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IPTV vs Me-Too TV

Light Reading
News Analysis
Light Reading
5/26/2005
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PALO ALTO, Calif. -- Content may be king, but can phone companies become king of content?

That's the big question everybody has about telcos and IPTV. They will have to strike the right content deals and partnerships and open up their networks if they want to profit from new technology such as IPTV, according to a group of executives here at the 13th annual Symposium, “Next Generation Media Networks," presented here by the Stanford Networking Research Center and Accel Partners.

It won't be easy. Already, the entertainment industry is entwined in a web of complicated and often exclusive licensing deals, and getting the right content will be a challenge for the telcos.

For example, Bob Greene, senior vice president of advanced services for Starz Entertainment Group LLC, took the audience here through the complex series of licensing agreements involved in acquiring movies:

First, movies are released to theatres. About six months after that, the movie is sold and rented on home video. It is only after that, about 1.5 months after the home video release, that the movies become available on pay-per-view networks, usually though exclusive relationships with cable providers and their content partners such as Starz. In fact, movies are typically licensed on an exclusive basis for about eight or nine years, says Greene, after which licensing is finally opened up to general broadcast rights.

Greene said that breaking into these exclusive relationships is the biggest barrier to folks that want to deliver content over broadband. "Exclusivity and ownership of rights are very important."

In digital music distribution, the licensing issues may not be as complex as with movies, but they are substantial. Rob Glaser, chairman and CEO of RealNetworks Inc., said the music publishers need quality and security guarantees from service providers in order to sell music online.

Glaser -- on a panel called "New Media: Is Content Still King?" -- held out the most optimism for the telcos, saying they have a window of opportunity to partner with the entertainment industry.

"Service providers have a very substantial opportunity to play a big role, especially if they take on a role such as DoCoMo in being the gatekeeper," said Glaser.

He said Japan's NTT DoCoMo Inc. (NYSE: DCM) has developed the best model for marketing entertainment content through new telecom networks by taking a cut of revenue in exchange for helping new content providers market their services over their network.

Proponents of more open, Internet-based models said that plenty of new content and business models will crop up if telcos employ an open, IP-based video platform. Jeremy Allaire, the founder and president of Brightcove, an IPTV content startup, says the emergence of open IP networks will create a new generation of content providers.

"An open platform gives content providers control over the brand and customer relationship," says Allaire. This, he feels, will create an explosion of niche content that folks can access directly over open, IP-based systems. "Nearly every small niche can be economically supportable."

Can telecom carriers, which have little experience with content and licensing, pull it off? Optimists such as Glaser, say yes. But others, such as Greene, say they should leave it to partners and just focus on the pipes themselves.

Later in the day, on a panel called "The Battle for the Living Room," executives from companies such as Microsoft Corp. (Nasdaq: MSFT), Yahoo Inc. (Nasdaq: YHOO), Sony Corp. (NYSE: SNE), and Netflix Inc. (Nasdaq: NFLX) debated the future of IPTV and its impact on consumers. Reed Hasting, founder and CEO of Netflix, said the industry had reached a crucial juncture, where it would be choosing between "freedom and control." He said that closed, proprietary TV systems such as those present on cable systems represent control, while open, IP-based networks represent freedom.

Hastings said that the industry will thrive only if multiple access networks develop and service providers pursue innovative products based on open technology. But Hastings said telcos are going down the wrong path if they are out to copy cable offerings:

"The tragedy is that the telcos are going to spend billions of dollars to do me-too TV."

Meanwhile, Moshe Lichtman, corporate vice president of Microsoft TV, showed the power of the Microsoft marketing machine with a flashy demo of Microsoft TV, navigating through a dizzying array of video content, including showing as many as five streams of video on one screen. Word on the street is that this "wow" demo is how Microsoft sold Microsoft TV to SBC Communications Inc. (NYSE: SBC). But don't hold your breath -- Lichtman said the day when you can buy a set-top box with a plug-and-play version of Microsoft TV that could be instantly activated by service providers is still two years away.

— R. Scott Raynovich, US Editor, Light Reading

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canadian
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canadian,
User Rank: Light Beer
12/5/2012 | 3:13:24 AM
re: IPTV vs Me-Too TV
Maybe Reed can explain this one to me, but I don't understand what exactly IPTV is. Sure, it is TV being received over the broadband pipe - but what does it give me as a TV viewer? What is the technology? A set top box? What else?

Why would IPTV be something I would be interested in?
paolo.franzoi
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paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 3:13:22 AM
re: IPTV vs Me-Too TV

Content is one problem. Its not like suddenly a bunch of hit content is going to show up out of nowhere. A second problem is stuff like this....

http://www.digeo.com/

And Direct TV has NFL Sunday Ticket as an exclusive.

seven
fiberous
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fiberous,
User Rank: Light Beer
12/5/2012 | 3:13:22 AM
re: IPTV vs Me-Too TV
orgasm
jayja
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jayja,
User Rank: Light Sabre
12/5/2012 | 3:13:22 AM
re: IPTV vs Me-Too TV
This is the key sentence in this story:

"The tragedy is that the telcos are going to spend billions of dollars to do me-too TV."

All I read about Telco TV offerings are Video on Demand, "new" content providers, DVR...

What about content? People watch TV (and subscribe to video services) for content.

Example - NFL football is supposedly a huge selling product for the satellite providers. It is not available to cable TV providers. SBC has an agreement with DISH or one of them - why not offer NFL football, in fact, why not just offer the satellite package over their new video network?

If all Verizon will offer are the same shows as I get with Time-Warner, they've got a problem.
rjmcmahon
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rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:13:19 AM
re: IPTV vs Me-Too TV
A second problem is stuff like this....

http://www.digeo.com/


I don't see this as a real problem.

If I were telcos I'd focus on enabling consumer gadgets that can be found on froogle. Using that search, one will not find a Moxi box but one can find many retailers for the Linksys WMA11b.

http://froogle.google.com/froo...
rjmcmahon
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rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:13:19 AM
re: IPTV vs Me-Too TV
Its not like suddenly a bunch of hit content is going to show up out of nowhere.

Agreed. The phone company execs know this. They are probably never going to get into the mass market video business. It's too expensive to build the modern access infrastructure and they'll get very little back in return.

Think of TelcoTV as another tactic of exernalizing costs. Telcos have large debts and would like somebody else to pay for them. Wall Street tends to "fund" a lot of hype, so why not see if they'll pay?

Imagine if the telcos stopped playing these games and started focussing on deploying real broadband in a manner like Hong Kong has done. They would be building something of lasting value in of itself. It's a better approach for everybody.
rjmcmahon
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rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:13:18 AM
re: IPTV vs Me-Too TV
It is a problem because if you ask the telco's they believe they have an advantage by offering a new way to access TV and entertainment services.

Do you think the strategic level executives at places like SBC/VZ believe this to be true?
paolo.franzoi
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paolo.franzoi,
User Rank: Light Sabre
12/5/2012 | 3:13:18 AM
re: IPTV vs Me-Too TV

rj,

It is a problem because if you ask the telco's they believe they have an advantage by offering a new way to access TV and entertainment services. They do not.

This is not on any of your hot buttons, but should scare the beejesus out of SBC.

seven
douggreen
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douggreen,
User Rank: Light Beer
12/5/2012 | 3:13:17 AM
re: IPTV vs Me-Too TV
RJM,

IMO, it doesn't matter what the executives believe. Their traditional revenue streams going downhill. Wireless bailed them out for a while, but that is now becoming a commodity with decreasing margins. The execs at the RBOCs have promised Wall Street that video is their path to revenue growth. Now they have to figure out how to do it.

They've tried partnering with satelite companies. A few of them even experimeted with an HFC cable TV offering on a trial basis. Neither of these proved to be profitable.

In my opinion, regardless of what they say about the superiority of IPTV, its main attraction to an RBOC executive is that it can deployed at a lower cost than a cable network using much of their existing infrastructure.

Customers won't change from cable or satelite based on theoretical advantages. Until we see exactly what the content offering is and how much it cost, the whole IPTV story is simply slideware.
rjmcmahon
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rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:13:17 AM
re: IPTV vs Me-Too TV
The execs at the RBOCs have promised Wall Street that video is their path to revenue growth. Now they have to figure out how to do it.

AOL/Time Warner promised Wall Street all kinds of things. Nothing happened. Why are the RBOC promises of today going to be any different?

In my opinion, regardless of what they say about the superiority of IPTV, its main attraction to an RBOC executive is that it can deployed at a lower cost than a cable network using much of their existing infrastructure.

People getting into the low cost video business are folks like Telemundo. No wires required. One just needs to find an underserved demographic. Why didn't the RBOCs get into that?

The RBOCs actions suggest they are not going into TV, despite such promises. Begs the question, why make the promises?
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