
Levi Shapiro was at the NATPE conference in Las Vegas recently and spoke with leaders in the IPTV field. The enclosed article will appear in an upcoming edition ofVideo Age International and IPTV Evangelist has the preview release.
Marcel Fenez is a twenty-year resident of Hong Kong and a devoted fan of IPTV. “PCCW captured 700,000 subscribers in three years because they offer more choice, on-demand movies and are the only source for English Premier League. Even Ipod didn’t capture that much market share in its first year”. Along with panelists from Telefonica, Microsoft, Thomson and Belgacom, Fenez discussed successful IPTV models from around the world. Whether in Hong Kong, France or Belgium, these learning are can be instructive for the future of IPTV in the US.
According to Bart Becks, who was responsible for an IPTV rollout in Belgium, there are three basic ingredients for IPTV to compete with cable. First, the technology has to be invisible to the customer. “It needs a very easy interface, with only one button to push, said Becks”. Panelist Benoit Joly of Thomson agreed, saying it must be “granny proof”. Second, IPTV needs to offer everything that cable offers, otherwise people will be reluctant to make the switch. “At a certain period, one of the Big 4 broadcast networks was not available, which hurt our take-up. To convince people to cancel their cable subscription, you have to offer same thing available everywhere else.” Finally, there needs to be some form of exclusive content. “In Belgium”, said Becks, “we bought exclusive rights to live football. This helped to increase churn from our competitors.”
IPTV involves television services over closed, managed network, usually owned by the service provider, which is typically the telephone company. IPTV is inherently hi-speed, and two-way. This creates the opportunity for personalized, dynamic ad insertion. In addition, viewers can see miniaturized screens while watching other programming. Now you literally see “what’s on” TV while without missing your show.
Culturally, IPTV has had an impact on the way Spanish viewers watch sports. Antonio Otero, VP Innovation at Telefonica VP Networks, talks about soccer viewing habits. “Twenty percent of Telefonica subscribers buy soccer match each month. Previously, people went to the local bar but now they are watching soccer matches at home.”
From the point of view of local stations, the greater bandwidth allows broader distribution for their content to a wider geographical audience. Becks cites a local television station in Belgium with a library of short-form travel related clips. These evergreen episodes reside in VOD and are being viewed by a broader potential audience.
Particularly, when there are fewer eyeballs, personalized advertising increases the value to brand owners. The capability, while not yet deployed, is to measure audience at the level of the zip code. What the panel did not explore was what type of advertising format, placement, and experience would be appropriate in a personalized advertising environment. Becks acknowledges, “We will need to use different metrics, rather than GRPs. IPTV can bring below the line advertising to mainstream media.” In short, this may make IPTV’s smaller long-tail audiences more appealing to advertisers as a micro-segment with the right ad for the right viewer at right time.
The key learning for IPTV in the US may be access to exclusive sports programming. Becks believes that “successful roll-outs have to have something exclusive, like only having the NBA available on AT&T. Costs a hell of a lot of money but its what they need to do to be in the game.”
Cable companies have learned that their customers want bundles. This year we will see AT&T and Verizon bundling video and television services in order to compete with the bundles offered by the cable companies. The true winner of this battle will be the consumer, who will have more choice and a richer viewing experience.