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Notable IPTV trends are highlighted at IPTV World Forum Asia By John Moulding This year's IPTV World Forum Asia conference and exhibition, held in Shanghai on September 27-29, uncovered a number of interesting themes that have a relevance far beyond the Asia-Pacific region. These included:
1. The central role of IPTV in telco transformation strategies
IPTV is the first concrete example of how Asian telecoms operators intend to change from being network operators to service providers. Zhang Lin De, vice president of Shanghai Telecom, told the pan-Asian audience in Shanghai: "Because of competition, ARPU (Average Revenue Per User) has been decreasing so the traditional telecoms business model is faced with a lot of challenges, and all operators have to set up strategies of transformation.
"The basic orientation of that strategy is to move from narrowband to broadband and from voice services to comprehensive information and multimedia services, and from single media to multimedia and single business operations to multi-business. IPTV represents new business growth and we can use it to face the competition. It is in line with the overall objectives of the telecoms industry."
2. The potential for IPTV as the technology platform of choice
IPTV is central to the convergent multimedia strategy pursued by the Chinese government, which wants to unify broadband, Internet and television by 2020. The IPTV roll-outs in Shanghai and Harbin are viewed by the telecoms operators concerned (China Telecom and China Netcom respectively) as experimental but they and the government believe IPTV has the potential to change the face of media delivery in the world's most populous country.
3. The acceptance of a broadcast/telco partnership model
In Europe and the US, most large telecoms operators are forced to enter the Pay TV market alone, building an end-to-end television and VOD platform that they manage themselves. Usually the incumbent Pay TV operators want to keep them out of the television business - especially cable operators jealously guarding their position as the only triple-play providers in their markets.
In China however, the government has encouraged a partnership approach that has seen media owner/producer Shanghai Media Group (SMG) acting as the content aggregator and platform operator, allied to China Telecom and China Netcom as the telecoms infrastructure providers.
In February the Chinese government established what is being referred to as the 'Shanghai Mode' (or model), which articulates the cooperative business model used for IPTV roll-outs in Harbin and Shanghai. Xiongyan Tang, CTO, System Integration Corporation, China Netcom Group, told the conference the 'Shanghai Mode' has been proven, with the telecoms operator delivering rich content via the content aggregator. "The key is solid cooperation to build triple-play services," he said.
4. A theory that there are two IPTV markets: youth and mainstream
Compared to Europe and the US, telcos and alternative broadband providers in Asia seem to place a greater emphasis on Internet-originated video content, sometimes compensating for inadequate infrastructure for high-quality private network-based IPTV.
But even in markets where broadband speeds can easily support private network-based IPTV, there is clear interest in Internet-originated video content. Ricky Wong, chairman and co-founder of City Telecom, the Hong Kong alternative broadband provider, believes the IPTV market can be segmented between mass-market family services, characterised by big-brand premium content and an emphasis on exclusivity, and an emerging youth market (under-25s) that values Internet-centric multimedia services including 'over-the-top' video downloads, user-generated content and peer-to-peer.
Wong is fighting against PCCW's comprehensive 'now TV' IPTV service in Hong Kong and sees Internet-originated video as an alternative strategy - one which does not require him to buy or aggregate vast amounts of expensive content. He offers only a basic broadcast TV (private network IPTV) line-up.
5. Evidence that IPTV really does work for large telcos
Major telecoms operators - especially incumbents - view IPTV primarily as a defensive strategy, providing a triple-play (or quad-play) bundle that should reduce churn on voice and data services. Dual-play and triple-play have been proved to reduce churn for the cable industry but few figures have yet been produced to show it works for new Pay TV entrants.
The IPTV World Forum Asia conference heard how PCCW has reduced churn by half as a result of its 'now TV' service and Ricky Wong at City Telecom (a significant rival for broadband services) admitted that it was becoming increasingly difficult to tempt PCCW subscribers away, despite having a much faster broadband service. The reason is television.
"Our sales people were outlining our broadband offer but Mums were saying that their kids wanted the Disney channels," he told the Shanghai conference, adding that he felt obliged to offer a basic IPTV service in response, although he would rather stay out of the television business altogether.
6. The concept of multi-platform television delivery
There is growing evidence worldwide that telecom operators are willing to look upon themselves as television providers rather than just IPTV providers. In Canada, Bell Canada has long offered the Bell ExpressVu direct-to-home satellite TV service and also delivers video to apartments using FTTH. Now the company is adding video-over-DSL, with trials in Toronto and Montreal. And KPN in the Netherlands began its video operations with digital terrestrial TV and has now added its 'Mine TV' video-over-DSL service, with plans to add mobile TV via DVB-H next year.
PCCW in Hong Kong is also pursuing a similar strategy. In September the company announced the launch of 'now on mobile', making 'now TV' content available to the company's 3G mobile customers, starting with various news, finance and sports channels. Services are being offered free to PCCW mobile subscribers until January. Paul Berriman told the audience at IPTV World Forum Asia: "We have taken all our content and put it into a content management group to try to harmonise rights to make content available on all platforms."
Increasingly, PCCW acts and looks like a media company as well as a telco and this represents an advanced stage of transformation, having replaced a network operator ethos (selling connectivity and bandwidth) with a service provider ethos (selling content and experiences), then moving beyond an IP television/multimedia mindset to a network-agnostic television/multimedia outlook.
7. The limits to how far IP technology can take IPTV
IPTV operators can take comfort from the success of PCCW in Hong Kong, which launched its 'now TV ' service in September 2003 and now boasts 608,000 subscribers (25 per cent penetration). As seen in other markets, video-over-IP-over-DSL was the technology that allowed the company to gatecrash the Pay TV market and the availability of a large broadband customer base and high-speed network with good reach were the foundation stones for growth.
Paul Berriman told the IPTV World Forum Asia audience that better content security, through Conditional Access controlled in the network, also helped them compete for premium content against the incumbent cable operator. This helped the company build strong relationships with movie providers for example, in another example of where the IP delivery platform provided a telling technology advantage. The company was also able to deploy low-cost IP set-top boxes that it could 'give' to subscribers.
However, determined telemarketing (using call centres to sell triple-play services to Hong Kong residents), successful upselling to existing broadband users, the use of 'a la carte' channel choice as a market entry strategy and the determination to capture exclusive premium content, like the UEFA Champions League soccer, have also been significant factors in PCCW customer acquisition.
Much of this has nothing to do with IP technology itself and everything to do with good media business, and a key lesson is surely that while IP technology is the ticket into the Pay TV race, it is no guarantee of winning.
With content-rich satellite operators already exploiting mobile and the Internet to deliver services, and starting to harness two-way broadband IP networks for VOD or complete triple-play offers, the inherent advantages of IP (unlimited on-demand, interactivity) are no longer exclusive to the telecoms industry. One lesson from PCCW appears to be that a successful IPTV operator is also a successful media operator.
8. The role of the triple-play
Jim White, vice president triple-play market development at Alcatel, suggested that in five years time, everyone will get all their telecoms/media services from one company. If his prediction is fulfilled it would represent the complete victory of the triple-play and quad-play, leaving no room for companies offering just television or just broadband, or even those bundling two services.
If White is correct, we should expect a significant amount of merger and acquisition activity during the rest of this decade as major telecoms and media providers seek to fill the gaps in their portfolios. The way BSkyB, Europe's largest satellite TV operator, has diversified with Internet-based VOD, 3G mobile TV, and most recently broadband over its recently acquired unbundled DSL network, suggests that incumbent media operators are pursuing transformation strategies of their own, just as telcos are working to become service providers rather than network operators.
Meanwhile, White suggested that broadband behaviour is very inspirational, with consumers moving their demands beyond 'connect me' as the first requirement, to 'organise me', 'entertain me' and finally 'empower me'. He suggested the broadband and triple-play market would be characterised by personalisation, interactivity and accessibility. In terms of personalising the media/communications experience, he said prime-time would become 'my time', consumers would start to become producers and there would be device proliferation.
Many of these themes are addressed in more detail within a number of reports published in IPTV News Analyst, our monthly PDF magazine focused on the world IPTV market. You can find out more details about this publication at www.digitalmediapublishing.co.uk
IPTV World Forum Asia is the leading IPTV event in Asia. The high-level conference and exhibition is attended by telecoms and media executives from across the Asia-Pacific region. More details at www.iptv-asia.net |
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