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IPTV: Bollywood or Bust?

Light Reading
Globalcomm News Analysis
Light Reading
5/29/2006
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India's telecom industry is gearing up to roll out IPTV services, but while carriers focus on getting video systems up and running, they’re challenged to acquire and protect video content.

Licensing content poses a challenge for any telco looking to offer video services. (See IPTV vs Me-Too TV.) But India's telcos have an added burden as they navigate a highly fragmented content pool when deciding what programming to deliver over their networks.

With a population of over 1.1 billion people, India has 18 major languages and hundreds of different dialects. "You could travel a few miles in any direction and run into a different language," notes Tonse Telecom analyst Sridhar Pai.

That fragmentation is reflected in its television content. India has a rich source of movie programming in Bollywood, which churns out over 1,000 movies a year, but "while Bollywood is center stage, television content is very regional," says Pai.

He adds that aside from a handful of established studios, the Bollywood machinery is fed by streams of “one-hit wonders” from production companies that come out with one big movie and fall off the radar -- not a stable source of content for a TV service.

Telecom operators including Mahanagar Telephone Nigam Ltd. (MTNL) , Bharti Tele-Ventures Ltd. , and Reliance Communications Ltd. are looking to roll out services initially to selected cities, which could give them a better handle on regional variations.

In offering IPTV services, telcos will be coming up against the cable market, which has been carved up by hundreds of small regional operators that serve up local content. Cable is not entrenched as in countries like the U.S. but it does have a broader reach than the telecom networks -- India has one million broadband connections and 62 million cable homes. "Even the slum homes in Mumbai have a cable TV connection," Pai points out.

Then there's the issue of content protection. "Content licensing is going to be a killer," reckons Pai. "For a country that's not completely used to respecting copyrights," the idea of paying for on-demand video services could be hard to catch on. Movies and computer software are "blatantly copied and no one cares," he says. "But for the content industry to flourish they need to have respect for copyrights."

Moviemakers may be reluctant to sign up unless carriers can create a price point that will lure in subscribers and still make enough money back, he says. "They’re going to be asking 'how much are you going to charge them and how much are you going to pay me?'"

It's those issues that are behind Reliance's decision to bring at least some content production in-house through acquisitions. (See Reliance Steps Up IPTV Plans.) At the same time, content providers have begun reaching out to carriers. Disney, for example, is planning mobile and IPTV content initiatives in India and is in talks with Videsh Sanchar Nigam Ltd. (VSNL) (NYSE: VSL).

A lack of content has also been cited as part of the reason for the slow adoption of broadband Internet in India, which ISPs like Sify Technologies Ltd. (Nasdaq: SIFY) are attempting to address with Web portals. With former RealNetworks Inc. (Nasdaq: RNWK) exec Surya Mantha as head of Interactive Services, Sifymax.com has begun Webcasting Indian sports, fashion, and business events to encourage users to switch from dial-up.

— Nicole Willing, Reporter, Light Reading

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