USA IPTV Market

Market Structure

Subscribers ('000)					Estimated
Pay TV	CATV	DTH	DTT	IPTV	Pay TV ARPU
96000	65294	34000	0	72	Euro 20-35

Competitive Landscape

Current Operators: Several small rural telcos are pioneering IPTV services in the US – examples include SureWest (California), All West (Utah, Wyoming) and Consolidate (illinois). SBC launched the ‘Dish’ service in 2004, re-broadcasting satellite TV programming from Echostar. There has bee aggressive launches of VoD from cable operators consisting of a mixture of paid-for premium content and free TV on-demand functionality in some cases.

Incumbent: Major network upgrade projects are on with a focus on fiber in a number of cases for example, Verizon’s launch of fiber broadband. However, no actual TV/VoD launches as at Q3 2005. SBC Communications has a partnership with Direct TV. SBC has set a budget of $4bn for IPTV deployment with a target pricing of $90 for triple play and it is targeting 6.8 mn subscribers by 2008

Competition: Cable multi-service operators (MSOs) are developing both VoD and IP telephony services. None of the non-telco DSL providers are known to be developing IPTV at present.

Market Analysis

Pay TV in the US is a highly developed market. Cable has been the main driving force of market growth and many households now have multiple TV sets. The US is also home to many of the premium content channels and content distributed to other markets around the world.

Major Telcos have recognized the urgency in entering the TV market to compete against strong triple-play offerings from cable operators. However, DSL bandwidth is generally constrained by long line lengths. TV/video-capable DSL will probably not go much higher than 50%, because high-speed access investment will increasingly be concentrated on fiber.

So it is very obvious that fiber will connect a significant number of video subscribers. Normally fiber to the node (FTTN) is included in the DSL broadband numbers, and SBC’s ‘Project Lightspeed’ is based on FTTN (unlike Verizon’s FiOS, which is based on FTTP i.e. fiber to the premise) – so this will boost the DSL availability figures.

Time Warner has indicated that cable operators will adopt a follower strategy on IPTV and VoD. The company is evaluating the technology, and accepts that IP delivery will be inevitable in the long term. However, it does not believe that a rapid move to IPTV is either necessary or feasible. It will therefore monitor progress of telco IPTV services, and if they take off quickly will step up the pace.

IPTV availability over cable will lag DSL at first, but will start to catch up in the mid period, and will be on course to exceed DSL by the end of the period – in other words cable operators will be upgrading their TV & video delivery systems to IP as a matter of general strategy by then.

Research report from TDG has indicated a higher and more rapid rise in penetration for FTTH subscribers, since FTTH providers are likely to market IPTV and VoD as the principal benefit of FTTH based Internet access. Main US ISPs are unlikely to offer VoD as a standalone service; it will only be available as an add-on to IPTV, at least in the near future. There is a possibility of some standalone VoD in 2008 and 2009.

Hi All, Now for some next few posts i will be focussing on international IPTV market with market construct, analysis and detailed competitive landscape.

Analysis of IPTV Global Market

Triple Play is no longer just a revenue enhancer, but a must for long term survival. Therefore telecom companies must devise a VoD / IPTV strategy. The ability of cable operators to quickly add voice to their service mix is a major threat to local telcos. With competition for core voice services coming from multiple fronts, telcos already face real prospects of accelerated revenue erosion.

Instead of plain triple play telcos should go for blended triple play where all the services would be blended together and would be interoperable resulting in ease for the end consumer. For example the consumer should get the flexibility to schedule its entertainment (limited to broadcasting channels and VoD) over the broadband. Moreover the voice service should be blended with video. Internet should be accessible from the TV by adopting a “Walled Garden” approach. Reliance is trying to blend the telephone, data and video together during its pilot, although in a limited fashion. Find examples & graph to support.

Telcos must become involved in the creation of content and services. Those that do not take an active role will be reduced to just the operators of “dumb pipe”. They certainly don’t have to become media businesses but they need to become media savvy. They must learn to partner people in the value chain. Find examples & graph to support.

IP is emerging as the telco’s most critical weapon in a showdown with cable competitors. All service providers can become triple-play providers, leveraging multi-service IP access solutions to provide voice, video and data over a common platform. Although worldwide many telcos have failed in the past to compete effectively with cable operators as video providers but the ongoing trend towards switched digital video services could favor the telco that understand switched services well and most important fat is that they have well established (in many cases integrated also) operations on massive scale to support switched services. For example Airtel is already experimenting with integrated solutions of pre-convergence era (mobile, fixed and DSL). All three services will be handled through integrated operations like sales force, customer care as well as billing.

Twenty is the magic number. Operators world wide are finding that a minimum of 20 Mbit/s is required to enable a compelling triple-play offer over DSL. This will guide network engineering projects and vendor solutions for DSL in coming years.

Emphasis / Interest on Triple Play are clear indications that telcos are rediscovering the importance of consumer market. Although telcos still consider corporate segments more lucrative than mass segment but now they realize that the continued erosion of bread and butter business could be fatal. Triple play can be a solution to stem that erosion.

Ability to increase ARPU by 100 percent is driving renewed interest in video. Mobile and fixed line services have already acquired a commodity status in most part of the world. Broadband services would be acquiring the commodity status in the near future. Currently only VoD is the only service that can offer the 100% effect on top-line growth for telecom providers.

Telecom Operators are far apart on their plans for Triple Play infrastructure. Here we can discuss about different access networks and compression techniques adopted by the service providers

IPTV Forecast

According to Kagan Research, the number of multichannel subscribers in the top 13 Asia-Pacific markets will rise from 188 million last year to 356 million in 2015. The report covers China, South Korea, Taiwan, Hong Kong, Singapore, India, Australia, Japan, New Zealand, the Philippines, Malaysia, Thailand and Indonesia. The region's consolidated multichannel penetration is expected to rise from 32.7 percent of TV households in 2004 to 54.4 percent in 2015, a 4.8 percent compound annual growth rate (CAGR). Multichannel revenues are forecast to grow from $13.1 billion in 2004 to $38 billion in 2015, a 10.1 percent CAGR.

The report, Asia Pacific Multichannel Markets 2005, also found that IPTV platforms are expected to develop in nine of the region's 13 countries, increasing subscriber share from less than 0.3 percent in 2004 to 9.4 percent in 2015. IPTV revenue share is projected to rise from 0.7 percent in 2004 to 12.9 percent in 2015. In addition, DTT households will rise from 3.6 million in 2004 to 87.7 million by 2015, a 33.9 percent CAGR.

The door to Asia media market investment is wide open. The region hosts a powerful mixture of favorable market conditions as large untapped consumer populations meet strong adoption of emerging digital media systems. According to a report from Media Partners Asia, India will become Asia’s leading market for cable and satellite broadcasters by 2010, as well as the region’s largest DTH market by 2008 and its leading revenue generating pay-TV market by 2015.

The Multi Channel video industry in India is set to rake in some $5.4 billion in revenues by 2010 and $8.03 billion by 2015. Cable TV is expected to contribute more than 82 per cent of the total subscription by 2015 while direct-to-home (DTH) will be responsible for 15 per cent revenue and Internet Protocol TV three per cent to the total revenue.

Despite the issues like an uneven regulatory framework, especially with respect to retail and wholesale cable TV rates, foreign investment, broadband competition, and program distribution, the Indian market is attractive, says the report.

Media Partners Asia Ltd (MPA), says, "Nonetheless, we believe that the market, not regulation, will triumph in the long term. We expect IPTV services, bundled with broadband, to be offered at a premium to the competition. We see monthly IPTV average revenue per user (ARPU) growing from $5 in 2006 to $7 by 2010 and $ 9 by 2015." The market for multichannel video (cable, DTH, IPTV) could grow from about 65 million in 2005 to 104 million by 2010 and 125 million by 2015. This implies that multichannel video penetration could grow from 57 per cent in 2005 to 67 per cent by 2010 and 71 per cent by 2015.

Driven by DTH pay-TV competition and potential deregulation, the study has projected cable to gradually consolidate last mile ownership, ramp up deployment of bundled digital video and broadband Internet, and corporatise industry practices.

Zee's DTH Business (Dish TV)

Zee's direct-to-home (DTH) service Dish TV has rolled out plans to commercially offer the latest Bollywood selection on demand from mid-October, and to sell PVR sets from mid-November of this year. Initially, the VoD service from Dish TV will be a 'near' video on demand. It will be priced at Rs 40 per movie and will offer a selection of upto five movies a day. Siti Cable, the cable services operator from Zee group, is looking to migrate to a digital set-up. Digitization offers scope for various valued added services such as Video on Demand, EPG, pay per view etc.

In phase one of digitization, cities like Delhi, Hyderabad, Bangalore, Kolkata, Chandigarh, Varanasi, Kanpur, Haryana and Mumbai are the cities who can boast of digital networks of Siti Cable, paving the way for improving the quality of service and making some additional value additions too. It was in 2004 that MSOs like Siti Cable, Hathway and InCablenet began to aggressively market STB-enabled digital services, firming up plans to invest in programmes for pay per view services and secure more agreements with niche channels. Additionally, MSOs intend to develop new revenue streams from broadband Internet services and VOIP telephony.

But the company does not have plans to offer broadband in a big way. "Currently company offers broadband and Net services in Bangalore (subscriber base: 6,700) through their own gateway, but they don’t have any big plans for the broadband.

Zee Telefilms has tied up with IBM to develop end-to-end digital media asset management solution called ZAMS (Zee Asset Management Solution) to deliver content to emerging mediums like Internet Protocol TV, High Definition TV, Video on Mobile and Video on Demand (Company already offers english as well as hindi movies through its DTH platform). After this it will be having end-to-end technology platform for digital acquisition, development and playout of entertainment content. The entire initiative of implementation and integration at Zee headquarters in Mumbai and broadcast center at Noida will be completing in September 2006. The estimated cost of entire implementation and digitization of existing assets will be over $7 million.

Telstra in IPTV

After going through lots of material, I have come across a good case study on IPTV which is all about Triple Play and bundling of al three products. Next year Telstra will launch iPTV in Australia a move first tipped by SmartHouse 6 months ago.

To put things in perspective, USA Today has called IPTV an 'infant, unproven technology with a geeky name'. But the ability to pipe TV content over broadband has the potential to turn the broadcasting world upside-down.

IPTV shouldn't be confused with Internet video. It has nothing to do with P2P file-sharing or watching a downloaded DivX rip of Lost on your PC. Nor does it describe watching a low-resolution QuickTime or Windows Media clip in a tiny web-window. Instead, IPTV is all about providing high-quality multi-channel television and streamed/downloadable video, all delivered via the web's IP protocols and displayed on the TV set in your living room. IPTV is happening now. France Telecom's MaLigne TV has been providing live TV and Video on Demand (VoD) since 2004 and FastWeb is doing the same in Italy. There are big plans for IPTV in the US, where SBC is betting $4 billion on the hope that the technology will bigger than big.

SBC hopes to have 18 million homes hooked up to its service (project 'Lightspeed') by 2007. Motorola and Scientific Atlanta which was purchased by Cisco last week will build the set-top boxes, while Microsoft will provide the IPTV Edition software. SBC's rival, Verizon, hopes to have around three million homes connected to its own service by the end of 2005.

In the UK, Video Networks has been running its HomeChoice service in London for the past five years, offering a quadruple-play package of broadband internet access, a basic package of IPTV channels, video on demand and telephony. The technology works. But HomeChoice has been slow to gather followers. Despite a five-year head start in the UK, the service only has 25,000-30,000 subscribers and is restricted to the capital. Telstra could well offer the service to it's 2.3 million Foxtel pay-TV subscribers. What is interesting is that 75 per cent of Foxtel's and Austar's subscribers have already ditched the analogue system, electing to take up digital technology, which delivers more than double the number of channels and interactive services. They also have a broadband connection and are a perfect audience for iPTV. The move to launch iPTV comes as the Federal government starts to crank up the move to digital TV. (See seperate story on digital TV) Only about 13 per cent of the 15.2 million televisions in Australian homes are now tuned to digital services, prompting free-to-air networks to push to delay switching over their audiences for several more years. Foxtel has said that almost 6 per cent of subscribers now had Foxtel's iQ interactive service, which enables them to rewind live TV and record two programs at once. A portable viewing service, called iQ to Go, would be released within 18 months. This is Foxtels version of iPTV.

Foxtel has also announced that it will be converting all of its subscribers to digital and switching off its analogue service by March 2007. Foxtel CEO Kim Williams and Austar CEO John Porter also say they hope to launch at least two 24-hour-a-day, seven-day-a-week composite high-definition channels by 2008. Free-to-air channels already broadcast many programs in HD. Foxtel's commitment to two HD channels will be made possible by extra bandwidth available on the Optus D2 satellite. Its next generation of digital set-top boxes will also have MPEG-4 chips to handle the higher-resolution video signal.

"There's nothing new about the concept of Internet Protocol Television" explains media analyst Graham Lovelace. "But early examples have been a poor experience and downloading content has just taken too long. Bandwidth and the cost of servers conspired to limit the growth of IPTV. That's now no longer the case, thanks to rising broadband speeds and more efficient compression." Faster broadband is key and this is why Telstra are spending $3.5 billion dollars building a bew 3G wireless network.

Telstra are confident that they can deliver a 12Mbps services which is ample for an iPTV service. As for compression, MPEG-2 is the most widely supported video codec in the TV industry, but it isn't the most efficient for IPTV. The services running today have proved that MPEG-2 can be delivered over broadband. But providers like Telstra will deliver the service over MPEG-4 AVC (H.264) or Microsoft's Windows Media Video 9 codec. These dramatically reduce the bandwidth requirements, enabling IPTV systems to carry more standard definition channels or potentially HDTV programming in the future.

"IPTV is entering a crucial stage in its development," says Adam Thomas, author of the report 'IPTV: A Global Analysis' for Informa Telecoms and Media. "It is moving away from a technology under trial, into full commercial deployment."

Thomas' research suggests that although there are barely 2.5 million IPTV subscribers globally today, there will be around 25 million by 2010. The report highlights China as the leading candidate for IPTV growth (4.9 million subscribers), followed by the US (3.4 million), France (2.5 million), Germany (2 million), Italy (1.6 million), the UK (1.5 million) and Spain (777,000). But considering that broadband penetration in Europe and the US is expected to rocket to 290 million homes by 2008, these numbers are still small.

IPTV is inevitable, but companies will approach it in different ways. Big ISPs such as Telstra and Optus when they launch there service will see it as an additional revenue stream, especially as this year's broadband war has seen prices fall but broadband speeds double. Foxtel will be able to offer the true on-demand and interactive applications that satellite technology lacks. Foxtel already has a broadband TV application in the works, and because of there 50% ownership by Telstra they are in a perfect position to capatalise on the iPTV service.

In Australia free to air broadcasters are watching what is happening in the UK where broadcasters have also been quick to spot the new opportunities that broadband TV can deliver. The BBC has been running the second of its Interactive Media Player trials (iMP), enabling users to download TV and radio shows after broadcast; ITV too has taken the broadband TV plunge - its pilot service includes local news and weather, an entertainment guide and community video.

Telstra has found their businesses threatened by mobile telephony and VoIP, but now with the new network they have an opportunity to reinvent themselves as media giant while also delivering communication and entertainment services.

Ultimately, while there's a great deal of excitement about IPTV, services are likely to complement rather than replace today's delivery mechanisms. What it will do is cause TV viewing to fragment even further. In an IPTV world, your TV screen acts as a web browser and programmes are searched by customised guides containing video search abilities. It's no wonder that Google and Yahoo! see video as a big part of our online future.We may find that streaming services take a back seat to the sort of video download service that's being pioneered by people like Telstra. The recent launch of Apple's video-capable iPod and, more importantly, the availability of five TV shows via iTunes, is an indication that the TV landscape across the world is about to change. We could be on the verge of a revolution that sees video on demand (VOD) truly take off.

Reliance's IPTV Venture

Reliance Anil Dhirubhai Ambani Enterprises (ADAE) group has drawn a blueprint for its entertainment business that straddles the entire value chain of the entertainment content and carriage-way business i.e. from development of content, carriage of the content and, finally, its exhibition. In the process, it will straddle different platforms ranging from film production to broadband Internet TV (also known as IPTV), mobile TV, direct-to-home (DTH), multiplexes and FM radio. Reliance Infocomm has collaboration with Microsoft to look at IPTV. The company is all set to enter consumer homes with broadband Internet through its fiber optic backbone. The same connectivity can be used to deliver entertainment content like channels, video-on-demand, among other things.

Reliance Infocomm has been undertaking IPTV trials on users in Jamnagar, Mumbai and Delhi for the past one year. During the trial period Reliance is using Set Top Boxes (STBs) named Choicepad with 40GB storage capacity. There are two types of remote which are currently under trial. One is the wired one and other one is wireless. Wired remote can be used to call other Home Netway users. Company is in the improvement process to provide telephony services from Netway to other networks also. Other than broadcasting channels company is also providing internet on TV sets (which is not limited in terms of access to the outer universe). Company is also experimenting with the static content in the form of “Magazine” service which is just like an encyclopedia. Company is not providing gaming as of now during the trial period. According ABI Research, total subscribers for IPTV globally are likely to cross 120m by ’10 and Asia Pacific will comprise 47 per cent of it, with India being a major market.


Microsoft, which has an existing technological alliance with Reliance Communications Ventures Ltd (RCoVL) for IPTV services, is likely to upgrade that into a joint venture partnership. Steve Ballmer, CEO of Microsoft, who spoke via video conferencing (during the post listing session of RCoVL), said that it would look at the possibility of picking up a strategic stake in RCoVL due to the immense potential of the IPTV business. Currently, there is a limit on FDI to the tune of 74 per cent and RCoVL has plans to rope in equity participation. The two companies had planned to work together to jointly create, test and deliver next-generation Internet Protocol (IP)-based television services using an IPTV solution being developed by Microsoft TV. This new technology is designed to enable Reliance Infocomm to leverage its nationwide infrastructure (that includes 60,000 kilometers of fiber optic) to deliver a set of next-generation television.


RCoVL is planning to invest around Rs. 5,000 crore per annum over the next three years in business segments of broadband, global and wireless businesses. A significant part of it will go to the IPTV business. Internal accruals and debt financing will fund this capital expenditure.

What is IPTV

IPTV (Internet Protocol Television) delivers television programming to households via a broadband connection using Internet protocols. It requires a subscription and IPTV set-top box, and offers key advantages over existing TV cable and satellite technologies. IPTV is typically bundled with other services like Video on Demand (VOD), voice over IP (VOIP) or digital phone, and Web access, collectively referred to as Triple Play. Because IPTV arrives over telephone lines, telephone companies are in a prime position to offer IPTV services initially, but it is expected that other carriers will offer the technology in the future. IPTV promises more efficient streaming than present technologies, and therefore theoretically reduced prices to operators and subscribers alike. However, it also adds many advantages that may play into market pricing.

One of the advantages of IPTV is the ability for digital video recorders (DVRs) to record multiple broadcasts at once. According to Alcatel, one leading provider, it will also be easier to find favorite programs by using "custom view guides." IPTV even allows for picture-in-picture viewing without the need for multiple tuners. You can watch one show, while using picture-in-picture to channel surf!

IPTV viewers will have full control over functionality such as rewind, fast-forward, pause, and so on. Using a cell phone or PDA, a subscriber might even utilize remote programming for IPTV. For example, if a dinner function runs longer than expected, you don't have to miss your favorite program. Just call home and remotely set the IPTV box to record it.

However, the real advantage of IPTV is that it uses Internet protocols to provide two-way communication for interactive television. One application might be in game shows in which the studio audience is asked to participate by helping a contestant choose between answers. IPTV opens the door to real-time participation from people watching at home. Another application would be the ability to turn

My first post was regarding the IPTV value proposition which was created, keeping the macro perspective. I am preparing the details of each and every section which i would be sharing in next few posts. Moreover there would be some posts regarding IPTV Business Case preparation.

IPTV Value Proposition

Search, Research, Create, Configure, Customize, Share & Consume the Content Anytime


Content

General: Subscriber can Search, create and manage his MoD (Multimedia on Demand) playlists

Rate the content as well as recommend to others (OSD supported)

Preview the content before actual purchase

Gift content (including VAS) to his friends

Give ratings & recommendations for content

Create his wish-list of content, whether available on IPTV or not

Pause, rewind, fast forward the running video as well as access TSTV

Access to universal button (iButton) with dynamic menu according to content on screen


1. Music: Subscriber can

Access huge database of songs and listen famous radio channels including World Space

Can view the lyrics of song while listening

Opt for “a la carte” or bulk uploading for enlisting the content in playlists

Listen audio books of different genres like discourses, children stories and language courses etc. which can be billable on PPV basis with extended duration

Use Telco’s mobile & broadband connections to search, edit and listen the playlists

Order for CD / DVD of songs according to his playlist


2. Games: Subscriber can play basic games, demo games and premium games (once) without buying. He can also play ad supported (brand experience based & movie based games)


3. Broadcast Channels

a) Customer should be assisted in deciding the channel to watch by providing a facility of mosaic of streaming channels (Not just pictures), PIP (Picture in Picture), layered content (for example movie with review or video & lyrics together) and program guide


Experience

a) Introduce Self Care System where subscriber can

Manage his subscription profile like PIN, spending limit, top-ups & parenting controls etc.

Schedule the recording / channel hopping of favorite programs using TV as well as broadband either on the network (n-PVR) or on STB (PVR)

Navigate through help topics like “How to do”

Self provision his triple play package including activation and deactivation based on duration, event, package or a la carte basis

View and pay his monthly bill through prepaid cards, bank ECS and credit card

Track his profile-wise and device-wise usage (same like mobility’s UNB & OT service)

Access the information about current offers, tariffs, commercials, ARC & collection center’s addresses and Subscriber care numbers etc

Place simple requests like for example “Duplicate bill to be sent” (as the CC call costs around INR 12 where if the usage of this platform will reduce the Opex)

Customize TV menus & screens using color schemes, themes, languages and EPG skins


b) Introduce Telco TV where subscriber can

View scheduled screening of latest movies including regional with/with out any commercial breaks

Preview and download the VAS for devices including TV

Manage his favorites like channels and music etc.

Set the reminders for his favorite topics of interest

Create / Join a community where subscriber can

Create his “Avatar1” representing his profile

Search and create the friends’ list (friends mosaic)

Share this favorites / music playlists with friends on network

Send and receive text messages, gestures and emoticons to other users in friend list (In future there should be voice & video including conferencing too)

View what his friends are watching (will drive our MoD usage)

Call to other IPTV users / anywhere


c) Lifestyle Media where subscriber can

Search the local information about eating joints, shopping centres, bars & restaurants etc

Search data according to current offers, location, brand availability, price and cuisine etc

Access “Directory Services” for contact no. and person for different services (Ex. Just Dial)

Browse through the “Virtual Tours” of high involvement products like gadgets, real estate, lifestyle products, consumer durables and vehicles etc (Ex. Play TV)

Visit DALs (Dedicated Advertiser Line) i.e. micro-sites (product zones) or brand channel to get info and tips about specific products and request for detailed brochure, customer representative’s visit, demo, free samples etc. (Lead Generation)


Subscriber can have its own TV channel (Premium Service) where he can share user created content like photographs and videos (available on Alcatel platform). (Same concept can be used for creating and maintaining brand specific channels)

Subscriber can vote through remote using one-click OSD


Pricing: Subscriber can be charged according to content


Movies (VoD): Can be offered through PPV, prepaid packs, subscription, ad support (using nano recharge codes), tier based, triple play usage and acquisition based pricing models.


Music: Basic package can be free with one song at a time (without playlist facility) supported by randomly inserted ads. Another can be at a bare minimum subscription fee where he can enlist any song from non-premium category but for videos and premium songs PPE (Pay per enlist) can be adopted with an option of a la carte & bulk pricing. Audio books can be offered at PPV basis with longer duration.


Broadcast Channels: Pricing can based on duration, event, package subscription and a la carte


Games: Set of basic & ad supported (brand experience based) games can be free and others can be offered at a la carte or on subscription basis. Trial pricing can be applied for previews.


Communication: Free service for profile creation, emoticons, EPG skins & community support and subscription packs of messaging and voice communication.


Lifestyle Media: Initially this service should be free to enhance subscriber’s usage and to change his pre-purchase behavior. So it should be offered as ad supported behavior. In future it can be extended to e-commerce. Directory services can be offered either free (ad support) or with low subscription fee. Ad World (ad per view) should be free with incentive driven model like free VAS and content to subscribers.