Broadband TV - Taking the Public By Storm One Niche at a Time
Colin Dixon, Senior Consultant, IPTV Practice Manager
September 21, 2006
What I Learned at IBC
While visiting IBC in Amsterdam two weeks ago, I attended a conference session in the Multi-Media in the Connected Home
track called 'The Markets - Integration or Disintegration.' The panel discussion inevitably turned to the much-debated
subject of broadband video on the television. The Microsoft representative on the panel argued that it will be "decades"
before broadband video reaches the TV and becomes a mainstream phenomenon.
His argument centered on the generally accepted notion that the so-called "late majority' - a segment which in theory
comprises over ½ of the mainstream consumer market - is typically very slow to embrace new technologies1. According to
this principle, one would expect that for many people - especially mainstream consumers who have become quite
comfortable with the TV they have known and loved for decades - are unlikely to embrace a radically different medium of
delivery.
While this insight seems commonsensical, the late majority has proven to be surprisingly agile when something compelling
comes along that appeals directly to them. Witness the speed with which this segment has embraced the Internet. In an
extremely short period of time, even the 'wait and see' late majority has flocked to the Internet, enjoying the
convenience of online shopping, the immediacy of Internet messaging, and the virtual interaction of online social
communities.
1. This is a well-known tenet of Everett Roger's diffusion theory (see The Diffusion of Innovations ), one used by
Geoffrey Moore in his book, Crossing the Chasm (and without proper credit given to Rogers ).
New Solutions Positioned to Push Broadband-TV to the Masses
Is there sufficient reason to believe that consumers (whether the late or early majority) will respond similarly to
Internet TV? This is a question permanently inscribed on every white board in Hollywood and Silicon Valley . Microsoft
seems to have an opinion, one surprisingly pessimistic for a company involved so heavily in Internet and IP media.
In order to answer this question, we must first take note of the complexities involved in actually connecting a
television to the Internet. Today there are basically two options: a direct connection via a broadband-enabled set-top
box, or a LAN-based connection where the PC or another server transmits the TV signal over a home network to a TV or
display device.
The first option is relatively straightforward and involves little complexity. This method of connecting the TV to the
Internet is employed by Akimbo and TiVo, both of whom deploy broadband-enabled set-top boxes configured specifically to
receive video signals over the Internet from their 'walled garden' of content.
The second option is - at least for today - much more complex and fraught with difficulties. Anyone who has tried to set
up a video sharing network or actually transmit video across their home LAN can testify to the fact that these solutions
are plagued by problems. However, this is the method of delivery that Apple has chosen to support with its
soon-to-be-released iTV platform, a proprietary wireless adapter intended to share iTunes content (music, movies, and TV
programming) with the primary home entertainment system.
At IBC, Amino (an IPTV STB vendor) announced the Aminet 125i, a new set-top box intended specifically to enable Internet
video to be streamed directly to the TV. The company plans to sell the Aminet 125i to companies wanting to deliver their
content directly to consumer's TVs without the hassle and expense of courting PayTV operators for space on their
systems.
One obvious market that might want to take advantage of such a solution is the adult entertainment (AE) industry, a
segment always interested in leveraging the latest technology to distribute their unique content (AE content purveyors
are hard-wired to identify and exploit disruptive technologies). Imagine if Vivid Video were to give away set-top boxes
that enable their Internet-based adult content to be delivered to the TV? No revenue sharing with satellite or cable
operators and a direct connection to their consumer. Sounds compelling - at least to some consumers.
The appeal of this solution is by no means limited to the AE industry: there are plenty of other companies that should
consider such a model. Imagine a mainstream retailer such as Wal-Mart or Target leveraging their brand and marketing
muscle to introduce movie and music streaming services that delivered content directly to the living room. Imagine
online movie distributors such as Movielink and CinemaNow using this model to reach the primary home TV. Talk about
growing your addressable market!
Can the Promise of BB-TV be Realized?
With the arrival of solutions intended solely for the distribution of Internet-based content to the living room and the
primary home TV, there is reason to believe that the challenge of connecting the Internet to the TV will be solved and
in very short order. But this alone is not enough to attract the masses to broadband TV: there has to be something
uniquely compelling about the service and content such that consumers (a) find it interesting enough to give it a try
and (b) valuable enough to use it on a regular basis.
To understand what this 'special sauce' might be we need look no further than the Internet itself. The essence of the
Internet - and what it does better than anything else - is connect people with unique but similar interests into virtual
communities and turn them into identifiable, addressable markets. To see what I mean by this, checkout websites such as
http://allnurses.com/ or http://www.americanbirding.org/.
To date, the economics of video delivery have precluded addressing such niche markets through traditional broadcast TV.
The wide geographical scattering of niche markets and the high cost of broadcast bandwidth make it cost prohibitive.
However, the economics of the Internet fundamentally changes this equation. Suddenly it's possible to use a single
delivery mechanism - the Internet - to reach all the German-speaking population in America or all the quilters in the
UK.
Aggregator, a new hybrid video operator in the UK, totally understands this power. When it launches services later this
year, not only will their customers be able to watch 30+ broadcast channels of FreeView; they will also be able to get a
wide variety of broadband channels. One of Aggregator's first on-demand channels will deliver Russian language
programming which heretofore was only available, and marketable, in Russia . Suddenly, this is a must-have service for
every Russian speaker in the UK!
With services like this appearing on TV screens around the world, there is now strong motivation for consumers of all
kinds to consider Internet TV as an in-home video alternative to their regular TV services. And when you recall that
each of us is a member of one niche or another, that strong motivation extends to us all.
Is it unreasonable to expect the mass of the viewing public to jump into Internet TV within 10 years? If you're a
Russian speaker in the UK, it might be reasonable to be talking about one year, not ten. With a sharp eye on market
demographics, services like Aggregator are poised to take the TV market by storm - one niche at a time!
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ENDS