Investment in IPTV equipment continues despite subscriber slowdown, says Infonetics Research

October 29, 2008 - Global investment in IPTV and switched digital video (SDV) equipment is continuing, with healthy increases in EMEA, APAC and CALA markets, but a sharp decline in North America pulling down the overall market by 5% sequentially in the second quarter of this year to reach US$ 1.27bn, according to Infonetics Research.

The dip in the overall market is attributed to a slowing of IPTV and SDV subscriber additions by service providers in some regions hit hard by the uncertain economic climate, particularly in North America, according to Infonetics' report 'IPTV and Switched Digital Video Equipment, Services and Subscribers'. North America's share of the overall IPTV and SDV markets was found to have dropped from 47% to 38% between the first and second quarters of this year.

"In environments where the future of the economy is unknown, IPTV and SDV subscribers are more apt to stay with their current provider, rather than look for a new provider with whom they may have to invest in new equipment and other upfront fees; this is especially true in North America and Western Europe right now," said Jeff Heynen, directing analyst for IPTV at Infonetics Research. "However, service providers around the world - particularly in Asia, Europe, and Latin America - are still investing in IPTV equipment because offering a video service is increasingly becoming a requirement to increase revenue per user. Operators will continue to add IPTV and SDV subscribers, just not at the fast clip they previously expected."

The number of IPTV subscribers is now forecast to reach 72mn worldwide by 2011, with Infonetics Research adjusting the forecast to reflect the current state of the global economy. IPTV subscriber growth was found to be strongest in France, where Infonetics Research reports that a 'fierce battle' for subscribers between Orange, Free and Neuf Cegetel has driven total subscribers in the country to nearly 3mn at the end of last year.

The worldwide IP set-top box market fell 10% in the second quarter of this year due to the subscriber slowdown, while the nascent IP video encoder market is up 8% as subscribers seek to add new channels, particularly high-definition channels, according to the research firm. Motorola is found to continue leading the worldwide IP set-top box market in the second quarter of this year, following by Cisco; in the APAC region, Dasan and Samsung are found to be neck and neck for the lead. IP set-top box prices are predicted to decrease steadily due to volume production of system-on-a-chip (SoC) designs from STMicroelectronics and Sigma Designs, as well as the entry into the market of Broadcom.

The report also states that IPTV service providers such as AT&T are ranging from days to weeks, prompting operators push harder for well-defined interoperability standards.