IPTV equipment revenue to reach $13 billion by 2012

According to Dittberner’s recently released report, IPTV Expansion Pack 2007, the IPTV equipment market will reach $13 billion (€9.19 bn) by 2012, before declining slightly. “After 2013 the North American market build out will slow. North America is the major market for high definition IPTV, which increases bandwidth demand and requires more expensive video equipment,” says James Heath, Director of Broadband Research at Dittberner Associates. “North American cable operators will be a major source of growth in the equipment business for the next five years.”

Dittberner puts together various forms of IPTV, not only IPTV over copper and coax networks, but also streaming web-TV over the open internet.

These equipment revenue forecasts can be affected greatly by two factors:

1. An increase of VOD peak usage above 10% of IPTV subscribers would greatly increase the Incremental Network Equipment Market. Indications in China are that some networks reach 60% peak usage, if a library of movies is offered at a flat fee.
2. The development of a food chain for Internet Television. The use of the Internet to watch TV requires a projected Incremental Network Equipment expenditure of between $500 Million and $1 Billion per year after 2009. “If content providers attempt to disintermediate the network operators without sufficient compensation, the Internet will suffer and Internet television growth will slow,” says James Heath.

IPTV will also be the beginning of two major shifts in network traffic patterns, reversing the largely unidirectional pattern of the Internet:

1. More traffic will remain within the local network. Both as content will be distributed from a local source or headend, and also because social networking, like Youtube, will grow.
2. There will be a large increase in upstream and peer-to-peer traffic as video communications and telepresence grows in use.

Home Networks will spur the growth of femtocells and WiFi as wireless home networking will be used to reduce installation costs. Home Network remote management will become a major issue that service providers will wrestle with, but home network management could become a new source of revenue for these network service providers.

Dittberner believes that the growth in IPTV will open up new product requirements that can be exploited by equipment providers. The All-Digital home will become a fertile place for the introduction of new appliances as consumers become telecommuters, as broadband wireless gravitates to femtocells and as network operators become service brokers.