IPTV: Avoiding the economic crunch

Greg Collins, VP at Dell'Oro Group says that IPTV equipment shipments are in great shape. But what about the economic downturn? Will this affect IPTV operators over the next year or two? A recent Rapid TV News Round Table panel of experts addressed the financial problems of consumers – and some operators.

"For 2009, we are expecting that unit shipments for all segments will increase with a higher percentage of units being high definition capable with a slowing in the trend toward integrated DVRs due to increased use of set-top boxes with multi-room DVR functionality,” Collins said.

Ian Valentine, chief architect and founder of MiniWeb Interactive, and who operates quite closely to BSkyB, said that during other economic downturns he had not seen the television industry suffer so much because when people are at home they want to watch TV, so it is almost the last subscription they want to get rid of, especially if they’re out of work.

But, he added, “I think that’s a consumer trend, I think for an operator trend, IPTV operators particularly will struggle, because getting people to churn and become subscribers to another Pay TV service is hard in an economic downturn if you’re not offering differentiation. I think the answers for the IPTV operators is very much in looking for new revenue streams, new business models and also embracing hybrid so they can expand their subscriber base without expanding their infrastructure.”

Dr Ofer Weintraub is CTO at Orca Interactive, and he agreed, saying hard times would force operators to seek to be different. “One point is application stores, which I think we will see within IPTV. It’s very easy to launch an application store with this environment that ADB provides, for example, in Java Script or HTML. You can really let any developer develop new applications, and it’s very easy to deploy, so that’s one way. The other way we’ve seen is interacting with Over The Top players to bring new content in and there is a surge of new content on web TV because it’s becoming very easy now. You can buy two cameras and if you are talented you can create a new show. If you look at Blip TV (blip.tv) for example over 50,000 episodes, web episodes, are now being broadcast, so that’s another opportunity for IPTV to bring new content.”

Ian Walker, Sales & Marketing Director/EMEA Pay TV at EchoStar Europe, said: “All the statistics from previous recessions or downturns show that [subscription TV] is the last thing to go. We also have to bear in mind in terms of certain economic groups, they tend to be a mass market, they’re making these decisions about shall I pay or not pay most of the time anyway. It’s not something new for the mass market to be thinking about what they’re spending their money on.

“Also for IPTV operators, and I think particularly about the Tier 1 [operators] and the major telcos, the original driver for video was just to drive broadband internet subscriptions, that’s what they wanted, and boost average revenue per user, etc. Their core business is not pay TV, their core business is subscribers and delivery, so for them IPTV is a marginal cost which will deliver extra subscribers. I think for the broadcast operators who are adding IPTV, pay TV is their core businesses, so a slightly different set of parameters for them, but I think everything tends to suggest that it will continue.”

Ian Challinor, Director, Business Development (IPTV) at ADB, said he felt that for new ‘green field’ entrants to IPTV the next year or two could be very challenging unless they could offer a service which was different to incumbent broadcasters. “But at ADB last year we’ve seen tremendous growth of IP subscription with some of our major accounts, so that’s a positive and the forecast this year are also extremely good. But I think it’s about providing the users with some stickiness. [They need] to provide a range of applications that make it great, this is my TV, it’s personalised to me, I can look at the weather, I can look at the stock market, I can look at the internet, I can go on a social networking site, I can personalise my content. All of these things are going to provide challenges for the operators but they will differentiate them from the present Pay TV operators that are out there.”