North America, Europe IPTV penetration reaches saturation point, says TeleGeography

Telcos worldwide are finding that IPTV is resonating with their respective customer bases as service penetration reached 15 percent in the first quarter of 2012, reveals a new TeleGeography report.

On a regional basis, the penetration rates of IPTV and pay-TV vary by region. In some regions, such as North America and Europe, IPTV penetration is reaching saturation.

Driven by AT&T (NYSE: T) and Verizon (NYSE: VZ) with their U-verse and FiOS service sets, U.S.-based telcos have been able to successfully sell their video services to nearly 40 percent of their eligible broadband base. During Q1, AT&T and Verizon reported that they added 108,000 FiOS TV and 200,000 U-verse TV subscribers, respectively.  While this is certainly a major milestone, the reality is that with 80 percent of households purchasing a pay-TV service, the market has become saturated.

Western Europe's pay-TV market is also close to the saturation point even though it has a penetration rate 20 percentage points below the North American market. One of the challenges that both Western and Eastern European service providers face is the presence of free-to-air service.  

In addition to Europe and North America, IPTV growth prospects in Latin America, Africa and the Mid East are also at a standstill. Latin America has been held back by both a constrained by market structure and an unsupportive regulatory environment, while free-to-air services and piracy have proven to be roadblocks to growth in Africa and the Middle East.

One market that's ripe for growth is Asia Pacific, a region that has a 46 percent pay-TV penetration rate, with telcos selling IPTV service to only 12 percent of their broadband subscriber base.

"Although the number of IPTV subscribers has grown by 36% in the last year alone, some operators are now seeing subscriber declines," said  John Dinsdale, a TeleGeography analyst. "Most of the remaining growth in IPTV will come from the Asia-Pacific--we expect the region to account for two thirds of global subscriber growth over the next five years."

For more:
 - TeleGeography has this post

Special Report: ILECs grew video, business and broadband power in Q1 2012

Related articles:
AT&T wireline rises 2.4% with strong gains in next-gen consumer, business services
CenturyLink's legacy services drag earnings down 5.2% amidst gains in broadband, business, IPTV
Verizon Q1: Wireline revenue impacted by wholesale losses; gains in FiOS, enterprise services
TDS Telecom Q1 revenue gets lift from broadband bundles, managedIP services
CenturyLink to take on Comcast with its IPTV service in Colorado Springs

Suggested Articles

Microsoft does not report exact revenue amounts for Azure, but it said Azure revenue grew 64% in the latest quarter compared to the previous year.

U.K. broadband provider CityFibre is targeting 14 more cities for its all-fiber gigabit service.

While Cisco has embraced the concept of disaggregation, service providers need to carefully consider how they will implement it.