The event that most IPTV World Forum (held this week at Olympia in London, England) most reminds me of is the Mobile Marketing Association's conferences. The commonality is that they present an opportunity for the telecoms industry to talk to itself and repeat mantras about new business models, especially advertising, while frantically trying to figure out how they will make money in a converging world.
Jean-Christophe Dessagne, head of IPTV & new media business development, Cisco Europe, summed one of the key issues up admirably during his conference presentation on Video 2.0, saying, "It's very hard [for operators] to imitate web service provider, because those services are free and based on best effort," which is no good for TV because users won't accept it, while, "They need to bring the look and feel of Web 2.0 to TV. They need content portability and to understand that free [video on demand] VOD gives rise to a 20% take-up of paid for VOD," so long as they get the content right, of course.
"Right now [operators and cable companies] are preoccupied by content acquisition," Kelly Anderson-Neiman, head of the cable sector with the TeleManagement Forum, told TelecomsEurope.net in an interview here. She added, "I don't think IPTV could be the cost justification to do an entire switch-over to IMS. That's probably in the research stage, it certainly is in cable where companies that are just trying to figure out which bits [of IMS] they can use and what they can't use"&brkbar;we just don't know what the final deployment will look like."
Such frankness is rare: earlier this week NEC announced its belated entry into IPTV, predicting that it will have IPTV revenues of €311.51 million/¥50 billion by 2010 by riding on IMS' coat-tails. The flaw in its approach is that so far operators have fought shy of embracing IMS. Certainly they recognise the need to move to next generation networks (NGNs), but the concept of NGNs has broadened and evolved since the heyday of IMS hype in 2005, and IMS in no longer centre stage.
IMS is perceived as too much of a forklift change and much too expensive, as Alcatel-Lucent, another IPTV/IMS proponent has already discovered.
Adam Boone, VP of marketing from OSS and revenue management specialist Subex, argues that the approach to making money from content has to be two-fold: by automating as many customer-facing processes as possible, thereby passing costs on to the customers and empowering them at the same time; and to leave existing systems in place, but plug them into Subex's platform so that new services and apps can be added relatively easily.
Boone explained, "With TV content, the makers get most of the revenue, not the distributors, so the only way to make money is to get costs down through automating as many processes as possible." He added, "It has to be a platform approach, not from a technology perspective, but from the cost angle." Boone admitted that sometimes the only option is, "a bolt-on [to existing systems] depending on how far down the convergence route they are."
The Cisco approach has similarities - according to Dessagne, its Content Distribution System doesn't store all the available content, rather it pulls it across the network as needed, "in a carefully managed way"&brkbar;we use web service interfaces - it's not necessary to get involved in middleware to scale distribution and preserve experience." In other words, leave as much as possible well alone.
So confusion about business models and the strategic technological route needed to enable them remains a subject of debate and uncertainty. It's most illuminating that Cisco's Dessagne felt moved to state, "This [IPTV] is not hype, it won't disappear." Despite the - mostly US - stats he wheeled out, it still sounded like he was trying to convince his audience and himself.