‘Red Queen effect’ plagues Europe’s telcos
September 29, 2008
A report from Screen Digest examines the challenges faced by telcos and their IPTV services in 26 countries across Europe. ‘IPTV Business Models: Profit and Loss in the Telco TV Space’ discusses the likely success of their strategies.
These strategies are likened to a statement made by the Red Queen in Lewis Carroll’s ‘Through the Looking Glass’ by the report’s author Richard Broughton. Despite rushing out IPTV services to differentiate themselves, their competitive position remains unchanged. As the Red Queen says to Alice "Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!"
IPTV services were seen as a way to reduce churn in broadband markets and boost additions by making the overall product more attractive to customers. The research in this report reveals that IPTV has not covered its costs in reduced churn rates and has had little or no positive growth impact on the broadband market overall.
Yet despite this, telcos are pressing ahead with their plans, with Europe forecast to have over 12m IPTV subscribers by the end of the year and well in excess of 22m by the end of 2012. On the positive side, some IPTV service providers in the heavily cabled markets of Belgium, Sweden and Germany have found that broadband additions have seen an increase relative to the growth of other DSL players, bringing them more in line with rival cable triple-play operations and the market average.
In these cases, the launch of IPTV has returned the companies to their original position in the broadband market. Screen Digest Analyst Richard Broughton comments "In these markets IPTV is not so much putting the companies at an advantage, just at less of a disadvantage."