IPTV/VoD: The fall of content's kingdom
But how will the story end?
There is a growing frustration with content owners and the content world in general from telecoms and technology companies. Both operate their businesses on the basis of creating, owning and licensing intellectual property. Start-ups in particular are suffering from problems such as restrictive EU legislation and not being to even talk with rightsholders, let alone do deals with them. In turn, content owners are increasingly fed up with the constant of business development executives asking the same questions and stubbornly refusing to try to understand and meet their concerns. The will is there, but the way is not. The simple consequence of this conflict is that smaller companies are being empowered, and a young ecosystem of IPTV-friendly suppliers is taking root. Necessity is once again the mother of invention.
Of course, this could be posturing by telcos to negotiate a better deal on content. It's hard to see exactly how they would have a positive outcome by following their threats through, not that it's stopped any business doing the same before now. Some of the most powerful companies in the world fill their trousers from forcing the hand of others.
Dealing with content owners is difficult – that's a universal truth. Despite the best efforts of some of the incredibly clever people they have working for them, the decision makers inevitably don't have the same level of understanding and find it hard to accept change. They've grown used to being powerful and are part of an exclusive club that's very hard to join. They are convinced of their divine right to rule, have too many business offers to deal with and know their product is popular. They know that entertainment services need good content to survive, so wield a very big stick when it comes to upstarts who want to disrupt their comfy way of life.
Historically, they've always won because of these truths. But this fight is one they are going to lose.
For one reason, digital piracy.
ISPs alone hold the key to limiting and/or ending digital piracy. Their networks are the conduit for the illegal trade of intellectual property and they know it. It's an unwritten rule that what they sell is effectively free movies and music, with a little browsing and email thrown in. There is nothing that can beat free (as BT will find out when they launch their "a better free than free" Vision service). For as long as piracy continues, it will be the number one reason that on-demand services are not taken up. There is absolutely no reason to pay for a movie or music track when you can access it for free on a P2P network. VoD is pointless when you have DVD-quality movies ripped from screeners available via BitTorrent.
The movie studios are desperate to avoid the cataclysmic failure of the record labels. And make no mistake, it was cataclysmic. If you are foolish and arrogant enough to persecute and make example of your own customers (typically pre-pubescent children, university students and the elderly), you will suffer the consequences, as they already have. The market is leading these companies in a new direction but they are resisting and clinging on to power by a thread. Those consequences mean more (not less) piracy, new software build to circumvent controls and to a certain degree, the snubbing of your products by a frustrated and resentful audience. For every lawsuit or software system, a community will naturally adapt in kind, be it with encryption or a boycott. You cannot fight an enemy who you depend on for your very survival.
Piracy is the hidden and unmentioned competitor to all digital services. Even within pay TV markets (of which the UK is not one), people watch linear broadcast television before paying for video on-demand. iTunes may have been a runaway success in the press, but the leading alternative are the likes of Limewire, Kazaa and eMule. If you contrast their usage against legal services, there is more than a mountain to climb. It's the entire Himalayas. As long as you can get hold of a raw digital copy of the media you want for free, people will just keep using P2P. Sorry, but that the way it is. Just look at the statistics. The power of your brand won't stop anything.
The industry's solution to the problem of digital files keeping their integrity (i.e. perfect replication and no degradation over time) has been to push digital rights management (DRM). In the US, we've seen the horrendous Orwellian regulation known as the DMCA (digital millennium copyright act) and more and more laws coming out to change the very nature of copyright. What we now buy is a licence (or the rights) to access copies of a copywritten work. We are, for all intents and purposes, hiring the work and letting investment bankers decide when and where we are able to enjoy art. That's great for the entertainment business, but it's bad for consumers, their customers.