Here Comes IPTV

Internet-protocol television

For nearly as long as visionaries have been predicting the imminent rise of video-on-demand, wild-eyed enthusiasts have predicted a day when the Internet will make it possible for anyone to be their own program distributor. That`s one aspect of IPTV.

What is IPTV? Possibly the hottest set of letters in Hollywood, it stands for Internet-protocol television _ something few studios are using at present and even fewer seem to understand, though it possesses potential to be the next tech boon for content-holders.

Depending on whose definition is being used, IPTV can involve various media pumped through to a PC or TV set, received directly or through a set-top box and distributed via a telco, cable operator or Internet service provider. The common thread is that the transmission is formatted in Internet protocol, the data-packet technology used by Skype and Vonage to provide inexpensive cable-based telephony. Because content is key to making any new technology platform fly, early deals struck by movie studios and TV networks are, by default, shaping the evolution of IPTV.

Rather than focusing on all of the things IPTV can be, it is worthwhile to examine how studios and networks are defining it through their partnerships and launches. Warner Bros., Turner Networks and ESPN are among major entertainment companies that have inked recent IPTV-related deals.

In a high-profile partnership that takes its cues from the broadcast-TV model, Warner Bros. and AOL have created In2TV, a broadband network that is free to consumers and relies on advertising to generate revenue. The raison d`etre behind Warner Bros.` move was clear: With a huge library of 6,500 movies and countless TV series, content is an immense asset -- and Internet broadband offers an addition to the studio`s revenue stream.

'A couple of years ago, after watching a lot of false starts in the Internet business, I said to myself, `This is going to happen one of these days, and it`ll be more than music videos, trailers and short news clips,`' says Eric Frankel, president of Warner Bros. Domestic Cable Distribution. 'We said that we should be first.'

Frankel notes that the first step was to clear programming: To date, Warner Bros. has cleared 14,000 episodes of 400 series for distribution via In2TV.

'The fastest way to build the market is to get a high-quality experience to the viewer,' says Kevin Conroy, executive vp and chief operating officer at AOL Media Networks. 'But you can only do that with a strong advertising component, and the strength of the online advertising market is what allows us to deliver (In2TV) at scale and free to the consumer.'

Kagan Research reports that AOL earned about $1.3 billion in ad revenue last year.

Watching TV on a PC, using a broadband connection, is not as far-fetched a notion as it might seem at first. U.S. cable companies and telcos have invested heavily in order to provide broadband services: From 1996-2004, capital expenditures to upgrade cable infrastructure were estimated at nearly $95 billion.

According to Tanya Van Court, vp and general manager of broadband and interactive television at ESPN, nearly 43 million U.S. homes have a broadband hookup. In addition, Intel`s Viiv platform promises the holy grail of convergence: a computer that looks and acts more like a TV set, all the better to hang on a living-room wall.

One strength of over-the-Internet video, commonly called 'over the top' video, is that it is free to consumers. Another appealing feature is inherent to the depth and breadth of the Internet, on which anyone can create a channel, and an endless number of video channels can cater to niche markets, a phenomenon known as 'sliver-casting.'

For viewers who do not wish to search for Internet channels, monthly subscription-based aggregators such as DaveTV, Akimbo and iSee Networks with WhiteBlox can assist. DaveTV, which requires a proprietary set-top box, offers a wide range of content. Akimbo is focused on IP video-on-demand and aggregates content from creators around the globe, according to CEO Josh Goldman.

'We have a giant library of content,' he says. 'It`s so cheap for us to gather, encode and host video over the Internet that it costs pennies for an hour of video to the home. This will mean that smaller entities can create a business out of putting video on the Internet -- or do it for fun or for passion.'

Cable companies are paying attention.

'Over-the-top video can be perceived as a major threat to cable by eroding its traditional business,' Kagan senior analyst Ben Reneker says. 'But cable (multisystem operators) are also in the perfect position to harness the Web`s vast video archives, providing straightforward delivery to the living room.'

IPTV essentially offers a one-to-one signal, providing channels on-demand as opposed to commercial television`s 'always on' model. Each IPTV program has an IP address, and a household`s 'box' finds it.

'Comcast will do it,' he says. 'We just haven`t said when.'

Of course, Microsoft also is in the IPTV game - in nearly every possible market position. Microsoft Media Center allows users to stream video directly to PCs, but the program also talks to TV sets. In addition, cable operators and telcos are making deals with Microsoft for its middleware, located inside set-top boxes, that decodes IPTV video sent to the home. AT&T`s substantial IPTV initiative will incorporate Microsoft`s middleware.

'Microsoft is trying to create devices that can take video input from any source,' Fellows says.

Back in Hollywood, studios and networks are paying close attention to developments in the IPTV space. Nobody wants to be last to the party, potentially a lucrative method by which to repurpose assets, but many companies are hedging their bets by waiting on the sidelines.

Still, others hedge by engaging in multiple-platform delivery schemes. ESPN is doing just that, based on an attitude notable for adopting new digital platforms aggressively while remaining platform-agnostic. Part of the reason is the network`s young-male demographic, the gender and age group that includes the most gadgeteers.

The delivery of video content via IP opens up new opportunities for content owners to push their content to a wide variety of devices -- the home TV, the home computer, and of particular interest to readers of this blog, the mobile device.

When there is tons and tons of content to be delivered, and 900 million mobile devices that can access the internet at ever higher data transfer rates, it stands to reason that before too long, the 2" screen will be recognized as a gating factor that is limiting the ability of all the players involved to maximize their revenues and profits. Microvision's solution to this is either the handheld or embedded PicoProjector, or the Color Eyewear platform. Now the full screen experience will be available on-the-go, with access to the exact same content that you can enjoy on your TV at home.

With the advent of IPTV, we can finally begin to see some really strong signs of the whole 'convergence' thing that got people so fired up back in 1999, when AOL bought Time Warner.