IPTV Has An Uphill Battle Against Cable, Satellite In The U.S. - InformationWeek

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IPTV Has An Uphill Battle Against Cable, Satellite In The U.S.

Competition among service providers is expected to heat up as more households upgrade to an HDTV set, according to a Gartner report.

Internet protocol TV services, which are offered by telecom companies, face in the U.S. a saturated pay-TV market that will require attractive pricing to lure consumers from cable and satellite services, a market research firm said Monday.

Fully 82% of all U.S. households reported having a pay-TV subscription in 2006, according to a survey by Gartner. The researcher forecasts that number to increase to 84% by the end of 2011.

Currently, fewer than 1% of the total pay-TV subscribers subscribe to a telephone company for IPTV service, Gartner said. However, that number is expected to increase to almost 8% by 2011, mostly at the expense of subscriber loss from the cable companies.

One area of intense competition among service providers will be in delivering high-definition content, as more households upgrade to a HDTV set. Nearly 40% of all pay TV households surveyed have either local or cable high-definition channels included in their monthly pay-TV service, according to Gartner.

Another competitive area is the interactivity features with pay-TV subscriptions. The number of households using those features has increased during the past year to 15% from 9%. Interactivity includes program guides, a channel or service with on-demand content, and advertisements where the user can click to request information.

"Many of these increases in feature adoption can be attributed to the fact that the entry of IPTV into this market has caused the competition to raise the ante," Gartner analyst Amanda Sabia said in the analyst's report.

To gain subscribers, IPTV providers are going to have to market highly competitive, low-price offers for feature-rich packages that combine pay TV, broadband, telephone, and mobile phone services. What is included in the video component of these bundles also would be critical to IPTV adoption, Sabia said.

"All the pay-TV providers will offer basically similar content," Sabia said, "but those IPTV providers that differentiate their offerings and are attentive to qualitative factors, such as quality of service, and that provide positive customer experiences will succeed in this well-established marketplace."

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