European Telcos Embrace IPTV, But Content Acquisition Poses Challenges, Says IDC

IDC estimates that the IPTV market in Europe is currently worth around $500 million, and will grow at a CAGR of 71% to reach $4.3 billion by 2010. In the next five years, household penetration of IPTV services will increase from 1% in 2006 to 11% by 2010.

The countries that will make up a large portion of this growth are France, Italy, and Spain, where the pay-TV markets are less developed than elsewhere in Europe, where the first large IPTV services were launched, and where some of the more innovative providers are based.

However, IDC points out that while IPTV offers a major new revenue source for service providers, it also requires massive network investment and the ability to navigate the complex world of content.

This means that in addition to their existing competitors in the service provider environment, telcos will encounter a new range of competitors in pay-TV providers.

"IPTV providers should be aware that negotiating content deals is a tricky and time-consuming business, and may take longer than they may anticipate," said Jill Finger Gibson, research director of European Consumer Multiplay Services.

"Rather than negotiating individual deals with a wide array of content providers, service providers should seek out content aggregators wherever possible to help improve their time to market for content."

IDC also believes that IPTV infrastructure gives service providers an additional platform to the world of user-generated content and online communities. The popularity of companies such as YouTube and Myspace.com has shown how consumers have embraced video as a means of communication as well as entertainment. Adding TV to the range of end terminals will foster growth in more of these types of services.