Apple iTV could kill the TV star, Warns IDC

Stan Beer
Tuesday, 19 September 2006 04:38

Your IT - Home IT

New research into the overall Australian digital TV landscape finds that free to air TV is coming under ever growing pressure IPTV and Internet video services.

According to research from IDC, in light of the ever changing media landscape, competitive pressures will extend beyond traditional Free-to-Air (FTA) TV networks and pay-TV operators due to IPTV entrants as well as Internet video services, given that consumers are turning to the Internet for video sources.

IDC says that initially this is occurring from Peer-to-Peer (P2P) file sharing networks such as BitTorrent for premium studio content, to personal blogs on MySpace or Google Video and YouTube for user-generated content. Other sources are legitimate online video services such as ReelTime and possibly the Australian iTunes store in the future.

"Today, quite a significant portion of Internet video users watch full movies and TV shows, and almost 30% obtain sports content over the Internet, which is one of the major drivers to pay-TV service adoption. Those who do not watch Internet videos have indicated that they do not want to watch videos on the PC screen and this immediate advantage FTA TV and pay-TV operators have over current online offerings will soon diminish. This is due to broadband service providers (BSPs) introducing IP set-top boxes to deliver online video content directly to the TV, along with the adoption of multimedia networks that stream content from the PC to the TV," said Sophie Lo, IDC's Analyst for Consumer Digital Markets.

However, local BSPs should watch innovative players like Apple, who are addressing the barriers that are currently inhibiting digital home adoption. For example, Apple will launch iTV (still a codename), early next year in the US iTV is a media adaptor / set-top box-like product that will access content from computers on the network for display on a TV. "By adding connectivity to their current service-device integration model, Apple is providing consumers with a complete end-to-end solution. Going forward, the iTV could possibly disrupt BSPs' strategy in establishing the home gateway as the media hub," cautioned Ms Lo.

This study, titled "Australia Digital Terrestrial, Cable, Satellite and IPTV 2006-2010 Forecast and Analysis: Videos from the Pipe,” is IDC's annual five-year forecast of the Australian digital TV market and presents the 2006-2010 forecast for digital-TV households and consumer spending on digital pay-TV services in Australia. A breakdown of digital terrestrial, digital cable, digital satellite, and IPTV is included.

The IDC study finds that:

# Digital cable and satellite revenue growth rates will be higher than that of subscriber growth as the Average Revenue Per User (ARPU) will increase, thanks to the take-up of advanced services such as on-demand programming and digital-video recording.

# IDC does not envisage another IPTV entrant until late 2007 or early 2008, as Telstra remains reluctant to enter the IPTV arena due to its equity in FOXTEL. Tier 2 and tier 3 BSPs lack a large broadband subscriber base, financial resources as well as experience in content acquisition and distribution.

# Although local telcos have not yet entered the IPTV market, their global counterparts - such as France Telecom and PCCW - have already established IPTV business models. Thus IDC expects local telcos' initial IPTV offerings to be relatively advanced and reliable, as the solutions have already been implemented by telcos overseas, and business models are in place.

# Current pay-TV operators are growing their subscriber bases by launching aggressive marketing campaigns that are targeted towards the mass market. A divide between high- and low-end users will emerge.
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