IPTV battles for market share in tough competitive environment, says Gartner

Eighty-two percent of all U.S. households report subscribing to pay TV, and the figure is expected to climb to 84 percent by 2011, according to a recent report from market researcher Gartner.

That highly saturated pay-TV market is precisely the one telecoms offering IPTV services must crack to have success. Today, less than 1 percent of all pay-TV subscribers are IPTV customers. Gartner forecasts that by 2011, the telecom slice of the market will grow to 8 percent — mostly at the expense of cable companies, which will lose subscribers to IPTV offerings.

As more households upgrade to an HDTV set, they will require HD channels from their pay-TV provider. The report, “Dataquest Insight: U.S. Consumer Pay-TV Preferences Are Key for IPTV Market Entrants,” found nearly 40 percent of all pay-TV households have either local HD channels or cable HD channels — such as Discover HD, ESPN HD and HBO HD — included in their monthly pay-TV service subscription, up 5 percent from the previous year.

Interactivity features with the pay-TV subscription have increased during the past year, rising from 9 percent penetration to 15 percent, according to the report. Interactivity features include interactive program guides, an interactive channel or service with on-demand content and interactive advertisements, where the user can click to request information.

The adoption of many new features, such as interactivity and HD, by cable operators can be attributed to the competitive pressure IPTV entrants are having, according to Gartner. The growing presence of IPTV service also is prompting cable operators to upgrade to digital transmission.

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