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Pay TV Monopoly Erodes in Italy

Sky Italia, the DBS platform owned by Rupert Murdoch-led News Corp., achieved near monopoly status in Italian multichannel TV following a 2003 merger. But now that monopoly is being fractured by new entrants via Internet protocol TV and digital terrestrial TV.

In IPTV, a cable TV-like video service delivered via the Internet, the leader is publicly-traded e.Biscom via its FastWeb branded service. There's also telco Telecom Italia's new Alice service. Elsewhere, Mediaset � the leading analog broadcaster controlled by Silvio Berlusconi � is offering pay TV via DTT, which is both a pay and free medium. The DTT pay channels are accessed via special decoder boxes using pre-paid smart cards.

Kagan Research forecasts that Sky Italia will bag $1.89 billion in revenue this year, accounting for nearly 95 percent of Italy's multichannel revenue. By 2015, pay DTT and IPTV rivals will cut into that share somewhat, leaving Sky Italia with 84 percent of all multichannel revenue�a still impressive $4.2 billion

"Like all incumbents, Sky Italia will have to innovate to keep ahead of its new rivals and that will moderate its profitability outlook," says Ben Reneker, a senior analyst at Kagan Research. "A key technology in play for satellite is hybrid set-top boxes enabling IP-VOD, interactive TV and voice over IP, which IPTV platforms such as e.Biscom offer. Partnerships will also be key to offer media mobility, such as a bundled cell phone service through an arrangement with a third party partner."

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