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By Pavla Kozáková, 21. 05. 2007 Czech Business Weekly
The interactive aspects of Internet protocol television (IPTV), which delivers digital TV over the Web, are helping the format to rapidly gain popularity across the globe, and analysts predict future growth.
The unique aspects of the Czech television market almost guarantee that domestic IPTV providers will succeed, despite the reluctance of Czechs to accept the pay-TV model. Western Europe dominates the IPTV market, with 68 percent of global subscribers and is likely to further increase its market share in the short term, according to U.S.-based market research and consultancy agency Dittberner. Asia has 28 percent of the world market while North America, Eastern Europe, Middle East and North Africa IPTV subscribers combined comprise only 8 percent of the worldwide market. But the low IPTV subscription rate allows for greater and faster growth. This potential was acknowledged at the IPTV World Forum Eastern Europe, which gathered IPTV providers, equipment suppliers and content providers in Prague last week. Around 4.6 percent of Eastern European homes were signed up for digital television services in 2005, and the number is expected to grow throughout the region. In the Czech Republic and Hungary it’s predicted to grow eight times, in Romania 10 times, and Poland four times, according to data from market research company Informa Telecoms & Media. Such a growth rate offers a huge window of opportunity for fixed-line telecommunication operators seeking new revenues and compensation for the loss in voice services due to the continuing decline of fixed line usage. “In theory, IPTV has a great future in the Czech Republic because of the country’s low penetration of cable television,” said Tibor Bokor, telecommunication analyst with brokerage Wood & Company Financial Services. The Czech Republic with only about 25 percent cable TV penetration offers a much bigger opportunity for IPTV providers than, for example Romania, with an 80 percent cable penetration. “By adopting a one-stop shop model for communications and content services—whether Internet, movies, television, or IP-based services—these companies can expect better customer retention and more stable revenue,” said Kresimir Alic, senior analyst with research company IDC CEMA and author of a study on IPTV services in Central and Eastern Europe. Over the next five years, IDC expects Central and Eastern Europe to see steady growth in the number of telecommunications operators offering IPTV services as part of their portfolios, either as a stand-alone service or in a triple-play package bundled with broadband Internet access and voice over Internet protocol (VoIP). The Czech experience “The demand on the Czech market for IPTV is slower than we expected,” Bokor said, adding that the main reason for such slow uptake is the fact that Czechs in general aren’t willing to pay for something that they can get for free, which is also the reason behind cable TV’s low penetration in the country. The first company that offered IPTV on a national scale was the mobile and fixed line operator Telefónica O2 Czech Republic, which launched its O2TV last September. It’s steadily gaining around 5,000 customers a month reaching 31,400 customers at the end of April, according to Stanisla Kůra, the chief strategy and product development officer for Telefónica. In order for IPTV to be a profitable service, the company would need subscribers in around 10 percent of the households (that means 400,000), according to Bokor. By the end of this year it is reasonable that it will gain between 50,000 and 60,000 subscribers. The O2TV offers over 480 movies in the video on demand (VOD) library and an extensive TV archive. The company launched a self-installation package on January 15, 2007. Since then, 37 percent of subscribers have chosen to install their IPTV by themselves. The price of the O2TV service starts at Kč 449 per month and offers over 30 channels. “Having a large coverage area helps ensure both visibility and a solid customer base, and first movers in any given area will have a distinct advantage,” Alic said, adding that content could prove to be the main problem of launching IPTV services, and attracting and retaining customers. While other IPTV providers in Europe secured broadcasting rights for special sports events such as football games to offer exclusive content, Telefónica included 3D documentary content to its VOD library April 2. The company is giving out two sets of special glasses per household, which allow its users to see parts of the documentary in 3D on their home screens. On request the company will send free additional glasses. The documentaries can be viewed either with the 3D glasses or not without any distortion in the quality of the picture. Another two IPTV launches are being mulled in the Czech Republic. Alternative operator Czech On Line, better known under its brand name Volný, has had its IPTV product in a preparatory stage since last spring and in the pilot phase since last fall. “We’ll launch the service this summer at the latest,” said Michaela Hajná, the spokeswoman for the company, adding that content agreements are still being negotiated. Volný’s IPTV plans to differentiate itself from its rival with lower prices and additional value added services, such as photo sharing or e-mail client on the screen. The variety of the channels will be similar to what O2TV and cable operators currently offer. Alternative fixed line provider Radiokomunikace is also preparing IPTV but didn’t provide any specifics about the schedule. “The greatest advantage of IPTV is its interactivity, the fact that you can watch any program over the weekend that aired during the week without specifically recording it,” Bokor said, adding that its biggest drawback is that so far only one device can be connected to the service. |
