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IPTV to Launch Price War, Not Innovation

As telcos and other new entrants to the market begin to deploy competitive pay television offerings, a new report suggests that price will be the main reason for consumers to change providers.

A JupiterResearch report found that 52 percent of consumers would switch pay-TV services if they could get a better price for the same channel selection. The option of pick and mix or � la carte channel selection was cited by 46 percent of respondents.

Around 20 percent said that they would switch if given a free digital video recorder, but nearly the same number said that nothing would make the them subscribe.

There was apparently little interest in high-definition programming, prioritised by only 6 percent of those surveyed and only 3 percent were attracted by a greater selection of video-on-demand services.

Nearly half of those questioned expressed an interest in the ability to scroll back through the schedule to watch programmes they may have missed, while 44 percent were interested in the ability to pause live television. Just over a quarter were interested in seeing Caller ID on their television screen, but the same number said that none of the advanced features mentioned had any appeal.

The report notes that price was the biggest motivator to change provider. It concludes that the best way to attract consumers to an IPTV offering will
always be to undercut the incumbent. While promising and delivering a cheaper service is the surest strategy for success, providers should also look to service bundles to disguise standalone prices and increase perceived value.

�While Internet Protocol TV proponents get caught up in the futuristic possibilities of the technology, consumers remain much more level-headed about what they look for in a TV service,� said Joseph Laszlo, research director at JupiterResearch and author of the report. �Competitors looking to deploy IPTV should avoid overwhelming the consumer with Jetsons-like �TV of the future� and focus instead on delivering real value in terms of TV of the present.�

Potential new entrants to the television business in the United States face enormous challenges in undertaking billions of dollars in investment to build out infrastructure and design services capable of attracting subscribers in a saturated market.

The majority of current pay TV subscribers are satisfied with their service and will require aggressive pricing, better channel selection or other clear benefits to induce switching.

However, the millions of customers using cable-provided phone services create a threat to phone companies� core business and leave them with little choice but to match cable�s triple-play bundle of voice, television and Internet services.

�Although � la carte channel selection is highly feasible over an IPTV infrastructure, the business case remains uncertain, and media companies are likely to resist such service plans,� said David Schatsky of JupiterResearch. �To address � la carte�s popularity, IPTV services should focus on giving consumers greater choice and control over their television experience, if not true � la carte.�

The JuniperResearch report is entitled IPTV: Simple Benefits, Not New Technology, Most Effectively Compete Against Cable. The consumer research is based on an Ipsos-Inisght online consumer panel and is drawn from over 2,000 respondents in October 2005 weighted to be representative of the US online population to within a confidence of plus or minus 3 percent.

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