Targeted advertising via Internet protocol television (IPTV) is expected to produce major revenues within the next year, according to IPTV executives' opinions revealed in a new report by Accenture and the Economist Intelligence Unit.
Of the executives surveyed, 46.5% said that they thought such advertising would produce "major" revenues, and another 37.4% said that they thought such ads would bring "moderate" revenues. In fact, targeted ads outstripped both premium content subscription fees and regular mass market ads as a projected source of major revenues in the opinion of the respondents.
IPTV proponents, who think that TV delivered via Internet protocol will be a perfect realization of customized content delivery (and long-tail profits), are watching markets like France closely to see how targeted ad delivery fares. France leads the US and most of the world in IPTV subscriptions, thanks in part to a paucity of television programming in many parts of the country.
In comparison, IPTV subscribership and revenues are expected to develop far more slowly in the US. The US market for multichannel television is already highly developed. As a result, the value proposition is less clear and it is likely that telecom operators will use IPTV, at least initially, as a defensive play. With such a high multichannel TV penetration rate already, IPTV is unlikely to offer anything new that existing subscribers of cable or satellite TV services do not already get. The revenue potential for IPTV as a stand-alone product is limited at best. However, as a part of a bundle of services, which includes broadband and fixed and mobile voice, the value of IPTV will be in its ability to reduce churn and to perhaps recoup some revenues lost to cable companies offering voice services.
Ben Macklin, author of eMarketer's recent IPTV: The Global Picture report, sums it up: "In countries such as France, Spain and Italy, IPTV has the potential to be a genuine revenue-generating service as it fills a gap in the pay-TV market. For countries like the US and the UK, however, the revenue potential for stand-alone IPTV services will be limited at best."
For more on IPTV's place in the US television market, see eMarketer's recent IPTV: The Global Picture report.