Web TV coming to a small screen near you

19 Jul 2005

If web TV, otherwise known as IP TV, can be made easy, immediate and cheap it will prove to be a big turn on for consumers, claims IT consultancy firm Deloitte. “Being first to offer a workable TV over the web, video on demand, iTunes for movies and so on will help drive market dominance,” said Tom Cassin, partner at Deloitte in Dublin.

According to Cassin, an increasing number of cable and internet service providers are examining the delivery of TV over the internet in the development of their customer offerings, with BT’s recent announcement that it intends to trial TV over broadband services in the UK being just one such example.

“Opportunities for provision of TV over the internet will be an area examined closely by the media, telecom and technology sectors during the next few months, as the way in which these organisations access their customers increasingly converge,” said Cassin.

“There are several challenges that will need to be addressed in the development of web TV and establishing how this application can successfully and effectively be delivered to users.”

He says these challenges include how customers will interact with such applications, ie will it be over a traditional TV set or over a PC/desktop? Who is going to supply the content? How will rights management be agreed upon? How will studios and producers manage the increased piracy risk that may arise as a result of delivery of TV over the internet?

Cassin highlights five key factors that need to be addressed to make internet protocol (IP) over TV a success: cost and the battle for margins; bandwidth availability; the move to digital; spectrum scarcity; and ensuring a satisfactory broadband experience.

“With the advent of TV delivered over the internet, it is likely we will witness a number of strategic alliances (and in the longer term merger and acquisition activity) as key players in the telecoms, media and technology sector look to maximise opportunities to reach customers in this way,” Cassin explained.

The question of whether customers will want to view TV on their PCs is an important area for consideration, he warned. With increased bandwidth and better compression techniques, people increasingly are choosing to download programmes and films on to laptops and PCs. But it is also clear that watching TV on a PC has its limitations.

“In its current format consumers actively and laboriously have to search out and download content using a keyboard and a small computer screen. If this is the future then the likelihood of TV-over-internet becoming the main way we access our evening’s entertainment is limited.”

However, Cassin reckoned, if watching IP TV on a main screen in the corner of a room can be made easy, immediate and cheap (ie by producing better applications, better compression systems and better bandwidth capacity) then the consumer will be wowed.

“If TV-over-IP does succeed in this way then it is possible that TV broadcasters might need to reassess their value chain to maintain their dominance. The time-shifting capabilities of the computer could mean people will fast-forward through adverts, a practice that would erode the traditional business models of broadcast television. It is also likely that it would result in a greater need for product placement in programmes or sponsored content to turn a profit.

Furthermore, Cassin warned, the ‘digital long tail’ effect of the internet — something exploited by Amazon successfully — could result in a rise in niche content opportunities.

“The potential of the unlimited scope of the internet is that programmes and films that are in low demand or have a low sales volume on conventional broadcast platforms can, if managed correctly over the internet, collectively make up a market share that rivals or exceeds current hits. In such a way, IP TV could enable niche content providers to produce material that could reach massive niche markets who had hitherto never been able to access such material,” added Cassin.

By John Kennedy