IPTV will fundamentally change telco's operational structure and create micro-markets of intense local competition according to a new report by the Yankee Group titled From Gorillas to Guerrillas: IPTV changes Everything.Â ItÂ predicts that by 2011 the IPTV market will have 9.83 million homes, with Verizon accounting for 4.7 million and AT&T for 3.9 million. Yankee estimates a total pay-TV market in the U.S. of 102 million by 2011, giving IPTV a 9.6 percent nationwide penetration.
But Yankee argues because IPTV can determine to which markets it deploys, this average misrepresents the true market impact. The impact is far more dramatic if a more appropriate denominator is used and Yankee predicts an IPTV share of 29 percent in markets where the service is rolled out. None of these will be green field markets and many will be cable's best markets. The prediction is for "bloody street-level market-share fights with IPTV providers." These providers will also be able to exploit the flexibility and power of IP-based video to create a powerful set of differentiated applications around the video stream.
Â "IPTV will forever alter the video ecosystem by creating not only a new breed of service, but also a new breed of service provider," says the report. "This transition fundamentally changes the market dynamic for all service providers, forcing them to to convert from centralized dominating gorillas to small responsive guerrillas." Telcos will change first followed by the cable MSO's which are predicted to be in a perpetual defensive position.
To get the creative differentiation required, all parties will need to move to an open application paradigm, again radically changing the ponderous development culture all the big providers have inherited.
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