Operators must invest in Asia/Pacific IPTV
July 3, 2009
Despite the massive investments necessary in Asia/Pacific’s IPTV market, both in technology and content procurement, telecom operators must invest to gain subscriber market share according to a report from Pyramid Research, the telecom research arm of the Light Reading Communications Network.
Although Asia/Pacific has the distinction of having the most successful IPTV operators globally, and rollouts continue throughout the region, operators continue to face challenges in three key areas: regulatory constraints, content, and technology costs, notes Charles Moon, analysts at Pyramid Research and author of the report. “Typically, regulatory issues come first, then the mammoth challenge of valuing and procuring content along with technology issues – both of which can affect subscriber take-up and bottom lines,” says Moon.
“One of the most glaring problems surrounding IPTV has been the lack of any framework around the service, putting it in a grey area, with neither the telecom nor broadcasting regulators having clear oversight of the sector,” says Moon. Also, the initial investments required in order to acquire content can be prohibitive for smaller players. “To make matters worse, the entrenched position of cable companies in markets like Japan and South Korea make it even more difficult for new IPTV players to negotiate for content rights,” he explains. “In addition to the lack of adequate infrastructure and the high cost of STBs hindering adoption, the fight to defend market share is intensifying."
Asia/Pacific provides good lessons for operators faced with developing a business case for IPTV services and determining an appropriate strategy for long-term success. “We believe the long-term opportunities that IPTV brings outweigh the short-term risks,” Moons says. “The promise of media, and the escape it provides from dumb-pipe business models, is encouraging carriers to take risks and make grabs for market share,” he adds. “Further, the benefits associated from capturing customers – such as lower churn, new service provisioning, and higher cash flows – provide a case for short-term sacrifices.”