IPTV and ITV: Two Worlds That Need Each Other Badly, If Only They Knew

The IPTV industry has been obsessed with two broadband TV universes.  One of them is the familiar Telco-based video universe where commercial Pay TV is delivered over managed private broadband networks, in which video quality and quality of experience are a high priority.  A good range of programming, including HD, really helps.  The other is the newer Wild West of video services brought via the open Internet, either to a PC near you (such as Boxee, Hulu and the like), or to a captive consumer electronics device (including ZillionTV, Sezmi and Roku): “over the top,” bypassing the walled garden of Pay TV and thereby appearing as a threat to operators that are trying to reserve sufficient bandwidth to deliver high-quality managed services over the same access facilities.

I respectfully submit that, until recently, the IPTV industry has been overly focused on quality and over-the-top at the expense of something else that’s really important. While the Telco video universe worries about over-the-top competition, video quality, and about keeping CPE costs down (for example, by ensuring that security, middleware and CPE play well together before deployment – an engineering-driven effort), a whole new set of opportunities is emerging, and failure to pay attention to them will be at the operator’s peril: Interactive television and the priorities of TV programmers and advertisers.

The “TV of Tomorrow Show,” hosted by InteractiveTV Today (itvt.com) in March, was an eye-opener of a conference.  Judging from participants, mostly from the Interactive TV (ITV) universe, the technologists take their cues from TV programmers and advertisers, rather than drive the train, as is so often the case for IPTV.  To the cable and satellite operators that have been implementing ITV applications, the success of a given technology platform is measured just as much on the ability to increase clickthroughs, reduce CPMs (cost per thousand ad-impressions) and gather viewing statistics for advertising as it is by technical competence.  By contrast, many IPTV operators continue to limit their measure of success only to the revenue and profitability gained from the consumer-facing services themselves; and not the B-to-B revenue gained from advertising.  A largely ignored opportunity for IPTV.

This is not to say that some operators aren’t waking up and seizing the ITV opportunity: advanced operators like Verizon Communications (with FiOS TV Widgets) and Orange (France Telecom, with a vision to establish an app store similar to that of Apple) -- and others -- are keen to opening up their service platforms, actively courting developers, and trialing new apps that are sure to be the key to differentiating their services over the competition.  But this phenomenon is far from being universal among Telcos to date, and the aforementioned priorities of programmers and advertisers still seem somewhat secondary.

Two topics of conversation from the TV of Tomorrow Show come to mind.  The first came after presenting current installed-base figures for the top 15 IPTV operators (Telcos) in a conference session entitled “IPTV Reaches Maturity.”  Several attendees came forward to ask for a copy of the presentation.  Why?  To quote a director of new media for one of the world’s top media companies: “I’ve been trying to get our people to pay attention to IPTV for years.  Now that some of the Telcos are breaking through the two million subscriber mark, maybe we can begin to cast a sideways glance.”