Global Pay-TV will reach 907m in 2013

The global pay TV market saw strong growth in 2012, with nearly 47 million new subscribers taking the total size of the market to an estimated 864 million households. Over the same period, growth in digital terrestrial markets was relatively flat, indicating that even in tough economic conditions people are willing to pay to be entertained.

As always, content is king, and it’s likely that high-quality content and access to the most recent movie releases are what’s driving the growth of pay TV services.  However, as over-the-top service providers such as Netflix start to bid for this content as well, pay TV operators may need to revisit their strategy to look at how they can improve their offerings in order to remain competitive. While there’s no danger of pay TV services losing their dominant place in the industry just yet, the rapid growth of ITPV and over-the-top services is not something that pay TV operators can ignore.

Consumers are getting more demanding, and with increasing innovation from public service broadcasters and smart TV manufacturers, the pay TV operators will need to keep up with these trends.  Many pay TV operators are in a good place to do this, as we see in the UK with both Sky and Virgin launching major new features this year. Predictions that cable TV operators face growing pressure from IPTV mean that some operators may need to innovate more than others, though. Whether they are able to do that well enough remains to be seen.

Deutsche Telekom considering cloud TV move

At the OTTtv World Summit recently, Deutsche Telekom confirmed that it’s planning to push ahead with its launch of multi-screen services. With subscriber numbers for its Entertain TV service up 40% this year, offering a multi-screen solution as part of that service is an indicator of an aggressive growth strategy for the future as well.

Most interesting, however, was the statement that Deutsche Telekom would look at becoming an over-the-top (OTT) service provider in its own right.  Deutsche Telekom already plans to offer existing channels as OTT services, as well as having partnerships in place with companies such as Spotify and Deezer, so this isn’t entirely new. However, a bigger move into this area would show it following Sky’s lead in moving from being a network operator towards being a content provider that is more network-agnostic.  This offers some major opportunities for growth, and helps avoid large, upfront capital expenditure such as the need to provide set-top boxes to subscribers.

The way that people watch TV is changing rapidly, and by offering their services on a wide range of devices, network operators such as Deutsche Telekom can reap the benefits of this.

It’s good to share as the connected device market prepares for growth spurt

A report by the analyst group IDATE reveals connected TVs will account for 63% of the new over-the-top services market by 2020. In addition to that, the global TV services market will amount to €355 billion by 2020, up from €233 billion in 2011. On average, over the next eight years, it means the market is set to grow by 4.7% annually. When you consider the wider economic climate, that’s an ambitious target to reach.

The driving force behind this however will be what the report calls the 'rest of the world' countries, including China, India, Russia and Brazil. These countries will increase their share of the global TV services market from 20% in 2011, to 42% in 2020.

One of the reasons for this growth is the development of on-demand-video services. IDATE’s deputy chief executive, Gilles Fontaine, believes "new on-demand services will increase their share of the global video market from 3% in 2011 to 12% in 2020.”

China and the Asian markets will be of particular interest as they continue to develop. Burgeoning middle classes in China and the modernisation of other economies in the region means there is, in every sense, a whole new market to explore.

We’ve said in the past that we expect to see a sharp curve on the adoption cycle of connected TVs. Consumer take-up stagnated in the early years, partly because the consumer education piece didn’t run parallel to the technology innovation. This is now being addressed and the benefits of connected TVs are already starting to light up living rooms. It’s now up to the industry to continue to develop additional, relevant, TV services to meet the forecasted demand.

ISPs reject over the top TV

ISPs claim that they can’t handle the video traffic that the BBC iPlayer is capable of generating. At 350MB for an hour programme it is not surprising that networks are starting to creak – and the service only has a limited number of beta users to date.

ISPs developing their own IPTV services are also surely concerned about over the top (OTT) services cannibalising their own revenue streams. It is the same issue that arose with the development of IP telephony; as usage rose, it consumed bandwidth and threatened voice revenues hence it is commonly throttled by ISPs.

But there’s a bigger issue here. OTT services such as BBC iPlayer aren’t really comparable to traditional TV in the home. In fact, it’s unlikely that TV on the PC will appeal to consumers beyond niche markets such as students at certain times of the day. Research into viewing habits shows that even when we do watch online video we like short sharp bursts of content, hence the popularity of Youtube.

Content owners like the BBC, ITV and Channel 4 should therefore be asking themselves how they can get their next generation services to the TV and onto other devices such as mobiles and gaming platforms.

OTT...Friend or Foe?

Over the top (OTT) is currently a hot topic in the broadcast industry especially so with the debate regarding net neutrality continuing to make headlines in the telecoms sector.

OTT TV means the provision of a TV service over the top of someone else’s network infrastructure – 99% of the time without any carriage payment (just think YouTube).

We’re great supporters of OTT but there are some obvious challenges that the industry must address…Having invested heavily building the necessary physical infrastructure, the net neutrality debate is fundamentally centred around the telco finding viable business models that will cover their investment. Whatever the outcome of these discussions we’re certain that OTT will have a massive impact on the TV industry for years to come.