Broadband Roll Out Continues To Drive IPTV Growth

IPTV is set for further substantial subscriber growth on the back of ongoing broadband roll out and increased capacity across most markets, according to several recent forecasts.

Developing markets, especially in Asia Pacific and Latin America, where broadband is expanding rapidly, will be the engines of IPTV growth over the period until 2020, with China continuing to surge ahead and consolidate its number one position in the field. This, according to the firm represents the near-term direction of broadband.

But the IPTV base will also grow in the developed nations where broadband coverage is still increasing. This is happening through both fiber roll out and deployment of techniques such as DSL vectoring that enable homes further from the nearest termination point to obtain access at sufficiently high bit rates for premium TV.

Indeed IPTV will overtake satellite TV in aggregate subscriber numbers for Western Europe in 2015, according to the Digital TV Western Europe Forecasts from Research and Markets. This estimates that IPTV subscriptions will rise 37% by 8.6 million between 2014 and 2020 to reach 32.1 million, compared with 5% or 1.2 million additions for pay satellite TV to reach 25.2 million.

Another report published May 2015, The Worldwide IPTV Subscriber Market, 1Q 2015 by Taiwan based Market Intelligence & Consulting Institute (MIC), confirmed the global rising trend in IPTV subs, counting the total for the first quarter of 2015 at 111 million, up 19% on the same period a year earlier, with South East Asia the leading region, accounting for 35.78 million of these. However Western Europe was still the largest IPTV revenue contributor in 2013, the latest year for which that data is available, accounting for almost 38% of the global total, according to a recent report published by Transparency Market Research, IPTV Market – Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2014 – 2020.

It is true that IPTV subs growth is dwarfed by OTT but here we are comparing two quite different service categories, since OTT embraces a range of offerings from pure play essentially subscription VoD services like Netflix and HBO, to dedicated online packages from established operators, like Sky’s Now TV. It also includes a growing number of niche and special interest offerings, while paid versions of YouTube and other previously free video sharing sites are coming along to add a further sub category. IPTV is more comparable with satellite, cable and pay DTT, attracting higher subscription prices, so that it makes no sense to equate it directly with OTT at present. This has the corollary that significant churn from traditional pay TV to OTT could well lower ARPU and even total pay TV revenues, despite overall growth in subscriptions.

With these caveats in mind, ABI Research has forecast strong growth for OTT over the next few years and a rise of 26 per cent in revenue for 2015. Then the 2015 IHS Infonetics Pay TV Services and Subscribers report anticipates OTT subs growth of 27 per cent for 2015, which is down on the 35% level of 2014.

 Ericsson has struggled to unite its IPTV and OTT products.

Ericsson has struggled to unite its IPTV and OTT products.

Although OTT is still distinct from IPTV the two are converging technically and it is a good bet that by 2020, the end date for many current forecasts, they will no longer be counted as separate categories. There is already considerable overlap, with CPE equipment in both cases connected to a broadband IP access network, with HTML normally used to format content on the screen and cardless security relying often on DRMs rather than traditional Conditional Access. In both cases applications like search and recommendation are often executed in the operator’s network, or cloud as it now referred to.

The two main differences lie in the handling of live video and control of the access network. With IPTV, part of the access network is ring fenced leaving other broadband services, including Internet access to sites like YouTube, having to contend for their share of the bandwidth left over. With OTT, all TV services have to share the bandwidth and moves by broadband operators to ring fence some capacity for specific video services, following partnerships with content providers perhaps, can fall foul of net neutrality rules. At the same time there is a trend among the major OTT players to build out their own CDNs and connect them to broadband infrastructures close to the subscribers, so this is a step towards IPTV in terms of delivery.

The other major distinction is that IPTV uses IP multicast for delivery of live TV, while OTT services mostly use unicast HTTP streaming. The former utilizes bandwidth far more efficiently for popular live events because each piece of video is only sent once over any network link, no matter how many users downstream are watching it. At each branch of the network, video is replicated onto each subsequent link leading to a device that has elected to view that content. This approach is far more scalable for popular live content, but OTT scores by being more flexible and having the ability to reach all connected devices, not just those within the IPTV walled garden. For that reason the more forward looking or innovative IPTV operators are already deploying hybrid solutions that combine the best of both, retaining the scalability of IP multicast but migrating to OTT technology for niche channels and on demand content. Meanwhile there are industry efforts around adaptive bit rate streaming, especially MPEG DASH, to improve QoS by reducing incidence of startup delays and stalls during playback caused by fluctuating network conditions, as well as to introduce some form of multicast to enable scaling.

One provider of IPTV services, Telco Swisscom, has already taken steps in this hybrid direction by deploying an Android based TV platform in conjunction with cloud based delivery hosting network PVR, enabling multiscreen access to on demand content outside the home. This platform is different from Google’s Android TV, which is a branded product enabling access to Google Play services for example. Swisscom is using the open Android platform aiming to attract third party developers, so it already has quite an OTT orientation. Swisscom had been using the Mediaroom IPTV middleware platform acquired by Ericsson from Microsoft in 2013, but was not prepared to wait for this to be updated by acquiring OTT components. Swisscom has retained Mediaroom for some customers but all new development is now focused on the Android cloud based platform.

Deutsche Telekom is another IPTV operator that has been looking to upgrade to what may loosely be called IPTV 2.0, in this case by virtualizing the set top box almost entirely, taking middleware and the User Interface as well as applications and network PVR up into the cloud. But for now at least Deutsche Telekom is retaining IP multicast.

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