IPTV in China


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IPTV in China

  1. 1. IPTV in China Jason Yin Managing Director In-Stat China Jan 12, 2006 www.In-Stat.com www.Instat.com.cn 3 China 101 • China is a High Tech Country Administrated by Engineers – China had 400 million mobile phone subscribers, 100 million active Internet users, 40 million PC installations at the end of 2005 – Broadband Internet users reached over 54 million in 2005, in which ADSL accounts for 70% – China is in transition from WW cost leadership to a global innovation powerhouse • TV has Been Widely Adopted by Chinese Families as THE Choice of Home Entertainment – Watching TV is an inexpensive activity as cost is minimal, though there is much duplication of content on different channels – There were over 360 million TV households by the end of 2004, in which over 115 million were cable TV householders – Large flat TVs are entering Chinese homes recently and viewers are hungry for content 4
  2. 2. China IPTV Framework In-Stat defines IPTV more specifically to be a video service displayed on a TV through a telecom carrier’s IP broadband network. An IPTV system is a closed one where only the content chosen by the operator is displayed. IPTV = Interactive Personalized TV 5 MII and SARFT • In China, there are two government bodies that need to be discussed when talking about IPTV: MII and SARFT. • The Ministry of Information Industry (MII), the principal regulatory administration for the telecommunications industry, regards IPTV as value added service over IP network and actively supports its development. Mobile operators and content providers can provide IPTV service to PC only by getting Permission for Cross Region Telecom VAS Operation. • The State Administration of Radio, Film and Television (SARFT) is responsible for supervising the operation of radio, film and television, which includes licensing radio and television broadcast stations, film distribution and cable television networks. SARFT is also in charge of monitoring the content on radio, film and television. • SARFT regards IPTV as broadcast and apply the same administration on content and broadcast network operation. Only those who receive Permission on Information Network Broadcasting Programs can provide IPTV services to TV or mobile phone. 6
  3. 3. IPTV Licensing • The China government strictly controls ideology so SARFT is more powerful than MII. Besides content, SARFT controls IPTV for displaying on TV or mobile handset as well, but MII only administrates IPTV for displaying on PC • On April 30, 2005, SARFT announced Shanghai TV Station, a subsidiary of the Shanghai Media Group (SMG), got the license to broadcast its own programs or other content providers' programs on IPTV networks. SMG had already established two separate companies for IPTV and Mobile TV businesses • The license issuance is regarded as a beginning signal of cooperation between the broadcast and telecom sectors, and China Telecom and China Netcom are making all kinds of alliances with SMG • However, the licensing issue is still daunting: – With fast development of technology, like Intel’s Viiv type of PC/TV hybrid and P2P video streaming, etc., the line among different displaying devices is blurring – SMG asks for 80% of revenue sharing, which is claimed by Telcos as unfair – A recent censorship action by a regional (Quan Zhou) SARFT warns Telcos even the SMG’s license isn’t safe enough to operate IPTV legally in various regions 7 Market Situation – Service Providers • Cable Carriers’ Perspective • Weak in business operation due to complex ownership structure and administration practice • Single-minded on cable TV’s transition from analog to digital under political pressure. The goal is to have all households in China on digital technology by 2015. • Feel threatened by IPTV momentum so they are working hard to delay IPTV in China • Telecom Carriers’ Perspective • Need to expand the addressable market of Internet broadband services from PC users to TV users • Need to provide triple play to retain current subscribers base • View the transition from access to content business as strategic 8
  4. 4. Market Drivers • The 2008 Olympic games in Beijing represent a strong driver for IPTV • IPTV has technology advantage in interaction and personalization • Telecom carriers are eager to develop more broadband users and provide service bundling to increase ARPU • Content providers regard IPTV as an alternative sales and innovation channel • Equipment vendors are anxious to get involved in a new round of investment • Three camps of vendors: CE, Telecom, IT, are competing with each other on time-to-market of IPTV solutions 9 Market Barriers • SARFT is more interested in developing DTV than IPTV, so deliberately slowing down the license issuing of IPTV • DTV has been lagged behind at the end of 2005, only several medium sized cities have been fully digitized and no more than 3 million households have been transformed • But recently DTV is taking off quickly in China as SARFT has: • Launched a new push measure the so-called “whole system shift program” • Kept silence on content censorship to provide incentive for digital transition • Learned by doing to promote content instead of boxes • Technology is still a challenge. • China’s broadband network has a long way to go to meet IPTV technical requirement • With large scale commercial deployment, different standards from vendors will lower the possibility of wide compatibility and will cost much more in maintenance for a long time • Need IPTV-specific interactive applications, rather than pure content • Due to content piracy, people will pay for connection and interaction, instead of content 10
  5. 5. Market Forecast IPTV Lifespan Compared with SMS and Broadband SMS for personal users Subscriber Base Broadband for business and personal users IPTV for home users 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year Source: In-Stat 11 Market Forecast China IPTV Subscribers in Millions 2005-2010 Source: In-Stat CAGR of IPTV market will be 183% from 2005 to 2010 12
  6. 6. Market Forecast China IPTV STB Shipments Units in Millions 2005-2010 10.00 Total STB Shipment (Millions) 9.00 8.70 8.00 7.00 6.00 5.00 5.00 4.00 3.70 3.00 2.00 1.00 0.24 0.46 0.10 0.00 2005E 2006E 2007E 2008E 2009E 2010E Source: In-Stat CAGR will be 144% from 2005 to 2010 13 Market Forecast China IPTV STB Revenues in Millions of RMB 2005-2010 4000.0 3480.0 3500.0 STB Renevue (Millions RMB) 3000.0 2500.0 2250.0 2000.0 1850.0 1500.0 1000.0 500.0 299.0 80.0 172.8 0.0 2005E 2006E 2007E 2008E 2009E 2010E Source: In-Stat CAGR will be 113% from 2005 to 2010 14
  7. 7. Conclusion •IPTV, featured for its interactivity, presents an attractive and promising potential market for all: • Telecom carriers are looking for a new revenue stream • Content provider see IPTV as an additional sales and innovation place • Equipment vendors hope to see a new wave of investment •The early stage for this market is not easy and there are still barriers to overcome: • Regulatory/administrative issues still need to be resolved • Technology need to be plentiful and affordable • Content needs to be developed that is interactive and specific to IPTV •But, after slow growth from 2005-07, the Olympics will spur growth in 2008: •The subscriber base is expected to grow from 4.5 million in 2008 to 18.2 million in 2010. 15 Questions? Thank you for your time Jason Yin, Managing Director, In-Stat China Jason.yin@instat.com.cn For further information on IPTV or any of In-Stat’s research be sure to contact your account representative or contact In-Stat at marketing@instat.com or at +1 480 483 4440 Additional Research: http://www.instat.com/catalog/Ccatalogue.asp?id=240 16