Give them what they want

10 May 2006

Not long ago I was having a drink with a few friends, one of which is an avid video buff. Call him Patrick. We got to talking about IPTV, and Patrick agreed that it was a neat idea as far as it went, but so far, he was not impressed. Yes, he lives in Hong Kong, and yes, he has seen NOW Broadband TV, and yes, he loves their a'la carte channel subscription model. Well done, says Patrick.

But here's what Patrick really wanted to know: 'Why can't I program my own channels‾'

Patrick explained thusly: 'NOW Broadband TV is essentially a better-priced version of cable TV, and they're essentially competing on a mixture of price and exclusive movie channels. But I don't want to get the same channels at a better price, I want personalized channels that are tailored to my taste.'

Patrick's basic concept was this: IPTV theoretically allows service providers to provide a wider variety of choice because it's one IP stream sent from a headend video server to the set-top box. You don't have to broadcast all channels at once through a node, as cable TV networks do. So why limit that to the same old broadcast video channels all pay-TV players have‾

Patrick emphasized that he wasn't talking about VOD, which is an event-based transaction not unlike, say, an MP3 download. 'What I want is a pay-TV version of my DVD video collection. Why can't I have one channel with nothing but Star Trek shows, another channel with classic sci-fi shows and another with cult classic movies like 'Omegaman'‾ I can get them all on DVD, so I know they're available. Why can't I order a tailor-made channel that allows me to subscribe to these shows rather than having to buy them on DVD‾'

License to ill

It's a good question. And the answer isn't in technology, but in licensing.

Licensing copyrighted video content is a troublesome affair for anyone who plans to distribute video in any way other than the standard model that cable TV operators have employed for years. Typical channel license fees are geared for mass markets, not personalized content channels.

VOD is also tricky because of the way that movie studios license their content. A typical Hollywood film isn't available for PPV licensing until at least eight months after its theatrical run, after which it's usually licensed on an exclusive basis for as long as nine years before it becomes open for general licensing.

And who gets these licenses first‾ Usually, incumbents who have been playing the pay-TV game for years - the same incumbents whose networks don't have the flexibility of IP-based video networks to support new, innovative services.

That may change in the next few years. PCCW was able to convince HBO, Cinemax and Star Movies to drop incumbent i-Cable for exclusive deals with NOW Broadband TV in part on the strength of its secure piracy-resistant network.

Also, the movie and television studios are already seeing the power of IP-based video distribution, from video downloads of 'Lost' and 'Desperate Housewives' on iTunes to the viral success of sites like YouTube.

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