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Telecom Insider Excerpt
The EU economy, along with that of much of the rest of the world, is in a deep recession, and 2009 is expected to see the first full-year contraction in GDP since the early 1980s. Central & Eastern European (CEE) countries will generally face greater downside risk than most Western European (WE) countries, owing to weak currencies, capital flight, large external liabilities and much higher refinancing costs. WE countries will likely experience a GDP decline (in local currencies) of around 3-5% in 2009, while in CEE countries, GDP contraction will range from -1% in Poland to -15% in Latvia. Under the pressure of the economic crisis, some telecom and media services, such as mobile TV or VoD in some markets, are seeing lower adoption rates, and service revenues are shrinking. Still, not all markets and all services are seeing significant declines. For example, pay-TV subscribers are expected to grow by 8% in 2009 to reach 163.4m across the European region, despite the challenging economic environment.
IPTV, the youngest pay-TV technology, is under a lot of pressure to withstand severe competition from well-established cable and satellite TV. At year-end 2008, IPTV subscriptions accounted for only 8.2% of total pay-TV accounts in Europe, generating more than US$3bn (€2.1bn) or 8% of total regional pay-TV revenue. Although we project that by 2014 IPTV will double its share of the total pay-TV market both subscriptions-wise and revenue-wise, the question is, what will happen to IPTV service in the worsening economic situation in Europe? We believe that in the next 12 months, the economic crisis will have a negative impact on IPTV service adoption only in certain European countries, while its impact on IPTV service revenue growth will be uniformly adverse across the entire region in the same year.
This Insider will analyze the short- to medium-term future of European IPTV in the current economic climate. It will focus on the three factors affecting IPTV growth: The combination of the level of broadband penetration and operators' Capex, availability of affordable alternatives and telcos' strategies. It will then look in detail at two CEE ( Russia and the Czech Republic) and two WE (France and Germany) markets that best describe the scenarios we propose.
Published monthly for each of the world’s most dynamic regions, Telecom Insiders are packed with trend analysis, industry best practices, market sizing and forecasting, competitor analysis, and case studies, providing you information you can leverage to make better business decisions. For more information about Telecom Insiders, please contact Amalia Vega via email at avega@pyr.com or telephone at +1.809.330.4520
Author: Stela Bokun
Publication Date: June 2009
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