It seems like a natural progression to bring the Internet to every possible consumer electronics device available today, and the television set is no exception. Not to be left behind, many a DTH provider has provisioned Ethernet ports in the next generation of STBs, although the software and strategy to provide enhanced services may still be a few years away. As expected, North America and Western Europe are leading this market as viewers in these regions become more particular about what content they want as well as where and when they want it. Strategies in both of these markets are somewhat different though with DTH operators in North America building their own proprietary online platforms, while their European counterparts opt for the HbbTV standard.

Even though terrestrial networks seem to be the more logical choice for hybrid services, there is no dearth of satellite-enabled solutions. In the UK, Sky Anytime+ already provides customers with a Sky Broadband connection access to comprehensive on-demand services. Content ranges from an extensive film library, popular entertainment and drama packages to “free” back-dated television programming. In South America, Brazilian broadband operator GVT plans to launch Pay TV services by mid-2011 with a combination of an IP network for VoD and satellite DTH for linear TV. Another Brazilian operator Oi is also leveraging a combination of its IPTV and DTH services, while Telefonica too may not be far behind.

At an additional investment that ranges anywhere from $150 million to $300 million, the drive towards hybrid definitely doesn’t come cheap. Even if just a quarter of the nearly 120 DTH operators around the world provide these services over the next 10 years, this means an additional operating expense on the order of $9 billion spread over the period. Naturally, the bulk of this expense will be seen towards the latter half of the period as early adopters pass the baton to their followers. This is part of the reason why NSR’s Global DTH Markets, 3rd Edition report forecasts operating expenses to scale from $65 billion in 2009 to well over $108 billion by 2019, growing just as fast as subscription revenues. For the industry as a whole, this implies that the cost of these “add ons” will have to be matched with alternative streams of revenue such as advertising and value added services.

Even though there is viewer demand for enhanced, hybrid television services, nobody knows exactly how this will be monetized over the long run. For now, as long as such upgrades keep viewers from cutting their digital TV cords and satiate their need to control the content they watch, NSR believes that operators will continue to foot the bill. Hybrid services are quite clearly a part of the subscriber retention strategy for most operators, while acquisition is left to the availability of Premium and exclusive content, HD and 3D services.