IPTV Catching On, Now 10% of Telco Subs Pay for TV, Too

Updated. After just a few short years, IPTV has become a growing force in the pay TV business, capturing more than 45 million subscribers worldwide, according to new research from TeleGeography. The accelerating growth in the IPTV market, while bad news for cable and satellite providers, shows the power of competition as new services enter the market.

In the past five years, IPTV subs have increased substantially, from about 7 million in 2006 to more than 45 million at the end of 2010. Those IPTV subscribers now account for approximately 10 percent of the global pay TV telecom services provider market, which is up from less than 2 percent five years ago. And that growth is accelerating: IPTV subs increased 38 percent worldwide in 2010, and 9 percent sequentially in the fourth quarter of 2010 alone.

According to TeleGeography, Europe continues to be the largest market for IPTV services, accounting for about 40 percent of global IPTV subscribers, but Asia-Pacific is the fastest growing market overall. While the region accounts for 35 percent of the market now, Asia-Pacific IPTV subs are growing at twice the rate of Europe and will surpass that region by the end of 2011. France is the largest IPTV nation, with 23 percent of worldwide subscribers, followed by China and the U.S., each with 16 percent, South Korea (8 percent) and Japan (4 percent).

The IPTV boom shows how new technologies can overcome older, incumbent services if priced right and if it provides value that users aren’t currently getting. AT&T (s T) and Verizon, (s VZ) for instance, have invested heavily in the U.S. to bring fiber to neighborhoods that previously only offered cable TV services. That competition, while disruptive, has also forced cable providers to innovate and improve their own offerings, with more HD channels, higher-speed broadband services, more VOD content and improved DVR functionality — all of which are good things for consumers.