Despite the proliferation of on-demand content and technology in recent years, getting customers to buy pay-per-view or video-on-demand content still remains a significant challenge for IPTV vendors, according to a recent study by IT research and consulting firm Gartner Inc.
In the fourth quarter of 2007, Gartner surveyed 5,800 consumers across 18 countries and territories and found that about three-quarters of all worldwide respondents had some form of pay-TV in their households. However, less than one-quarter of all respondents said they purchased either PPV or VOD content in the past year.
“Consumers already value DVD and videotape purchases and rentals, so getting them to transfer this behavior or habit over to IPTV subscriptions is a key strategy in developing revenue,” Amanda Sabia, principle research analyst at Gartner, said in a statement. “Providers need to ensure that ordering and navigation processes for PPV and VOD are easy to understand and user friendly. They should also offer competitive pricing, free trials and a wide range of titles, making sure they include various unique and most-recent versions.”
The Gartner research indicates that globally, the average consumer spends 22 hours per week viewing entertainment on the television set; of which 16 hours per week is spent watching TV and six hours watching DVDs or videotapes. In addition, 39% of all survey respondents had downloaded some form of video content (moves, TV shows and video clips for example) in the past three months.
Gartner concluded that tapping into this established behavior and providing alternate solutions to satisfy demand is essential in earning incremental revenue for Internet Protocol television (IPTV).
Sabia said providers need to be creative in new business models, exploring "pay per day" and "pre-paid on-demand" options as well as gaining leverage from advertisers and aggressively marketing PPV and VOD libraries.
“As competitive pressures in the consumer communications market continue to drive telephone companies to expand their suite of services to include broadcast television and video programming, telcos have to provide distinct services to convince subscribers to switch to their products,” she said. “Differentiated content is a major lever for new IPTV providers to win customers.”