Although consumers are increasingly prepared to have some form of pay-TV in their household, getting more consumers to order and then regularly view pay per view (PPV) or video on demand (VOD) remains a key challenge for service providers.
In the fourth quarter of 2007, Gartner surveyed 5,800 consumers, covering 18 countries and territories, and found that approximately three-quarters of all worldwide respondents had some form of pay-TV in their households, yet fewer than one-quarter of all respondents purchased either PPV or VOD content within the past year.
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 maintains that tapping into this established behaviour and providing alternate solutions to satisfy demand is essential in earning incremental revenue for Internet Protocol television (IPTV).
"Consumers already value DVD and videotape purchases and rentals, so getting them to transfer this behaviour or habit over to IPTV subscriptions is a key strategy in developing revenue," says Amanda Sabia, principle research analyst at Gartner.
"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."
Sabia also advises providers 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 says. "Differentiated content is a major lever for new IPTV providers to win customers."
Based on the survey, Gartner has developed a model which allows providers to understand potential PPV and VOD usage and subsequent incremental revenue. The model found that the top five global markets for PPV or VOD – based on the combined highest access and content scores – are likely to be China, the US, Canada, Germany and South Korea.