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Europe will Continue to Dominate the IPTV Market

According to the latest market study by Multimedia Research Group (MRG), global annual growth of IPTV subscribers will reach 102 million in 2014, a 25 percent CAGR. Despite economic hardship in many countries, robust Telco broadband and IPTV investments have been driving growth as a means to meet and outperform the Cable and Satellite pay-TV competition.

IPTV operators are using fiber access in high-competition markets and advanced DSL such as channel bonding and VDSL2 in other (less competitive) markets. As a result, Telcos have been discreetly improving their IPTV bandwidth capacity to sub-markets that need upgrades -- without overspending in markets that don't require immediate upgrading.

The Eastern European IPTV market is moving quickly to early maturity, while ROW markets shows faster gains than other regions. "As late as 2007, Eastern Europe had only a few IPTV trials or start-ups. Now, there are 16 fully operating IPTV Operators and another 3-6 in trial," says Jose Alvear, IPTV Analyst with MRG.

These Operators continue to grow their service base, because they have much greater technical and creative control over their service than their Cable competition. By 2014, Europe will have 45 percent of the global market, Asia 31 percent, North America 19 percent and ROW about 5 percent.

High ARPUs still favor Europe and U.S. IPTV markets, with largest service and systems revenues also coming from these regions. Of the specific CapEx items tracked by the report, expenditures will grow from $3.1 billion in 2010 to $5.1 billion in 2014, while Service Revenue will grow from $17.5 billion to $46 billion in 2014.

Over 50 companies are profiled in the report, including many emerging markets in Eastern Europe and ROW. Despite many obstacles and competition, 23 IPTV SPs (mostly in Asia and Europe) will have exceeded the million-subscriber mark by 2014.

"For many IPTV Operators, STBs (Set-top Boxes) make up over 70 percent of CapEx expenditures," says Alvear. "Therefore we can expect greater penetration of integrated hybrid, IPTV, and over-the-top (OTT) STBs (including connected TVs with STBs embedded in TV Sets)."

In the North American markets, all eyes have recently turned to Verizon and AT&T, each adding about 1 million subscribers in 2009. Since Verizon stopped signing new franchise agreements outside its existing footprint, speculation is growing that Verizon will switch from its QAM/IPTV architecture to an all IPTV (Fiber-based) architecture for future franchises after 2010.

Meanwhile AT&T, with no such technical constraints, is free to use a discreet upgrade approach to growing bandwidth using a mix of advanced DSL or FTTX as needed.

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