Internet Protocol television (IPTV) is set to grow 26-fold within four years, securing 63m subscribers worldwide, according to researchers iSuppli.
iSuppli predicts that the technology, whereby digital TV signals are delivered via high-speed broadband rather than by satellite, terrestrial or cable, will experience its biggest leap the next year.
The expected explosion in popularity is put down to a large number of telcos battling to enter the IPTV market.
"Throughout 2004, 2005 and some of 2006, you had small carriers deploying services on a regional basis," said iSuppli analyst Mark Kirstein. "Now you have large carriers like [US telcos] Verizon and AT&T offering IPTV, as well as some international carriers."
In the UK, London company Homechoice has been the only IPTV supplier for some years. However, BT plans to launch its BT Vision service in the autumn. Homechoice is due to roll out to other UK cities in the coming months.
As the IPTV industry evolves to include greater interactivity and to integrate voice, video and data, it is expected to grow to a $27bn (£14m) business from its current level of less than $2bn (£1.05bn).
Video services, including user-generated content, are predicted to account for 87 per cent of revenue. Kirstein also predicted that broadcasters will offer IPTV subscribers enhanced services such as on-demand gaming, music and home networking management.
IPTV, like cable, benefits from a strong ‘return’ path to the broadcaster, enabling users to call up on-demand content and use interactive functions like electronic voting and TV shopping. The interactive capabilities of digital satellite and digital terrestrial (Freeview) are relatively limited.
Sky, which recently launched a ‘free broadband’ quad-play package and is ramping up its Sky By Broadband legal downloads service, is reckoned to be on the back foot. Citigroup analysts have suggested that the satellite giant is fighting hard to protect its eight million customers from the IPTV threat.
“The fight to capture the expanding base will put (IPTV) providers on a collision course with existing pay-TV market competitors,” said Kirstein.
Europe has taken the early lead in the global IPTV market, thanks to patchy satellite and cable coverage. Asia is predicted to achieve the largest subscriber base by the end of this year, but the US will lead the world in IPTV revenue, thanks to a higher average revenue per user.