By Geof Todd & Ved Sen
An interaction with the online agent of BT Vision, accessible from the BT Vision website: We are now routing you to one of our chat team… You are now connected with Jenny. Jenny: ‘Welcome to BT, the most complete broadband provider. My name is Jenny’. Jenny: ‘How may I assist you with your order today?’ Ved: ‘Hi’. Ved: ‘I’m trying to understand the range of on-demand services for BT Vision.’ Jenny: ‘BT Vision is an ON Demand based TV service. You get all the same TV and films that you get from any other provider but with BT Vision you can watch your favourite programmes when you want to. There are no start times for shows, no commercial breaks, you just select what you want from a list of over 5000 hours of programming and press play.’ Ved: ‘Can I get for example, the FIFA World Cup Finals from 1970 to 2008?’ Jenny: ‘Please click here for the BT Vision On Demand content list.’ Jenny: ‘This link will show you packages and prices.’ Jenny: ‘Sorry we were not able to continue our chat. Since I have not heard from you for some time, I am going to close this chat. You can visit http://www.bt.com at any time to find out about our products and services. Thank you for chatting with us.’
BT Vision is arguably one of the more successful and well managed IPTV rollouts. Yet IPTV continues to struggle in the global context. The reasons are obvious, and a strategic shift is required to truly exploit the power of IPTV. In this article we’ve referred to BT Vision as an example but the problems are endemic to the IPTV model being adopted globally.
IPTV = the delivery of digital TV content over a fully QoS managed 2-way broadband network. This is a deceptively simple description of what is now understood to be a very complex and costly proposition. Initially, the focus was all on the technicalities of the infrastructure, but it was quickly overtaken by the well worn cliché ‘Content is King’. In fact, bandwidth and network infrastructure would appear to still be just as important in the race to truly achieve the full value out of an IPTV service.
It turns out that the delivery of Digital TV was and remains the most demanding use of the broadband infrastructure in this respect. To deliver TV requires continuous streams at either high or higher bandwidths (despite the shift to MPEG4) with significant service quality management overheads. And if the service aimed to mirror the Broadcast TV experience, the network also had to support multicasting – which not all switching systems were designed for.
Just take a look at the latest report from Tech Crunch that highlights the growing bandwidth issue for on-demand streamed content alone, let alone going for the full on-line TV experience. It becomes clear why we’re still playing catch up despite the massive and on-going investments in infrastructure (in tens of billions of dollars, worldwide, annually, according to Heavy Reading).
That is not to say that IPTV was a bad idea or that these technicalities are not insurmountable; most IPTV operators grew out of Telecom businesses, who have struggled since the bursting of the telecoms bubble in the early 2000s, (and re-structuring of established suppliers like Marconi, Nortel and 3Com) to overhaul the global telecoms infrastructure that was originally designed to support analogue voice calls and was evolved rather than reengineered into a digital video network.
In reality, the promise of a truly broadband enabled on-demand digital TV world has only been achieved in part and in some places.So it looks like the promise of the ‘Quad Play’ integrated business (= one bill around one core infrastructure to supply Fixed line voice + Broadband + Mobile + IPTV) has had to deal with a difficult problem of limited infrastructural capability. But they have also, in our view made some strategic missteps which have not helped the IPTV cause.
First, IPTV has tended to be a defensive play for most Telcos, who have used IPTV to shore up their ARPUs to minimise the effect of becoming just a ‘bit pipe’ supplier, rather than to try to truly disrupt the TV market. This is borne out by the relative lack of innovation in either content or services from IPTV providers, who have mostly relied on VOD catalogues and bidding for content rights to create a me-too service. It’s just a different technology being used to deliver (or attempt to deliver) exactly the same product for the consumer.
Where’s the value? BT Vision describes its own service “in a nutshell” on their website: “BT Vision is the best way for your whole family to watch more of what you love, when you want. Get all your Freeview channels, pause, record and rewind live TV, catch up on TV you may have missed – plus watch any extra films, TV shows and sport you want on demand…”
Does this seem different from Sky or Virgin or Freeview Plus with LOVEFiLM to the lay consumer? By their own admission, you can “get all the same TV and films that you get from any other provider but with BT Vision you can watch your favourite programmes when you want to.” So the only apparent difference is the on-demand viewing, which is currently also promised by most PayTV operators, not counting the iPlayer, 4OD, and many others who are coming to a living room near you soon. This is the challenge of every IPTV operator. Even the leading IPTV service in Australia, from iiNet, has a motley line up of content that would struggle to compete with their PayTV counterparts.
Second, many telcos have looked to hire teams of senior TV professionals and try to recreate the broadcast model. Strategically, this has played right into the hands of the incumbent PayTV operators since, at best, this offering can be equal to but rarely better than the incumbent offering. Also, telcos have arguably suffered from an underestimation of the business complexity and costs for content, resulting in an undifferentiated service.
The PayTV operators and incumbent content providers were always one jump ahead. For example, once the Premier League was available through multiple operators, Sky moved their content and service game on by making HD more pervasive, also offering games in 3D and now through News Corp, they are looking likely to benefit from their acquisition of F1. Then there’s the fact that the IPTV promise around on-demand content often overstates their differentiation. On BT Vision for example, it’s not “any extra films TV shows and sport” as the site says, but rather any extra films, TV shows and sport from the existing BT Vision Catalogue, which is available here. 5000 hours of content isn’t really all that much. If they were all movies, it would be 2500 odd films (less than what LOVEFiLM already offers online), or it would be about 200 days of TV. The question is how much content out of a typical 200 days of TV would actually appeal to any single user (10-15%?).
As we’ve said before, the infrastructure challenge remains daunting, which is why the hybrid model of DTT & IP remains popular (Freeview and IP VOD, in the UK). Yet, IPTV has managed to grow impressively to 45million subscribers worldwide, with a quarter of those coming in the last year. And yet we’re left wondering the “could-have-beens”. IPTV held the promise of a new and different TV based experience, but the realisation has not lived up to the promise so far. The next assault on the TV, via the OTT route is likely to yield more innovation.