into a business opportunity.

The Global IPTV Market will experience strong growth between now and 2020, driven by consumer demand for pure-play IPTV services, video-on-demand (VoD), interactive services and multi-screen experiences. This paradigm shift makes sense, given the growth in broadband penetration — particularly in Latin America, Asia Pacific, Middle East and Africa.

As mobile technology becomes more robust and Internet content grows exponentially, the market is being reshaped by strong growth in the use of IP-enabled video devices such as smart tablets, smartphones and smart TVs. The IPTV market will grow from $24.94 billion in 2013 to $79.38 billion by 2020 — reflecting a compound annual growth rate of 18.1%, according to a report by Transparency Market Research. Increased global broadband penetration and lower IPTV subscription prices are two of the main drivers of growth.

Although the global Pay-TV market posted a respectable 5 percent overall growth rate in 2014, the sector’s growth clearly is being driven by Internet Protocol Television (IPTV), according to ABI Research. While cable and terrestrial TV platforms will see growth slow to 3 percent, IPTV will experience the strongest gains — 14 percent; satellite TV should grow by 7 percent.

Not surprisingly, cable TV market growth is driven by the Asian-Pacific and Latin American markets — the two regions combined were estimated to have added over 13 million subscribers in 2014, while the mature North American Cable TV market declined by about 1 percent.

Tapping into this robust market will create an opportunity for global Pay TV middleware suppliers, according to a new report by Frost & Sullivan.  Frost’s Global Pay TV Middleware Market report predicts that the market’s revenue would nearly double over the next five years — rising from $1.05 billion in 2014 to $2.03 billion by 2020.

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