Analog to Digital to IP - News about the Future of TV

The last few days have seen the release of a number of stories and studies that all point to one simple conclusion - IPTV is, or will soon become, the dominant transmission mechanism for TV programming.

  A report from  Needham & Co. suggests that in 2012, the U.S. TV ecosystem will generate more revenue from licensing and subscriptions ($85 billion) than from advertising ($80 billion).  Further, the continued rollout of "TV Everywhere" technology (using IPTV to deliver content to mobile and other devices) is likely to add $10-12 billion a year to the US TV market.  They note that these numbers currently don't include what's being earned on online video sites like YouTube.

Interest in video content will continue to grow. We'll see it in display ads and search engine queries. Brands not only want to monetize pre-recorded content for channels on YouTube and other video sites, but to stream live programming effortlessly from their YouTube Channels to mobile devices. It appears this will become Google's unofficial long-term strategy.

Most of the new IPTV revenue, the report suggests, will come from advertising - as research is beginning to suggest that that Video-on-Demand viewers are less likely to skip standard spot ads than viewers who access programs through DVRs. As the IPTV experience is much closer to VOD than DVR, this suggests that TV Everywhere content can be monetized with standard TV ad loads, pricing, and monitoring.  The report concludes by saying "We believe that TV Everywhere will be one of the primary drivers of valuation growth for today's TV ecosystem over the next five years."

  While global demand is likely to remain high, the recent news for leading U.S. telco IPTV providers is mixed.  Verizon recently announced a halt to major expansion of its IPTV service (FiOS) as well as most system upgrades for existing customers, and seems to be shifting its focus to more the profitable wireless sector.  AT&T's U-verse, on the other hand, is seeing greater-than-expected demand as it continues to build out its network - experiencing delays as it runs out of critical equipment and having to hire more installers.

  Research firm Ovum released a report suggesting that most of the early roadblocks to IPTV are disappearing as newer broadband and IPTV systems continue to diffuse and achieve scale economies.  They suggest that as these improved telco nets expand, IPTV use will shift to those platforms, as well as bringing new audiences and demand for IP-delivered digital video.  Ovum notes that for the 114 million subscribers around the globe who get TV through telcos, less than half get the TV through a telco IPTV feed.  However, demand is high, and with the next-gen systems enabling expanded (and lower-cost) delivery, Ovum predicts that by 2016, IPTV revenues will account for 60% of global telco TV revenue, and 71% of their pay-TV subscribers.


  Mobile devices lies at the heart of the TV Everywhere experience, and there's good news on that front as well.  New research from the Pew Research Center showed that ownership of two main mobile devices doubled over the holidays.  In the one month between mid-December 2011 and early January 2012, both tablet and E-book ownership nearly doubled, rising from 10% to 19% in each case.  Nearly one-third of adults in the U.S. (29%, up from 18%) own at least one of the devices.
  For TV Everywhere, Ultrabooks (fast, slim, light laptops with wireless connectivity and long battery life - like the MacBook Air) may prove to be even a better platform for mobile video viewing.  Juniper Research suggests that with the introduction of a wide range of new models at CES, Ultrabooks will become strong competition for tablets, and predicts a faster rate of adoption than experienced by tablets.  Specifically, they see ultrabook sales growing at three times the rate of tablet sales over the next five years.  Ultrabook sales, regardless of its growth rate, adds to the growing potential audience for mobile video, and is likely to contribute to its growth and diffusion.


  Meanwhile, a NATPE panel addressed the future of mobile video, and most of the panelists were strongly positive:

“The opportunity appears to be enormous by any stretch of the imagination,” said Nielsen Senior Vice President Scott L. Brown, noting the boom in smartphone penetration.

Mike Bloxham, the executive director of the Media Behavior Institute, said: “There’s a huge amount of growth yet to come in mobile-related revenues … we’re almost at a Jurassic stage of development.”

Brown added later that advertising might not even be the dominant revenue source for mobile video, reminding the audience that pay vs. ad-supported business models are still being developed.  Other panelists reported on studies that suggested that there's likely to be increasing demand for live events streamed onto mobile devices.

All said, the future of IPTV, TV Everywhere, and mobile video seems bright, as long as the industry can resolve licensing and rights issues.

Sources - YouTube: Influence TV Everywhere Will Have on Search,  SearchBlog (MediaPost)
TV Everywhere Will Overshadow Hulu and YouTube,  MoBlog (MediaPost) 
Does Verizon Cable Deal Spell Death of FiOS Expansion?  DSLReports.com
Modem shortages lead to delays in Milwaukee U-verse installs,  FierceIPTV
Telco TV delivery to grow to 71% IPTV by 2016 as hurdles fall,  FierceIPTV
Tablet and E-book reader Ownership Nearly Double Over the Holiday Gift-Giving Period, Pew Research Center report.
Ultrabooks Growth To Outpace Tablets,  OnlineMediaDaily (MediaPost)
Mobile Video Primed, Ad Model in Early Stages,  OnlineMediaDaily (MediaPost)

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