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TV Mass-Market is Dead, Buried & Forgotten

Digital TV services are expected to reach around 165 million homes in western Europe and the U.S. by 2012, according to the latest Datamonitor assessment.

With consumers able to access broadcast video content via a variety of methods, including cable, satellite and mobile broadcast TV -- pay-TV service operators will be up against fragmented new competition, and meaningful innovation will be a crucial factor for survival.

As the sector transforms, service operators and broadcasters are searching for multiple strategies to ensure that their offerings are kept attractive to consumers. Primary strategies are through bundling alternative communications services (including voice and data) to traditional TV services.

Triple and quadruple play service offerings, from operators like BSkyB, Canal Digital and Verizon, are attempts to survive changes in the marketplace. Furthermore, Datamonitor believes that these offerings are expected to aide in the significant growth of digital TV services over the next few years.

According to Datamonitor's estimates, there are around 105 million households subscribing to satellite, cable and IPTV services in the U.S. and western Europe. By 2012, Datamonitor estimates there will be around 77.7 million satellite TV households in both regions.

Digital cable is expected to show significant growth as analog declines. By 2012, there will be an estimated 69 million digital cable households, an average annual increase of 8.4 percent from 2006. IPTV is expected to illustrate the largest growth. By 2012 it will be present in an estimated 19.3 million households, which represents a compound annual growth rate of 41.8 percent from 2006.

High-speed connectivity and open Internet access is the most important factor in the transformation of the television sector. Despite the fact that the issue has been at the forefront of the convergence discussion for quite some time, it is important to reiterate how rising broadband penetration is revolutionizing this sector.

As connection speeds increase, compounded with advancements in compression technologies, the quantity and quality of new IP-based video services offered by TV service providers, internet service providers (ISPs) and telecoms operators is set to escalate.

However, it's truly a double-edged sword for pay-TV service operators. The entrance of broadband into the home gives consumers the freedom to access a vast array of over-the-top entertainment options. For instance, consumers are able to download content via peer-to-peer (P2P) networks, stream it through an online aggregator, or access other alternative forms of entertainment directly -- and thereby bypass all the traditional gatekeepers.

Furthermore, content producers and most public service broadcasters are beginning to push content through proprietary or partnered online portals, such as the BBC's iPlayer and the recent strategic move to deliver content via YouTube. This puts rising pressure on traditional aggregators to boost the attractiveness of their service offerings in order to acquire and retain customers.

That said, I believe that all content producers -- particularly the big media companies -- must now come to terms with the reality of an open public Internet that enables an abundance of consumer choice, which will result in continued fragmentation of the content marketplace.

The legacy TV mass-market is history, it won't be coming back, and the notion of a passive or captive consumer only exists in the minds of people who refuse to let go of that bygone era. To the rest of us -- by and large -- it's dead, buried and forgotten.

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