| IPTV continues to shake up the television industry, challenging conventional business models and practices and forcing pay-TV operators to re-evaluate their operations to ensure they maintain customer share in a highly competitive marketplace.
The technology is quickly establishing itself as the fourth television broadcasting channel, alongside cable, satellite and terrestrial. Informa Telecoms & Media reinforces this message, recently classifying IPTV as a “disruptive technology that is hitting rival triple-play operators while benefiting consumers by driving down prices.” Its report, entitled ‘IPTV: A Global Analysis’, notes that cable and satellite operators are now offering cheaper mini-packages of television channels, and some satellite operators are now getting involved in hybrid systems, using IPTV to offer supplementary services – another growing trend as the best ways to keep up in the industry are explored.
The IPTV industry is forecast to burgeon over the next five years, tripling growth by 2013 to create 57 million IPTV homes, according to the same report which goes on to comment that penetration will remain fairly low at 4% due to difficulties in attracting subscribers away from their current and long-established providers. There is no doubt the technology will retain its popularity but as business models mature, we can expect to see further consolidation with TV and telecoms operators creating hybrid models, offering the best of both worlds to customers.
End users, who have embraced new video technologies, are now exerting greater influence and control over the industry and they are key to the industry’s future. Developing television viewing trends see consumers embracing interactive and on-demand services that allow them to take control over their own TV schedules. In the UK alone in the last year, Britons watched more than 180 million TV programmes through BBC iPlayer on all sorts of video-enabled devices, not just through the television.
The industry is now more attuned to consumer personalisation of time and place – a radical shift from the traditional broadcast model that played out static content, according to a predetermined schedule, to a fixed device in the home. The strong growth of the DVR market for example, which Informa Telecoms & Media forecast would reach 56.1 million installed DVRs worldwide by the end of last year, has given consumers a taste of interactivity, video-on-demand (VOD), time-shifting and electronic programme guides. Audiences have responded extremely positively - never before have viewing habits changed so quickly and markedly over such a short time.
From a competitive market perspective, pay-TV operators that are able to offer their customers flexible services will have a marked advantage, being able to retain customers with ‘sticky’ features and provide a service which allows them to tailor to their own needs.
There is one aspect of the television industry which remains constant. Content is king in the television world as consumers tend to be driven by specific, or niche programming rather than loyalty to particular channels. However, securing premium content coupled with other desirable features, enabled through IPTV, attracts and retains a solid customer base. IPTV as a content delivery mechanism needs to offer security to protect the value of key content assets. Pay-TV operators shell out huge sums of money to be able to sign up exclusive content in high demand, such as high profile live sports coverage or film premieres and therefore the need for robust protection is paramount. Once exclusivity is lost, the value related to content disappears with it and both the consumer and content owner lose out.
Security and conditional access systems have traditionally been tackled through the use of smart cards in set-top boxes, which has been an effective solution. However smart cards present some difficulties for operators including an expensive and time intensive task to replace cards for upgrades. Recent years have seen the introduction of more cost effective and easy-to-manage software-based security solutions. Such solutions can be managed and upgraded ‘over the air’, with minimal disruption to subscribers and the operator. It has been widely adopted by IPTV operators as a more cost-effective and efficient solution for forward thinking and margin sensitive operators.
As successful as IPTV has been to date, shaking up the industry and introducing new challenges and opportunities, it shouldn’t necessarily be seen as a complete replacement – as a standalone TV delivery technology competing with the established models. We are already seeing a two-way network approach being adopted by some traditional cable, satellite and terrestrial operators that are then able to enhance the service they can offer to subscribers. The use of IPTV also allows operators to offer triple or quadruple-play services within the same package, another ‘sticky’ element for consumers and one which can increase ARPU.
Companies working within the industry have recognised the need for a unified security solution that enables pay-TV players to remain competitive and offer the portfolio of services required to keep attracting and retaining customers. Verimatrix is one company offering such services. We have developed the most widely-deployed IPTV content solutions worldwide and are well positioned to address protection challenges from both an IP and hybrid perspective, allowing pay-TV operators to combine broadcast and broadband services.
Pay-TV operators are now able to deliver linear programming via cable or satellite distribution networks at the same time as they deliver content and information over an IP broadband two-way connection. In turn, their services are enhanced through added value services such as VOD. The two-way connection also allows consumers to interact through sharing recommendations and comments as well as to chat freely among each other. From an operator perspective, both ARPU and churn are greatly improved while opening the door to additional revenue streams through mechanisms such as targeted advertising.
To address this emerging market need, Verimatrix has developed VCAS for DVB , which enables system operators to use a single robust security solution for hybrid and one-way DVB broadcast networks . Verimatrix developed VCAS for DVB in response to demand from cable, satellite, terrestrial and IPTV providers that see the potential for these hybrid approaches to enhance their service offerings, boosting traditional digital broadcasting with premium VOD content.
VCAS for DVB has also been designed to protect the segments of such networks that are maintained as traditional one-way networks, with no direct return path available. This is a major development as it means those operators can now incrementally upgrade to seamless DVB services with the same pay-TV head-end architecture securing IPTV and hybrid networks. Operators are able to support existing one-way subscribers while providing a clear upgrade path to capture higher ARPU subscribers who desire more interactive capabilities and VOD services.
It is easy to see how pay-TV operators whether cable, satellite, terrestrial or IPTV can benefit from providing a service that offers customers the best of both worlds. With television advertising revenues in decline, pay-TV operators must ensure the content and services they offer are attractive to their customers and competitive within the marketplace.
We can expect the trend of triple or quad play packages to continue as telecoms providers or broadcasters combine services to create these converged packages. The pay-TV industry will continue to move at a rapid pace and those companies that ignore the market opportunities and consumer demand will be quickly left behind. There is no time to waste with long-standing traditional broadcasters feeling the heat from new players entering the market in quick succession.
There is no question that the growth of IPTV services has had a positive effect on the television industry, helping it to transform to a viewing experience that is almost unrecognisable compared with just ten years ago. Consumers will remain loyal to those operators that allow them the freedom to choose what they want to watch, when they want to watch and on a range of fixed and mobile devices. We should forget though, that the focus ought to be on exploiting the opportunities IPTV enables as a complementary technology. It is the means by which we can deliver a fully converged and consumer friendly digital television service.
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