Even if the end-user – the consumer at home – doesn’t know it, IPTV is gaining a foothold in his or her life. Whether it’s watching an episode of a favourite TV drama that was missed earlier in the week via an on-demand service on PC or catching up with news headlines on a mobile phone, it’s encroaching into many people’s lives.
But this adoption, use and embrace of IPTV is, by and large, taking place without the consumer being aware of the technology behind it. They probably don’t even know that it’s an IPTV service they’re using or even what the acronym stands for.
As the participants of the following roundtable discuss, the means by which the TV service is delivered to a consumer is a barrier to take-up. The average customer, when presented with a plethora of choices, from cable to satellite to IPTV, is going to look at the meal on offer, not the recipe by which it was delivered.
With new players getting involved, including telcos, retailers and videogame portals, each of whom is betting that their well-known brand name will carry additional weight in influencing a buying decision among a market that’s not necessarily tech-savvy, it’s a philosophy that’s not going to change soon.
In the USA, Amazon Unbox, Apple iTunes and Microsoft Xbox Live are all consumer services that have brought on-demand IPTV to audiences that otherwise might not be aware or at all interested in IPTV. How will these services fit into the IPTV market and what would their entrance into Europe mean for telcos and broadcasters?
Jonathan Beavon: IPTV, as currently defined by the large telcos, is in competition with cable TV offerings and does not really compete head-on with open-internet delivered entertainment services. IPTV offers broadcast television, video on demand in various flavours (such as nPVR or catch-up TV) and in some cases has interactive applications. The quality of the IPTV service is determined and controlled by the fact that telco owns and controls the QoS of broadband network.
In contrast, entertainment services offered over the open internet cannot yet rely on a totally reliable delivery. In the medium term however, IPTV and open-internet delivered entertainment services will co-exist within the same service bundles and longer term IPTV and internet delivered entertainment will combine but the winners and loser in the end game are yet to be determined.
Paul Berriman: We need to evaluate these offerings from a live versus delayed content point of view. There is always a place for on-demand type content and requirements for a quality viewing experience, independent of the end-to-end bandwidth bottlenecks of the internet, but these ‘box’ propositions all require that the content needs to be stored to some extent before viewing. This is not possible for live viewing of key content such as sports. In other words, there is always a place for linear channels and always a place for video on demand. However, our proven experience is that linear channels provide the ‘bread and butter’ revenue streams and VOD is the ‘icing on the cake.’
Therefore, the products and services in question will probably have a place for some viewers, but would compliment a full blown linear pay-TV service, rather than replace it.
Sebastian Kramer: From its initial definition, which was very telco-centric, IPTV has significantly evolved to encompass a whole family of solutions relying on IP technology to deliver TV and on-demand services. As available network bandwidth continues to evolve, a network agnostic use of IPTV becomes a viable platform for interactive services. This will create an interesting dynamic in which broadcasters can enrich the linear TV service of the existing broadcast bouquet with on-demand capabilities, thereby very closely approaching an all-IP service. As boundaries are indeed blurring with a growing number of hybrid broadcast/broadband deployments, IPTV solution providers will need to be very well versed in both domains. The winner of this game is the consumer, which is very positive.
A well-publicised survey in North America by Accenture revealed that four per cent of the 6,000 respondants questioned thought that “IPTV” was a reality television show. Is this similar to the market in Europe and, if so, does it reflect a general lack of awareness in the market and constitute a barrier to IPTV growth?
Sebastian Kramer: Whether or not it holds true, IPTV is a means to an end. It offers an interesting TV experience in which consumers can increasingly choose programming in a convenient what they view and when they view it manner. In that respect, consumers don’t have to be bothered understanding the technology enablers, which achieve this goal. At the end of the day, the proof of the pudding is in the eating and consumers will increasingly select service packages on the basis of their convenience and relevance of content. What is very positive in this sense is that IPTV has enabled an entire new family of commercial bundles offering yet more choices to the consumer.
Jonathan Beavon: IPTV is an ‘industry term’ so it is not surprising that consumers have little idea or even care what IPTV means. Growth in IP delivered broadcast TV and VOD will depend on the telco’s marketing, content offers and aggressive bundling of TV with fast internet, telephony and other services. If their IPTV offer compares well with other bundled TV offers from cable or satellite then IPTV will capture a significant percentage of the pay-TV market.
Paul Berriman: PCCW approached the market with its IPTV service, primarily as a pay-TV service branded as NOW TV. There is no mention of IPTV at all in any of our communications to the market. The customer is buying a pay-TV service, which he or she is selecting from among other pay-TV service offerings such as cable TV which are clearly understood. Operators or service providers that pursue marketing using technical terms risk confusing consumers. In Hong Kong, with an installed base of more than 800,000 and over 35 per cent penetration of households with NOW TV, PCCW’s IPTV based pay-TV service has not experienced a barrier to IPTV growth through branding or publicity.
Has the wide availability of HD broadcasting via cable and satellite meant that more innovative IPTV bundles and services are needed for the European market? And how could IPTV service providers differentiate their product?
Jonathan Beavon: Yes. IPTV will need to use a broad range of TV, VOD, interactive and communications services to differentiate. No single application will differentiate sufficiently, so IPTV will need to make innovative use of the technology that a standard cable or satellite can’t replicate. For example, VOD technology for archive or catch up TV, digital video recorders (DVR) used for legal peer-to-peer sharing of content and cool new applications that allow communication between IPTV users.
Sebastian Kramer: It is clear that a simple ‘me too’ approach to the incumbent cable and satellite offers is not going to be the convincing argument to attract the required subscriber numbers nor will it in a next stage prevent churn in any material way. An undescribed differentiated pay-TV service may work initially in countries without a strong tradition in digital TV, but as the digital TV landscape matures, we’ll get closer to the dynamics of the more advanced digital TV markets such as the UK. In such an environment, inevitably IPTV providers will have to emphasise what truly differentiates them: convenience, choice and richness of content business models even across multiple consumer electronic devices. In this respect, operators should not underestimate the opportunity to differentiate through the overall ergonomics of their service resulting from the right navigational flow and content recommendation. Finally, IPTV providers can create business-to-business platforms for partners offering niche content and non-video services to enrich the overall TV experience.
Paul Berriman: We also believe HDTV is the future and we are investing in it. Today’s HDTV will, in five years’ time, be the standard definition. We will be launching HD services this year and at least one-third of the English Premier League soccer games will be available to us in HD. For those IPTV service providers whose HDTV offerings will be some time coming, interactive services are one way to differentiate in the mean time. However, IPTV service providers will surely have to invest and develop networks to support HDTV in order to stay competitive in the longer term.
American IPTV operators are charging around US$100 for triple-play bundles, the equivalent of which are available for under US$65 in most European countries. Is this pricing a consequence of the maturity of the European IPTV market or symptomatic of its comparatively low take-up?
Paul Berriman: I am not sure I am qualified to comment on the relative price points of the US and European markets. It does appear on the outside that Europe has more choice of providers of both broadband and pay-TV services (not just IPTV), so this may also be a factor.
Security is an ever-present concern and has meant that many IPTV providers initially based their services on offering sport, which faces a reduced risk of piracy (once a game’s been played and the score known, there’s little demand for it). But with European TV audiences traditionally being more demanding, a wider range of premium content is a must. How should a service provider best protect its content – hardware, software, or both?
Sebastian Kramer: For the service provider, the focus will be on service protection, i.e. protecting the revenue associated to the service, both for subscriptions and transactions. Security solutions have a life cycle during which they effectively protect provider revenue. The upgradeability and the effectiveness of piracy countermeasures for a service protection solution is therefore as important as its initial security.
Every really secure solution relies on a combination of software and secure hardware such as a secure decoder chip or smartcard. The upgrade of any well architected solution can happen in software up to a point where the capabilities of the underlying hardware security infrastructure have been exhausted. In the case of a portable token, like a smartcard, this entails replacing only the latter whereas in the absence of such a removable token it may entail replacing the entire client device. In the end, this choice of whether the security hardware is the decoder chip or a smartcard is therefore an operational one more than anything else. However, in any case an acceptable security level will only be achieved with a combination of hardware and software.
Paul Berriman: We have zero piracy and total revenue assurance for content providers. We divide the DRM into two parts: the ‘right to see’ and the ‘right to copy.’ We believe our unique approach of putting the conditional access or ‘right to see’ protection in the network rather than in the STB is the right way to secure content. We then use dynamic key digital encryption from the headend to the STB to protect the content from being copied. Of course both elements require some hardware capability. In our case, the ‘right to see’ is protected by some hardware and software features in the DSLAM and the ‘right to copy’ by some hardware and software capabilities in the chipset in the STB. Many content providers have had their technical people crawl all over our platform and they admit it is the most secure regime they have seen. This is one of the reasons why we have been able to secure so much premium content and build such a trusted partner relationship with our content partners.
Jonathan Beavon: A service provider should be sure that their content protection, rights management and conditional access supplier has a track record of protecting premium pay-TV, sports and on-demand services on a large scale. IPTV is small today when compared to the total pay-TV market but if it takes a significant share of the pay-TV market then security weaknesses will be exploited by hackers and pirates. A football match that is retransmitted live and free over broadband will have an appeal and a premium movie that is copied and freely distributed will also have a value for pirates.
TV on mobile has had a rocky few months with competing providers and the EC getting involved to try and come up with a single broadcast codec. What role do you foresee mobile TV playing in the market in the future?
Jonathan Beavon:Mobile TV broadcasting will get included in bundled offering along with IPTV. The importance of mobile TV will depend on the interests of the particular service provider, for example, national telco with fixed and mobile offerings will try to bundle the offerings.
Paul Berriman: Mobile TV is an important part of our quadruple-play. We now have a number of content channels available live and/or delayed on all four platforms of TV, internet, fixed line broadband phone and mobile. We are encouraged by the results and envisage demand growing with this compelling quad-play proposition. Mobile TV in our case is delivered via our 3G unicast and multicast networks as well as via our ever increasing wi-fi hotspots to cater for the growing availability of dual mode 3G and wi-fi devices. We continue to look at supplemental broadcast technologies in case we may need them, but this is not just a technology issue of a single codec standard; it also revolves around device availability, spectrum availability and additional network build issues.
Sebastian Kramer: In any entertainment application, mobile has a solid track record to take its place as one of the alternative consumption platforms. For music we can already consider this a done deal and this trend will only further solidify as portable media players increasingly integrate with mobile handsets. In particular, this will not be different for video content and TV. However, not unlike any other communication or entertainment applications the role of mobile is not an either-or.
The most successful service will be the ones where small screen and large screen entertainment don’t just coexist but also mutually enrich each other.
Any really attractive mobile TV offering will have to assume a position that complements the overall viewing experience in a useful way. Features like screen-tuned video snacks associated to the overall programming or cross-platform bookmarking look very promising in that respect. Now, for these converged offers to actually work, the industry will have to ensure that its entire business workflow for managing, selling, distributing and protecting content is truly cross-network and cross-device. In Nagravision, this approach forms a cornerstone throughout our converged solutions suite.
Should European politicians be getting involved in mobile TV at all? Isn’t it in the industry’s best interest to govern itself?
Sebastian Kramer: Politicians and regulators are inevitably involved when it comes to the choice of broadcast technology and the attribution of frequencies to service providers. This involvement is important when it comes to harmonise the introduction of services within a certain geography like Europe. By the same token, it is key to give flexibility to the service providers to allow innovation, differentiation and competition between the different players, which does in the end benefit of the consumers. From the Kudelski group we offer a comprehensive set of solutions for mobile TV that allow to generate and protect revenue irrespective of the broadcast technology and which are therefore broadly applicable across geographies and their technology preferences.
Jonathan Beavon: No, but standards bodies should try to set common and open standards and frameworks.
Paul Berriman: We believe in a technology neutral approach to spectrum allocation and its usage. This would imply that an industry is free to choose how it develops its technologies. Regulators seem to come and go on this issue. For years we have seen many regulators propagating policies of technology neutrality, then we see favoured technologies creeping in. We are in favour of a consistent approach above all else.
ROK Entertainment is one of the leading mobile TV providers in Europe yet few consumers have heard of it. One of the reasons for this is undoubtedly ROK’s lack of marquee programming. Is this a barrier that third-party providers can overcome or will existing TV broadcasters like the BBC hold onto this trump card to launch their own mobile TV services?
Jonathan Beavon: Start-up content and aggregation companies will always face tough competition from established players but innovative programming or differentiated service features could be important in allowing these companies to succeed.
Paul Berriman: I must say I too know very little about ROK. For us, the ability to channel content over four platforms, one now having become the premium pay-TV platform in Hong Kong enables us to promote our mobile TV through well recognised channel brands being available on handsets as well as on the TV set. In that case, it may well be that having marquee programming is important for the successful recognition and take-up of mobile TV.
Sebastian Kramer: When a new media consumption platform like mobile TV is introduced, the resulting service uptake and churn figures will greatly vary across geographies. Incumbent media players can indeed build on their presence on one platform and offer extensions on the mobile platform that enrich the overall experience. That is a trump card not to be underestimated. By the same token, new entrants that truly innovate on the new platform and entirely focus on mobile TV can be equally successful. One example in this respect is H3G in Italy, which has enjoyed record subscriptions in a mobile-only market play by focusing on programming that is really relevant for handheld devices. After less than 12 months of operations, more than 400,000 subscribers have already signed up to H3G Italy’s mobile TV service over DVB-H. This early success is very promising for the entire mobile TV industry, demonstrating that mobile consumers are willing to pay for the right content at the right quality.
We think we will see successful cases of both examples and our mobile TV solutions offer the hooks to turn both approaches into a commercial success.
For obvious reasons we most often hear about the advantages that IPTV will bring to the consumer, but what benefits will IPTV services offer to marketers who advertise via television, AV equipment manufacturers, content creators and broadcasters?
Paul Berriman: With the internet, consumers go to portals to find the content they want. Advertisers then plant themselves into that content. With IPTV, the content itself becomes the portal to products and services. For instance we have the movie-ticketing channel where the customer can watch trailers of movies showing at the local cinema and then enter interactive mode to buy the tickets. Similarly, our business news channel is a portal to stock quotes and in the very near future, stock trading. In this way, and combined with the ability to target advertising more precisely, advertisers can find consumer eyeballs more quickly and more directly, then take advantage of interactivity to transact with the consumer whilst he or she is still interested in the product being promoted. A kind of ‘precision marketing at the point of decision’ is one phrase I have heard which crystalises the concept.
Sebastian Kramer: In general, it is clear that in digital TV the opportunities for targeted and interactive advertising have been underutilised so far. Even on fully broadcast-centric service infrastructures a significant potential is left to be monetised by leveraging set-top box oriented solutions for targeted advertising. For both IPTV and broadband these possibilities can even be taken to a next level, because of the much more targeted and individualised data mining that can be achieved. For consumer electronic vendors, there is a significant opportunity to market all kinds of media devices that tie into the offer of interactive, personalised and portable content.
Jonathan Beavon: Advertisers are facing the gradual and inexorable shift from linear TV to on-demand TV and this threatens traditional TV advertising. Broadband IPTV offers advertisers new opportunities to deliver better personalisation and targeting of advertising and this should be exploited. Content creators and broadcasters should also look for new opportunity as they will be able to sell their content in new ways such as on-demand, catch-up, archive, download and clips of TV. AV equipment manufacturers should consider how to add extra functionality to their products. They should include home networking capabilities, hybrid combination of broadcast/broadband, hard disk storage and other features.