IPTV Hurdles: Fresh Material, Zillion-Channel Guide, In- Home Links
SANTA CLARA -- DBS can sleep soundly knowing the competitive threat of IPTV is wielded by uncreative Bells, a satellite veteran said. “These are people that have screwed up my bill the last 3 months,” said Larry Chapman, formerly exec. vp of DirecTV and pres. of its Latin American operation: “Their idea of innovation is call waiting… If I had to pick a competitor, they'd be at the top of my list.” He spoke on a panel late last week organized by TiE, a Silicon Valley networking group organized by Indian-Americans and originally called The Indus Entrepreneurs. Bells, including IPTV leaders SBC and Verizon, weren’t represented.
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Bringing “the utility mentality,” Bells haven’t been “a big competitive force,” Chapman said. Marketing partnerships between DirecTV and Bells have “not been successful,” he said. But Chapman acknowledged telco video “will erode market share over time” for DirecTV, as digital cable has, though it’s unclear whether this will be an “irritation or a death knell.”
IPTV’s success depends on providing programming far beyond what’s available on cable and satellite; moving high-quality video throughout a home for viewers to find what they want, and helping viewers easily find what they will like out of many thousands of choices, speakers said. But the other technical hurdles and the huge equipment costs that doomed Time Warner’s Full Service Network interactive TV trial in the mid-1990s have vanished, even as consumers have embraced interactivity with adoption of newer technologies, they said. But the lack of a “plug & play set-top” box remains important, said Investment Dir. Claase Heise of Deutsche Telkom’s T-Ventures, and the cost of 6-8 hours’ installation by technicians at $50 hourly demands progress to self-installation, said Video54 CEO Selina Lo.
IPTV can’t just be “a new delivery system” for established TV outlets “with a couple of calling features” integrated, Chapman said: “It ain’t going to move the market.” Discounts from bundling video service with other telco offerings will sustain IPTV, but only at first, he said. Overcoming inertia enough to persuade consumers to switch out their set-top boxes and remotes “really will require some fresh thinking to take it to the next level.” But Microsoft IPTV CTO Peter Barrett contended: “It’s not going to take very much to drive people away from what they're getting on broadcast.” He said many ordinary consumers would find compelling a system that automatically delivered beach photos of the children to their TVs -- and to the grandparents’. Barrett hinted that the Microsoft technology SBC and many foreign carriers have chosen will integrate voice in astounding ways.
Blogging and podcasting show the way to “a whole new world of people creating content” and reaching audiences through IPTV, Chapman said. That opens a “Pandora’s box” of business problems but will contribute importantly to the sometimes extreme narrowcasting that, with highly local and other special-interest programming, can differentiate IPTV from cable and satellite, he said. Heise and Josh Goldman, CEO of IP video aggregator Akimbo, agreed “personal” and “user-generated” programming will boom to make up a large part of IPTV.
An audience member expressed concern that SBC’s and Verizon’s urges for control would keep them from opening up programming as broadly as preferable. “It’s not greed; it’s stupidity” that gives U.S. carriers that inclination, Heise said. European and Japanese carriers have shown “that it makes sense to let content in” from independent sources, he said. Panelists said competitive pressures and the inherent openness of the IP technology would prevent the Bells from being very restrictive. “If we don’t do anything we will become a dumb pipe,” Heise said.
Regarding navigation, grids, folders and hierarchies can barely handle the multihundred channel challenge of satellite and cable, let alone IPTV’s “hundreds of thousands or millions,” Goldman said. The new video technology must look to the “great discovery and user filtering” tools developed for Amazon.com, Netflix and iTunes, he said. The “dirty little secret” of pay TV is that “people watch 10-12 channels 90% of the time even though they have access to hundreds of channels,” Chapman said. He said PVR-style automated intelligence should offer each viewer channels of interest.
Startup Video54 has overcome Wi-Fi’s limitations and made wireless the best way to connect IPTV gateways to set-tops throughout homes, said Lo. The company just completed a funding round premised on IPTV’s enormous promise, she said, without providing the amount. Heise said he hoped wireless would win out over wired alternatives including internal power lines.
As IPTV intensifies the trend to on-demand video, “broadcasting probably really gets restricted to something like the Super Bowl or the next moon landing or something you really would like to watch with everyone else,” Heise said. Barrett said: “Consuming on broadcast is a burden, not an advantage.” He said watching breaking news like coverage of the London transport bombings will largely move to the mobile devices people will have with them wherever they happen to be, Barrett said. Chapman said “there’s a lot of life left in the broadcast model” -- if broadcasters embrace IPTV and exploit the opportunities. - - Louis Trager