research0703.qxp
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US growth decelerates in Q4
The growth of the US IPTV market continued to decelerate in the fourth quarter of 2012, as a consequence of the impact of Hurricane Sandy and the slowing expansion of Verizon's FiOS service. The two major US IPTV players, Verizon and AT&T, reported a combined gain of 326,000 video subscribers in the fourth quarter, down 19% from the 402,000 acquired during the same period in 2011, according to the IHS Screen Digest Television Intelligence Service at information and analytics provider IHS. This marked the second consecutive year of slowing subscriber growth in the fourth quarter, with the total for the last three months of 2011 down 7% from 430,000 in 2010. For the entire year of 2012, net subscriber adds for the two U.S. IPTV services amounted to 1.3m, down 14% from 1.5m in 2011. Through to 2017, both major US IPTV players will continue to see their subscriber gains moderate as the market becomes more mature. By 2017, IHS Screen Digest expects that IPTV in the United States will account for 13.4m pay-TV households, or 10.8% of all pay-TV subscribers. “Verizon's FiOS accounted for the majority of the slowdown, as the fibre-to-the-home (FTTH) service added only 134,000 subscribers in the fourth quarter of 2012, down from the 194,000 gained during same period in 2011,” said Erik Brannon, senior analyst for television research at IHS. “The disruption caused by Hurricane Sandy may have slowed FiOS’s progress. However, the major reason for the deceleration is that FiOS is largely finished expanding its footprint into new geographic areas of the United States. FiOS’s penetration is significantly higher than that of U-verse, causing longterm growth to slow for Verizon's IPTV service.” FiOS in 2012 increased its
video subscriber base by 553,000 to reach 4.7m, up 13.3% from 4.2m in 2011. This represents a 21% reduction from the 701,000 increase in 2011. FiOS’s video penetration now stands at 33.3%, compared to 31.5% at the end of 2011. Nevertheless, the largest US IPTV provider grew its video subscriber base by 13.3% in 2012. AT&T continues to maintain its growth in its U-verse video services, as 192,000 subscribers joined in the fourth quarter of 2012, only 8,000 less than during the same period in 2011. U-verse video subscribers grew 19.6% for the year and now stand at 4.53m, closing in on FiOS’s total video subscribers. With a much broader rollout of U-verse, the fibre-tothe-node service passes 72% more eligible video homes than FiOS. Given a significantly larger reach and low video penetration of just 18.7%, AT&T is also able to maintain steady growth in gains for its IPTV services. All told, U-verse added 745,000 subscribers in 2012, down just 7.3% from 2011's net gain of 804,000 subscribers. IHS Screen Digest concludes that IPTV growth continues in the United States, although at a reduced pace. “Plenty of room for expansion remains a s FiOS focuses on penetration levels and U-verse stresses marketing to its lightly penetrated footprint,” it advises.
Smart TVs to top 50% of market
More than one of every four television sets shipped worldwide in 2012 was a Smart TV, with the rapid sales growth of these Internet-connected sets paving the way for them to account for more than half of the market by 2015. Worldwide shipments of Smart TVs amounted to 66m units in 2012, up 27% from 52m in 2011, according to the IHS Screen Digest TV Technology Service from infor-
mation and analytics provider IHS. This impressive growth gave smart TVs a 27% share of the total television market for the year. By 2015, shipments are expected to rise to 141m units and account for 55% of global television shipments, the first time they will make up more than half the market. The following year, shipments will expand to 173m units, amounting to nearly two-thirds of the worldwide television total. “Despite a decline in global television shipments in 2012, consumer demand for Internetconnected televisions soared during the year—and the surge in sales shows no signs of abating,” said Veronica Thayer, TV systems analyst at IHS. “Smart TVs are rapidly joining the mainstream as manufacturers refine their products to add new features and to make them easier to use.” According to IHS Screen Digest, Smart TVs have come a long way from the first models introduced a few years ago. TV manufacturers have been continuously improving the user interface and features to make them more user friendly, creating multiple and innovating ways as well to control and interact with the TV set. Some companies, including LG, Samsung and Sony, have focused on developing their own Smart TV platforms. By doing so, these manufacturers are seeking ways to differentiate themselves from the competition and to add new hardware and software features that enhance the consumer experience. Some of these features include content discovery, personalisation of the home screen, recommendation engines, advanced controls— i.e., gesture, motion, and voice—and multiscreen capabilities. IHS Screen Digest suggests that one of the most promising features that can drive consumers to the purchase and use of Smart TVs is partnership by a smart TV brand with pay-
TV operators. Using Smart TVs as a client device in a pay-TV household can help TV manufacturers distinguish their products in the marketplace, reduce customer premises equipment costs for operators and ultimately benefit consumers. Even so, IHS Screen Digest warns that the proliferation of proprietary Smart TV platforms has caused fragmentation and created problems for the developers of television apps. TV manufacturers LG Electronics, TP Vision—for Philips TVs—and Toshiba founded the Smart TV Alliance in June 2012, to allow developers to create apps using open standard systems that can successfully run on all the platforms supported by the alliance. Panasonic joined the alliance in January 2013, and more companies are expected to sign up in the future. An emerging trend of 'smartready' TV models has come about through the partnership announced by Roku during the Consumer Electronics Show in January with several TV manufacturers, including Coby, Hisense, TCL and Westinghouse. Using the smart-ready approach, any television enabled with a mobile high-definition link (MHL) can be turned into a smart TV using a Roku Streaming Stick. These types of partnerships are highly valuable to second- and third-tier brands that wish to compete in the smart TV market. For its part, Google TV has made some improvements since it was first launched in the market, more recently adding voice search and a new TV guide called 'PrimeTime'. However, this has yet to resonate with consumers. Sony released the first Google TV set in 2010, but now only sells it as a separate box, similar to the Vizio CoStar and the Hisense Pulse. LG Electronics continues to offer Smart TVs with Google TV, first introduced in 2012, on screen sizes ranging from 42 inches to 60 inches.
30 IP television