IPTV To OutRun Pay TV

Written by Oonagh Reidy     07/07/2014 | 13:19 | Category: INDUSTRY

IPTV viewers to outnumber Pay TV by 2018, PwC predicts.

IPTV To OutRun Pay TV41% of Australian householders will be watching paid for Internet Protocol TV (IPTV) services - more than Pay TV cable services like Foxtel by 2018, a new report from PwC suggests. 

However, spending on IPTV won't be as high as Pay TV, due to the lower costs of Internet TV services compared to Foxtel's higher subscription prices, analysts warn. 

In 2013, consumer spending on media/entertainment grew 4.4% due to demand for interactive games, internet - especially mobile - and subscription TV, including IPTV, the report shows.

However, IPTV revenues are spread over more players and channels as the industry fragments further as new players enter the scene. 

Currently, over-the-top (OTT) services include Quickflix, Fetch TV, Telstra T-Box, with US giant Netflix tipped to enter the Aussie market possibly in 2015. Traditional broadcasters, telco's and retailers are all looking to make a play in the IPTV and on-demand space. 

Quicklix, which is Australia's answer to Netflix, has almost 120,000 paying customers and the number of hours viewers spend streaming content has jumped enormously, in its last quarter to March. 

IPTV is "a burgeoning sector" says CEO Stephen Langsford and if Australia follows global trends there will be plenty of more customer appetite for online TV. 

"We think, in time, there will be multiple players [in that space]." 

Aussie viewers may also opt for several OTT services, considering the low cost of a subscription compared to traditional Pay TV, similar to the US experience where viewers subscribe to Hulu, Netflix and Amazon Prime all at once, he says. 

Video-on-demand services like JB Hi Fi Video Now are also forecast to grow revenues to $255 million by 2018, the PwC report predicts. 

Foxtel's Presto, iTunes are also competing in this space, but Quickflix is one of the cheapest at $10 per month - half the price of Presto and a fraction of the cost of Foxtel Pay TV subscription, which on average customers pay around $100 per month. 

A large percentage of customers also opt for pay-per-view movies and TV shows on top of the $10 fee, says Langford. 

Fetch TV service which is sold via Optus and iiNet is also a IPTV option at low cost, and is also on a drive to grow subscription base, but offers the free-to-air channels on top of on demand services. 

Consumer spending on entertainment and media products forecast to grow to $25.4 billion by 2018.