By the end of the first quarter of 2010, the number of IPTV subscribers around the world stood at 36.3 million, up by almost 8% in the first three months of the year, according to a report released last month by research firm Point Topic.
The Middle East and Africa (MEA) was described as "beginning to show serious growth for the first time", with the UAE and Egypt singled out as the most significant markets in the region. But overall, the region lags far behind the rest of the world with a meagre 0.4% of the world’s IPTV subscribers in the MEA region compared to 49% in Europe, 32% in Asia and 18% in the Americas.
Georges Dabaghi, general manager for the Middle East at On Demand, the content management subsidiary of IPTV firm Seachange, says that in the Middle East, the Gulf nations have the more advanced IPTV deployments.
"Uptake of IPTV is a derivative of fixed broadband growth – anywhere broadband uptake is high, IPTV will follow," he says.
"We have seen in the past five years that there is a general trend from GCC countries, and, in particular, the UAE, Saudi Arabia and Qatar, in rolling out IPTV systems, and that they are way ahead of other Middle East markets."
For the region’s incumbent telecom operators, their extensive legacy infrastructure and subscriber bases that run into millions are the driving force behind the IPTV market in the Middle East. These are spurred on by the desire to roll out additional offerings to boost declining revenue from voice, and retain brand loyalty.
"Triple and quad play is a hot topic among the regional operators," says Stéphane Le Dreau, vice president of Solution Marketing at Nagravision, a supplier to on-demand and digital TV operators over broadcast, broadband and mobile platforms.
"They are deploying fibre to the home (FTTH) in the UAE, KSA and Oman to be able to offer 100Mbps for internet and also bandwidth-heavy content such as HD and 3D," he says.
In Qatar, Qtel’s IPTV offering ‘Mozaic’ was rolled out in 2007, and the telco recently completed a pilot project for the introduction of fibre-to-the-home (FTTH) services in the country, which it says will be capable of delivering speeds of up to 50 Mbps.
Saudi Arabia incumbent STC, the only operator in the Kingdom with a broadband network that reaches across the nation, is planning to launch an IPTV service "probably" in summer, according to Dabaghi.
In the UAE, he says, "there is an obvious lead from Du and Etisalat, with both having infrastructure that is ready made for the extending of services to tens of thousands of users across UAE".
A comprehensive broadband connectivity is the lifeblood of IPTV; without robust connections reaching out to homes and providing high speed access, there can be no IPTV. On Demand’s Dabaghi adds that in order to create an environment where IPTV will flourish, public and private sector need to collaborate.
"Governments need to be there, but even more so, a country’s regulator," he says.
"Investment could be public, or the private sector could be induced to undertake this. It’s a collective effort really — regulators and policy makers need to come together; governments, regulators and vendors must work together.
"In some parts of the Middle East, this is happening. For example, today Abu Dhabi is a fiberised city, and KSA is planning to do the same. But in other parts of the Middle East, countries are still taking up DSL. IPTV can be delivered over DSL, but as providers offer more differentiation, HD and more, they need higher bandwidth capabilities."
The UAE’s IPTV sector has benefitted from significant investment, and a readiness to make quick decisions and adopt new technology. Together with low levels of piracy and a high GDP, the business case for IPTV is much easier to make than in other parts of the region such as Egypt and Morocco.
Frederic Bonnard, vice president marketing at Soft At Home, a France-based provider of IPTV technology services that is part-owned by Etisalat, says that while it is important for an IPTV provider to focus on quality of service to compete with cable and satellite providers, they also need to leverage the interactivity provided by IP – something that is not as strong in broadcast offering.
"They need now to compete with new entrants such as connected TVs that are providing services ‘over the top’ (OTT). So it is important for providers to embrace OTT services – such as internet browsing, replay, application stores and widgets along with IPTV services to really leverage the IP connectivity."
The high level of interactivity means that from the moment a service is launched, IPTV providers can delve into the data produced by their viewers, compiling figures on viewers’ preferences and viewing habits. They can then build promotions and packages around the most popular programmes and services.
Says Dabaghi: "Where IPTV is maturing, operators such as Du have started to do more than linear TV such as VOD. Providers can assess what customers can and will pay for, so cost and revenue streams can be made to run in parallel."
Le Dreau says that personalisation is one of the factors that can make IPTV a successful venture for an operator.
"It is especially relevant, because of the web, where personalisation features have become the norm, and this is increasingly blending with TV," he says.
Services can be personalised on a number of different levels, from VOD to time-shift functionalities, and the technology now allows for advanced capabilities including a personalised user interface, favourites and recommendations based on a subscriber’s profile and usage. As well as affording users greater control over the service, providers that offer widgets and targeted advertising could also be tap into an extra source of revenue.
One way to overcome the challenges of low IPTV penetration, according to Dabaghi, is to make the services more affordable. He recommends that cheaper set-top boxes (STBs), or hybrid STBs with satellite receivers could be one method of making it more accessible in countries with lower GDP. Awareness of IPTV’s capabilities is another factor that the industry will need to focus on over the next couple of years, with marketers tasked with informing the public about the interactivity, convenience and ability of IPTV to integrate with other IP-based services.
For Bonnard, the key development in IPTV over the next couple of years will be adopting OTT.
"IPTV will be focusing on delivering high quality premium content such as major sport events or movies, while OTT will deliver catch-up TV, VoD and third party application services. The Internet will become an access mechanism for the TV and not just a me-too of the PC, while convergence of services and screens, such as TV, PC, web and tablets, where content coming from anywhere can be played on any device will be a major factor," he says.