8 things about IPTV

This post was also published on Technology Spectator.

“The computer industry is converging with the television industry in the same sense that the automobile converged with the horse.” – George Gilder, Life after the Television

IPTV seems to be on the verge of hitting the buzzword bingo card. I’ve had a lot of questions on it recently, and figured I’d post a few key bits I’d written in responses.

1. The technology is already in your lounge room.

There’s more than a million XBox 360′s in homes in Australia. Not to mention all the Foxtel IQ’s, Telstra T-Box’s and FetchTVs. Google may be winning the desktop, and Apple is clearly dominating the tablet space – but the big screen isn’t going anywhere. And Microsoft have a big opportunity sitting in a lot of lounge rooms.

2. Data is the next Masterchef

The opportunity for IPTV providers will lie in accuracy of data. The measurement landscape will fundamentally change – not only will Australia be watching a much broader range of content, we’ll all be watching it across much wider time frames. So the measurement and buying models will start to look a lot more like digital does currently. And more important than the one killer show will be deep and accurate data about who’s watching a bunch of shows.

3. TV buying will start to look, feel, and operate a lot more like digital.

On-demand services bring with them a highly fragmented audience that will consume content across vast time frames. It’s the exact opposite of traditional TV with it’s scarcity of content within dictated timeslots.

4. Live television is one of the pillars still holding up the traditional TV model – and it’s the area that will come under attack in the next 2-3 years.

Even with the attention given to Telstra’s part in the $1.25B AFL rights deal, I still think they’ve flown under the radar and scored a massive coup. “Event” television is where broadcasters make big profits with advertising. This event television was once pretty much 7.30-9.30pm every weeknight. That’s eroding though, as people are watching a broader range of shows, and accessing the shows that are on broadcast channels via “other means”. In 5 years it’s feasible that live TV (whether that’s via broadcast or IPTV) will be the only thing in the lounge room capable of hitting 7-figure audiences in Australia.

5. What about catchup TV, isn’t that proof that the broadcasters are getting it right?

We’ve seen great results for advertising in catch-up TV. But it’s a transitional solution, it’s the networks adapting to change in a way that is still rooted in oldschool thinking. Catchup as we see it today is traditional digital thinking applied by traditional TV business.

6. Pureplay IPTV is still niche in Australia.

And by this I mean television content delivered through a dedicated internet-based content distribution network to a TV. It’s a technology that is emerging as much in ethnic communities as anywhere else. These communities can get access to Greek, Hungarian, Indonesian, Malaysian, Chinese stations. Pretty much anything you want, I’ve even seen a Cuban station pop up. This highlights the real opportunity in IPTV, while also demonstrating how it’s the antithesis of traditional TV. In the future, abundance of content rules.

7. The advertising dollar isn’t important – yet.

These pureplay IPTV channels are often just direct streams from abroad, the opportunity to insert advertising doesn’t exist on a large scale at present. And it’s not necessarily the business model either – the low cost of delivery means that these companies can make a profit simply out of subscription services. There’s no need to maintain a bunch of costly gear like a traditional TV broadcaster needs to. Even big players in the space such as Fetch aren’t aggressively going after advertising dollars – it’s just not a core part of the revenue model yet.

8. This agility, low barrier to entry, and abundance of content is quietly shifting the television landscape in Australia.

It doesn’t make a difference to people where the content is coming from. Once the experience is ubiquitous and transparent, we will see a swift shift from the current TV landscape dominated by three players, to an abundance of lean, niche content creators acting as broadcasters.

- September 2011