Research and Markets announces the addition of the "Europe Telecom Insider / Vol. 1, No 4, Edition 6 - Europe's Five-Year IPTV Forecast: Mostly Cloudy, but Temperatures Slowly Rising
" report to their offering.
The EU economy, along with that of much of the rest of the world, is in a deep recession, and 2009 is expected to see the first full-year contraction in GDP since the early 1980s. Central & Eastern European countries will generally face greater downside risk than most Western European countries, owing to weak currencies, capital flight, large external liabilities and much higher refinancing costs. WE countries will likely experience a GDP decline (in local currencies) of around 3-5% in 2009, while in CEE countries, GDP contraction will range from -1% in Poland to -15% in Latvia. Under the pressure of the economic crisis, some telecom and media services, such as mobile TV or VoD in some markets, are seeing lower adoption rates, and service revenues are shrinking. Still, not all markets and all services are seeing significant declines. For example, pay-TV subscribers are expected to grow by 8% in 2009 to reach 163.4m across the European region, despite the challenging economic environment.
IPTV, the youngest pay-TV technology, is under a lot of pressure to withstand severe competition from well-established cable and satellite TV. At year-end 2008, IPTV subscriptions accounted for only 8.2% of total pay-TV accounts in Europe, generating more than US$3bn (euro2.1bn) or 8% of total regional pay-TV revenue. Although we project that by 2014 IPTV will double its share of the total pay-TV market both subscriptions-wise and revenue-wise, the question is, what will happen to IPTV service in the worsening economic situation in Europe? We believe that in the next 12 months, the economic crisis will have a negative impact on IPTV service adoption only in certain European countries, while its impact on IPTV service revenue growth will be uniformly adverse across the entire region in the same year.
- The ongoing economic downturn will affect IPTV adoption and service revenue growth differently across various European markets in the next 12 months. IPTV service adoption rates will decline in some markets, while becoming stagnant or even growing in other. Meanwhile, affected by the worsening economy, IPTV service revenue growth is likely to slow down across all European markets.
- In times of economic recession, when families and businesses are forced to cut costs considerably, service price plays a crucial role in the adoption of any service, including IPTV. In some European markets, IPTV adoption may plummet as customers, pressured by the worsening economy, opt for more affordable offerings from other pay-TV providers. This is the case with some Central & Eastern European markets, such as Poland or Russia.
- Creative and affordable bundled packages will be a way for telcos to mitigate the adverse effects of the economic recession on IPTV service adoption. Often the incumbent operators in their countries, major IPTV players are better positioned to offer bundled services that include telephony, broadband Internet access and IPTV than are local cable and DTH satellite service providers. Although offering cheap and convenient bundled packages may result in surging IPTV service adoption, this strategy will adversely affect IPTV revenue growth in the short term. We see such strategies in Italy and several other European markets.
This Insider will analyze the short- to medium-term future of European IPTV in the current economic climate. It will focus on the three factors affecting IPTV growth: The combination of the level of broadband penetration and operators' Capex, availability of affordable alternatives and telcos' strategies. It will then look in detail at two CEE ( Russia and the Czech Republic) and two WE (France and Germany) markets that best describe the scenarios we propose.
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