IPTV: still more promise than payoff

03 Dec 2009

IPTV is still more promise than payoff for most of the handful of Asian service providers who have deployed it, according to delegates at a forum in Hong Kong.

This year’s IPTV Forum Asia conference focused on recent IPTV rollouts in Japan, South Korea and China. But so far, it’s slow going for all three markets.

Korea’s three IPTV services from KT, SK Broadband and LG Dacom have racked up less than 1.5 million subscribers between them in the last year. In Japan, Hikari TV – the IPTV offering from NTT, the country’s biggest broadband operator – has just 760,000 subscribers, and may hit one million by March. Meanwhile, China had three million IPTV users as of August 2009.

(For comparison purposes, Frost & Sullivan is calling Asia’s IPTV subscriber count at 9.4 million for 2009 – which is 51% higher than last year, and still makes APAC the second-largest IPTV region after Western Europe).

A lot of the barriers remain the same – government regulations and broadcasters/content owners playing hardball have held back IPTV rollouts in plenty of Asian markets until the last 12 months or so.

IPTV is also still plagued by the usual negatives, according to Hee Sul Park, chairman of the policy planning committee for the Korea Digital Media Association – inconsistent QoS, slow channel change and low interactivity (especially compared to marketing).

And then there’s the customers themselves, said Ahn Sung-Jun, VP of LG Dacom’s myLGtv business division. “It’s difficult to change viewing habits that have been cultivated for 40 years, but this is what IPTV has to do.”

Operators have been trying to do that with tactics such as targeted ads, catch-up TV and interactive services like shopping. Yet for all that, IPTV is still perceived as too similar to cable TV in consumers’ eyes.

Interestingly, IPTV even has mobile TV as a competitor in Japan, said Masamitsu Nakamura, GM of planning for the BBTV promotion department of Softbank BB. “Mobile TV is spreading fast because people don’t pay for content but they buy devices that can receive free content, and they watch a lot of mobile TV at home.”

Noticeably, revenue earnings did not come up. ARPUs did, but the numbers were mixed. Pay-TV ARPU in Japan is $37. In Korea, it’s $6.00. China ranges anywhere from $3-10 for IPTV (compared to $1-2 for CATV).

Standardization remains a chief hurdle as well. Shanghai Media Group CTO Bobby Lee noted that it’s “still troublesome to get one vendor’s STB to work with another vendor’s headend.”

And that’s just the equipment. In terms of software and middleware, the Open IPTV Forum (OIPF) has been sorting through specs from a couple of dozen other standards bodies, from the DLNA, W3C and HGI to the Broadband Forum, 3GPP, OMA and ITU to enable common UNIs, home gateway integration and other features that will give IPTV the value-add it needs to distinguish itself from the rest of the pay-TV pack.

But as OIPF president Yun Chao Hu said, “Creating specs is easy. Convincing the industry to use them is much more difficult.”

Still, IPTV players aren’t giving up just yet, and are banking on the future with new services like HDTV, 3DTV, multiscreen initiatives that bundle mobile more tightly into the fold, and B2B services targeting corporates, schools and government departments.

Still, it won’t come cheap. Sebastian Lee of KT’s Media Business Unit said that Korea’s IPTV players will be investing $3.7 billion in IPTV – with $1 billion alone going to “contents” – by 2012.

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