IPTV I knew yea too little

The last few weeks has seen various announcements about Broadband TV and services going live There was AOLs/Time Warner with In2TV, AOLs investment in Brightcove, BBC's on demand video service, ITV local 's broadband TV channel to name just a few. All signs of the gathering momentum behind Broadband TV. Broadband TV is now a definite threat to the viability of the IPTV strategies of telcos.

There are three aspects to the threat. Firstly, broadband TV is less capital intensive system than IPTV. Broadband TV uses commodity hardware and tried and trusted Internet protocols. Nothing new is being done with Broadband TV. This means that the barriers to entry to this market are low opening up the market to a much larger number of entrants and consequently competition. IPTV requires access to the local exchanges to put in new hardware or build your own network. Very capital intensive.

Cost of content is the second challenge. Content usually passes through several hands before arriving at the consumer. All of whom add their own markup to the price of the content and thus inflating the price to the end user. And this will be no different for IPTV providers. With Broadband TV many, if not all, the middlemen can be cut out. Broadband TV allows content providers to build a relationship directly with the user. Dis-intermediating the middlemen whether they are aggregators or telco (or cable company or satellite provider or broadcaster). This provides higher margins at lower cost to the consumer. This will be serious price competition to the IPTV and will make some IPTV offerings uneconomical.

Broadband TV will from the get go have a much larger market size than IPTV. IPTV's market size is limited to the size of a telco's network. Nor will their be 100% take up of IPTV by everyone on the telco's network. Broadband TV's market size is the Internet. Even if a Broadband TV provider is limited to a nation that is still at least an order of magnitude greater market size. Even with the competitive environment of the Internet, a Broadband TV provider will have a huge market size to serve.

IPTV is going to face an uphill battle against Broadband TV. Not the least because every computer and every next gen games console is a Broadband TV set top box. There is nothing new for the customer to buy or provider to subsidise. And now GYM are at the crease for their innings. Interesting times.

Link: Om Malik on Broadband TV vs IPTV

Broadband TV, IPTV, Disruption, GYM