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IPTV/VoD: The fall of content's kingdom

But how will the story end?

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But even if they did, then the problem of distribution would still exist and cause pain. As it stands today, there are generally six accepted outlets for media assets in every country of the world – satellite, cable, terrestrial, internet/broadband, mobile and now IPTV.

In each of those three markets and their windows, you can sell them via pay-per-view, support them with advertising or licence them to third parties. The trouble is each platform is geographically limited. You'll never, ever be able to reach 99.9 per cent of the population. Even BSkyB with its dominance of eight million subscribers only reaches one third of all the households in the UK – you can't increase the range of a satellite. All suffer with scalability issues and can only put content in front of specific audience. IPTV fixes the problem as it gives you access to anyone with a telephone line and/or a broadband connection of some kind.

Homechoice's solution is to aggregate genres of content that are then sold on a subscription basis. Their music video playlisting service is one of the most popular parts of what they offer, along with cult shows such as the A-Team and Airwolf. Music videos are a classic example of an old business model in trouble with the new, as it's very, very difficult (if not impossible) to charge for them at all. The same is true for old episodes of soaps, dramas, classic movies and documentaries. Industry types often tout nano-payment (i.e. a few pence or cents) as an alternative to subscription, but yet again it's enormous hassle for very little.

At the same time, advertising agencies and media buyers are slowly waking up to IPTV and on-demand viewing as more and more headlines break about the new medium and what it can offer. Interactive TV terrified them as premium calls on Sky enabled them to collate viewer responses to adverts and monitor campaign effectiveness – which is a problem if your work is not quite as powerful as it could be. IPTV is massively more compelling and uses the most advanced technology available. For the first time media is provided on a transactional basis that allows personalisation to an unprecedented level of detail to a targeted, motivated audience. Brands can have their own channels, reduce their costs in comparison to other platforms and spend more money on editorial programming.

There are numerous problems the advertising world has with IPTV, not least in understanding the very basis of what IPTV actually is, does, and what opportunities it offers. On-demand viewing empowers consumers with choice, which is bad for advertisers because their trade tends to relies on almost forcing people to notice them. You don't choose whether posters are on tube carriages or whether your James Bond movie on ITV is interrupted with adverts, but you do choose whether to skip adverts using your PVR or whether to pick a program from the on-demand menu and watch it at your leisure. Put simply, half of ad-world is terrified and thinks their world is coming to an end, and the other half are so excited they could scream.

Neither of the two camps have much to fear. Advertising will always exist in linear broadcast television, even if it is multicast MPEG-4 in the case of IPTV. Non-premium content served on-demand will always have to be supported by advertising, as it can't be sold via pay-per-view. But it's going to make a real mess. The utopia that industry has always dreamed of has just appeared on the horizon, in the form of totally tailored and intelligent direct rich media marketing. Now everyone can see a different advert during the live TX of the Bond movie which is aimed directly at them and is delivered by a system that intelligently learns their behaviour patterns while integrating seamlessly with their phone, PC and mobile or any other web-based system they use. The possibilities are endless. It's a playground with every toy you could every want.

Random scatterbrain carpet-bombing of every target demographic group is no longer needed, which means more money for doing interesting and creative things with brands and their resources. The old world buys by 1,000, which is also not a great model to put on the on-demand "long tail" future where views occur one by one incrementally, forming an aggregate audience built over a longer period of time. The catch 22 situation is when it comes to statistics, which are the bread and butter of marketing. Rate cards are based on how widely circulated your media is, and very little evidence is available for on-demand. Without statistics, advertising rates are your best guess. And your best guess tends to affect your statistics. The trouble comes from working out exactly who gathers the viewing reports – is the rightsholder of the on-demand content, the broadcaster its played out from, the owner of the IPTV platform or an independent body like BARB or ABC?

The shrewd among us will almost certainly be seeing the solution for themselves as we go along. The clue is Google AdWords. The viewer needs to be able to watch for free, as nobody will pay for 30 minute episodes of sitcoms or news clips, and the advertiser can pay a broadcaster as before during a live broadcast. The owners of back-catalogue content can't find a way to make money from their archive material, and advertisers need to find a way to survive in the new world that walking through the door whether they like it or not. The solution is very, very simple.

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