The Competitive Threat from IPTV - Part I

I thought I’d be able to succinctly summarize the concept of Internet Protocol Television (IPTV), but after much research I realized I should devote multiple blog entries to this fascinating topic. Part I of this series will provide the user with a basic understanding of IPTV, and how it is beginning to alter the competitive landscape for TV broadcasting.

Naturally, IPTV is reliant upon the underlying Internet Protocol (IP) standard. IP allows different network devices to communicate with one another through the use of a common schema to route IP “packets” by source and destination address. These packets contain data payloads which correspond to real-life applications such as webpage transactions, chat clients, and of course video delivery. IPTV is therefore a packetized emulation of the high bandwidth video broadcasting that was the traditional domain of cable systems.

IPTV is considered a disruptive technology to the TV broadcasting industry, since it stands to greatly alter the viewing experience of subscribers. No longer would customers be subject to fixed channel assignments and arbitrary programming, but with IPTV one can selectively choose individual programs to be delivered at a time of one’s choosing. A senior executive from Tandberg (subsidiary of Ericsson) went so far as to state at a conference that the next generation of IPTV services would be a personalized blend of entertainment, communications, social networking and web media [1]. The same executive also stressed the role of Generation Y in driving the need for delivery of IPTV services across all connected platforms – PC, TV, and mobile [2]. It’s logical then to see that IPTV is actually just a service, which is extensible across any device which is capable of connecting to the Internet and viewing such content.

There are a number of players offering IPTV services, ranging from free to pay services. Hulu, sidereel, and even the major networks like NBC, ABC, and CBS offer free video programming. On the other hand pay services such as Netflix are quickly positioning themselves as premier paid webTV providers. It is therefore no surprise that Google is also making a foray into this market. The video below captures both the essence and advantage of IPTV, as well as the position that Google is looking to leverage in this rapidly growing market.

Google TV is not alone as a platform for convergence of multiple online media services. Boxee is a provider of free software to equip one’s PC to interface with their TV. The software even allows the PC console to be controlled by an iPhone running the Boxee app! Both Boxee and Netflix offer their respective IPTV services via dedicated hardware set-top box as well. Furthermore, IPTV is gaining increased presence through web-enabled televisions themselves. According to Park Associates, some 3 million broadband-equipped US households purchased Internet-connected TV’s in 2010, and this number will rise to 350 million by 2015 [3].

[1] “Potential IPTV Threat Discussed at Satellite 2009.” Satellite News, 01613448, 4/8/2009, Vol. 32, Issue 14

[2] Reedy, Sarah. IPTV World Forum: Moving beyond the triple play.

[3] Shields, Michael. Mediaweek. New York: Jan 10, 2011. Vol. 21, Issue 1, Pg. 9, 1 Pg.