IPTV Is Not What You Think

by adam , Shelly Palmer, Jul 28, 2005, 10:06 AM

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I was attending the Cable and Telecommunications Association for Marketing (CTAM) "Thrilla in Phila" conference on Monday at the Philadelphia Convention Center. CTAM holds several cable-centric confabs throughout the year and always puts on a great show. One session, in particular, caught my eye. It was entitled, "Integrated One-Two Punch of Traditional and New Media." The speaker was Peter Sealey, CEO and founder of the Los Altos Group, an adjunct professor of marketing at UC Berkeley and the former CMO of The Coca-Cola Company. As you can imagine, the room was packed and the presentation was thoughtful and right on point -- until the end.

Pressed for time, Sealey decided to end his speech by bringing up the most important challenge facing marketing executives and brand managers today -- IPTV.

And I paraphrase: "IPTV (Internet Protocol Television) will change everything! Once you send television over the Internet consumers will have complete command and control of their content. Imagine watching anything you want whenever you want to and skipping commercials at will." Sealey said more than this and he said it loudly, authoritatively, and with extreme conviction. There was only one problem... for whatever reason, he did not offer any definition for IPTV other than Internet Protocol Television."

This was profoundly sad considering that the room was filled with non-technical cable television, content, and marketing executives who were hanging on his every word. They left that room thinking that IPTV was going to fundamentally change their business. I know this because I heard dozens of people openly discussing how important this innovation must be if they heard it in that room pontificated by that guy.

So, let's review:

IPTV is not television over the Internet. It is television over Internet protocol. It is an alternative method of distribution -- a transport mechanism, nothing more. The systems are not open to the public anymore than a cable set-top box from Comcast is open to the public. IPTV systems are walled gardens that will be used by operators to achieve optimum bandwidth efficiencies while enabling them (either cable or telcos) to provide television-like services, on-demand content, broadband connections, and voice over Internet protocol (VoIP telephone service) over a private, inherently interactive, two-way network. Neither Verizon, Comcast, or any other serious IPTV provider will use the public Internet to deliver their services. Why would they?

IPTV over the public Internet is called streaming video. With the exception of concept services like Akimbo and a few others, there are really no set-top boxes or television sets that display IPTV signals in common use. There are several services being planned, but they are going to have the same problems all new technologies have: distribution, cost per subscriber, and the aggregation of desirable content to name a few.

Are we likely to see a public television product that mimics the current television experience utilizing the public Internet? We might, but it's highly doubtful. Television provides a pretty good television experience and for broadcast business models, it is extremely efficient.

On the other hand, IPTV offers an inherent two-way system that allows for census-based measurement and true transactional user experiences. So, there may be a tipping point (and to quote Turner Marketing guru, Barry Fischer, "some money to be chunked up") at some future time.

IPTV is not a threat to television, nor is it a threat to any existing advertising models. It is simply a form of two-way distribution that will be employed by cable operators and telephone companies as they compete head-to-head for your bandwidth and content dollars.

Is the future of IPTV that limited? No. There are several models where IPTV systems will be used to create new audiences and new value chains utilizing upcoming video game platforms and portable video devices. Won't that change everything? No, it will change some things and it will not use the current versions of IPTV in form or function. The new models are more akin to aggregated Web sites than cable, satellite, or broadcast television systems -- but that's for another column. In the mean time, let's not confuse the public Internet and IPTV systems, with regard to upcoming products from the cable and telecommunications industries, they just don't overlap.

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