Do we want our IPTV?

Video is clearly the “in” thing on the Internet, with new peer-to-peer television offerings, user-generated video services, Internet video channels and telco interest in IPTV. So it was a shock to see such a low turnout at last week’s IPTV World Forum Asia in Singapore. You’d think every telco in the region would have sent out a delegation to find out what the latest thinking is and how the pioneers are doing. Or perhaps it’s in everyone’s too hard, too costly and too much government meddling basket?

Let’s face it, Asia hasn’t realised its promise when it comes to IPTV, particularly given the much touted high-density, high-bandwidth economies like Hong Kong, South Korea, Japan, Singapore and Taiwan. The region was at the forefront thanks largely to PCCW’s Now offering, which first started more than four years ago, but since then there’s largely been a vacuum. PCCW/Now still accounts for the majority of IPTV subscribers in Asia with its 850,000 signups, and it was only a few months ago that it was joined by a serious telco IPTV offering – Singtel’s Mio.

In the meantime, it seems there’s now more IPTV activity in Europe and the US, particularly in conjunction with some of the new fibre rollouts. The Asian numbers haven’t been helped by some world-class dithering by regulators, which continue with 20^th Century models to regulate Internet and new media. South Korea, for example, should be an IPTV showcase by now if it wasn’t for the insistence by regulators that they can’t broadcast in real-time and other hobbling policies. Most of the other regulators around the region seem not to understand the new digital media landscape either.

Nevertheless, there were still some interesting lessons to be had from last week’s IPTV event, first and foremost that it will remain a very expensive business to enter into and one that will have a very long return on investment. Speakers from PCCW/Now and Singtel/Mio both stressed that they viewed the business as a pay TV service – meaning it required all of the various agreements with content producers, advertising and a reliable platform rather than an Internet “best effort” platform.

In the case of PCCW, it’s yet to turn a profit after four years and has recently ploughed US$200 million into getting the broadcast rights for English Premier League football. Singtel has also been sourcing original content and is not expecting to turn a profit on its IPTV service for 10 years. Low Ka Hoe, the director of Mio TV and content, also pointed out that nothing less than a 20Mbps connection (or ADSL2+) was good enough for delivering the service given that they wanted it to be seen as reliable as regular satellite/cable TV.

For all the talk of “video 2.0” and user-generated video content, most of the big telcos seem to think they need to be a pay TV operator first, then add the social networking/user-generated content frills later. This could well be the case because, let’s face it, everybody across the whole media landscape seems to be still playing a guessing game when it comes what consumers want and are willing to pay for. The real convergence hasn’t happened yet – consumers still go to a TV set to get regular shows and head to the Internet/PC to get niche content. Whether the two come together remains to be seen.

Content producers are also still guessing. Yew Ming Lau, VP of business development for Turner Broadcasting Asia Pacific, said Turner and other original content producers were still working out how to tap into the “long tail” of niche content by experimenting with various web channels and other delivery models. Telcos would be happy to hear that he believes they are better placed to deliver the niche stuff in conjunction with the regular programming, but then again this could be just because both the telco and the content producer see this as the best way to monetise user-generated and other new content forms.

Which brings us to the elephant in the room that few people want to draw attention to – the web-based and peer-to-peer players like Joost, Babelgum and the newly-announced Knocka TV (from the founders of ICQ). Some might even call it the over-the-top elephant that may come crashing through to spoil the party. One surprising voice to acknowledge it at last week’s IPTV gathering was Hou Zi Qiang, an independent director of China Netcom who stressed he was presenting his personal views rather than those of the carriers.

According to Qiang, “the basic business model of new media is the Internet business model” and “video should be on the Internet, not on the private network of an operator.” In other words, IPTV is ripe for disintermediation like every other media. And perhaps that explains the low turnout at last week’s IPTV World Forum Asia last week – everyone’s tuning into what’s happening on the Internet before they commit to expensive IPTV rollouts. – Geoff Long