November 16, 2006

Making Broadband Triple Play Profitable: IPTV Revenues

This is the 14th document in the "Making Broadband Triple Play Profitable" series.

by Lars Godell

with Thomas Mendel, Ph.D., Andrew Parker, Andrea Carini, Lizet Menke

Executive Summary (This is a document excerpt)

Eleven Western European incumbent telcos have launched IPTV services, but they don't have many subscribers yet. Reflecting the early days of the IPTV technology and the challenges ahead, incumbents' published IPTV customer targets are fairly modest. Forrester's detailed, bottom-up IPTV revenue model for 17 countries supports moderate IPTV ambitions for incumbent telcos. After a slow ramp-up, we expect one in four European xDSL/fiber broadband subscribers to have IPTV within 10 years. However, this average masks a big gap between the UK, where we only expect 13% penetration, and France, where we expect 33% IPTV penetration in year 10. On average, Europeans are not willing to pay much for TV content and they need a discount to buy triple play. In a mature TV market, this means incumbents will need to price IPTV below competing cable and satellite TV services. Adjusting for incumbents' 33% IPTV revenue share, we expect the average incumbent to get only €11.24 in net annual IPTV revenues per broadband user in year 10.

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