Revenue generated by the premium video services market, an area comprising pay-TV, mobile video, DVD, broadband video and theater/box office receipts, is expected to rise to $277 billion by 2010, up from less than $200 billion in 2006, iSuppli Corp. predicts.
Much of that growth will be driven by increasing revenue for pay-TV services, particularly for the fast-expanding Internet Protocol Television (IPTV) area.
“The pay-television industry is the 800-pound gorilla in the entertainment space,” said Frank Dickson, principal analyst for multimedia content and services at iSuppli. “The pay TV market is an established and lucrative one, representing about $120 billion in worldwide sales in 2006. The segment is dominated by direct-to-home satellite and digital and analog cable TV services. However, the telecom companies are entering the market with aggressive Internet Protocol Television (IPTV) offerings that are sure to spur an arms race in pay television and in quadruple-play services.”
IPTV is the fastest-expanding segment of the pay-TV market, with revenue expected to increase to $23.5 billion in 2010, rising at Compound Annual Growth Rate (CAGR) of 103 percent from $681 million in 2005, iSuppli predicts.
The table below presents iSuppli’s worldwide revenue forecast for pay television services for satellite, cable and IPTV.

Figure: Worldwide Subscription Revenues for Pay Television Services—Satellite, Cable and IPTV (Revenue in Millions of U.S. Dollars)
Source: iSuppli Corp., February 2007

Several major trends in the pay-television market will have ramifications throughout the entire technology value chain. These trends include the rising use of non-linear video, i.e. services like Video-on-Demand and Digital Video Recording, which allow viewers to watch the programming of their choice whenever they want. Other trends include the push for interactivity, the looming analog television broadcasting cut-offs and the increasing impact of Web 2.0.
Other notable iSuppli findings regarding premium video services include:

Significant offerings in the pay television market include high-definition programming, Video on Demand , digital video recording and value-added television-based services. These developments also are changing the face of television advertising.

If advertising revenues are added to the premium video sales, the total market amounted to approximately $370 billion in 2006.

Sales of DVDs are slowing. During the next three to four years, DVD sales could decline by as much as 15 percent to 20 percent. With most movie libraries and television series already on DVD, Hollywood studios are generating more than half of their revenues from DVDs—and are running out of new content to sell, making this an issue of paramount importance to them. One cause of the DVD sales deceleration is the fact that consumers have become more price-sensitive, believing that the average DVD cost of $20 is too expensive, especially compared to renting.

As broadband speeds increase to 4Mbytes/sec. and to 6Mbytes/sec. and faster, more content companies are looking at the Internet as either their sole distribution method or as a complementary one. This is especially key as content providers strive to make their programming available to all “three screens,” i.e. PCs, televisions and mobile phones. However, broadband video transfer rates are only about 750Kbytes/sec., with some at 1.3Mbytes/sec.—still far slower than required for displaying high-quality pictures on 35-inch-plus screen-size televisions.


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