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The IPTV Evolution

Release Date:2008-01-25  Author:Weijun Lee  Click:

The Promises of IPTV
Despite all the promises of Internet Protocol Television (IPTV), an IPTV operator cannot really compete with well-established cable TV (CATV) and satellite TV providers if its IPTV solution is only designed, deployed, and perceived as another way to deliver the same traditional broadcast TV program with the same revenue streams and business models.

In reality, IPTV has evolved from a simple broadband alternative to CATV in its early deployment to a convergent service platform that enables multiple revenue streams, including subscription, premium contents, targeted advertisement, and value-added services (e.g., televoting, games, video telephony, distant learning).

When properly designed and deployed, IPTV can become the killer application for a telecom carrier. Imagine the following scenario: When an IPTV viewer notices some fancy-styled dresses or shoes worn by the leading actresses in the movie she is watching, she can easily pause the scene, pop up a window to show related information, find the price and comments left by other viewers in a cyber community, order the merchandises over the underlying IPTV service platform, and have it delivered to her home directly. How convenient it is! She does not even need to take out her credit card, make any phone call, or type in her home address, since her IPTV system already "knows" her billing data and delivery address!

The Evolution History of IPTV
IPTV has evolved through the following phases since its inception: Barebone IPTV, Enriched IPTV, Interactive IPTV, Personalized IPTV, and Comprehensive IPTV, as shown in Figure 1.

Barebone IPTV
IPTV was in its "barebone" format (i.e., delivering broadcast TV programme over DSL or fiber) when it was first introduced several years ago by a few European carriers to compete against the invasion of triple-play offers (i.e., voice-over-IP, cable TV, and broadband Internet) by cable operators.

By simply including the barebone IPTV service inside its own triple-play bundles, telcos can compete equally with cable operators.

However, a barebone IPTV solution is a pure defensive strategy, and does not utilize the full potentials of the IPTV technology (e.g. interactivity, service integration). It brings neither new experience to end users nor additional revenue streams to carriers.

Enriched IPTV
Since "content is the king", an IPTV operator may choose to offer premium contents to enrich its IPTV solution.

The premium contents may be offered as live TV channels or Video-on-Demand (VOD). Live channels are most suitable for popular contents like sports, new releases. VOD is good for long-tail contents that cater to each small group with special tastes.

The premium contents may be exclusive or non-exclusive. For example, PCCW in Hong Kong chooses to buy the long-term exclusive rights of certain premium channels. On the other hand, Verizon believes the hefty price of exclusive broadcast rights is unjustifiable and its FiOS service can fare well on its ultra-high bandwidth and video quality.

In some cases (e.g., IPTV over WiMAX links that support less bandwidth than fiber or xDSL access lines), "Enriched TV" may be offered via some hybrid-TV solutions that consist of traditional broadcast TV channels (from cable TV or satellite) and premium on-demand contents (over IPTV channels).

The "Enriched IPTV" solution has low technical complexity and is easy to implement, but it requires some business investment in premium contents.

Interactive IPTV
"Interactive IPTV" may be called the "true" IPTV solution because it is based on IPTV's unique strengths: unicast and multicast, the two IP packet delivery methods not supported by the cable or satellite networks today.

An "Interactive IPTV" solution unleashes a whole range of new features, for example, Time-Shifted TV (pause, rewind, fast forward), TV-on-Demand (TVOD), and Network-based Personal Video Records (NPVR).

While some high-end set-top-boxes (STB) for cable TV or satellite TV viewers already adopt Personal Video Recorder (PVR) feature to record live TV or scheduled programs into local hard drives, the IPTV-enabled NPVR feature allows every set-top box to offer similar functions by storing the designated content on the network side. This enables a significant reduction in capital expenditure (CAPEX).

The TV-on-Demand feature allows a user to watch any TV program that has been broadcasted in the last few days in his/her subscribed IPTV service package. Many users love the TVOD feature more than PVR and NPVR features for two unique reasons:

  • TVOD requires no programming effort by the end user.
  • TVOD stores all the programs in all the TV channels without being limited by the number of tuners (one or two) inside the STB or by the size of the local hard drive attached to a PVR.

PVR and NPVR allow a subscriber to store the recorded content as long as he/she wants. Of course, it is possible for a viewer to combine TVOD with PVR or NPVR.

Thanks to the "enhanced values" perceived by subscribers, IPTV service can be sold at a higher fee than competing services such as cable TV and satellite TV.

Personalized IPTV
Sharing the same root with Internet, IPTV has native support for various Web services, including intelligent personalization of subscriber profiles and usage habits.

An IPTV viewer can easily create one or more personalized TV channels that contain his or her favorite programs chosen from multiple broadcast channels. 

The IPTV system can intelligently and statistically learn the usage habit of a subscriber, and make smart recommendations about relevant premium contents and merchandises.

Some subscribers prefer privacy protection over the convenience of personalized advertisement; therefore the IPTV system must allow each subscriber to select his or her preferred level of privacy protection.

Comprehensive IPTV
"Comprehensive IPTV" represents the future of IPTV, i.e., making IPTV a convergent service platform that hosts a variety of value-added services including information portals, games, video telephony, video conferencing, TV-commerce, photo/video hosting, distant learning, and karaoke, as shown in Figure 2.

IPTV-based services will eventually become an indispensable part of our everyday life, and any telco that takes an early start towards this vision will ride this trend and enjoy competitive advantages.

IPTV Brings Multiple Revenue Streams
With versatile support for enriched contents, interactive user experiences, subscriber personalization, and comprehensive value-added services, IPTV brings multiple revenue streams to telcos.

According to market date, the end users may be willing to pay a higher subscription fee for an IPTV service package that is more attractive and easier to use than the equivalent cable TV or satellite TV service packages.

IPTV services may be offered in several tiers (packages) to cater different catergories of subscribers. Each IPTV service package is a mix of broadcast TV channels, premium contents, and certain types and amounts of value-added services.

Premium contents
With Time-Shifting TV feature and TV-on-Demand feature, IPTV may change the viewing habits of traditional TV viewers.

According to a recent analysis by Shanghai Media Group - the IPTV operator in Shanghai, China - IPTV customers are more interested in programs such as movies, kids shows, reality shows (law), and sports (as shown in Figure 3) that they would have missed if without TSTV and TVOD features.

Intelligent advertisements
According to another related analysis by Shanghai Media Group, its IPTV service significantly increases the viewing time between 10am and 6pm, as shown in Figure 4. One of the possible reasons is believed to be the TV-on-Demand feature that allows housewives watch their preferred primetime TV programs during other times, e.g. day time. The increased viewing time transforms those traditionally less-attractive timeslots into premium spots for advertisement insertion.

Everyone dislikes irrelevant advertisements but seeks/accepts relevant information. While the traditional broadcast-based advertisement model is impaired by the ad-skipping function in PVR and NPVR, the personalized intelligent advertisement model enabled by IPTV actually improves the relevance and acceptance rate of each advertisement.

Value-added services
IPTV is an intuitive graphical interface for many value-added services. For example, televoting is a popular service for mass-competition TV programs such as "Dancing with Stars". With IPTV, a viewer can vote with the remote control via an intuitive and reliable graphical interface, and can also check the statistics immediately afterwards. After the Dance Sport Final Competition in China in 2006, the 20 million cable TV viewers cast only 40,000 votes via phone calls and short messages, but the 100,000 IPTV viewers cast about 5000 votes: a 25 times improvement in the voting rate!

Looking Forward
IPTV seems the most promising killer application to bring telcos more and more revenue streams and edge out competitors if, and only if, it is properly evolved.