• by Erik Sass  @eriksass1, October 13, 2006

China will be home to over 10 million IPTV subscribers by 2011, according to a new report from Pyramid Research. The rate of new subscriptions will remain moderate until 2008, but is expected to take off in the three years following. This will put China roughly on par with the U.S., which is expected to have about 11 million subscriptions by 2010, according to industry analysts at the Diffusion Group. However, both countries will lag behind Europe, which is expected to have 14 million IPTV subscriptions by 2011.

The lower rate of growth in the near-term is due to ongoing privatization of key media sectors by the Chinese government, clashes between various regulatory agencies, and the lack of a standard system for delivering IPTV. However, China is aggressively expanding its fiber-optic network, easing the bandwidth bottleneck and allowing an IPTV explosion.

China has laid about 2.5 million kilometers of large-caliber fiber-optic cable or "trunk line" since 2000. And in 2005 alone China laid 16 million kilometers of optical fiber--the branch lines serving households--roughly equal to American deployment in the same year. China's total fiber-optic network--including both kinds of cable--topped 65 million kilometers in 2005, and had a transmission capacity about 60 times that of 2000.

Although subscription is still the dominant model in most places, IPTV holds promise for advertisers because of its addressability and interactivity. About 20 percent of the European digital TV market has switched to free, ad-supported service, and it's still growing in popularity. One set-top box manufacturer, Amino, touts its capability to deliver dynamic one-to-one advertising, meaning individually addressed ad content based on information voluntarily divulged by customers.

Although IPTV is attractive in the U.S. for the same reasons--including the availability of content on demand--American researchers say the difficulty of getting video from computers to television is hindering its spread. Todd Board, an analyst with Ipsos Insight, says that watching movies and TV on the PC or portable devices is not exciting to mainstream America. According to a recent Ipsos report, only 2 percent of Americans downloaded TV shows--5 percent among 18-34s. Only 3 percent of Americans have downloaded a feature-length movie. Short-form content, including music videos and news clips, remains most popular.