Back in 2003, I got very excited about the potential of ‘long tail’ content.  This is the type of content which has little value to the masses but is really valuable to the few.  At BT we coined the expression ‘thousands to millions’ – thousands of specialist content producers delivering to millions of niche consumers.  In the internet world of text and pictures, this phenomenon had already been massively successful but the big debate was, and still is, whether this it would translate ultimately to longer-form television.  Certainly YouTube has proved the market for the short clip, PC consumed, ‘long tail’ video content.  However, that service also has its own ‘long tail’ consumption curve with the popular and features clips getting a biased proportion of the viewing.

So I suppose the questions to be answered are whether the television will ever be the right device for ‘long tail’ consumption, whether there is a sustainable business model around providing such content and what effect further viewing fragmentation will have on the broadcast industry as a whole.

From a device perspective, TV traditionally equals community and the PC delivers personal viewing.  Convergence is driving the TV and PC closer but let’s define the TV here as the living room display device and the PC as the personalised alternative.  The television also tends to demand a higher quality experience (HD) whereas the ‘lean-forward’ PC delivers a better lower quality video experience.  In this scenario, niche has to have a wide-ish appeal within a household and have strong production values which is somewhat counter-intuitive.  We also have the technology barrier that niche is primarily on-demand and the vast majority of television receiver technology within the home is one way only.  So could the first lesson be that the television device and the long-tail are not natural bedfellows?

Satellite and cable broadcasters have effectively been touting ‘long-tail’ content for a number of years by offering hundreds of niche channels surrounding a number of anchor brands.  Indeed, you could argue that day-part programming has historically been filled with long tail content – reruns and low cost shows focussed on either watching paint dry or grass grow.  But does a personalised, targeted channel line-up in the form of long-tail VoD make a compelling consumer proposition?  We could look at Joost and Babelgum for validation.  These were launched as two innovative, niche internet broadcasters that relied on ‘long-form’, ‘long-tail’ content to attract new customers.  Their potential audience was enormous and their market awareness strong following coverage but mainstream media worldwide.  However, both failed to get any traction.  Compare that to BBC iPlayer and Hulu which use the same distribution medium but rely on mainstream programming for their appeal.  Without that ‘anchor’ content these two well-funded and well-presented wannabees just didn’t have sufficient mass market appeal to succeed.  So is the second lesson that TV niche content is not attractive enough unless it is supported by main stream content?

Niche content, by definition, appeals only to a limited subset of a possible audience.  That is OK is you can find that subset economically but that is not normally the case.  This was the conundrum that we faced at BT in our early experimental days delivering long-tail content.  We would find what we believe was compelling content, acquire it, make it available and then work like crazy to find the precious few who valued it.  We saw two solutions; aggregate enough niche to deliver mass market appeal – expensive and a real leap of faith -or market intelligently enough to identify our audience amongst the masses.  Certainly intelligent agents and clever search technologies are now more advanced to help in this but the third lesson may be that niche audiences are just too hard to find to make a business model work?

But let’s say we find these elusive customers. Can these niche audiences be persuaded to spend disproportionately more money on goods and services than the normal viewers and therefore command higher CPMs?  There is very little proof today.  Firstly, we must find the audience (expensive), then create personalised advertising for them (expensive), take time to prove that the response rates are higher than normal (expensive) and convince the advertisers to pay more (tricky). We know that YouTube is still not profitable today so what hope for a TV-based version? So the fourth observation could be that the heavy lifting to prove niche is just too difficult to achieve?

Lastly, the broadcast model is currently under threat from the fragmentation effect of multi-channel, multi-service and multi-device viewing.  What incentive is there for commercial broadcasters to deliver content that hastens their demise?  Today, the long tail is hurting the broadcast industry without generating sufficient replacement revenues to sustain a hybrid model.  It will take a giant leap of faith to bet on niche being the way to navigate away from the mire they find themselves in.  So is number five that current incumbents will actively fight the introduction of long-tail content alongside their broadcast content?

So are the cards too stacked against ‘long tail’ on the TV to ever become a mass-market proposition?  Well I think there is some light at the end of the long dark tunnel.  Firstly, I believe we will see more ‘editorialised’ niche content being offered and delivered in a managed way across existing broadcast infrastructure.  What does this mean? Well, broadcasters will discover the best of the web and wrap it up in a way that suits their audience – even better if this packaging can be personalised and targeted.  The content is monetised in the conventional way – top and tailed with advertising and sponsorship messages – and the audience gets a satisfying experience that is consistent.

For the more adventurous consumer, the inclusion of a simple browser within the new hybrid OTT TV solutions would give infinite flexibility.  Give the customer the tool to discover the massive choice of internet-based video content themselves without gate keeping or creating a walled garden.  Will the solutions providers have the courage to enable this feature on the new generation of hybrid broadcast solutions?  I’m very interested to see whether they do and two particular weather vanes are the HBBTV initiative and Project Canvas.  Both solutions are broadcast-led and the tendency will be to choose the walled garden approach under the pretence that controlling the user experience precludes offering open internet access.  The latest STB technology will support fully functional browsers handling all video formats and display technologies so the consumer will have the ability to wander unrestrained through the vastness of the world-wide web and spend their ad dollars wherever they choose.  A frightening prospect for the broadcasters -but the enlightened ones will realise that a combination of broadcast, editorialised OTT and open browser access to the universe of internet video ‘long tail’ will truly be the ultimate consumer proposition.  Just look at Sony’s PS3 for inspiration – an open browser that has brought BBC’s iPlayer successfully to the TV.

If these things happen then I believe that the long-tail on TV is it going to be the next new, old thing…  Are you?

A recent PVR study caught my eye and got me thinking.  Actual Customer Behaviour, in conjunction with London Business School, conducted an 18 months study in a number of homes with personal video recorders, video-on-demand and online video services. The study was conducted for a consortium including Ofcom, the BBC, Channel 4, BT Vision and Microsoft, among others.  What particularly interested me was the observation that the availability of an archive of programmes in the personal video recorder reduced the appetite for true video-on-demand.  I believe Virgin Media claim that the availability of iPlayer shifted their customers’ viewing habits to circa 40% catch-up.  I also thought about my family’s viewing behaviour – check broadcast to see if anything is worth watching, if not check the PVR for unwatched recorded programmes, if not check Sky Anytime for catch-up content, if not check our DVD/Blue-ray collection for anything appealing and if not look at Sky box office for pay-as-you-go VoD.  We seldom make it to the box office option – maybe once every other month – and if we do then we only pay for an HD version.  If we also had the ability to watch free OTT content on our TV then that would make a paid event even rarer.  So a number of things to contemplate:

1)      Is the availability of catch-up TV (iPlayer, Hulu, TV.com) enough to satisfy the vast majority of viewer’s TV needs and…

2)      If so, will future IPTV business models primarily be license fee/advertising/sponsorship/product placement driven and…

3)      Does this put the balance of IPTV content power firmly in the hands of these super-aggregators of quality, catch-up TV?

I think the answer to question 1) is almost certainly yes.  Many, many households are happy with just a broadcast service and adding a catch-up facility alongside would probably deliver 80% of the value-add from a broadband-to-the-TV connection.  The interesting aspect is whether the remaining 20% of value – delivered through VoD or games or applets – warrants the additional complexity of delivery.  A simple Canvas-style box offering DVB/T broadcast channels and catch-up TV would undoubtedly hit the spot for 8 out of 10 viewers so what value investing in the rest?  Present all that catch-up as a backward and forward EPG then the service becomes easy to find and use.  Add an option to accelerate forward content (pay a little extra to see Top Gear earlier than the transmission) and you have a real winner.  And yes I know we all get very excited about the bleeding edge opportunities like TV widgets and T-commerce but my blog audience is definitely not representative of Joe Public and I do wonder if the mass-market will ever give a damn.

An affirmative to Question 2) would require IPTV service providers to acquire new skills and technologies to survive in such a brave new world.  In my previous blog entries, I have been banging on about the need to understand a consumer’s consumption habits so that they can be effectively ‘retailed’ to.  Unless commercial messages are contextual, current and compelling then they will not break-through and therefore not command the revenues required to make a service providers’ business model work.  I don’t dismiss the possibility of additional movie rental purchases or e-commerce revenues or applet sales but these may well be small in comparison.  In this new world targeting, data mining, meta-tagging and profiling technologies become the super stars.  This could also be a great opportunity for outsourcing – agencies that specialise in doing the difficult matching and thrive on scale.  Think DoubleClick for the TV.

Probably most interesting is the answer to question 3).  Traditionally the power has rested with the linear broadcast provider for subscription TV services and with the movie studios for VoD movies.  The former are now striving for, and in some cases achieving, direct relationships with consumers by in effect competing with their existing channels whilst the latter have been working hard to avoid disrupting the status quo by strictly maintaining release windows.  In a catch-up dominated IPTV world, both models will have to change.

It could be that broadcasters combine linear and catch-up packages, brand them completely and pay service providers purely to distribute the content.  The service provider falls back to the role of dumb carrier and monetises the network.  The broadcaster fronts customer acquisition activity by leveraging their media reach and the service providers offer installation help, guaranteed quality or discounted triple-play bundles.  Maybe not an ideal scenario for the service provider but it does allow them to ‘revert to type’ and leverage core skills.  The broadcaster gets to exploit its ‘content is king’ position but will always have an uneasy alliance with the distributor.  And both need to decide how the set-top box is funded.  Is it a universal product which can subscribe to multiple broadcaster services or a tethered offering?  Here lies the real opportunity of a Freeview/Canvas-like product, the consumer buys the box and as long as the OTT content is only ‘gatekeeped’ by the consumer then many different content providers could compete for that customer’s loyalty.  Sounds like the PC to me – one platform, many services.

The studios have another challenge – ensuring that their VoD delivered movies are promoted.  In my BT Vision days, we looked upon blockbuster movies as a marketing expense as the minimum guarantees and revenue shares demanded by the studios make them a loss leader.  Now in a world where catch-up is the compelling proposition then the movies need an edge and that for me is achieved by shrinking the release windows.  This would maximise the promotion ‘halo’ effect from a film launch.  Today if I see a movie on VoD, I can hardly remember its theatrical release unless it is a Harry Potter title or similar.  I also believe that broadcasters may well choose to mash-up with film aggregators, like Netflix or Lovefilm, and not bother to contract the movie rights direct – unless that broadcaster owns a studio of course.

So are we entering a ‘catch-up’ centric IPTV world and moving away from the traditional VoD centric model?  I would argue so but I know that you all have your own views…

The delight of the UK TV market is that it is unique.  Born out of the creation of the world’s first national broadcasting organisation in 1922, the industry has since evolved through commercial TV, cable TV, satellite TV and now the fledging IPTV.  BT Vision has pioneered the DVB-T hybrid model by taking Freeview and adding on-demand programming through an integrated IPTV connection.  On the face of it, this should be a compelling combination but due to technology, content and marketing challenges the service is yet to realise its potential.  So now the BBC are looking to swop in, hijack the model, define the platform, deliver the content and market it using the same machine that made Freeview such a success.  For the first time, Sky may find themselves outclassed by the infinite flexibility that a broadband connected Freeview clone could deliver.

So what does the future hold for UK IPTV? Let’s first assume that Project Canvas goes ahead.  This is a big assumption and in my view is predicated on the following:

1. The BBC enables, not controls, the new platform.  A gatekeeper approach will cause too many conflicts.
2. The BBC assists in the platform definition and does not dictate it.  The approach must be open, transparent and flexible enough to adopt ‘best of breed’ technologies.
3. The BBC must allow their content to appear on all competing platforms.  The UK public has already paid for it – every which way they wish to consume it.
4. The BBC has to embrace all the various business models – even if it is not in their culture to do so. 

So with Canvas outlasting its marsupial predecessor – Project Kangaroo – we are free to speculate on the effect it will have on the UK TV landscape.  Here’s a possible outcome:

1. A number of manufacturers start to manufacture the enhanced Freeview and Freesat set-top boxes and sell them through retail outlets.  The first offering is simply an Electronic Program Guide (EPG) that displays broadcast content schedule two weeks ahead and catch-up content one week behind for all the BBC channels.  Simple proposition but massively compelling.  It starts to sell in large numbers.
2. ITV and C4 make their content available on the same platform and in the same format.  Variants start to appear with movie content available – through sites like Netflix or through variants of service provider solutions like BT Vision.
3. ISPs start to edge cache all the popular content to reduce the burden on their networks and improve the experience for their customers.  The cost of the caching is born partly by the broadcasters.  Quality assured connections begin to appear funded by an additional broadband subscription fee.  50% of the UK public take this option.
4. Consumers buy more and more of the boxes as they move their existing box to a second room and start to rely on the IPTV Freeview for main viewing.  The winning products are the ones which deliver the best user experience – speed, quality and ease of use.  Freesat becomes ever more popular as the HD service complements the increasingly ubiquitous large flat screens.
5. Virgin mirrors this revolution with similar services available on their DOCSIS 3 cable solution and launch a Freeview variant for off-net customers.
6. The UK public’s viewing habits transition from broadcast to on-demand dominated.  In effect, everyone has access to the ultimate network PVR and they just love it.
7. Services start to become personalised, social and contextual and new commercial models appear that exploit T-commerce, applications-on-demand, voting, rating, content sharing and portability.
8. Sky react as they are being seriously squeezed by both Freeview and Freesat. They enable the broadband connection in their new HD boxes and offer BBC catch-up.  They argue with ITV and C4 for a while but eventually get that too. They then make the decision to swap out all their old digital boxes – a replay of the analogue to digital strategy in the late 90s.
9. The UK finishes switching off all the old analogue broadcast signals and the freed bandwidth is used to transmit HD over DVB-T2.  Freeview HD arrives.
10. Technologies become mature and standard enough to integrate into the TV set.  The word IPTV fades into obscurity and everything just becomes ‘TV’ again.

The result?  The UK consumers end up with the richest choice of platforms and services in the world powered by the marriage of commercial and public service models, the diversity of transmission technologies, the excellence of UK programming and the creativity of UK entrepreneurs.  A pipe dream maybe, but one well worth fighting for?

The mantra of content owners and broadcasters worldwide is that they offer a unique combination of content, brand and experience which cannot be picked apart.  In the linear broadcast-only days this made a lot of sense.  In the UK we tuned in to BBC1 where we knew we would see quality programming and soon grew to love our favourite programmes presented in a schedule designed to maximise viewing numbers at peak times.  We would tune in to Channel 4 for a more edgy, contemporary style or ITV for more populist, inclusive programming.  For the commercial channels, the ads and sponsorship messages were inserted into that linear feed by day part and viewing numbers were simply converted into a cost per thousand metric.

Then along came video-on-demand.  Suddenly individual programming was sold without the channel brand and presentational experience attached.  This was just about OK for movies which were traditional presented standalone but for TV the stresses started to show.

Then along came catch-up.  Now the fun really started.  This looks and feels like linear programming but delayed.  Surely then the old model of content, brand and experience all in one should hold?  This was challenging when licensing to IPTV operators who offered a VoD option, as the content had to sit in their user interface and be consistently presented with all the other content available.  But tensions were there and many broadcasters asked for their own branded areas within that interface where they could exert their own control.  This was the game consistently being played when I created BT Vision.

Then along came video-over-broadband.  Suddenly the broadcasters saw an opportunity to get back in control.  Spurred on by the innovators like Joost and Bablegum, the broadcasters created their own internet video player which allowed then to by-pass their traditional content customers and exert that longed-for control.  Thus the likes of iPlayer, Hulu and TV.com were born.  Raging successes all of them, the broadcasters gave a long sigh of relief and all was well with the world once more.

But it is not, is it?!  The planets are still not aligned.  In the TV world, that catch-up content does need to be presented alongside other content in a consistent, user friendly, reliable, relevant fashion and that means integration.  It does not mean displaying 5 independently controlled interfaces through one service.  Someone must be the trusted, independent aggregator of all the content someone wants to consume and no single broadcaster can be trusted to deliver that (think Kangaroo).  Maybe the ideal choice is the service operator who is content agnostic and ARPU driven. So then we would come back full circle to ‘traditional’ model of licensing the content without the brand and experience and allowing that operator to do what is right for the customer.

Sezmi – the TV2.0 operator (www.sezmi.com) – uses the mall analogy in an attempt to overcome this dilemma.  Macys at the end of the mall has a collection of goods from all brands but coexisting in the mall are a number of specialist shops selling some of the same items but designed to appeal to the brand-led shopper.  Similarly on Sezmi, we see a Sezmi designed interface that uses personalisation to present from the complete pool of content a ‘best bet’ view of what their customers might want.  Alongside this are a number of branded content ‘channels’ where a broadcaster’s programming is pulled together under one umbrella.  It will be interesting over time to see which entry method the consumer prefers.  My bet is on the personalised Macys and the recent research from Accenture Broadcast Consumer Survey 2009 who surveyed 14,000 consumers across the world to determine television viewing habits. Among key findings, the survey found that consumers remain very loyal to the programs they enjoy watching. ‘Nearly three-quarters (73%) of respondents said they watch some programs on more than one channel — indicating that consumers follow their favourite programs from channel to channel and have little loyalty to the branded content channel to which the content might be associated.’ I guess this no surprise to us consumers but a hard message for the strong channel brands to swallow.

We are also seeing innovation around creating a personalised linear broadcast feed where a recommendation engine analyses the full suite of channels and creates your own feed by automatically swapping between those live feeds.  The channel brand you might end up trusting the most could be one created through a recommendation service.  Add to this an element of peer rating – aka LastFM – and the entertainment brand we most trust will be created by our friends and family!

Of course programme interactivity and t-commerce – think voting on Xfactor and product placement – piles complexity on complexity.  Who should own that consumer relationship?  The content owner, the broadcaster or the service provider?  Today this is handled outside of the service provider via the phone but today IP-connected TVs allow more sophisticated, more immediate audience response that could either by anonymised or form the foundation of a content owner to end customer relationship.

So how will all this play out?  There is a maelstrom of business models, brands, user interfaces, devices, distribution channels, partnerships, consumer preferences and egos to align.  As a TV consumer, I want the programmes I like, presented through an easy interface on my device of choice, representing good value for money and delivered in an acceptable quality.  I am hoping for all our sakes that compromise will prevail and we put the customer first.

Would love to get your thoughts on what that compromise will ultimately look like and who will win this land grab?

Amino’s Response

Below is a copy of Amino’s submission to the BBC trustees on their Canvas initiative.  Would love to know whether you agree or disagree?

 

Amino fully acknowledges that the UK public have demonstrated a real appetite for the BBC’s free on-demand services with the impressive usage of iPlayer by 1.4 million PC users per week. We also support the initiative to build on the Virgin Media experience and extend this content on to the television to deliver greater mass-market appeal. The BBC has stated its intention to work with partners to generate a set of standards that allow it and others to work with a manageable environment for the cross-platform distribution of its content so that UK consumers, with no contract, have a device that is simple to install and use and open to all content providers. 

Project Canvas is being proposed as a set of standards to promote the accessibility of OTT content to the public in the same way that Freeview is a vehicle to give the public access to Digital Television services. Amino welcomes the introduction of an appropriate open standard for OTT.

However, in proposing Canvas as the vehicle to drive those standards, the BBC must be careful to:

Recognise this is not Freeview

·         The comparison of Canvas with Freeview is inaccurate – in the latter the consortium owned the masts that broadcasted the streams that the Freeview boxes were designed to receive.  In the OTT world, those ‘streams’ are many and varied and dictating one standard over another would inevitably bias the market. Clearly by the Trust stating that the current Freeview vehicle is not the right mechanism to deliver Canvas, the BBC are aware that the analogy is false.

Facilitate and not control

·         Pre-approving Canvas content would leave the BBC as the gatekeeper for the UK public on what content and business models are acceptable.  That is a route to many media headlines and much heartache for the corporation.  The shouts of ‘who moderates the moderator’ will be deafening.

Work with the market, not against It

·         The Open IPTV Forum was created in March 2007 and is a well-supported, pan-industry standards organisation which has been working tirelessly to produce end- to- end specifications for IPTV based upon existing technologies and open standards.  We note that BBC has now joined this organisation but needs to support these proposed specifications and not contradict them.

Support UK plc

·         The Canvas solution could well be a ground-breaking architecture for the rest of the world to copy and follow (as was Freeview).  This offers a superb opportunity for uniquely innovative UK technologies companies to assist the BBC to develop and then ultimately export this model globally.  However, currently, the Canvas team are working with Cisco, Thomson and Humax to define the hardware reference platform.  The BBC is also working with Adobe in defining the software standard.  This is despite the fact that the UK has a wealth of UK talent in companies like Amino, Pace, IP Vision and ANT – all of whom are being starved of a significant commercial advantage.  In the end, the loser will be UK plc as American, French and Korean companies exploit that advantage.  It is not sufficient to justify this preference on previous Freeview/FreeSat relationships nor on the receipt of external R&D funding.

 

Encourage innovation through flexibility

·         Standards can be both liberating and constricting.  In defining a platform and publishing the specification for that platform, the BBC will encourage strong content and application innovation in the UK.  However, the platform will have to morph as new technologies appear – particularly driven by the fast moving internet.  This is similar to the transition from DVB-T to DVB-T2 but many more times and much faster.   So Canvas will have to be flexible, and not prescriptive, if the platform is to match the success of the PC internet world.  Such flexibility will certainly cost money, drive obsolescence and frustrate some but will be essential to the longevity of the platform.

In conclusion, Amino believes that Canvas has laudable aims.  However, like Project Kangaroo before it, the road to delivering a standard UK OTT platform is covered with the potholes of bias, self-interest, indecision, dominance and obsolescence.  The answer is to adopt the role of facilitator – not dictator – and acknowledge that this may well cost the BBC more but will deliver much more to UK citizens and business.

Amino’s recommendation to the Trust is to:

1.       Define the standards of how to access BBC iPlayer content but not how to deliver it.  This means promoting innovation through open API’s and not through a standardised platform.  Granted there will need to be brand guidelines around the use of that content but that is all.  The internal BBC view will be that ‘iPlayer’ is a combination of content and experience that cannot be picked apart.  Don’t be fooled – others may deliver a better experience around that content if they are given the opportunity to do so.

2.       Select technologies that are standardised and platform independent to enable both a smooth service evolution and the portability of Canvas to other platforms and territories.

3.       Actively support UK plc technology companies to drive ‘standardisation by default’ so that innovation is encouraged but duplication is avoided.

4.       Support a set of technologies (encoding, encapsulation and presentation) to avoid bias and widen the appeal.  This is the only way to be transparent and applicable to all.

5.     Be open to all business models.If Canvas is to be an alternative to Pay-TV then there had better be paid-for content and advertising present

In 2004, I had the honour of key noting the inaugural meeting of the IPTV World Forum event at Earls Court.  I had forgotten the key messages I extolled back then – until I attended the keynotes and panel sessions during last week’s IPTVWF event.  They were almost the same messages five years later and I felt a twinge of panic for our industry as I sat and waited for real insight.

Now I should state that I did not attend all sessions so their magic may have eluded me but let’s face the facts – IPTV is not viewed as a successful model today and the market is still waiting for it to have its day.  Countering that, the basic premise of broadband to the TV – and importing the stellar success of the internet to that device – has to be a winner.

So what was my contribution to the debate?  Well when it was my turn I stated following…

It is not what you sell but how you sell that matters!

For me, IPTV today feels a little like a grocer who is stocking his shelves indiscriminately with as much product as he can cram in his store with no regard to what his customers want, how they find stuff, how elastic the pricing is, the margin mix is a basket, which products sell well together, the effect of weather and other factors on sales, the understanding that most are buying for a family with eclectic tastes, the power of consumption data in negotiating wholesale prices and the importance of customer service in promoting loyalty.  All this is the ABC of retailing and drives significant ARPUs once the grocer gets it right.  We all recognise that such ARPU growth is something our industry badly needs.

The great news is that IPTV, by definition, is capable of delivering this model.  Compare that to most digital terrestrial, satellite and cable providers and none can match the richness, immediacy and flexibility of IPTV.  So if this is our key difference then exploiting it has to be the answer to IPTV’s prays.  Ironically, Cable wants to go IP because they see the potential that we as an industry have largely ignored!  I feel that we are sitting on a pile of gold and busily searching for pennies.

A quick check list of ‘retailer readiness’ looks something like this:

1)      Are you collecting data for the customer’s device?

2)      Does this data include navigation, content consumption and quality?

3)      Are you using this data to refine your service on a daily basis?

4)      Have you a retailing specialist on your staff?

5)      Are you personalising your service to different groups of customers?

6)      Do you price content differently based on prior purchase history?

7)      Do you associate and package multiple content elements (video, ads, branding etc) based on established learning of effectiveness?

8)   How much of your content is delivering a positive contribution to the services bottom line and do you use this to buy better?

9)      Do you analyse your churn in terms of service usage, quality and pricing?

10)   Can you accurately predict how the profitability of your service will respond to new content, to improved quality, to bad weather, to competitive activity, to new features and to reduced broadband tariffs?

If you get past question 3) then congratulations – you are already ahead of the game.  You are also fairly unique as some collect but few analyse and fewer still use the results proactively.  I realise that reaching phase 10) is a long way off but getting there should be every service providers ‘put a man on the moon’ ambition.

Learning to retail is the killer application that gives IPTV the fame and fortune it rightly deserves.  So don’t get seduced by large catalogues, catch-up TV, screen widgets, scrolling EPGs, long tail, DLNA et al but let your customers show you the way.

We are now hitting a crunch time for Internet Video (OTT) to the TV.  Looks like consumers love it (just look at Hulu and iPlayer), content owners love it (real customer contact at last) and the VC-backed start-ups are scrambling to monetise it (look at all the new retail STBs claiming to deliver it).  BBC are busily trying to standardise it (joining OpenIPTVForum to bolster Project Canvas), Telcos are hoping they can monetise it (bandwidth/QoS charging) and television manufacturers are hopefully trying to differentiate through it (evidenced by CES 2009).  Service Providers are wondering how to integrate it in to their IPTV services (whilst still paying for content from the owners who they now compete with), traditional STB manufactures are placing speculative bets on the video format and protection combinations (Adobe, Microsoft, Apple et al) and middleware providers are trying to incorporate in to their UIs. Chip manufactures are attempting to support it in silicon (STM, Broadcom and Intel), advertisers are wondering how to message effectively through it (pre-roll, post-roll, telescoping, sponsorship, banner ads) and governments are trying to regulate it (the Viviane Reding brigade).  Cable and satellite operators are praying it goes away (whilst launching their own services just in case), clever software developers are innovating around the presentation and application layers (Yahoo widgets, Jinni, BLOBbox, Bee.tv, Boxee, Aprico) and niche video sites are wondering if they get cheap distribution at last (Cycle.tv, Joost, Babelgum). Journalists are writing reams of comment on it (most of it recycled), exhibitors are inviting people talk about it (most of it recycled) and the majority of the world is oblivious to all this and frankly don’t care.

But we as an industry do care and knowing which paths lead to success and failure is definitely front of mind.  The PC-based OTT model is fairly simple to understand.  The platforms are standard with lots of horsepower (PC or Mac), the technology choices are simple as they are only a click away (Browser, Codec and DRM), the audience is colossal, the business models understood and the delivery mechanism ubiquitous (the internet).  But on the TV things become more challenging.  The platform is CPU-poor (STB or TV), the interfaces are simple, the addressable device universe is small, the popular Codecs/DRM are not fully supported, the consumer expectation for quality and reliability is high and internet connectivity behind the TV is rare.  Combine this with the popular OTT content owners trying to ‘control’ their content on non-PC devices and OTT opportunity has the real possibility of exploding before it starts.

So what is the answer?

Step 1 is to be realistic about consumer expectations:

1)      We need to deliver  a TV experience – ‘it better be at least as good quality and available the minute I want it’

2)      The interface better be easy – ‘my coloured buttons on the remote better do the same thing across the whole service’

3)      All the content needs to be in one place – ‘You mean I need to buy two boxes to see all the stuff I want!’

4)      It should travel to and from other TVs and other devices – ‘I want to finish watching the movie upstairs on my iPhone’

5)      There must be some editorialisation, contextualisation and personalisation – ‘ I’m not going to scroll down all those titles to find something that interests me and I want to be surprised with compelling suggestions’

6)      The branding should be minimal – ‘I only care about programme brands and not these random parent company brands’

7)      It must be easy to install – ‘What do you mean by running five cats?’

8)   It must be cheap – ‘I don’t pay for it on my PC so why should I pay on my TV?’

 

Step 2 is to understand what the market needs to do to satisfy these expectations:

1)      The content owners and telcos must work together to deliver the expected quality of service (and share the revenues appropriately).

2)      Content owners cannot insist on their own look and feel but must become, or find, a trusted aggregator to consistently deliver a great user experience across its own, and others, content.  Beware of regulation if this is not done fairly.  The interface must be simple and portable – ideally across the existing universe of TV devices.  That means offering a hierarchy of features that become increasingly available as the device horsepower increases.  They must also stop continually changing their underlying technology choices - this is OK in the fluid architecture of the PC but not for simple devices.

3)      Creating a critical mass of content which challenges that available on the open internet is very challenging for a single content owner.  Yes Hulu is doing a good job and Kangaroo was bounced by the Competition Commission but the consumer want more than even they could offer.  Let’s not forget that integrating OTT into existing DVB and IPTV content feeds is essential.  I’m afraid that means true integration – within the broadcast feed, the EPG and the VoD catalogue.

4)      The encoding and protection of the content must be standardised to allow portability across devices.  Discovery of content stored around the home network is also attractive – DLNA is a good start.  However, it then must be easy to locate and view – PC-like folders with incomprehensible files names will not do.

5)      TV content providers must learn to be proper retailers by understanding consumption and preference and use that knowledge to offer compelling propositions that delight their customers.  The broadcast ‘viewer’ model no longer cuts it in this time-poor, choice-rich world that we live in.

6)      Be it Cat5, HPNA, Moca, HomePlug or Wifi, it must be easy to install and reliable.  The economics of OTT will not support a truck role.  And don’t ask the consumer to input a WEP key through the remote control.

7)      The business model will not be solely subscription or pay-as-you-go so the industry must innovate around advertising, sponsorship, t-commerce, apps stores, up-sell/cross-sell etc

Step 3 is to pray for a miracle and hope we manage to create the right ecosystem that gets OTT thriving.

So there it is – as easy as 1, 2, 3.  I’m not naïve enough to believe this is going to be easy but dropping the protectionism, the separatism, the proprietary, the indiscriminate and the mediocre would be a good start.  So come on, let’s stop OTT going TNT before it’s too late.  Remember the most important thing – consumers love it!

Anyone agree?

Classic economic theory says that the players within the IPTV eco-system will be well down the consolidation route by now.  We start with lots of innovators – VC-backed start-ups with imagination, invention and inspiration – driving the critical first wave.  Some get it right and some don’t but soon the natural leaders emerge.  Then the big boys briefly wake up from their perpetual slumber and realise that some of their customers are considering breaking ranks by choosing one of these new guys on the block.  Panic ensues and they either acquire in haste (Nokia Siemens with Myrio), build their own solution using armies of engineers (Microsoft with Mediaroom) or freshen up something they already had in the cupboard (Ericsson with IAP).  Soon the natural order of things are restored, innovation stops, everyone gets more or less the same proposition and they all pay about the same price.  But that is not happening in our industry.  Yes we have MS happily claiming domination in the Tier 1 telco standard IPTV space but that space is no longer where all the market sizzle is.

Suddenly everyone is talking up solutions offering internet-resident, broadband-delivered video to the television screen using PC-like codec technology (Flash, WM, H.264), limited DRM (or CA in IPTV speak), no quality of service and fair encoding quality.  These tend to be vertical offerings (Netflix to LG) but still lack the best-of-breed consolidators which help tame the original, anarchic worldwide web (Yahoo, AOL etc). These solutions are fine if the customer knows what he is looking for, knows how to find it and is organised enough to pre-order it – in other a techno-geeks like me!

But will be the dominant model over the longer term?  Are we reinventing IPTV or just evolving it?  Will the service provider current IPTV solutions survive (Uverse, BT Vision…)? Will the existing middleware providers power them? Will this new world belong to the internet heavy-weights (Google…) or the CPE guys (Sony, Samsung, LG…) or the content owners (BBC, News Corp, Time Warner…)?  Hopefully looking at this from the consumer backwards will hold some of the answers.

To the vast majority of consumers, television means an editorialised experience delivered at high quality with 100% availability.  Granted some are beginning to exert more control over their consumption through PVR/DVR functionality and more recently VoD but the experience is simple, reliable and high quality (both in terms of the content and the picture/sound).  The current IPTV eco-system providers support this paradigm by delivering simple and intuitive EPGs, PVR control, fast channel change, browsable VoD catalogues and catch-up TV selections.  Will internet video delivered content substitute this experience?  Let’s not get side-tracked by Hulu and iPlayer – they work because of the massive support the content gets from the broadcast channels.  They work because the same experience is not available on the TV.  So if broadcasters refuse to license this content to the service providers then they will probably establish another distribution channel independent of classic IPTV but this is not want the consumer wants – they want it integrated into their current TV experience.  What about other internet content – the long tail stuff?  Two problems here:  1) it is hard to find and 2) it is normally viewed solo.  Yes it does have value but putting a browser on a TV and offering just this content surely will go the same way as email on television – too hard for too little.

There is an interesting wrinkle though – Blueray 2.0 interactivity where the new players are IP connected and display downloaded, app store resident, widget functions that appear around the BD content.  Intel has a good demonstration of this using their Cameron chip.  Could this be the new OTT route?  Maybe, but feels a little like the games console offering where something like Wii TV can be accessed but again it is a ‘side-car’ option and not fully integrated in to the mass broadcast experience.  I have used my Wii to access iPlayer content but only so I can watch BBC catch-up content on my flat screen.  If it was fully available through my BT Vision box then that is by far my preferred route.

So my bet goes with evolution not revolution.  The current TV solutions are the ‘centre of gravity’ that makes television work.  I certainly believe that we must work hard to incorporate OTT, personalisation and applications-on-demand onto the TV–borrowing and adapting from the PC and mobile worlds – but incorporate not substitute.  Not for the mass-market at least (and by mass-market I mean the entertainment bill-payer!).

Remember what happened to Disney’s Moviebeam – it lacked that centre of gravity, that mass-content anchor.  So I do see the natural order of things being restored but not without content owners, service providers and eco-system providers working together to deliver the evolving customer need.  Otherwise the browser-based, internet-powered set-top boxes will fill the gap and separation will indeed ensue….

 

 

My TV room always has a Mac portable sitting on the coffee table for my girls to use as they watch the box.  In fact, I’m using it to write this post now whilst laughing at the exploits of the weirdoes on Channel 4’s Come Dine With Me. It is my own hybrid Bellyvision experience.  This dual device experience could offer the solution to the conundrum of personalisation on a community television.

 

Imagine all my personal interactions being displayed on my own remote control whilst the family watch the communal broadcast on the large screen in the corner of the room.  If the two are in sync, then I can see a Rotten Tomatoes (www.rottentomatoes.com) review on the Bond film we are watching, see what programmes all my Facebook friends are enjoying, vote throughout Alexandra Burke’s Xfactor performance, view an extended telescoped advert about the BMW I saw at the break, purchase a copy of the book that the One Show has just reviewed and buy a ticket to the latest Cohen Brothers movie which received rave reviews from Jonathan Ross.

 

My personal remote would grow to know me by tracking my consumptions habits and recommend all sorts interactive and commerce possibilities as I watch the broadcasted content.  I could watch a preview of programmes available on other channels and bully the rest of the family to turn over if it looks more interesting.

 

This will not work for everyone but there are already some companies trying to create this hybrid experience.  It may not excite us oldies but for the multi-tasking, multi-device younger generations it is merely an extension of their current habits.  It does not require the broadcaster to modify their standard programming and would work with any and all televisions.  It could be prototyped on a standard Windows laptop, leverage all the great websites by federating their applications, communicate through WiFi or GPRS and start to tease out what works and what doesn’t.  The solution could then morph onto a bespoked remote which is retailed through high street stores.  However, with the growing popularity of Netbooks with built-in mobile broadband then all it needs is a small USB controlled IR unit and away you go.  Alternatively, an iPhone or similar smart phone with a number of downloaded applications would also do.

 

I took part in a debate some three years ago on whether devices would converged in to one all-signing, all-dancing mega-device.  I came away with the conclusion that the one device we would always have with us is our own personal data store.  Yes is would be a phone, and an audio player, and a portable video player but we would also dock it into other devices – PC, stereo, TV – to unlock and transport owned content and then personalise the entertainment experience.  In this world, that portable device is also our personal remote control.

 

Well the over-weight, middle-aged, wine snob won the £1,000 on tonight’s Come Dine With Me and I’m on the C4 website reviewing the recipe for his seafood Paella. Wouldn’t it be good if I could just hit a button and have the ingredients delivered to my door?!!  Hmmm..

Would you swap your personal viewing activity in exchange for better targeted advertising? This ‘value given for value received’ equation is critical if the industry is going to succeed in migrating from mass to me.  Now if you are reading this, then the smart money says that you are in the industry and get the trade off.  But what about Ma and Pa living in Middle America? This has to be a really difficult concept to grasp.

An indication of the size of the challenge is given by the furore around Phorm (www.phorm.com).  This is a technology which sits in your ISP, tracks all of your surfing activity, crunches that data in a big database and spits out targeted ads especially for you.  A great idea but one that have given the internet purists a coronary and the regulators a job for life.  Tested unwisely without user consent a number of months ago, BT are now asking for consent and claim that their customers understand and value the trade-off.  I hope this is the case but I suspect that either they don’t truly understand the deal or the trial group are sophisticated users.

Imagine the conversation:

Provider: ‘if you let me track everything you do then I’ll send you ads that you will really want to see’

Customer: ‘I don’t like ads’

Provider: ‘But you don’t understand, you don’t like ads because they are not targeted.  Now you will love them’

Customer: ‘so you guarantee me that I will love every ad?’

Provider: ‘well not exactly. The special algorithm which we have developed should do the job quite well after a while and once we have tuned it’

Customer: ‘doesn’t sound convincing. What if I look at adult content, will you send me loads of escort agency advertising?’

Provider: ‘Oh! At the moment it is probably our intention to potentially discard this information sometime in the future.’

You get my gist.  A tricky conversation at the best of times.

However, there are easier deals to sell.  How about exchanging consumption data for loyalty points on your club card?  For a free movie once a month? For an iTunes download? For free samples? For reduced subscription rates? For cheaper petrol? These are easier to understand and could help the migration from trepidation to acceptance.

Let me be clear, I’m a real fan of the swap.  However, companies offering the deal need to be trusted, open, transparent, consistent, honest and fair.  How about the following message:

Provider: ‘Dear consumer, we want to deliver the most compelling entertainment experience to you that we can.  Amongst other things, this also involves attempting to refine and target the ads messages that are essential to our revenue model.  We would like to use your viewing habits to learn more about you and then, over time, do our best to deliver more valuable advertising.  We absolutely guarantee only to use this data for this purpose, to use it anonymously so no advertiser sees your details, to offer you the ability to opt in or out at any time in the future, to poll you regularly to see if our solution is working and continually refine this solution over time so it really works for you. We have published a full Privacy Policy which lays out, in plain words, this commitment to you.’

If companies really start to get this right then the most effective marketing of all – advocacy – kicks in and your family and friends start to tell you how good the solution is and how they trust the provider.

So the industry has a strong marketing challenge making personalisation work but one which must be faced and won.  I suspect that the trusted brands (are there any left??) will find it easier to achieve and that less well known companies will need to partner and proxy this trust.

So what‘s your view?  Is it a fair swap? All comments welcome.