Content is an important tool that IPTV service providers will use to increase the competitiveness of their services and to increase customer spending. So says Gary Schultz at MRG Research

Market categories

There are two general market environments for IPTV services. The first is the North American environment, where about 90 per cent of all homes are already served by cable or satellite. This also is the case in the Benelux countries, Scandinavia and Austria. Korea and a few other countries in Asia also fall into this class. This class of IPTV providers is trying to increase their broadband market share and reduce or eliminate their rate of loss of residential subscribers. Triple and quadruple play will be important packaging and pricing strategies for this market. The second market environment is one where the free, over-the-air, broadcast channels predominate and cable and satellite have a low level of penetration - say 30 percent or less. This is typical of most of the large European countries such as France, Italy and Spain. In Asia, both Hong Kong and Japan fall into this category.

Personal interests

Today, IPTV service differentiation is being driven by local and personal interests, not by mimicking competing multi-channel services at a lower price. To get closer to providing on-demand offerings, service providers are offering subscription tiers (sports, news, ethnic, children’s channels), VOD and local channels. IPTV markets in Europe and Asia differ considerably from those in the US because US cable has already built up on-demand and interactive services and two-way capabilities in most of their networks. The problem in North America is to convince consumers that IPTV is a superior alternative. Having a stronger content offering will be a key part of a successful IPTV strategy in North America. This is not true in China, Europe and much of the rest of the world.

Content strategies for addressing markets dominated by cable and satellite must be stronger than in markets dominated by free-to-air. New services such as network PVR, VOD and games are important ways that IPTV operators are differentiating themselves from cable and satellite companies, while some operators are providing content that is originally designed for VOD, in low cost linear form as a starter-service to provide samples of the new content to would-be subscribers. All these new forms of content are still under development. Interactive content and games have been deployed already on some competing networks, so development has been done on them already.

Internet video

Other content-oriented offerings include premium programming in a subscription VOD (SVOD) format, sports as a means to “prime the market,” tiered and ‘a 0la carte’ services. Video delivered via the Internet is also being explored both as a competitor and a source of content for IPTV operators, especially since Internet portals such as Yahoo and Google, as well as content owners, are working to capture the TV market. One positive outcome of this debate is that content providers are awakening to different distribution strategies that should improve the position of IPTV.

Regional IPTV leaders including PCCW and City Telecom (Hong Kong), KDDI, NTT, Verizon, FASTWEB, Free, Neuf, France Telecom, SureWest, Manitoba Telecom, Homechoice from Video Networks Ltd (London) and other content producers spanning Europe, Asia, North America and emerging markets are all experimenting with new content service models.

Gary Schultz is Research Director and President of MRG Inc., headquartered in Sunnyvale, California. In May 2006, MRG, Inc. published its second report on global IPTV content: ‘Winning IPTV Strategies Report - 2006’. For further details, see www.mrgco.com