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IPTV and VoD: the great content adventure

Time for a new deal between ISPs and content owners

The smart choice: opportunity from uncertainty

Our mission at Digital TX is to open up IPTV as a simple, intelligent and open platform that anyone can innovate around – just like the internet, but with some tweaks. The costs of producing an distributing a multicast IPTV stream in MPEG-4 on a PC are negligible (aside from a camera and/or broadband connection, you can do it in less than 30 seconds with the free VLC player for example) – small enough that anyone in the whole world can produce and distribute their own live and on-demand TV channel(s) with a broadband connection and that geographic boundaries no longer apply.

Viewers have access to an unlimited amount of content from every culture, country or social group that has access to the internet or interconnecting IP network (3rd party data centres, local council CCTV etc) – channels, movies, albums, clips, games and more. User-generated content is in, broadcaster exclusivity is out. Gone is the concept of the “walled garden” – a term used to describe a private set of exclusive private information services provided for customers for display on a device such as a cable TV set-top box or 3G mobile phone.

Any element of the set-top box’s ecosystem can be made available to developers, allowing different start-up videos, screensavers, incoming & outgoing call dial-tones, EPG menu “skins” and many others. Anything on the internet or the local area network the device is connected to is fair game and easily portable to the IPTV environment (assuming of course that it is suitable for TV as well as a computer) – flash movies, viral film clips, software applications and all totally available in parallel to the main TV and media on-demand platform that does not exist on the internet.

A world of possibility comes with its own burdens juxtaposed, and the one staring us in the face is the need for a way to have a really intuitive and easy way to find our way around all this potential chaos. This is the Achilles heel of operators that rely on such an open platform to counter-weight the buying power of the bigger guys, and one they will exploit as a problem that they solve by offering less, premium material. PCs have bookmarks, Google and address bars, mobile phones have short codes, Teletext has pages numbers, but IPTV has a limited screen area real estate size which most couch potatoes get very angry about if it is obstructed or overloaded, and needs a way to manage all the available content that a 3 year old could use with their eyes shut. The bottom line is the user interface (UI) needs to be better than good – it needs to look and feel like it was sent from heaven itself.

Many industry pundits believe that ISPs offering IPTV services will largely be competing for, and consequently cannibalising, the same markets and that the battle will eventually be decided by those with the most powerful brands. In a brand-driven market like the UK, such words ring true. Cinemas like Odeon and UGC, who offered no competition to BSkyB’s scheduled-broadcast service, Sky Box-Office, can easily and inexpensively innovate their own pay-per view living room “private cinema” experiences if they secure an extension to their existing window rights. Their brands are perfect and the platform exactly what they need to fight back against the competition from video on-demand.

One of the most interesting (albeit predictable) IPTV concepts in development now is descended from Blockbuster’s “channel” on Kingston Communication’s KIT service, based in Hull. Online DVD rental companies like ScreenSelect, LoveFilm, DVD2Home and DVDs365 have seen the cable “FilmFlex” and “FrontRow” services and already have strategies in place to gradually evolve their current business model for video on-demand subscriptions. The clearest way they have found to do that is to build a branded video on-demand “channel” that is accessible from the EPG or system menus on the IPTV service (the same type of screen as featured on Sky Digitals interface). Such a “channel” can be created once and made available on multiple ISP operator platforms.

The concept is extraordinarily appealing when combined with Freeview, given Sky’s scary churn rate and their customers’ dissatisfaction with their movie channels. BT have also seen the possibility and added it as a cornerstone of their “Project Nevis”, along with network PVR functionality (which is basically just video on-demand, but from a list of programs you specify that you would have otherwise recorded on your Sky Plus PVR). A sobering perspective is contrary evidence gathered from Video Networks’ real-world experience they have found that including their on-demand “channels” into the live TV line-up has significantly increased their popularity – consumers tend to associate on-demand content with payment, making it the last resort when nothing else is on.

Aside from all the talk of rights and intellectual property, IPTV technology is breaking new ground in the types of services available through a TV or computer, and the way we consume and buy media. If you’re a nerd (as most lovable ISP types are), it’s easily one of the most innovative periods in multimedia for some time. Companies like Agile TV, which offer voice navigation, and the much hyped G-Cluster are offering new and fun ways to enjoy TV. The latter is a long-time favourite in most conference-attendees’ diaries – their set-top software allows operators to offer immersive pay-per-play 3D video games over broadband networks, without the need for a Playstation, Xbox or GameCube to be attached (the video output from the graphics card is sent over the network like normal TV). We’re talking Halo 2 rather than Sky’s Digital’s Pacman or Tetris.

These aren’t just toys or fads – despite the mandatory adoption curve, they offer new ways to make money, new platforms to develop content for and provide added-value that helps newer market entrants to differentiate their services from incumbents. When Sky launch their new HD service this year, you can guarantee the others won’t be far behind once they have let the market grow so they can migrate the mass market over to their ADSL2+ platforms.

The largest IT conglomerates who offer products and services for IPTV will bore anyone who has the inclination to listen about the thinking of engineers that has been through the grinding wheels of their market department. They call it the larger picture – the home ‘eco-system’. Don’t get me wrong, future-proofing and seeing the whole chess board is important, but with the legacy infrastructure already littering houses all over the country its going to be a while until even the first building blocks are in place.

Part of the motivation for taking the Microsoft shilling (other than that they are so hungry to undermine Siemens and grab market penetration they will pay for your entire project), is the breadth of devices that support their DRM technology – PCs, Pocket PCs, Xboxes and soon to be, set-top boxes. There will come a time where content will need to be produced multiple devices and the rights explicitly controlled to the very last second, but that time is not now when the industry just needs to catch its breath.

It's time for a new deal – a fresh partnership between ISPs and content owners to help each other usher in a new era of content consumption and technological innovation. Both share the massive excitement over IPTV and the risks involved in deploying it, and each can ease the other’s concerns. The rewards are there for the taking – we absolutely can break the back of piracy, but we need to cooperate to do it. ISPs can minimise it from their networks, and content owners can control the distribution of authentic material. We need a working group that can collaborate with regulatory agencies to smooth over potential problems before they arise and define a safer and more compelling future. What is needed is an agreed 18-month “honeymoon” period given to each by the other – the granting of extremely appealing and flexible conditions to each other’s assets and infrastructure as good will. A gesture of faith in relationships that will develop in the years to come as the dust settles on the new digital world. Let’s build that world together and do what the other platforms never had the chance to, and would have killed to have.

© Digital TX Ltd

Digital TX Limited is a London-based provider of technology and consultancy solutions for interactive digital television and broadband media.Alexander Cameron can be reached at alex.cameron@digitaltx.tv.

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