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Mixed Upside-Downside of Pay-TV Markets

By 2014, 84 percent of all pay-TV net additions will come from emerging markets, however a successful pay-TV VoD service in these markets will depend on a variety of factors, according to the latest market study by Pyramid Research.

"By 2014, emerging markets will account for 69 percent of the global subscription total, with 84 percent of all pay-TV net additions coming from these markets," says Dan Locke, Senior Analyst at Pyramid Research.

Almost half of the world's pay-TV subscriptions come from Asia-Pacific, mostly from China and India. The next-largest emerging pay-TV nations are Russia, Egypt, Turkey, and Poland.

Even though most pay-TV subscriptions are found in emerging economies, the revenue opportunity in these markets is considerably smaller than in developed ones, due to significantly lower pay-TV ARPS.

Low incomes make high prices for pay-TV unaffordable for most in developing markets, and free or inexpensive alternatives such as pirated content deters adoption even further. As a result, only 20 percent of pay-TV revenue worldwide comes from emerging markets.

"A successful pay-TV VoD service in an emerging market will depend on a variety of factors, including the network technology and architecture, content availability, consumer demand, and the competitive landscape," explains Locke.

Despite lower attach rates in emerging markets than in the U.S., Pyramid believes sizeable revenue opportunities for VoD and DVR services still await due to the sizeable and largely untapped markets.

The Pyramid report provides explanations, examples, and case studies from a range of markets. These cases highlight best practices that can be emulated to build incremental revenue streams with pay-per-view, NVoD, push VoD, a-la-carte channels, movies on demand, DVR and time-shifted TV, subscription VoD, free VoD, true VoD, and interactive VoD.

The report also includes an update on the status of pay-TV adoption and revenue across emerging markets, setting the stage for an analysis of whether VoD can serve as a viable differentiator to help drive pay-TV demand or whether investments in the service are doomed to fail.

It concludes with VoD and DVR adoption and revenue forecasts covering the world's largest emerging markets measured by pay-TV revenue and adoption -- Brazil, China, India, Mexico, and Russia -- as well as forecasts for the U.S., the largest pay-TV market in the world, and the market most likely to experience a downside from the adoption of over-the-top video.

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