IPTV growth strong, more likely as U.S. subscriber additions continue apace

jimo

Research company MRG recently released a report showing IPTV subscriber growth was increasing at a faster rate than satellite or cable TV growth, and it forecast that the number of global IPTV subscribers would track at an 18.7 percent CAGR, to 105.1 million in 2015, up from its current 53 million.

Last year, the researcher pointed out that the IPTV ecosystem was adding about 10 new operators every quarter, about 50 percent of which were in North America. Vendors, it said, were releasing a variety of new cloud-based IP video solutions, focusing on delivering OTT and managed IPTV entertainment mixed with linear TV and VOD. That's a trend, MRG said, that shows IPTV operators are hoping to better compete against incumbent pay-TV operators--satellite and cable operators--through a variety of new IP-based services, leveraging OTT delivery and other forms of online entertainment options.

"In recent quarters, IPTV operators have seen their subscriber growth outpace that of their cable and satellite TV rivals," wrote Jose Alvear, IPTV Analyst for MRG. "IPTV operators are expanding their TV offerings by aggressively adding HD, multiscreen and multiview services and hybrid services like OTT video linked with Digital Terrestrial or Satellite video services."

That trend is an easy one to spot in the U.S., where both Verizon's (NYSE: VZ) FiOS TV service and AT&T's (NYSE: T) U-verse service have seen year over year growth of 20 percent plus, while cable and satellite have continued to bleed subscribers, prompting the inevitable chorus of "cord cutting" after each quarterly report from pay-TV operators.

It's not hard to see why the media fixates on cord cutting... it's a sexy topic about a service with which many subscribers have had bad service experiences. And, the numbers from cable companies keep feeding the monster.

As a Bernstein Research report showed, the fourth quarter was a "good" one for cable, but it still lost some 318,000 subs in the U.S., a drop of about 2.8 percent from a year ago. In fact, in all of 2009, 2010 and 2011, the cable industry hasn't had a single quarter of growth (see this chart).

Satellite has shown steady growth, except for a decline in last year's third quarter. In the fourth quarter, it added 147,000 subs for a Y-o-Y increase of 1.5 percent.

But IPTV has been gold. It added 412,000 subscribers in the U.S. in the fourth quarter for a 23.3 percent bump from the same quarter a year ago. And, over that same three-year period, the 23.3 percent growth in the fourth quarter was its lowest number, due to both a slowdown in the expansion of FiOS and U-verse into new markets, as well as the service reaching equilibrium in some markets. Both companies said they'll focus on increasing penetration of existing markets in 2012.

In 2008, global IPTV numbers stood at 24 million subscribers. At the time, those numbers were forecast to soar to 92.8 million by this year, almost double what they actually are. Some of that is due to slower than expected growth in Asia and Latin America. But, as MRG's Alvear said, much of that is likely to change as "government and regulatory issues" in Latin America and Southeast Asia are dealt with.

Nonetheless, IPTV operators have been in the catbird seat, compared to their cable cousins. And, that's not likely to change for awhile--Jim

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