I’ve had a few conversations with folks at different companies servicing the IPTV space over the past few weeks. These conversations have hardened my prior opinion. IPTV is nothing more than cable in sheep’s clothing and cable isn’t going to be the wolf much longer.
IPTV has a major problem (and lots of smaller ones); it is a closed proprietary delivery mechanism.
While IPTV uses new technology to deliver video to the consumer, the problem is not in how to get the video to the consumer, it’s in how to get the consumer to the right video. Telecom providers, like the cable and satellite systems before them, want to control every piece of video that reaches you through their approved device. But this is like looking at AOL’s business model in 1998 and saying that’s the ideal Web content delivery model. (Yeah they make a lot of money doing that, but who would you rather be today, AOL or Yahoo?) The market for video content in ten years is going to be like the market for any other Web content; you won’t want someone to limit your access to what they deem relevant any more than Web surfers were happy being spoon fed content from within AOL’s “walled garden.”
The fact is, the cable hub-and-spoke delivery model that has
been so pervasive for decades has run it’s course and is about to die. It might not die tomorrow, but it’s going to
die pretty soon. Open, packet-based, decentralized
delivery is simply going to dominate all data communications, not just text and
audio communications. If you can access
all your data over a single open network like the Internet, why wouldn’t you?
We’ve heard it everywhere recently. This is the age of consumer empowerment. Consumers want access to any content, any time, any where that they want. Cable and satellite simply cannot provide this type of flexibility in delivery. And once content owners begin to realize the tremendous potential of this open network (like AOL seems to be belatedly realizing) and begin to make all of their mass-market content available over broadband, there will be nothing to keep customers from defecting. After all, it’s a business model issue, not a technical issue.
To see this in action, you can also look at the VoIP market. It should give you a sense of the path all data communications is taking; complete disaggregation of the supply chain. The VoIP market is evolving into:
- a bunch of companies providing physical delivery infrastructure (these are your wired and wireless broadband Internet providers such as your SBCs and Comcasts and Sprints),
- a bunch of companies providing hardware solutions that comply with open standards for integration with any service (these will be your Nokias and your D-Link’s and your Ciscos, etc.), and
- a bunch of software solutions that reside on the network and tie physical delivery to the device in ways that make the consumer happy (these will be your Skypes and your Microsofts and your Yahoos).
Everyone is free to innovate and compete within their slice of the supply chain. You may still buy a bundled offering from one company, but increasingly you’ll find that you want to be able to shift between different hardware, software, or broadband service providers to get access to new features, better prices, etc. and the providers will be forced to lower those barriers to switching in order to compete. Add in the provision of multiple services over the same infrastructure with a little less FCC oversight and the number of providers in each slice is going to explode.
So, again, why exactly do I want to lock myself into another closed delivery channel that ties me to the same devices and pushes the same content I can already get from two existing proprietary networks for the same price? So I can get it all on the same bill? Oh wait, it must be access to the world-class customer service at SBC (which you’ll be using a lot with their IPTV service). The bottom line is that telecom providers are essentially trying to replicate the cable hub-and-spoke model over a packet switched network. Why? So they can maintain security and scarcity in the network. They want to keep the network closed and all the services bundled together. But I don’t think this is what consumers really want, and eventually consumers always get what they want.
IPTV is going to be hitting its “stride” in about five years, but in those five years, the world will have changed dramatically. People will be downloading/streaming vast quantities of video directly from content owners over open IP networks to any device with broadband access, local storage and a display (hell, they’re already doing it). They will be able to buy these devices in myriad form factors that make use of thousands of potential open standard Web-based services. IPTV will simply look like a bad experiment that occurred during a rapid and profound change in the way communications services are delivered.
Without delivering any quantum improvement in benefits to consumers, IPTV will ultimately fail. And with its’ failure, the last nail in the coffin of closed network distribution will be driven home.
UPDATE: Michael Parekh wrote a good post about this some time ago that I’m just catching up to.