IPTV - What, Why, and Will?

What is IPTV?

A good place to start is wiki (may be till Knol or Wikia).

In summary, IPTV is delivery of Television on any IP enabled device through broadband. Though, IPTV definition in itself is still shaping up; hence the examples may vary as per one’s definition. Until a commercial model successfully establishes itself, IPTV definition will continue to evolve.

Ironically, the current definition IPTV by some leading analyst (An Introduction to IPTV)does not reference the very devices that kick-started the IPTV eco system like time-shift (e.g. Tivo), place-shift (e.g. slingbox), the mobile phones, iPods and other mobile entertainment devices. This year’s Ofcom’s report on Communication Market does a good justification by including telecommunication, new media and content companies.

Some of examples of IPTV are BT Vision, itv.com, joost, babelgum, Tiscali, etc. However, youtube or iTunes like services, i.e. just watching video over internet isn’t IPTV. But if Apple TV to effectively ( with its ease of configuration, navigation, search, etc) bridge the gap between its services and TV set – one may end up viewing these services as part of IPTV eco-system. This could be further accelerated if the key manufactures start making TV sets with WiFi built into them…but then, will that be a TV or a computer with 42”LCD screen. I will hope for the success of such Television set, as an easy to use and value added kit compare to current Telco's IPTV equipment which is package of – a setup box, a TV and ugly interface.

Why IPTV?

The roots of IPTV are in the changing behavior of entertainment consumption that started with video consumption over Internet and with availability of time-shifting boxes. Once for the niche and savvy users only, the choices like relevant content on a preferred device and at preferred time, content-on-demand, zero search, value added services (like interactivity, social communities, information, news, etc) have become part of basic expectations from an IPTV service.

The above consumer behavior is supplemented by two other factors that are driving the innovation within the Telecommunication and Broadcasting industry. First is, the declining in the fixed line revenues. Telecommunication companies are forced to find the new avenues of the revenues. Second factor is, the convergence of markets with new media firms moving into the broadband with voice offerings coupled with info-entertainment and other add-on services.

IPTV Market

This is interesting bit! Every month, a new report quotes a different market potential of IPTV in UK, each with different CAGR. One analyst firm has also released a report which discusses the different predictions by different analyst firms! Some facts (source: Ofcom, ScreenDigest and MRG Inc):

• Hong Kong is the world’s leading IPTV market
• In Europe, France is ahead of the game with subscription over 2.5 million(end of 2006)
• UK is just over 100,000 subscription, mostly BT Vision subscribers (43,000 at the end of 2006)
• 57 IPTV services across the Europe (leading IPTV product vendors include Tut, Tandberg Television, Harmonic)
• Top 5 (FY2006) leading IPTV operators include Orange, Telefonica, Free Telecom, Neuf Telecom, Fastweb
• Revenues: 470 million Euro in FY2006, 1 billion Euros expected in FY2007
• Subscribers: 2.9 million in FY2006, 5.6 million expected by FY2007
• Broadcaster’s advertisement revenues are falling (ITV, ABC; UK - 2.2% in 2006, compare to 2005), while subscription spend increase by 3.5%
• More than 50% households have broadband with average bandwidth over 4 Mbps
• With rollout of Tiscali TV, 15% of UK households now have IPTV coverage

While I have already noted the customer expectation in IPTV world, the trends for future would continue to be: always available personalized content, personalized advertisements, and mobile seamless entertainment.

Will IPTV succeed?

Today’s IPTV offering from Telecommunication industry is in its infancy. Some of the reasons for this include:

• Architecture – current protocols and infrastructure cannot support “real time” and “live real time” streaming due to inherent bottlenecks due to limited bandwidth and data packet loss. This problem becomes more profound with UK's growing interest in HDTV(in UK, a 1.7 % of total households) and multiple channel viewing at homes
• Lack of content, interactivity, content-push services and mobile entertainment

Web TV or Video-On-demand services will find its audience (as currently) with BBC iPlayer, 4oD, Joost or proposed Kangaroo services from BBC, ITV and Channel 4.

However, both the models cannot support even a fraction of today’s audience at a given time. For example, as per UK TV viewing pattern, the highest viewership is during the evening time(after 2115Hrs), with 48% of households turning on thier TV sets. If a fraction of this audience is to tune into a program, say, X-Factor Final episode on BT Vision V-Box?!

The future isn’t all that gloomy with the BT’s current investment of 10billion GBP in deploying Next Generation Core Networks (NGN). Only remaining question to answer is, which revenue model will succeed?