A content conundrum

As we survey the IPTV future from the foot of the “hockey stick”--that mythical place early in the market adoption lifecycle at which service providers are building out their IPTV service infrastructures in earnest--it’s a good time to do a reality check. After the telcos have upgraded their systems for the on-demand IP future, what will make them truly “better” than their local competition? Nowadays, the conversation is increasingly beginning and ending with content, not infrastructure. Fewer and fewer telco people are saying that a highly adaptable and responsive infrastructure (alone) will be enough to differentiate them.

Let’s go through a brief checklist to illustrate where we are today:

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  Network suppliers offer IPTV-ready access and transport solutions: Check.

• Video servers are available and compatible with IP on-demand protocols: Check.

• Video headends can convert multiple audio and video inputs into constant bit-rate single program transport streams, ready to hand off to the network and distribute to subscribers: Check.

• IPTV middleware and applications platforms are interoperable with a wide variety of infrastructure, OSS and business systems options: Check.

• Video content formats are standardized and can be securely delivered and viewed in realtime or cached for later consumption: Check.

• CPE suppliers offer enough of a variety of set-top boxes and multi-service residential gateways to give service providers multiple ways to distribute programming and content securely within the home: We’re getting there.

Wait a minute… distributing programming and content in the home? What programming and content?! Judging from my own conversations in the industry, it seems that content has again become a focus of attention. Especially since both Verizon and SBC announced that several ex-cable industry executives are in charge of their respective programming teams. But think about it: Today, there really aren’t many unique video programming sources out there. Does this mean that the Verizon and SBC services will end up being a “me-too” to cable and satellite? If that were to be the case, it would be a major disappointment.

For sure, the RBOCs and perhaps the largest independents have the resources and the clout to negotiate some great programming deals. Will they stay with their familiar sources or will they try to “color outside the lines?” And as for other telcos, the National Cable Television Cooperative (NCTC) can provide a full assortment of TV programming, but it’s pretty much the same programming line-up that’s offered to cable. What’s more, some telcos have been complaining that it has been taking an inordinately long time to obtain programming from the NCTC. Then there are VOD content aggregators; but again, their offerings are similar to what’s on cable and satellite.

One way to avoid such issues is to be creative: “creative” as in “creating their own programming.” eBisMedia, a division of Italy’s well-known FastWeb service, has been commissioning or producing its own programming since 2002. BT, at the IPTV World Forum in London in early March, positioned itself as an “entertainment facilitator” and plans to partner with the BBC for programming. Will other major carriers--including the RBOCs--actually produce their own content, in their own studios? Or would the RBOCs make a move equivalent to BT’s, by partnering with PBS?

Recently, owners and aggregators of alternative content, having the intuitive belief that IPTV may represent an opportunity for them not only to bypass the traditional cable and direct broadcast satellite distribution channels, but also for incremental revenue, have been reaching out to learn more. These content providers also see telcos as a vehicle they can leverage in order to monetize specialized content that cable and satellite don’t have the capacity (or in some cases, the inclination) to accommodate.

In a way, this is happening already; through partnerships between content companies and technology providers.  Akimbo Systems is building a service that aggregates many on-demand programming options that simply aren’t available via cable or satellite. ICTV Inc., a company that offers its product both to cable and telco operators, is the source of more than thirty interactive TV program services thorough its HeadendWare offering.

But this is just the beginning. Companies that own, or have the rights to offer, classic movies, arts programming, movies and television programs from other parts of the world; even the local weather, are also looking beyond their existing distribution channels to put their toes into the telco IPTV waters.

Looking ahead, will major carriers harness the aggregation capabilities of companies like Akimbo and ICTV? Will they produce their own programming? Will they supplement the TV programming that they obtain from the NCTC with programming from highly specialized programming sources? Will they complement theatrical movies-on-demand with VOD programming from “classic movie library” and “world programming” sources? Will they harness Web-based content and deliver it to the TV? Then there’s “narrowcasting:” IPTV has the potential to serve millions of audiences of one viewer each, so each of them can have the potential to check on their own local weather. 

Will telcos do all of the above and even more? It’s too early to say; we’ll have to see what happens as the year continues to unfold. If these emerging sources are a harbinger of the content universe that we can look forward to, the IPTV waters will become very hot indeed. Cable operators will have to figure out how to carry a similarly broad line-up or be scrambling to catch up!

Steve Hawley is principal consulting analyst of Advanced Media Strategies. He may be reached via his Web site, http://www.tvstrategies.com.