IPTV/VoD: The world that's on its way
Part two: The television revolution
Industry comment One of the most common questions operators and analysts are asked is whether IPTV will happen, and if it does, whether if will deliver its promise.
The answer is probably not one you'd expect. It already has happened, and is already delivering. IP and internet technologies may not turn up on our doorstep or down our aerial socket tomorrow morning, but the key point to remember is that in 20 years it will be the dominant method of broadcasting.
The secret is in seeing the bigger picture. Rupert Murdoch infamously declared recently that market entrants need to operate in the mass market or in niche segments, or else they would be someone’s lunch in the middle ground.
Broadcasters have already seen it, as have a lot of telecoms companies. Cable operators are using IP over their coaxial wiring, every country has one or more "triple play" operators and both BT and Sky are evolving their businesses to so-called "hybrid" distribution that uses a combination of both traditional RF transmission and IP back-channel distribution through broadband.
The last mile copper network in the UK is too unreliable for immediate real-time video on-demand so these first services will see an incremental delivery pattern starting with offline "push" downloading onto PVR hard drives that gradually change to live video. BT's 21CN upgrade and digital switchover will help to drive the migration.
Nearly all the main ISPs that control 95 per cent of the UK broadband market now have a TV play of some kind, and there's no guarantee that they will be the right ones. The landscape is quite a bizarre and fluid tapestry of daily shifting sands that is yet to whip up into a storm. The cable companies have merged and re-branded as Virgin, BT is launching its Vision hybrid, Sky has bought Easynet, Tiscali has acquired Homechoice, Orange is consolidating across Europe and launching its BT clone, Namesco and Eclipse are launching off the Netgem and BT Max platforms. Carphone Warehouse has bought AOL UK, and Pipex is acquiring to get fatter.
The television revolution is not one of on-demand viewing or spectacular interactivity. It's far simpler than that. IPTV introduces internet technology to broadcasting, which is a massively different mechanism of delivering video. Traditional broadcast is promiscuous, in that one signal is sent that anyone can receive. Internet technology is transactional, meaning every viewer is given their own personal copy of a piece of content, or maintains a personal link of some kind to the originating broadcaster. Transactional means a personal request is made, and a personal response is given in return to complete the two way bilateral process.
So what is this vision and promise, and this world that is on its way?
IPTV offers all the strengths of the internet with none of its weaknesses. It means everything from the internet, with rich-quality, interference-free DVD video on-demand. Anyone can develop these services, and reports of their usage can be generated from normal web server logs just as they are for websites. Content producers can go from limited market penetration to unlimited reach of everyone with a phone line or broadband connection. It means broadcasters and every other type of content publisher can strengthen or re-initiate much closer relationships with their viewers.
The internet will eventually be the preferred medium for carrying broadcast television. It will be a particular boon for those who currently use satellite backhaul carriage and pay hundreds of thousands of dollars a year for the privilege, as the choice will be between millions of dollars over the years or a bill less than 10 per cent of the cost using the net backbone. All devices will have internet connectivity and be able to communicate with each other internationally in milliseconds, completely transparently, without respect for distance, borders, or language.
The Holy Grail of IPTV and its ultimate promise is that by being powered by the internet it can offer unlimited TV and radio channels from all over the world, and access to every piece of content ever created in human history. TV menus will no longer carry a few hundred channels from broadcasters in a subscriber's country and its neighbours, but literally millions from every country in the world, of any size, made by anyone. Every TV channel, radio channel, movie, TV programme, video game, music album, piece of software, picture, mobile accessory or multimedia presentation can be accessed in any country, anywhere, by anyone, on any device from wherever they are, whenever they want.
The reasoning for DRM in the new digital age resulted from some serious futurology done by the record labels rather than a panic over copyright. Digital files don't lose quality like analogue copies, and so can't be trusted to disappear into the ether after a few years with the masters being retained by the owners in a studio bookcase somewhere. They worked out very quickly that with the internet being what it is, there was no way to be able to control the distribution of digital files, but that the only thing they could control would be the ability to access the file itself.
DRM reflects an old business model trying to survive a new generation's demands, but in itself is organised madness. Consumers hate it, it creates pain, its proprietary when it needs to be cross platform and transparent, and most importantly it negates the web's most powerful asset – its viral nature.
The new world means that your media will travel with you wherever you go, in any country, on any device, any time you want it. Subscribers will have a global account that is accessible on all of their devices and locations that stores their preferences, rights and demographic information (i.e. their profile). Information about customers and their personalisation preferences will be centralised, and be accessed by decentralised (or localised) delivery equipment. The rights model that divides into countries, platforms and time periods will be challenged by this new idea of portable settings and access as the purchase of the media will be tied to a person rather than a place, device or time.
That's a very scary thought for most content rights holders. Scary enough to make you pursue racketeering of the very people who buy your products. It ranks up there with the dreaded idea of cannibalisation.
It's been reported many times that movie studios don't sell cinema tickets; they sell DVDs and act as investment banks. Of every 10 movies, seven lose money, two break even and one actually makes money. Doing anything to upset the apple cart, like video on-demand, might tempt consumers from buying those lovely, over-priced plastic discs and mean they won't make much money.
The situation is changing slowly, but isn't helped when brilliant executives are frustrated by their more senior colleagues who don't "get" digital media.
This again is utter madness. Every time a company expands, creates a new product, or a trend forces them to re-position, there is the risk of cannibalisation. Cash cows and margins don't last forever, and change happens whether any of us like it or not, as it's life's modus operandi. Fearing that is the same as fearing a new product or life itself.
Digital distribution means no physical packaging costs – all the perpetual revenues with none of the costs. It's a content producer's wet dream, and a powerful complimentary service to be offered gradually alongside what's there now, in the knowledge that it will eventually replace it over time when consumers have adjusted.
As Bill Gates rightly predicted, the ownership of physical merchandise will cease to exist and we will rent access to artistic works over a network for a period of allocated time.
Convergence messes everything up, and we can't pretend that yesterday's ways of doing things will fit today's and tomorrow's problems. Contracts for intellectual property are an art form that make lawyers drool in anticipation of the juicy, chunky fees they can charge because of the length of time it will take to put the jargon together that makes up the eventual 5in legal booklet known as an agreement.
The old world is based on everything being separate. Convergence means every device does everything the others do too, and there is no more separation. All things devices do that were originally different from each other have now merged into one big feature set.
Hollywood uses a very complex rights model based on multiple release calendar "windows", and subdivides access to their intellectual property as much as is possible to ensure maximum profitability. In practical terms, that means you can licence a title, material of likeness for a certain region, country, territory, platform and allocated time period upon payment of an arbitrary up-front minimum guarantee based on how much of a risk you are.
It's very difficult to create new windows for new technologies when current customers have paid handsomely beforehand for their little slice of the action. It's equivalent to pushing ahead in the queue, or having to reimburse people for what they will lose from another customer having access to those rights.
It's also for that reason that we are seeing all the lame "stepping stone" services like download-to-own (D2O) websites, as these can be classed as extensions to existing windows through some legal wrangling rather than anything new.
But there is an even more basic problem with IPTV that plagues the content industry, and that is one of definitions. Most people have no idea what it is, and get thoroughly confused between the variants. IPTV is an umbrella term for TV and video distributed using internet technologies. That doesn't mean it has to use the internet, just the technology, as you would find in a normal home or office network. As an umbrella term, it can mean full multi-channel television like Homechoice, Internet TV, Broadband TV, video downloads, or P2P services, and doesn't necessarily have to be viewed on a set-top box or media player. The typical industry understanding is that it is full PAL/NTSC television transmitted over a privately-managed last mile network such as DSL.
Not having the definition right isn't a great way to start. Naturally, the lawyers are grinning because it means months of pointless meandering over details and potential specification problems they can charge by the hour for.
But it's not just a headache in educating people about the potential of the technology, it makes getting content onto platforms very difficult. Most productions (movies, TV programmes, etc) are not completely original in the sense that they use a chain of material licensed from other rightsholders (for example the likeness of an actor/actress, DVD artwork, news footage in documentaries, or music soundtracks) that has to get "clearance" for inclusion and distribution in the master production.
That clearance in the UK is typically categorised into "all TV" or "all new media". That material hasn't been licensed for IPTV in either category (as there is no standard definition) and they need to go back and get clearance for it again, which means additional cost.
The definition will come in time, but right now it means the platform owner bears the cost of legal consultations and the subsequent additional fees needed to cover re-licensing. It's also the reason why some of the most compelling service content (such as DVD-titling on VoD movies) is too difficult to include. The chain of rights clearance is a massively complex problem that currently doesn't have the market demand to sufficiently motivate the content industry to pursue it in detail.
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 email@example.com.
As well as co-ordinating the birth of the IPTV Consortium (IPTVC), Alex is now offering a great value one day workshop course on IPTV and Video On-Demand (VoD) specifically for web and media professionals. It can help you get up to speed on the latest technologies, content deals, operators and applications across the world, and offer immense value in identifying both new opportunities and threats for your business and personal career. If you would like more information, call Alex on 07986 373177 or email firstname.lastname@example.org. Readers who quote The Register as their source will receive a 10 per cent discount on the course fees.