Audio Video News

A new report released by analyst and consulting company Ovum suggests that, as digital television opens new frontiers, competition between telecommunications giants and the TV industry will increase rapidly. Ovum also predicts that digital television connections will grow from 62 million in 2001 to 350 million in 2006, creating numerous opportunities for companies throughout the new media sector.

In addition to the rapid growth of DTV consumers, Ovum's study indicates that television commerce (tCommerce) revenues from these connections will be worth $45 billion by 2005. This is on top of revenues from other services such as pay-TV, gaming, education, and information, which the analyst says will exceed $60 billion.

Ovum's Shirley Brown explains that since "telcos and traditional TV broadcasters are vying for market position, each sector must guard its strengths and exploit new opportunities. Television is good at developing and delivering programming content to mass audiences. Telcos' strengths include strong customer bases, established billing arrangements and effective customer management systems. By guarding existing revenues and building service offerings in the convergent space, a market leader will emerge."

Consumers will be able to choose interactive services delivered via what Ovum terms an "Internet@DTV" model, using broadcast services such as cable or satellite, or alternatively via a "DTV@Internet" model, utilizing the Internet and telecommunications networks. Ovum says that the "digitization of broadcasting transmission breaks down the barriers between the Internet, traditionally a telecommunications domain, and the traditional media-oriented television sector. Convergence of the two sectors occurs with interactive services offered to consumers through either their televisions or personal computers."

The report predicts that the type of service people choose will depend on their preference for information in a communal situation (TV) or as a personal experience (PC). Ovum adds that "the first sector to establish appealing interactive services will gain the most customers and subsequent revenues. To capture the DTV market, TV broadcasters and telcos are currently adding new offerings to their traditional product ranges and learning from each other, forging alliances with companies who have experience in the 'opposite' sector to assist their growth."

According to Ovum, competition between telcos and TV broadcasters centers around increasing viewer numbers to gain advertising revenue, maximizing consumer expenditure on transactions (commerce), and forming alliances for popular entertainment services including movies, shows, and video games. Brown states that "once television interactive services have reached maturity, they will compete head-on with the services offered by the Internet, and similarly the Internet will rival television in information, entertainment, and educational video and audio services. Ovum research indicates that digital television offers huge rewards for those companies that can get it right and retain their customers. Whether that will be telecommunications companies or television broadcasters remains to be seen."