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IPTV in CEE: the Way Forward or      Still a Market Niche?    Edyta Kosowska, Research AnalystInformation & Communication ...
Today’s Presenter                       Functional Expertise                       • Market research & consulting expertis...
Focus PointsIntroductionCurrent Status of the IPTV Market in Central and Eastern EuropeIPTV Market Drivers and ChallengesG...
Introduction               4
IPTV Spans the Telecoms and Pay-TV Ecosystems   Pay-TV Market Segmentation                Telecom Market Segmentation     ...
Incumbents Operators in CEE Drives IPTV Market Growth                                                       •Bulgaria     ...
Current Status of the IPTV Market in Central and                Eastern Europe                                            ...
IPTV Markets in Bulgaria and Romania are the LeastDeveloped in the CEE Region                  BULGARIA                   ...
IPTV Market Growth will be Especially Difficult in Countrieswith High Pay-TV Penetration                            IPTV M...
IPTV Uptake is Directly Proportional to Broadband andInversely Proportional to Pay-TV Market Penetration                  ...
Revenue Growth will be Driven by Both ARPU and   Subscribers Base Increases                        IPTV Market: Revenue Fo...
IPTV Market Drivers and Challenges                                     12
The IPTV Market will be Largely Driven by theDevelopment of Bundled Services                        IPTV Market Drivers in...
For New IPTV Market Entrants it is Difficult to PenetrateSaturated Pay-TV Markets                     IPTV Market Restrain...
Differentiating IPTV Offers in Terms of Quality, Contentand VAS will Deliver Significant Competitive Advantages           ...
Growth Opportunities in the IPTV Market                                          16
In the Long Term IPTV is likely to Become a Target Technologyfor Telecom Operators, ISPs and Cable TV Providers     Over t...
Changes in Media Consumption will Drive IPTV MarketGrowth                         TV on Demand                            ...
New Business and Technological Opportunities are likelyto Make IPTV Business More Profitable        New pricing     models...
Summary          20
In the Short Term, IPTV in CEE Is Unlikely to Expand Beyond Market Niche TV services must be embedded in all CEE telecoms ...
Next Steps Request a proposal for our Growth Partnership Services or Growth Consulting Services to support you and your te...
Your Feedback is Important to Us             What would you like to see from Frost & Sullivan?Growth Forecasts?Competitive...
Follow Frost & Sullivan onFacebook, LinkedIn, SlideShare, and Twitter           http://www.facebook.com/pages/Frost-Sulliv...
For Additional InformationJoanna Lewandowska             Gustavo CuryCorporate Communications       Sales managerICT Europ...
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IPTV in CEE: the Way Forward or Still a Market Niche? Frost & Sullivan Web Conference

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Triple play services have become a commercial reality in Central and Eastern Europe (CEE). For telecom operators, wanting to compete with cable and satellite TV operators, implementation of TV services has become a must. The question remains whether this should be deployment of internet protocol based television or focus on some other technology.

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IPTV in CEE: the Way Forward or Still a Market Niche? Frost & Sullivan Web Conference

  1. 1. IPTV in CEE: the Way Forward or Still a Market Niche? Edyta Kosowska, Research AnalystInformation & Communication Technologies 14 December, 2010
  2. 2. Today’s Presenter Functional Expertise • Market research & consulting expertise. Particular expertise in: - Secondary and primary research - Strategic analysis - Contacts with media Industry Expertise Experience base covering broad range of sectors, leveraging long-standing working relationships with leading industry participants’ Senior Executives - Mobile Communications - Fixed & Mobile Broadband - Value-added Services - Machine-to-MachineEdyta Kosowska What I bring to the TeamResearch Analyst ICT • Telecom market knowledge (technologies, trends, etc.) • Understanding of Central and Eastern Europe markets realitiesFrost & Sullivan • Analytical skillsCentral and Eastern Career HighlightsEurope • Extensive expertise in telecom market analysis.Warsaw • Working directly with many major companies, including: - Amdocs, USA - Hitachi, Japan - HP, USA - TP SA (France Telecom), Poland Education • Master of Economics from University of Economics, Cracow, Poland 2
  3. 3. Focus PointsIntroductionCurrent Status of the IPTV Market in Central and Eastern EuropeIPTV Market Drivers and ChallengesGrowth Opportunities in the IPTV MarketConclusions 3
  4. 4. Introduction 4
  5. 5. IPTV Spans the Telecoms and Pay-TV Ecosystems Pay-TV Market Segmentation Telecom Market Segmentation Cable TV Telephony Analogue Fixed-line Digital Mobile Satellite TV Broadband IPTV Fixed Television over public Internet was Mobile excluded from the analysis. Source Frost & Sullivan 5
  6. 6. Incumbents Operators in CEE Drives IPTV Market Growth •Bulgaria •The Czech Republic •Hungary •Poland •RomaniaIn the near future, cable TV operators as well as ISPs are likely to play more important roles in themarket. Source Frost & Sullivan 6
  7. 7. Current Status of the IPTV Market in Central and Eastern Europe 7
  8. 8. IPTV Markets in Bulgaria and Romania are the LeastDeveloped in the CEE Region BULGARIA THE CZECH REPUBLIC The lowest IPTV penetration in the region. The IPTV market is dominated by the incumbent operator Telefonica. However, due to limited IPTV has just become interesting for the main attractiveness and technical issues, the telecom market participants. companys subscribers base decreased in 2010. FTTH/B investment drives service development. IPTV IPTV has started to be deployed by smaller New market entrants are likely to come from the telecom operators, also those who provide small ISPs space. broadband in FTTH/B technology. HUNGARY ROMANIA POLAND Magyar Telecom remains the market Penetration of pay-TV in Romania is the leader. The company is testing highest among CEE countries what TP SA has the largest share of the IPTV market EuroDOCSIS 3.0 technology for IPTV negatively impact IPTV market growth. in Poland; however, the operator has started to services provision. focus more on satellite TV services. IPTV is still an emerging technology. Usage of cable network for IPTV Until 2010, IPTV had primarily been An important market participant is alternative provision as well as FTTH/B technology developed by one company, iNES. operator Telefonia Dialog. The service is also development are likely to stimulate developed also by ISPs: SGT and Inotel. IPTV market growth. The future growth of the technology is likely to be dependent on the incumbent In the long term cable TV operators are also operator strategy, which launched IPTV expected to play a role on the market, especially at the end of 2009. those who invest in FTTH/B. Source Frost & Sullivan 8
  9. 9. IPTV Market Growth will be Especially Difficult in Countrieswith High Pay-TV Penetration IPTV Market: Household Penetration (CEE), 2007-2017 IPTV Market: Number of Subscribers (CEE), 2010 12 Romania Bulgaria The Czech Subscribers (Thousand) Poland 25 39 RepublicHousehold Penetration (%) 10 215 235 8 6 4 Hungary 132 Note : All figures are rounded; the base 2 year is 2010. Source Frost & Sullivan 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year The IPTV market in the Czech Republic was the Bulgaria The Czech Republic largest in the CEE region Hungary Poland in terms of both number Romania of subscribers and revenues. Note : All figures are rounded; the base year is 2010. Source Frost & Sullivan 9
  10. 10. IPTV Uptake is Directly Proportional to Broadband andInversely Proportional to Pay-TV Market Penetration IPTV versus Broadband IPTV versus Pay-TV IPTV Market: IPTV Household Penetration versus Broadband IPTV Market: IPTV Household Penetration versus pay-TV Household Penetration (CEE), 2010* Household Penetration (CEE), 2010* 7% 7%Households IPTV Penetration (%) Households IPTV Penetration (%) 6% 6% 5% Czech Republic Czech Republic 5% 4% Hungary 4% Hungary 3% 3% Poland 2% Poland 2% Bulgaria 1% Bulgaria 1% Romania 0% Romania 40% 45% 50% 55% 60% 65% 70% 75% 0% 40% 50% 60% 70% 80% 90% 100% 110% Households Broadband Penetration (%) Households pay-TV Penetration (%) * The size of the bubble represents the total number of subscribers * The size of the bubble represents the total number of subscribers Note : All figures are rounded; the base year is 2010. Source Frost & Note : All figures are rounded; the base year is 2010. Source Frost & Sullivan Sullivan 10
  11. 11. Revenue Growth will be Driven by Both ARPU and Subscribers Base Increases IPTV Market: Revenue Forecast (CEE), 2007-2017 IPTV Market: Number of Subscribers (CEE and ROW), 2010 CEE 0.65 1.6% Subscribers (Million) 300 120 250 100 ROWRevenues ( € Million) Growth Rate (%) 200 80 39.05 98.4% 150 60 100 40 Note : All figures are rounded; the base year is 2010. Source Frost & Sullivan 50 20 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Year Revenues from IPTV services are likely to remain a small part of Revenues Grow th Rate total telecoms revenues in the short to mid term. Note : All figures are rounded; the base year is 2010. Source Frost & Sullivan 11
  12. 12. IPTV Market Drivers and Challenges 12
  13. 13. The IPTV Market will be Largely Driven by theDevelopment of Bundled Services IPTV Market Drivers in CEE Countries Additional important stimuli are likely to be investments in deploying and upgrading broadband infrastructure. Demand for Value-added Services Demand for Bundled High Quality Services Digital TV Infrastructure Development Deployment Source Frost & Sullivan 13
  14. 14. For New IPTV Market Entrants it is Difficult to PenetrateSaturated Pay-TV Markets IPTV Market Restraints in CEE Countries Relatively Low High Pay-TV Broadband Penetration Penetration Price Sensitive Society Piracy Acceptance Important restraints also include social factors. Source Frost & Sullivan 14
  15. 15. Differentiating IPTV Offers in Terms of Quality, Contentand VAS will Deliver Significant Competitive Advantages IPTV Market Challenges in CEE Countries New VAS Getting Access Implementation to Interesting Content A wide content offer at reasonable prices are the basic requirements that need to be achieved to compete Challenges with other pay-TV players. Competition with Other Pay-TV Implementation Technologies of Adequate Pricing Policy Technology Issues Source Frost & Sullivan 15
  16. 16. Growth Opportunities in the IPTV Market 16
  17. 17. In the Long Term IPTV is likely to Become a Target Technologyfor Telecom Operators, ISPs and Cable TV Providers Over the forecast period IPTV is expected to become popular primarily in urban areas. Less habited territories are expected to remain under dominance of satellite TV operators. Satellite TV IPTV Source Frost & Sullivan 17
  18. 18. Changes in Media Consumption will Drive IPTV MarketGrowth TV on Demand TV as PC Consumer demand is expected to drive 3D TV development of more customised offers. Channels a-la- carte HD TV TV Everywhere IPTV on Mobile New Pricing Network Models2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source Frost & Sullivan 18
  19. 19. New Business and Technological Opportunities are likelyto Make IPTV Business More Profitable New pricing models are likely to attract more price sensitive users. Appropriate Pricing Strategy Clear Readiness for Communication High Content Expenditures of Value Added Key Success Factors Strategic Infrastructure Partnerships Upgrade Appropriate Marketing In the near future, IPTV Messages operators should take advantage of lower prices of infrastructure and end-user devices. Source Frost & Sullivan 19
  20. 20. Summary 20
  21. 21. In the Short Term, IPTV in CEE Is Unlikely to Expand Beyond Market Niche TV services must be embedded in all CEE telecoms offers to compete with pay-TV providers on the triple play market.However, in the short to mid term IPTV is unlikely to be the only technology deployed. Many incumbents are expected to focus on satellite TV development, especially in the rural areas. Access to premium content is Lack of sufficient infrastructure expected to be the main limits growth potential in the competitive advantage. IPTV market. Partnerships with pay-TV Changing TV consumption is likely to be one of the most Conclusions market participants may important market stimulus. facilitate market entrance. IPTV roll-outs are likely to be the Price sensitive societies expect most economically justified in low prices of the IPTV services. the urban areas. Source Frost & Sullivan 21
  22. 22. Next Steps Request a proposal for our Growth Partnership Services or Growth Consulting Services to support you and your team in accelerating the growth of your company. (enquiries@frost.com) + 44 (0) 207 343 8383. Join us at our annual Growth, Innovation, and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth, London (www.gil-global.com) Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities(www.frost.com/news) 22
  23. 23. Your Feedback is Important to Us What would you like to see from Frost & Sullivan?Growth Forecasts?Competitive Structure?Emerging Trends?Strategic Recommendations?Other? Please inform us by taking our survey. Frost & Sullivan’s Growth Consulting can assist with your growth strategies 23
  24. 24. Follow Frost & Sullivan onFacebook, LinkedIn, SlideShare, and Twitter http://www.facebook.com/pages/Frost-Sullivan/249995031751?ref=ts http://www.linkedin.com/companies/4506 http://www.slideshare.net/FrostandSullivan http://twitter.com/frost_sullivan 24
  25. 25. For Additional InformationJoanna Lewandowska Gustavo CuryCorporate Communications Sales managerICT Europe ICT Europe(0048) 22 390 41 46 (0044) 20 7343 8310joanna.lewandowska@frost.com gustavo.cury@frost.comAdrian DrozdResearch ManagerTelecoms Europe(0044) 1865 398 699adrian.drozd@frost.com 25

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