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This is a very exciting time in the TV market.
Listen to one set of opinions and you'll learn that TV is in terminal decline; that it is losing out to the Internet; and that the trend is at its worst in the 18 to 34 age group.
On the other hand, studies of TV viewing show clearly that it has a long way to fall. The average viewing time in the USA is 4 hours per day; the average Web usage time is 1 hour. Typically, 90% of participants in surveys say they use TV daily; it's around 62% for the Internet.
But the future isn't a case of TV versus the Internet.
The future is about high-speed Broadband delivering a new way for the Internet to save TV and keep it on its pinnacle as the #1 of media.
Those trends are:
1. Growth in "HD Ready" TV sets in the new and replacement TV market of 1.2 billion TV households worldwide.
2. Broadband capacity and deployment on track with ever-increasing bandwidth rates for the same or lower cost.
Over the next 5 years the market for High Definition Television Sets is expected to grow from around 50 million HD-enabled households to over 200 million. The number of broadband-enabled homes in the same period will reach nearly 800 million. However, not all of those broadband homes will be "very high speed" broadband as in VDSL2 or FTTH.
Based on the falling "cost per port" of very high speed broadband relative to today's broadband speeds, Vidanti forecasts a total of around 260 million very high speed broadband-enabled households by the year 2012.
A "very high speed" broadband connection will offer a minimum of 50Mb/sec downstream. That is more than adequate for streaming High Definition video content, so these homes can also be considered as "HD-enabled".
So, in 2012 there will be 200 million homes with a HD Ready television set, and 250 million homes that are served by a broadband connection that is HD-enabled.
Many analysts have noticed a disparity between the number of homes that have HD Ready TV screens and the number of homes receiving HD content, whether by satellite, cable or terrestrial (over-the-air).
In one report, the estimated number of HD Ready sets in Europe is forecast at 115 million by 2010, whereas only 17 million homes will be receiving HD content. Others point to similar outcomes: only between 15 to 30% of HD Ready television sets purchased will achieve their potential and actually be used to display high-definition video.
This "content gap" seems like an un-met need that should not be allowed to go unaddressed.
The gap is an artefact of the way that HD content is delivered today: the satellite digital broadcasting platform has been the first to respond, and has advantages over its cable and terrestrial rivals, but even it struggles to accommodate the extra bandwidth that is needed for HDTV on its satellite transponders.
Enter high-speed broadband.
By the time that high-speed broadband has reached a critical mass to enable this, consumer familiarity with streaming video over the internet (so-called "Internet TV" or "PC TV") will be pervasive. Already, websites such as YouTube are switching to the MPEG-4 (H.264) video compression formats to prepare for the increase in video quality that will be required.
Global IPTV market growing but more slowly than anticipated.
The reason for this lies in the nature of IPTV i.e. "a Telco IPTV service is usually delivered over a complex and investment-heavy walled garden network, which is carefully engineered to ensure bandwidth efficient delivery of vast amounts of video traffic" (Karl Sin, BNS). Many Tier 1 Telco IPTV accounts have opted to use middleware solutions that has resulted in soft launches or delayed rollouts. Pure-play IPTV companies have reported lower revenue or issued market warnings.
However, analysts report that the underlying market trends for IPTV in Europe and Asia are still strong. The IPTV market in Europe is expected to double in 2007, and the top 5 IPTV operators - Orange, Telefonica, Free, Neuf and Fastweb - account for 60% of the total European subscriber base of 2.9M.
The problem lies in the value proposition to consumers: why should anyone care if the same content and services is delivered over IP as opposed to Cable? The real battleground for the TV platforms is about advanced features such as support for high definition, video-on-demand and digital video recording (and the combination of these).
The challenge facing IPTV Operators and Service Providers has been to find the right technology and services to provide a high quality, reliable and attractive service that allows them to compete with more traditional multi channel services such as Satellite and Cable. The Consumer is also expecting to use the TV for more than passive viewing. Already, almost half of European Broadband users choose to watch TV online at some point during the week, as they choose to watch previews or reruns of their favourite shows, or films at times that suit them, rather than the schedulers. IP based on demand services are widely offered by Broadband Service providers, and content is migrating from the PC to the TV as the preferred viewing method. Consumers routinely view their digital photos and video on the TV by either plugging in their cameras directly, or by streaming from the Home Network PC. There is a steady convergence of video and data services within the home and many consumers expect to be able to use the TV to make Video Calls by 2012.
Growing trend for adding Broadband to Digital Video Broadcasting (DVB) receivers.
The trend towards HD has led to re-design of receiver equipment for the Satellite TV markets, using H.264 video compression and DVB-S2 chipsets. There is a perception, that use of IPTV for Video on Demand would be a good way to level advantage with the Cable TV providers. A key emerging market for Satellite IPTV devices is Germany, where it is expected that many new DTH HD services will start broadcasting in 2008, to coincide with the Beijing Olympics and the Euro2008 football. SES Astra predict more than 100 HD Channels will be available by 2010. Many of these will be pay-TV rather than free, but the trend for German consumers to buy the unit in retail outlets and then choose to upgrade to paid content by obtaining a smartcard is expected to be maintained.
There is also an emerging market for Cable IPTV receivers. The rationale here is that it is cheaper in the long term to source IP-based equipment which is becoming ubiquitous across the IT industry.
Finally, there is an emerging market for Terrestrial (DTT) IPTV receivers. Countries such as France have mandated that their DTT services will carry HD programming. Hybrid DTT/IPTV markets are predicted to be a major driving force in France, Spain and the UK. The French market is being addressed by Darty. In Italy, a service is being trialled by RAI. There is also a possibility that there will be a HDTV over DTT market in the UK, as OFCOM are lobbying to create 4 HD channels on Freeview. BT Vision is already in the SD market, offering Freeview combined with video-on-demand over ADSL. They have made a GBP10bn outlay for a "backbone" network for ADSL2+, and plans broadband speed offers of up to 24Mbs for next year. Tiscali UK is also actively competing with BT - it acquired HomeChoice and plans to roll out TV services nationally this year, and it acquired Pipex to bring it's ADSL subscriber base to 2 million.
China will also launch HD on DTT broadcasts in 2008, according to a recent national five-year (2006-2010) guideline on cultural development. This is in line with China's plan for HD production and transmission of the Beijing Olympic Games. Broadcasters will have to use the recently released Chinese DTT standard but the compression codec (MPEG-2 or MPEG-4) has yet to be specified.
In some instances where the broadband bandwidth is too low for IP Broadcast the IP connection can be used to trickle feed Premium content to a hard disk in the Set Top Box for later viewing by the consumer.
This market is varied as are the methods used to present consumers with a choice of programming, scheduling and on demand services. Each Service provider needs to develop their own service package that is suited to the needs of consumers, local infrastructure and competition, and require a flexible solution to meet those needs.
Emerging demand for integrated Internet TV with IPTV solutions.
The growth in Internet TV and video sharing websites such as YouTube, blip.TV, Joost and Babelgum has led to a new un-met need - the ability to relay video content from the PC to the living room television.
Many of these sites are already anticipating the step function in quality from the current content that is shared and served. Many of these sites stream video encoded using Adobe's Flash v9.0. Some are switching to using H.264 encoding and recently Adobe announced that Flash is to support H.264.
Infrastructure investment is cost justified by IP video streaming opportunities
Fiber-to-the-Home build-outs very often precede IPTV markets.
There is growing evidence from the market that the cost investment on the FTTH build-out is frequently justified by the revenue opportunities of video streaming. However, the overall market is still very young and dominated by the Japan segment.
In conclusion, this is indeed an exciting stage in the TV market, and one that Vidanti is well-positioned to serve. Vidanti can provide the Service Provider or Equipment Manufacturer with the knowledge and experience to meet this challenge and to satisfy the needs of the consumers. Premium, High Definition content together with IP based, interactive services can be merged with Digital Broadcast TV, Home Network and telephone systems all in the same platform.
Placing TV and TV Services at the centre of the Home Entertainment Network.
