Welcome IPTV: Part I

There's a new wave of changes headed for the TV and film industries: Television viewers can choose what they watch, when and how they view programs and where they catch up on their favorite shows. That's just the beginning. The interactivity of the Internet, the emergence of DVR (digital video recorder) technologies, easier access to wired and wireless broadband services, and the development of digital network distribution formats for streaming multimedia content are forces that are combining to provide viewers with more choice. The great Internet TV race is on, and the field is crowded and getting more crowded all the time. Welcome IPTV. But with that the TV and film industries are in the midst of a major shakeup.

Whether the heat now being generated by IPTV can be maintained depends on the performance of still-evolving digital services delivery platforms. They have to seamlessly manage a huge variety and amount -- and it's still growing rapidly -- of digital video content on offer. Then they must navigate through a maze of networks, wired, mobile IP, 3G and 4G cellular, to reach a broad range of stationary and portable media devices that utilize a variety of proprietary and open standard formats. Not an easy task.

There is little doubt that the emergence of interactive Internet and mobile TV offerings poses a threat for established companies and new market entrants all along the respective industries' value chains. Still, there are huge opportunities as well. Equipment manufacturers, distribution partners, content producers, TV networks and film studios are all struggling and experimenting with ways to tap into the rapidly growing Internet TV and film markets and get a handle on how viewers can, and want, to make use of them. Viewers themselves are struggling to come to grips with how to use set-top boxes and portable devices, and figure out which content and services are accessible and affordable.

The idea of watching appointment TV is being disrupted by the DVR, which has taken the 'water cooler' chatter out of the mix. Consumers now watch what they want to watch, when they want to watch it. Technologies like Slingbox from Sling Media take that a step further by giving consumers the ability to watch TV not only when they want to, but also wherever they want to. The interactive nature of IPTV, as well as the unsettled state of devices, formats and standards, stands in severe contrast to the passive nature of traditional TV viewing. Social networking sites such as YouTube have demonstrated the potential for interactivity to attract viewers and drive network traffic.

The key technological drivers pushing IPTV viability are high-speed bandwidth, powerful hardware, evolved codecs and DRM (Digital Right Management). There are numerous technical hurdles in the path toward widespread IPTV adoption, including the variety of consumer software and hardware options, the rapid proliferation of viewing devices, and the need to establish links between multiple vendors. But the major challenge is really about defining a business model that works. That's why just about every media and entertainment company is experimenting with Internet TV-related applications. The market is uncertain which models for delivery will prove profitable and sustainable: download, rental, subscriptions, ad-supported, or some combination of the above. This has created the need for companies like Extend Media that can supply and/or stitch together the many moving parts required to deliver these services. However, it's emphatically clear that IP-based distribution, instead of proprietary networks via satellite or cable, is now a viable video distribution mechanism with the potential to eclipse all other methods in the future. Refashioning and re-engineering themselves to deliver programming to fragmenting mass markets that are getting comfortable with various new media channels has not only led established players to ally themselves with numerous new content and distribution partners, technology providers in particular, but also to rethink their business models and devise new ones suited to the nature of digital channels.

On my next blog, we will discuss how different players are pushing IPTV in very diverse ways.