IPTV/VoD: The fall of content's kingdom

What is needed is a new model that addresses the inherent insecurity and unreliability of the internet but keeps its distribution economics, while compensating those who transport the digital data (backbone operators, delivery agents, ISPs etc). Licensing between mediator and rightsholder needs to be as automatic as possible, but flexible enough to respect the window system, allow private arrangements and give the option of exclusivity over multiple countries and platforms. The ability to scale is also deeply important, as the "long tail" of back catalogue sales means that some titles will only attract negligible consumption, but others may exceed billions of views. Dynamic pricing in different markets using different currencies, multi-lingual versioning and variable revenue-generation mechanisms (PPV, Ad-supported free view and subscription) must all be included as standard.

The information we have, and are using to build new technologies and brands is out of date and inaccurate – we cannot possibly know how people will consume media in the future, so it is prudent to acknowledge that to a large extent the industry will need to stick its neck out and be ready to accommodate change as and when it occurs. Time and place-shifting is evolving entertainment to be a transaction that happens on demand, rather than a passive experience controlled by broadcasters' schedules and the will of those who fund productions. Peak viewing times and typical behaviour are now splintered and unfamiliar, but luckily not too far away from common sense.

Piracy has shown us what the market wants and how people consume. The quick way to commercial suicide in any business is to ignore your customers and actively resist or frustrate them. Indeed, that resistance negates any of the alternatives you want to offer them. An illegal download or VoD transaction is not a lost DVD sale in the eyes of a consumer, or even in the eyes of most who work with the technology; it is a more convenient and cheaper alternative to be enjoyed at a different time and place. They know downloads cost less than a physical disk, so patronise and profiteer at your peril. They see the financial returns reported from the opening weekends of theatrical releases, which typically are tens, if not hundreds of millions of dollars. Copying a digital file from one PC to another is their understanding of digital distribution – it's cheap, quick and essentially free.

The question is when, not if, rights holders will be able to surmount their paranoid fear of cannibalising existing revenue channels to create new ones. The market has made its voice known – it's now a case of who responds quickest, as delay will punish the latecomers and the last will perish outright. The next step in both legal and illegal P2P content distribution is to bypass the PC entirely, and then skip the DVD player too. The next mainstream destination is the IP set-top box or media player, both which can connect to the internet directly themselves or stream video and audio from PCs by proxy. BitTorrent, eMule and Limewire are one step away from their set-top box editions.

This isn't a problem that can be controlled. The only way to stop it is to go head on, and that means holding your breath, rolling up your sleeves and accepting that these new alternative services that need to be developed require some modest sacrifice and co-operation with people outside the normal box. Aristotle famously defined the three act structure of a story (in Poetics) that Hollywood uses as its bible today. In pure LA terms, the first act, or problem/setup, is one of limited distribution in a globalised age of digital media. The complication, or middle act, is piracy and the failure of the music industry. The last act, resolution, is yet to be finalised.

The content industry has a choice now it's up the proverbial tree, having rocks thrown at it (another reference to the three act structure of screenwriting), and its hero's plan has been dashed. The question is how the story ends – whether it will be a glorious feel-good last chapter where everyone wins or a terrible tragedy where the final goodbye is through death by a thousand cuts. Dramatic it will be, but that's what makes the people buy it.

© 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.

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 iptvworkshop@digitaltx.tv. Readers who quote The Register as their source will receive a 10 per cent discount on the course fees.