According to a new study by US research firm Parks Associates, the number of IPTV subscribers worldwide will reach nearly 40 million by the end of 2009, due in part to ‘aggressive provider deployments’. Parks Associates reports that the number of IPTV households grew by nearly 80 percent in 2008 to exceed 20 million, with a growth rate of over 50 percent anticipated for 2009. Report says the most successful rollouts are expected to incorporate multiple services such as home networking, convergence in entertainment and communications features, and unique interactive services such as quality on-demand programming. “Telco/IPTV services are a core part of successful digital home strategies, but the appeal of these services is strongest when they are part of a complete service package,” said Kurt Scherf, vice president and principal analyst at Parks Associates. “To edge out incumbent pay-TV providers, telecom operators must move beyond the ‘killer app’ mentality and be holistic in their approach.” Research firm In-Stat is less optimistic, saying that each of the major set-top box segments, including cable, satellite, DTT and IP, face widely different outlooks, with growth expected to slow in the IP set-top box market. The IP set-top box market is reported to have grown 55 percent in 2008, but this is not expected to continue, according to In-Stat, as few new telco deployments mean that unit shipments of IP set-top boxes will see only ‘slight increases’ in 2009 and 2010. At the IPTV World Forum Asia end 2008, Informa Telecoms & Media principal analyst media Simon Murray said that they are predicting 57 million IPTV subscribers worldwide by 2013, “But not all of these will pay for TV content. Telcos tend to be using IPTV as a customer attention tool, a way of bundling their products and increasing their blended ARPU figures alongside faster broadband and telephony. (Telcos) are not necessarily looking at linear channel revenues but at content on demand.” November 2008 saw the Cable and Satellite Broadcasters’ Association of Asia (CASBAA) publish its IPTV in Asia Report, researched and written by management consultancy Spectrum Value Partners. Report says that over the past five years, the region’s pay TV and broadband industries have grown at an average annual rate of 22 percent, and are estimated to have generated more than US$53 billion in revenues in 2007. Cable remains the dominant pay TV platform, followed by satellite. “While IPTV subscriber growth has more than tripled over the last two years, IPTV in Asia is still at an infant stage. Apart from Hong Kong, where IPTV has achieved significant market share, IPTV penetration in most markets is less than 10 percent. Nonetheless, Taiwan, Korea, Singapore and Japan have witnessed significant improvements in IPTV penetration over the last two years, and show potential for IPTV to become a comparable pay TV platform,” says the CASBAA report. Report says China and Korea currently contribute more than half of the IPTV subscribers in Asia-Pacific. By virtue of their large populations and established pay-TV markets, these two countries are expected to continue to drive the overall IPTV market in the region. Informa’s Murray agrees, saying that China will be the biggest IPTV market in the world, with 13 million subscribers there projected by 2013. Looking ahead, Asia-Pacific as a region will be a key driver of global IPTV deployments. Although the Asia-Pacific only accounted for 37 percent of the total number of global IPTV subscribers by the end of the first half of 2008, it contributed 57 percent of the net increase in subscribers during the same period. The number of IPTV subscribers in South Korea rose sharply in July 2009, thanks to the government’s push to meet two million by the end of this year and subsequent ‘aggressive’ marketing campaigns conducted by the country’s IPTV operators, according to reports in local newspaper The Korea Herald. According to the report, the number of IPTV subscribers receiving linear broadcast services increased by nearly 127,000 July 2009 to reach over 595,000 for the country’s three IPTV operators (KT, SK Broadband and LG Dacom). This makes a daily average of around 4,000 new subscriptions taken out in July, compared to a daily average of around 1,000 for the first six months of this year. At a meeting with the heads of the three IPTV operators on 28 July, Choi See-joong, Chairman of the Korea Communications Commission, said that although IPTV has penetrated the market relatively quickly, the service providers should speed up investments and put renewed effort into securing subscribers. Of the country’s three IPTV operators, KT leads the pack with around 274,000 subscribers, followed by LG Dacom with around 189,000 subscribers, followed by SK Broadband with around 132,000, according to the report. Taiwan’s ChungHwa Telecom aims to reach 800,000 MOD subscribers by end 2008 from the current 570,000, with Olympics coverage having helped boost subscribers by about 15 percent. In comparison, PCCW’s nowTV reached 927,000 subscribers by the end of 1H2008. Besides winning broadcast rights to the popular English Premier League (EPL) football from i-CABLE for three seasons, now TV brought its channel offerings past the 160 mark in 2009. April 2008 launches included China-based financial news channel China Business Network, sci-fi and mystery entertainment channel AXN Beyond, Chinese hit movies channel Celestial Movies Asia, and classic Chinese movie channel Celestial Classic Movies. Female entertainment channel Sony Entertainment Television debuted in July, while AETN All Asia Networks’ documentary and infotainment channels The Biography Channel and The History Channel came on in July and September respectively. now TV’s in-house produced Cantonese infotainment channel now Hong Kong Channel rolled out in December before All Sports Network took to the IPTV service as well as rival i-CABLE in January 2009. Financially, now TV reported 45 percent year-on-year growth in revenue to US$134 million in June 2008 attributed to higher subscription yields resulting from increased ARPU and expanded paying base from the addition of new content. Meanwhile, SingTel announced that its mio TV service has surpassed the 100,000 customer mark to coincide with its second birthday July 2009. SingTel also launched Football Frenzy, Singapore’s first multimedia social football experience, which will be available across the company’s online, mio TV and mobile platforms for the UEFA Champions League, UEFA Europa League and Italian Serie A soccer tournaments. ESPN STAR Sports is a production partner for SingTel’s Football Frenzy offering, which includes four mio TV channels: three linear and one on-demand. SingTel holds the cross-platform rights to all 146 UEFA Champions League, 149 Europa League and 120 Serie A matches. Asked whether the Football Frenzy experience had been created with the English Premier League (EPL) as their ultimate goal, Edward Yong, chief of content & media services group, SingTel, said it had been created around the UEFA soccer. “But we would like the EPL to see what we have done,” in optimizing these tournaments across all three platforms. In Malaysia, major telco Telekom Malaysia Berhad (TM) is planning a Q4 2009 launch of as yet unnamed commercial IPTV services. This new IPTV service is not to be confused with TM’s existing subscription-based broadband TV service Hypp TV, revamped end-2008 and priced at MYR 9.90 (US$2.80) per month. September 2008 saw TM sign a Public-Private Partnership (PPP) Agreement with the Government of Malaysia to roll-out HSBB (high-speed broadband) network and services. Infrastructure will be rolled out over a period of 10 years with the Government investing RM2.4 billion, and TM investing RM8.9 billion (totaling US$3 billion) to provide highspeed broadband access to over 1.3 million premises by 2012. Phase one of the HSBB project will cover the Inner Klang Valley, all key economic and industrial zones throughout the country, the Iskandar Malaysia Region, all public institutes of higher learning nationwide and all private such institutes within the rollout areas. Comments Media Partners Asia’s Vivek Couto, “Incumbent telco Telekom Malaysia (TM) is upgrading its fixed networks to provide faster broadband speeds and capacity for IPTV, a costly initiative partially subsidized by the government. With respect to content, Telekom Malaysia plans to spend about US$55 million for the next two years, somewhat light relative to the US$270 million. Astro spent on programming during 2008. Media Partners Asia (MPA) forecasts indicate that pay-TV penetration will climb from 45.3 percent in 2008 to reach 60.7 percent by 2013, and 63.6 percent by 2018. Astro’s DTH service will have 57 percent of TV homes by 2018, while Telekom Malaysia will have 6.6 percent with IPTV. Continues Couto, “Regarding Telekom Malaysia, there are a couple of scenarios to consider: One is that TM could pursue a JV with terrestrial broadcast major Media Prima to aggregate the latter’s popular local content into viable IPTV channels and VOD services. However, a marked ad downturn has hurt Media Prima in 2009, and the company is unlikely to invest in a JV over the near term unless there is immediate monetization. Secondly, TM may still close a long-awaited alliance with Hong Kong telco/IPTV specialist PCCW for technical infrastructure and content. The timing of this deal remains uncertain, given PCCW’s privatization pitfalls in Hong Kong during Q1 2009, while the nature of the deal itself remains opaque. Even if TM were able to get carriage of a few brand-name channels currently available on Astro or on PCCW (we understand that TM is in negotiations with STAR, National Geographic Channel and HBO), it would still be lacking viable local content, which features high in the ratings. In 2008, (for example) Astro Ria, Sun TV, Astro Prima and Astro Ceria featured among the top 10 TV channels during 2008 for all demographics.” According to the CASBAA/ Spectrum Value Partners report, With the exception of China, India and Taiwan where regulators have capped the prices of cable TV, IPTV in Asia has been 20-30 percent lower than competing pay TV platforms. In an attempt to increase ARPU and reduce churn, IPTV is increasingly being offered as a part of bundled offerings by operators seeking to leverage on their multi-play propositions. This trend has been led by more developed markets in Hong Kong, Korea, Taiwan, Singapore and Japan where operators have the triple and quad play capabilities. Many IPTV players in Asia have employed channel bundling for their services. Some operators however, have chosen to offer a-la-carte pricing as a means of differentiation. For example, SingTel’s mio TV offering is centred on allowing customer choice of channels. PCCW also initially started with a-la-carte pricing in order to gain market share quickly. However, once it established itself, PCCW scaled back on its a-la-carte pricing and put forward more bundled-channels packages. This is likely to be the trend for most players going forward. Charges for installation and set-up equipment have also proven to be a key factor determining service uptake. In terms of package pricing, there are generally three options. For a basic TV package bundled with a broadband connection, channels in the basic tier are priced very low. For example, for a low subscription fee of THB180, Thai consumers are able to subscribe to TT&T’s MaxNet IPTV service. As subscribers increase, IPTV operators such as China’s CCTV have generally employed a mid-range IPTV service offering a wider range of pay TV programmes to cater to a wider variety of consumers. These services are usually priced slightly higher than analogue cable but cheaper than digital. Lastly, as IPTV players grow their market share, they have sought to provide a full pay TV proposition comprising extensive programming, without the need for broadband connections. For example, while Hong Kong’s PCCW provides bundled service offerings, its large subscriber base allows the operator to provide its customers with the option of subscribing to its IPTV service without a broadband subscription. The CASBAA report’s conclusion says, “As the region becomes more connected with broadband coverage and penetration increasing, we can expect growth in the IPTV market. However, thegrowth is expected to be uneven. Markets such as Hong Kong, Japan, Korea, Taiwan and Singapore with their high levels of broadband penetration and receptiveness to pay TV as a product are likely to take the lead in the regional IPTV market. Growing interest has also been observed in countries such as Thailand and Malaysia where initiatives to improve broadband coverage have been undertaken. Countries such as Vietnam and the Philippines do not currently have solid IPTV deployments but trials of different scale have been conducted by local operators. Lastly, while IPTV has not been able to gain traction in countries such as India and China due to regulatory constraints, these markets bear great potential and it will be crucial to watch for signs of any change in these regulatory approaches.”