Wednesday, August 15, 2007

Cable TV or IPTV? It’s the Consumer, Stupid!

IPTV (as opposed to Internet TV) does not offer the consumer anything more than Cable TV can (and mostly already does).

If you agreed to what I just said, you don’t need to read any further. You are already clued-in. You are one of the cognoscenti. If you didn’t, sit down, shut up and listen - this may take a while.

If you are not sure of the difference between IPTV and Internet TV you can read my previous blogs or read one of these - A Seminal article by Robin Good, Also Jeremy Allaire on Brightcove and especially this one).

Try a simple experiment with people you know - sell them IPTV service. It can be as complicated or as simple as you like. Explain if necessary what IPTV is about and then ask “Company X is offering this service, would you switch to it?” For Company X you can substitute your local phone company (there is a good chance they are in fact offering IPTV or are shortly planning to).

Of course, we know the outcome of this experiment. Most people will prefer to stay with Cable TV – quite possibly you will not get a single person to “sign up”. If I am completely wrong, please, contact me immediately. I will be happy to post a retraction if appropriate and reexamine everything I have learned in the last ten years about the business of Internet Video.

Let’s examine why consumers will not want to move to this new technology. Let’s compare what they get. To be fair, we will compare what IPTV will look like in a few years when it has matured. By the same token, Cable TV with their huge investments in fiber will also be a little bit more sophisticated than they are today.


Cable TV

IPTV

Channels Available

About 200

About 200

Video-on-demand

Yes

Yes

Time-Shifting

Yes

Yes

Interactivity

Yes

Yes

Smallest Ad Targeting level

Neighborhood

Neighborhood

Serves the Long Tail

No

No

Guaranteed Quality of Service

Yes

No!

Hmm, I don’t see it. Why would anyone switch to IPTV?

But lets look at it another way. Perhaps the consumer will not have a choice because business forces (such as lower costs, easier delivery etc) are driving towards IPTV instead of Cable TV or any other choice in the marketplace today.


Cable TV

IPTV

Requires “Head End” in neighborhood

Yes

Yes

Smallest Ad Targeting level/metrics

Neighborhood

Neighborhood

Content-Owners benefit more

No

No

Advertisers benefit more

No

No

Network/Plant Costs

Same

Same

Need to buy broadcast rights to content

Yes

Yes

Not!

The bottom line is this. You cannot make consumers suddenly switch to a new technology (in this case IPTV), when there is not a whole lot of value-add over the old technology (Cable TV). You cannot make them abandon their existing gadgets or even make them add a new gadget for a new technology that offers at best an incremental advantage.

You need a cross-platform strategy and technology i.e. consumers should be able to be use, understand and own the new technology without a huge behavior change and with minimal cost to move over. If you want to push IPTV and you are not doing it on TV (rather than the computer) you are sunk. And, if your model does not add several compelling reasons for people to switch to IPTV from their current Cable or Satellite connection fuggedaboudit. Better still, you need a model like L3 which allows people to keep their Cable TV and start using IPTV or Internet TV until they become comfortable with it.

Or you could keep chasing failing business models like Akimbo and CinemaNow and MovieLink and so many more....


5 comments:

Lorenz said...

Hi Anil,

I think you are not quite right when you say that IPTV doesn't offer anything more than Cable. In fact, real VoD is not yet possible with analogue Cable (or did you talk about digital cable?).

Furthermore, Telcos will add services such as Caller IDs on the TV and several other interactive features.

Lorenz said...

Oh, and I forgot to add.
With real VoD you have possibilites like pause, forward, rewind, etc. Just as if you were watching a DVD. With cable VoD it's just possible to choose a different starting time for a movie (usually every 15 mins or so).

Anil Gupte's Video Blog said...

Yes, VOD is possible on digital TV. On my Time Warner account I was able to order a movie two years ago. Yes, you need digital cable and therefore a set-top box.

Everything that IPTV can do, Cable TV will eventually be able to do. In fact, you just gave me an idea for my next blog. Thanx! :-)

Mayank Batra said...

Hi Anil Sir,

But wouldn't cable TV, even digital cable TV in any sense mean 1 way interaction from the operator to the user. In IPTV you will always have new features coming up because it can support 2 way interaction.
A real VoD would be possible when i get to see a collection of movies and play the one i desire at any time i want. The VoD that digital cable, all the STBs are offering is only limited to them playing movies on their timeline and we can via mobile or other means let the provider know if we are interested in watching the one showing at an X time or not.

Anil Gupte's Various Blogs said...

Mayank:

I don't maintain this blog any more and am starting a new one. To answer your question, think of it this way. The difference between Cable TV and IPTV is simply the medium. Anything that is lacking at both ends in CableTV, they can add. They have 100s of millions of customers and billions of dollars. All they need to do is make incremental improvments.