IPTV services will struggle for years against entrenched pay-TV and free-to-air TV providers, according to predictions from analyst Gartner.
It estimates there will be 3.3 million subscribers to IPTV services in Western Europe by the end of this year and 16.7 million within four years. But despite this robust growth prediction, the analyst warned that IPTV will "struggle over the next five years" to become a mainstream revenue opportunity for carriers.
Faced with competition from pay TV and free-to-air terrestrial TV providers, carriers will resort to low-priced services and bundles to drive subscriber uptake. As a result, carriers' IPTV revenues in Western Europe will grow from €336m in 2006 to only €3bn in 2010.
But Gartner principal research analyst Susan Richardson said this doesn't mean that carriers should hold back.
"While the short to medium-term profits from IPTV will be modest at best, carriers can't afford to delay in the deployment of the IPTV platform. Those who delay too long will risk undermining their ability to be long-term key players in the consumer infotainment communications business," she said in a statement.
"This is because IPTV is not a single service; it is a new distribution platform over which many services can be offered eventually. Investments now have to be seen in the context of seeding the ground for the future."
The UK currently has one of the smallest numbers of IPTV subscribers in Western Europe with only 75,000 subscribers predicted in 2006.
Although this is set to increase fairly rapidly to reach 1.9 million by 2010 with the introduction of services such as BT Vision this autumn, Gartner predicts that the UK will remain a weaker prospect for IPTV. This is mainly due to the existing pay TV landscape and dominance of Sky TV.
In contrast Gartner predicts that by the end of 2006, almost half of Western Europe's IPTV subscribers will be based in France a total of 1.7 million generating revenues of €141m.
Gartner defines IPTV as the delivery of video over a carrier's managed broadband network to a customer's TV set. It does not include streaming media over the internet to a PC.
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The Weekly Round-Up: 07.04.06