The big $ell

Digital Broadcast caught up with some of the IPTV industry's major players at the Middle East and Africa IPTV World Forum in Dubai last month, to assess the content delivery platform's fortunes in the region.
The big $ell
By Administrator
Sun 28 Dec 2008 04:00 AM

Digital Broadcast caught up with some of the IPTV industry's major players at the Middle East and Africa IPTV World Forum in Dubai last month, to assess the content delivery platform's fortunes in the region.

IPTV is an accurate acronym to describe the bare bones of the platform, TV via internet protocol. In reality, however, the technology provides a number of capabilities and opportunities, both technical and commercial, for operations that embrace it.

"Viewers don't buy IPTV - they buy entertainment services," says Mike Whittaker, vice-president broadcast technologies and operations at Showtime Arabia. "Consumers now face a tremendous choice in devices and with it comes a complex range of business models."

As a pay TV provider, Showtime is particularly interested in the customer facing side of IPTV rather than the ins and outs of the underlying network infrastructure.

"IPTV is being adopted by telcos in other markets and although the Middle East is seeing some activity, it is not at the forefront of these developments. Showtime is not exclusively a DTH operator.

It is a pay TV service provider and as such we are working with airlines, mobile operators and telcos to bring our content to as many people as possible," says Whittaker highlighting the availability of Showtime on both du and Etisalat cable networks.

One of the most obvious services enabled by IPTV on a level that can not be achieved on other broadcasting platforms is video-on-demand (VOD).

"VOD is a future of TV, but not necessarily the future of TV. I think VOD will fragment with the catch-up market leading the way rather than the premium ‘sneak preview' pay-per-view model," claims Whittaker explaining that this second option amounts to the customer opting out of the wider viewer community creating "a lonely water cooler moment" for themselves at work the following morning.

As the libraries of VOD service providers continue to grow there becomes a danger that users could find it difficult to identify what they want to watch, particularly when a large quantity of the programming is niche, long-tail content rather than a small number of shows raking in huge audience figures.

"The problem is that people don't know what content is available and STBs aren't able to help them browse their options adequately," claims Philippe Alcaras, executive VP for Selevision.

Users want a system to understand what they need. To ensure VOD is viable, we need to combine greater memory capabilities and broadband connectivity in the STBs. Customers are prepared to use other options than direct selection but browsing is not perhaps the best way to do this. Look at the example of the iPod Shuffle, it doesn't have any interface whatsoever but it has proven tremendously popular.

So too has the Apple Genius function [which automatically compiles playlists for a user based on what iTunes users around the world selected in their own playlists]. We will see more functions like this in the TV business as well."

The capabilities of STBs will have to expand on several fronts over the next few years in order to fully exploit the capabilities of IPTV. Whittaker highlighted the need for improved search functions within STBs to enable easier navigation around the expanding VOD libraries that are set to come online in the coming years.

In order to improve the search functionality, programming will need to be tagged in more detail to provide metadata that is useful for consumers.

"Search and classification is important. The more data we have about the content the easier it is to tie that in with the user," says Eugene Sarmiento, Ericsson global head of sales development IPTV. "It is difficult when you are dealing with 10,000 titles. Apple TV uses recommendations but that can restrict you to one genre. Just because you watched a horror film doesn't mean that is all you are interested in.

There were rumours in 2007 that Google was toying with the idea of becoming involved in the set top box market with its own search and ad targeting software. In the meantime, operators are seeking more advanced options than those that are currently available.

"We are launching an intelligent EPG. Viewers can set their own programming preferences and the PVR will then record automatically from the linear schedule," says Ali Ajouz, VP of marketing sales and distribution for Orbit Communications. "Viewers also have routines. Our research suggests that over-35s prefer linear television whereas younger viewers have embraced PVR and search.

"There are many illegal VOD services in operation in Middle East and they will continue to proliferate with increased broadband penetration. [The technology] will only be commercially viable if piracy is addressed," claims Ajouz.

"We can look at what the pirates are doing and legitimise it," says Whittaker. "Our business is being affected considerably by piracy. It is a very real problem though we have been encouraged by the recent number of raids against pirates.

"What people need to understand is that they are not stealing from Steven Spielberg and Co in Hollywood, they are stealing from Middle East companies that have invested local money in acquiring that content."

With the STB manufacturers and pay TV operators confirming that search capabilities and improved library navigation will prove key to any future success, what does the future hold for linear TV services?

Orbit's plan to use a preset PVR to record preferred viewing from its regular slate of programming is an indication that they see some future for scheduled broadcasts.

Satellite-based broadcasting is likely to remain the dominant delivery method in the Middle East for mainstream standard definition television services, which discounts many of the advanced services that IPTV offers.

Moving to an entirely on-demand service would force the hand of consumers to invest in more expensive STBs, potentially alienating them and driving them to a rival operator.

A VOD-only service would also waste the offerings of the FTA channels, whether they are large pan-Arab channels providing valuable content with wide appeal or one of the many smaller, niche, themed channels.

Aside from the business case for continuing to offer linear services, many believe there will always be some demand for these services.

Whittaker also believes that linear programming has a continuing role to play.

"It is still part of the mix. Look at online shopping. Sometimes it's nice to browse, to just sit back and discover something. It's also about navigation across devices, the rights windows on pay TV from cinema, tier one pay, tier two pay, blackout, FTA will change as a result," he says.

"For example, when the first KSA-government feature film was released a few years back, it aired on a VOD basis via the Showtime platform."

The investment required for IPTV is by no means insignificant and with such a high satellite penetration and such an underdeveloped IP network infrastructure, it would be difficult to criticise any operator or network for adopting a cautious approach to the technology.

This is not the only concern worthy of consideration in the view of Whittaker, who believes it is important to look at the major benefits of the technology in a regional context.

"There is no disputing that IPTV brings choice, but how many more options do Middle East viewers require when they already have access to 400 FTA channels? In other markets we have seen IPTV services benefit from the analogue switch-off," claims Whittaker.

"Here we have not had that transition as there is effectively 100 percent DTH penetration. IPTV has also benefited from broadband penetration but we don't have the best broadband infrastructure in the Middle East."

There is an opportunity however that would allow the region to pull away from other markets. The key to this lies in the demographics of the Middle East.Motorola recently commissioned a report into the so-called generation of ‘Millennials', (16-27 year-olds). The aim of the study was to assess the consumer technology and media consumption habits among this influential age group in Europe and the Middle East.

The populations of Germany and the UK both have around 14 percent in this age bracket compared with 24 percent in the UAE.

The results of the survey found that ‘Millennials' generally take the ‘any time, any screen' approach to media consumption with 32 percent preferring to watch programming on their PC than on TV.

There was also an eagerness to take content onto mobile platforms with three quarters of all respondents interested in the ability to watch movies while travelling.

Three minute versions of regular TV shows were of interest to 61 percent of Millenials. The UAE respondents offered the most positive response to HD television and the most interest in the ability to purchase items featured on programming direct to from the TV. All regions expressed an interest in the wider interactive capabilities offered by IPTV. Motorola is focusing its attention on combining these services across all platforms.

"The concept is the same so the consumer experience should be the same across the different devices," says Ian Wilkinson, solutions marketing manager at Motorola. "Achieving this means there is lots of back office software work that needs to be done. It is crucial, however, that we hide that complexity from the consumers.

"The EMEA region has the benefit of looking at previous case studies in other markets but technology wise, rather than looking to adopt two year-old systems, we have to offer the latest and greatest. We are adapting the technology to the region in order to address this.

The EMEA rather than the US is leading the way with IPTV, largely due to competition in Europe. The skill set for web-based applications also applies for interactive TV so we are seeing more flexibility in what we can offer.

The mobile angle is much stronger in the Middle East because of the enthusiasm for the latest, greatest handset. That's what is different about the Middle East market. As a result we don't make the distinction between each platform.

Wilkinson says that although the first IPTV STB was developed in 1999, it did not really come into its own commercially until a couple of years ago.

"Several things have changed that moved have it into the mass market. The development of MPEG-4 in 2006 and digital rights changes turned IPTV into a mass market principle," says Wilkinson.

The momentum behind IPTV is now building with all parties keen to exploit the technology.

"All the operators are on board and I think they recognise that IPTV is the future. Together with the added attraction of HDTV - and in the future 3DTV - pirates will not be able to compete and legitimate operators can open a gap and push people away from the pirate market.

IP can also be more secure than satellite and I think the satellite operators know this. They will look at terrestrial networks to help ease the pain," predicts Wilkinson.

"Between 1999 and 2007, one million IPTV STBs were sold, between 2007-2008 the second million were sold. It is a global standard and the EMEA rather than the US, is leading the way. This is largely due to intense competition in Europe," claims Wilkinson.

One of the challenges of IPTV, moving forward will be the handling of targeted advertising. If well-executed it could be the saving grace for ad-funded broadcasters. The potential privacy pitfall will have to be avoided to make this a reality.

"In the early days of the internet, cookies were unpopular. The thought of people taking information from you was repellent," says Jeremy Foster, marketing director, Marketing and Strategy, Ericsson Middle East.

"Privacy and convenience are connected to each other. Gradually the public has come to the conclusion that using cookies makes life easier, so they are willing to accept them," suggests Foster.

With IPTV, as long as people feel they are in control and they can turn off the interactivity and choose to have the regular broadcast experience, then I think they will be happy. The potential value of the service makes it likely that people will choose the full experience. Imagine if all the Indian viewers in Dubai could choose to just have Hindi-language advertising, for example."

The second issue with targeted advertising comes with exactly how targeted ad spots need to be to achieve maximum impact.

"The problem with individual targeting is that you may not want to be bombarded with your own personal stream of marketing. If my son is watching his programmes on my IPTV account, then all the advertising I get will be about cartoons," says Ericsson's Sarmiento.

"It's a balance between individual and segmented advertising."

So with collaboration across so many previously free standing industries, from ad agencies to broadcasters and telcos, how does Motorola's Wilkinson see these relationships panning out in the future?

"Content will always be the driver. HD won't make a bad movie any better. Content providers feed the network, providers need content. There has been some weariness in the past but everyone has accepted that there is mutual benefit. You need the content that best suits the demands of regional consumers," says Wilkinson.

"Sky showed the way in the UK with the English Premier League rights. Everyone thought they had paid a fortune for them, but now it looks like a very shrewd investment indeed,"

"The ace card is with the content owners."

IPTV market growthIPTV rises, cable falls

A recent study by Pyramid Research predicts strong growth for IPTV services over the next five years.

According to the report, IPTV currently represents around three percent of all pay TV subscriptions, however this figure will rise to 14 percent by 2013. This will be at the expense of cable TV's share which will decline from 76 percent to 61 percent.

"IPTV operators continue to make strong strides in gaining pay TV market share," says Özgür Aytar, senior research manager, broadband & media, Pyramid Research.

"We estimate that IPTV will drive a global total of 9 million net subscriber additions in 2008, 40 percent of which will come from markets in the Asia-Pacific region."

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