There is no silver bullet for IPTV success in Europe, says Ovum

August 27, 2008 - There is no "silver bullet" for a successful IPTV service in Europe, according to market analysis firm Ovum, as the sector shows more variance across the region than broadband or mobile markets and is at a "much earlier stage of development".

The firm adds that IPTV in its benchmark countries of Belgum, France, Germany, Italy, Spain and Sweden has made good progress, but operators still face many challenges, some of which are unique to each market. Key variables include broadband and pay-TV penetration, market dynamics, local loop unbundling conditions and competition. Ovum adds that Germany's 1% penetration is not necessarily a reflection of failed IPTV strategies, but rather that German IPTV operators face fierce competition in a market where consumers are used to low-cost TV.

The company believes that the next phase of IPTV development will "make or break many operators", as they need to achieve much greater scale and grow ARPU to start enjoying greater profitability, while the "increasingly vocal" presence of consumer electronics vendors and over-the-top players in the TV space will only intensify competition.

Pricing is believed to be critical for achieving growth, with some operators such as in France aggressively pushing a €30 triple-play package while also squeezing up ARPU via incremental growth in sales of video on demand and additional pay-TV packages. Belgium's Belgacom meanwhile launched pricing that undercut its cable TV rivals to boost growth and Germany's Deutsche Telekom has reduced prices considerably to compete on more level terms with other pay-TV platforms.

The one strategy which all markets possess is identified as aggressive promotions, and the most effective drivers of growth are named as price leading, aggressive marketing and strong content line-ups.