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….