Will IPTV Lag in U.S. Market, Compared to Europe?

Unusually for the broadcast market, Europe leads the U.S. in the number of IPTV (News - Alert) households and will remain ahead for the foreseeable future, say researchers at Business Insights, at least on a “gross subscribers” basis.

Despite strong support from European service providers, IPTV will remain a bit of a niche proposition across much of Europe, with the platform facing stiff competition from existing cable and satellite services and, increasingly, digital TV broadcasting.

One of the big exceptions is the French market, where IPTV will have 28 percent household penetration by the end of 2010, Business Insights says. What makes the French market different, and relatively more receptive to IPTV uptake, are a combination of very-strict codes on placement of satellite dishes, which limits satellite penetration, along with relatively low cable TV service penetration.

The U.S IPTV market is beginning to gather momentum, but might be a more challenging market than Europe, in part because the multi-channel video market is well-developed, meaning telcos are entering the market as the fourth competitor, in most markets, and might be the fifth competitor in some markets.

For those reasons, Business Insights estimates IPTV will garner six million households as customers by 2010. There are about 114.5 million U.S. households using television. About 86.5 percent of TV homes buy multi-channel video services, or about 99 million households.

Six million households represent about six percent penetration of multi-channel TV homes. At 20 percent penetration, IPTV households could reach 20 million households.

History suggests some contestants will be able to get 30 percent multi-channel video penetration over time, though.  That level already has been reached by some new video contestants, in some markets, within a couple to several years.

That implies 30 million IPTV customer accounts, over time. Also, similar levels of penetration have been gotten by new cable voice competitors within several years when competing against telcos for the residential voice customer.