|
|
|
Most telcos will have to cooperate for IPTV or deliver wholesale services, Ovum predicts By John Moulding Ovum, the analyst and consulting company, is predicting that the majority of incumbent telecoms operators launching IPTV services will eventually end up as wholesale network providers who support third-party television offers over their networks, or working in a cooperative relationship with companies who acquire and aggregate television content for transmission over their networks.
Ovum believes that those telcos who deliver end-to-end television platforms, controlling the content acquisition and rights management themselves, will be the exception rather than the rule.
The company has just issued some figures putting the number of IPTV subscribers worldwide at 29.5 million in 2010 (up from five million in 2006). Global revenues from IPTV services will increase from nearly $1.5 billion this year to $9.3 billion in 2010, Ovum predicts. (Informa Telecoms & Media have put the figure at 36 million IPTV homes by 2011 - making up 3.4 per cent of the world’s TV households).
"These modest numbers reflect the fact that IPTV will continue to represent a number of challenges for operators well after being launched - challenges which include understanding and accessing content," Ovum states. Senior analyst Annelise Berendt warns: "The content culture is completely alien for telecoms companies. Their heritage and competencies are anchored in owning and managing the network and while they can work hard to change that - for example, by importing new staff from the content industry itself - it will be a slow process.
"Consumers don't associate telecoms brands with entertainment; and from the content owner perspective, it is still hard for telcos to cut a good deal on licensing rights given that they have no track record or even audience, as is the case with many IPTV providers."
Ovum believes IPTV can succeed but has to be viewed as a long-term project by telcos. The company says careful positioning and the role a telco takes will be a major contributor to its success or failure as a TV service provider. "Working with partners on a joint go-to-market strategy with co-marketing and co-branding will be the best approach for many operators, and we expect a large number of those partners to come from the traditional TV sector," Berendt reveals.
The cautionary note follows a warning from John Delaney, principal analyst at Ovum, in July that telcos’ expectations from TV were starting to outstrip reality "by a considerable margin". He pointed out how telcos were talking about offering mainstream broadcast TV in 2004 but had now added VOD and various ARPU-boosting interactive services to their plans, with suggestions that HDTV was also a 'must-have' service.
"Modesty seems to be going rapidly out of fashion," he stated in the summer. "Egged on by the equipment supply industry, telcos are starting to take a much more expansive view of what they should do with TV. We suggest it is time for a reality check."
Delaney then went on to list the constraints on telcos, including access to content and bandwidth in the access networks (especially the far reaches of ADSL loops). He warned then: "We are not saying that telcos should stay out of TV; absolutely not. But we are saying that they need to be careful about getting carried way with progress in what the technology can do."
In its latest research on the IPTV market, released mid-October, Ovum defines three positions that a major telecoms operator can adopt in the entertainment marketplace. These are:
1. Leading star
The 'Leading star' is where the telecom operator takes the lead in delivering television content, including licensing and aggregating the content. The advantages are that they have full control of the IPTV service and take all the revenues, but it also carries a high risk since the telco incurs all the costs itself.
According to Ovum’s Berendt, "If successful in this role, the operator starts to look like a broadcaster rather than just a telco." Ovum points to Belgacom in Belgium and PCCW in Hong Kong as examples of 'Leading stars', although there are few players operating this model.
2. Supporting cast
'Supporting cast' is where the telecom operator partners with one or more content providers to deliver IPTV, co-brands the service and co-markets it. This avoids the high risk aspects like content licensing but requires the formulation of a good partnership and does not maximise revenues. A good example is France Telecom, which went to market in a collaboration with France's two satellite operators [CANALSAT and TPS], who provided all the broadcast TV content that was available originally on MaLigne TV (now Orange TV).
3. Production crew
'Production crew' is where the telecom operator opens its network to third-parties who want to deliver television services, taking a backseat role that is not seen by the consumer. This model ranges from providing a basic wholesale transport service to being an intelligent facilitator of services.
The ‘Production crew’ business model involves minimum risk but the rewards are also less: limited revenues and thinner margins. Ovum expects some telcos who already deliver communications wholesale services to add 'white label' IPTV solutions. The company even points to the possibility of a supermarket offering branded TV services via this route.
Berendt says: "We believe a few players will be successful as 'leading stars' but not many. A lot will try to get to that position but we think that in time they will fall back to the position of 'supporting cast' and 'production crew'. These are the two positions where we believe the telcos should be playing."
Ovum identifies exclusive content, user-generated services, integrated communications (like telephony via the TV) and cross-platform services (like IPTV and mobile TV), and possibly enhanced/interactive TV as potential ways to differentiate an IPTV service. It warns, however, that eventually, a differentiator becomes a 'must-have'.
Ovum sees targeted advertising - and even the possibility that consumers will opt-in to view certain kinds of adverts - as an area IPTV providers can pursue, although not as a differentiator for consumers.
At a press conference in London to unveil the research results, Annelise Berendt pointed to Verizon and its FiOS service in the US as an example of how telcos can seek to differentiate themselves through price as well. "That was completely unexpected and took the market by surprise," she notes.
"The market is already so crowded with so-called differentiators. They are offering 180 channels for $34 if you are already a broadband subscriber, which is a steal in the US. Comcast [cable rival] offers the same package for $50.
"That is a market entry strategy and they are trying to upsell consumers to other tiers and have taken one year to reach 130,000 subscribers, and that is very good given the problems they with local franchises.”
Using price competition as a differentiator requires a significant investment but as Berendt points out, so does the acquisition of exclusive premium content, the strategy used by companies like Belgacom (Belgian football rights) and PCCW.
Triple-play is not the only game in town
Mark Main, senior analyst at Ovum, believes there is still room for single-play service providers, despite the significance now attached to bundled service offerings. He believes that a company can sustain a single-play business in the long-term providing they deliver their one service very well.
The important thing, he believes, is that they know today whether they are going to pursue their existing business and excel at it, or move strongly into offering other services in a portfolio. The greatest danger is that they are indecisive and so fail to exploit either opportunity successfully. |
|
|
IPTV World Forum Middle East & Africa 08
|
|
Features 
