 | Issue: | Asia-Pacific II 2006 |
| Article no.: | 11 | |
| Topic: | IPTV – potential and pitfalls | |
| Author: | Jeffrey Soong | |
| Title: | CEO | |
| Organisation: | Broadband Network Systems | |
| PDF size: | 56KB |
About author
Jeffrey Soong is the CEO of Broadband Network Systems Ltd (BNS), an Asia-focused IPTV enabler providing service operators with technology integration, content aggregation and strategy consulting. Mr Soong has over 20 years of experience in the fields of entertainment, technology, international finance and technology convergence. Prior to co-founding BNS, he was CEO of Vodexa Networks. Over the course of his career, he has also held senior management positions with SVP International and CSSV Media Ventures and World Entertainment Network. Jeffrey Soong holds a BS degree in Electrical Engineering and Computer Science and undertook PhD scholarship studies in Computer Science at Caltech.
Article abstract
The traditional production and distribution schemes of the broadcasting and entertainment sectors are rapidly loosing hold. Wired or wireless broadband links, and many types of access devices, form the pivotal conduit for digital content distribution. New forms of distribution – IPTV, mobile distribution and the like – bring entertainment, news, indeed content of any sort, to consumers at any time, wherever they may be. This is merging, and drastically changing, the business models of both the entertainment and communications sectors.
Full Article
The 21st Century media landscape is increasingly, and radically, shaped by technology and changing consumption habits. The dividing line between consumers and creators of media content is, by now, blurred forever. What used to be a linear process of entertainment production, broadcast and consumption is now morphing into a world where primetime equals anytime, and the old economics of broadcasting and entertainment are changing as service providers invent an ever wider variety of options to reach audiences despite the radical change in viewing habits. Internet Protocol television, IPTV, has played a central role in giving this trend true momentum over the past few years. The reason for this is not hard to see – IPTV has finally enabled telcos to break into the world of video entertainment. This development has pushed about the boundaries of traditional communications and entertainment industry service and products like never before. However, as telecommunication operators around the world rush to launch IPTV or ‘triple-play’ services, one begins to wonder whether the same business model can work in all markets. The answer is, probably not. From different consumption patterns, to the make-up of the content distribution landscape, to customer spending power and the state of existing infrastructure, every market is unique and distinguished by these and many other factors. These inherent differences should be studied carefully to determine the right services and market entry strategies. The right business model The concept of content anywhere, anytime, and over any medium – and consumers multi-tasking using an increasing range of technologies – has only just started to gain momentum, but will have fundamental implications for operators’ business success well into the future. In this new environment, analysing one’s motivations and business parameters is critical to understanding the challenges and opportunities that lie ahead. Two of the more obvious motivations for telcos to launch IPTV are churn reduction and ARPU , average revenue per user, increase. However, there are a number of not so obvious ones, such as positioning the broadband line as the pivotal conduit for all digital content distribution. As battles rage on for the control of the living room by PC makers, console game makers, PVR, personal video recorder, makers and portable device makers, telcos should realise they have a tremendous edge by owning the trusted last mile to the home. This edge should be capitalized on fully. The content challenge The distribution of content has changed more drastically in the last five years than it has in the previous 200. The emergence of the Internet, game consoles, iPods, PDAs (personal digital assistants), mobile phones and the like, as entertainment devices, has forever altered how entertainment is distributed and consumed. Consequently, the old model of content creation from the ‘top down’ -i.e. from producer to distributor to platform (TV, movie theatres, video stores, Internet, etc.) – no longer rules. It has expanded to include content creation and distribution from the ‘bottom up’ through peer-to-peer or from consumer/creator to platform and to other consumers and this trend needs to be acknowledged by IPTV service operators. In fact, this ongoing evolution of content distribution makes future-proofing investment in IPTV more important than ever before. For a fledgling IPTV operator, future-proofing their investment requires building an extremely flexible platform that will be capable of accommodating all new distribution mechanisms and content creation channels now and in the future. It also means not merely designing multicast and VoD, Video on Demand, services, but positioning the IPTV service as the first point of entry for content into a consumer’s life. Taking a holistic approach Many potential operators place technical decisions above all when building an IPTV service. However, it is a common pitfall for operators to look first at what equipment and technologies are on the market before deciding what these can provide in terms of services. Looking at today’s entertainment world, it is clear that control has started to shift towards the consumer. Personalising content to conform to individual interests, as opposed to the traditional mass distribution of general content, is starting to become the name of the game with increasingly interactive elements, such as multiple story endings to vote for, enticing audiences to get involved. This makes the choice of service to offer on an IPTV platform infinitely more challenging and requires operators to first define exactly what their IPTV service should look like and what it should encompass, before going out to find and design – or even invent – the technology components needed. This is why we advocate a holistic approach when designing the service. It includes looking at the three critical elements – strategy, content, and technology – as interconnecting components that form the cornerstones of a successful service deployment. The strategy needs take into account the realities of the content industry, the content needs to deliver the business goals, and the technology needs to facilitate the execution of the strategy. Here, a neutral third party with clear understanding of this holistic approach concerning strategy, content and technology may be needed to help telcos examine the question from ‘outside the box’. This approach will also address the important area of tailoring a service to one’s specific needs. Many of the IPTV solutions on the market today are result of years of research and product development, and are largely based on specifications designed a long time ago. These solutions may be adequate for multicasting or VoD, but do they really take into account the myriad of new services that exist today or are likely to be launched tomorrow? We believe that tailoring a platform to each individual service operator’s specific requirements and market environment is critical to building a service that will be truly future-proof. It will enable operators to respond to new challenges quickly and without major additional investment and allow them to monetise new trends in content creation and distribution that will keep their service competitive going forward. Bridging the divide Now, a clear divide still exists between the telecommunication and content industries. This is a result of the fundamental differences between the cultures and business practices of the two, and a better dialogue is needed to bridge this divide. In my conversations with potential IPTV operators around the world, one of the questions that almost uniformly comes first is “Will I be able to get good content?” The sentiment behind this question stems from years past, when Hollywood tended to be suspicious of digital distribution. However, times have changed significantly and content owners have fully recognized the seismic shift in consumer behaviour and the opportunities this brings with it. In fact, today they are embracing digital distribution with open arms. Content owners are used to platform changes as new, better platforms emerge and take a systematic approach to managing their content across them. For them, the emergence of new platforms is a positive development as it opens new revenue opportunities. However, the content industry is a mature industry with an established value chain. Operators need to understand what content owners are looking for when deciding whether to license their content to a new platform. In order to have a fruitful relationship with the studios, operators must demonstrate an understanding of issues such as content protection, revenue potential, accountability, brand image and many others. Within the area of content, a key decision for operators is to determine how to acquire and handle the content expertise required. Should they outsource content acquisition since it is fundamentally different than the traditional telco business? Should it be outsourced for the launch phase only to achieve quicker market entry before bringing the function in-house? If so, how can they internalise this content expertise? All these issues require careful planning and perhaps the help of an outside company, as the task of internalising content expertise is a lengthy, complicated and tedious one. Embracing change Launching IPTV is not just a matter of simply adding another service to an operator’s portfolio; it requires a fundamental change of business model. For an IPTV provider with an in-house content department this also means changing the corporate culture to handle the clash between the ‘suit-and-tie’ and the ‘ponytail and goatee’ cultures. To succeed, operators need to embrace change and morph from being a pure telco operator into a true communications and entertainment provider. However, managing this change internally can be a daunting task for companies that have for years operated within a fundamentally different business paradigm. How senior executives address this change management is perhaps key to the long-term success of the telco itself. Overall, there is no doubt that IPTV will play a major role in shaping the entertainment and communications world of the future. However, launching the service is quite challenging. Operators have to ensure they build a watertight business case using a holistic approach that will future-proof their service.
