Abstract
Report Overview
Internet Protocol television (IPTV) is rapidly emerging as a new TV platform. Delivered over broadband, it promises to reenergize the telco business model and disrupt the traditional TV business. The technology leverages the flexibility and scalability of IP to transform the television experience by providing access to more content- content that is superior in quality and can be more personalized and interactive than traditional broadcast TV. Within this context, video on demand (VoD), by enabling further service differentiation, is becoming a key component of the IPTV proposition.
IPTV and VoD services are as uncertain as they are tantalizing, however. The TV business is complex and largely new territory for telcos; the jury is still out on the commercial viability of IPTV and VoD services.
Pyramid Research' s new report- Can Video on Demand Save IPTV? VoD Economics, Global Forecasts, and the Case for IPTV VoD- takes a long, hard look at the VoD business model for IPTV operators, analyzing its value proposition, investment requirements, content dynamics, and overall market opportunity to assess whether telcos should take on the challenge or make do with pay-TV alone.
In Section 1, Pyramid Research reviews the global evolution of VoD services, platforms, and deployment economics. Section 2 includes an analysis of the new telco business model and the VoD value proposition for IPTV players. In Section 3, Pyramid Research examines the IPTV VoD business models of today and how and why they will change over time. VoD thrives on compelling content, but IPTV operators are quickly finding out that content acquisition is more time-consuming and expensive than envisioned. Section 4 delves into VoD content dynamics, providing insights into successful VoD content strategies and best practices from the perspectives of IPTV operators and content providers. Finally, in Section 5, Pyramid Research projects VoD transactions and revenues over IPTV networks, by region.
Included in this report are also four case studies of operators that provide VoD services:
- France Telecom, France
- PCCW, Hong Kong
- Time Warner Cable, USA
- Verizon Communications, USA
Key Objectives
- Can VoD save IPTV?
- How will the VoD business model evolve on IPTV platforms?
- Which IPTV VoD packaging strategy will come out on top?
- What type of content is necessary to make VoD work?
- How much does IPTV VoD cost?
- What is the IPTV VoD opportunity?
Target Audience
- Operators: Understand the technology, competitive, and content challenges that await an IPTV VoD launch. Use our forecasts to size the market opportunity and our case studies to assess best practices and develop your go-to-market strategy.
- Content producers: Evaluate new markets opportunities and develop strategies to expand the audience for your content and to increase your revenue from it.
- Vendors:Understand market dynamics and assess the needs of both IPTV VoD carriers and content providers. Use our forecast to develop sales plans and identify key market opportunities.
- Broadcasters: Evaluate the impact of the new technology and the competition to develop a market-leading but realistic growth strategy.
Companies mentioned, discussed or reviewed includes:
- 20th Century Fox
- Alcatel-Lucent
- Amazon
- ANT Software
- Apple
- Arroyo Video Solutions
- Belgacom
- BigBand Networks
- BitBand
- Broadbus Technologies
- BSkyB
- BT
- Buena Vista
- Cablevision
- Canal+
- C-COR
- Cisco Systems
- Comcast
- Concurrent Computer
- Daiei Hawks
- DirecTV
- Disney
- Entone Technologies
- Ericsson
- Espial
- FastWeb
- France Telecom
- Free Telecom
- Freeview
- Harmonic Inc
- HBO (Home Box Office)
- Juniper Networks
- Kasenna
- KPN
- Mei Ah
- Microsoft
- Minerva Networks
- Motorola Myrio/Siemens
- National Geographic
- NBC Universal
- nCube
- Netflix
- New Line Cinema
- Orange
- Orca Interactive
- Paramount
- PCCW
- RealNetworks
- Rhapsody
- SaskTel
- SeaChange International
- Shaw Communications
- Showtime
- Softbank
- Sogecable
- Sony Pictures
- Starz
- Studio 37
- Tandberg TV
- Telefonica
- Telenet
- Telstra
- Terayon
- Tilgin (formerly i3 micro)
- Time Warner Cable
- Tiscali
- Verizon Communications
- Versatel
- Video Networks Ltd
- Virgin Media
- VRT
- Wal-Mart
- Warner Brothers
- Yahoo!BB
- YouTube
Table of Contents
- Acronyms and abbreviations
- Companies mentioned in this report
- Executive summary
- Introduction
Section 1: VoD evolution, platforms, and economics
- 1.1 From PPV to SVoD and interactive TV
- VoD: all about convenience and choice
- How DVRs are changing the VoD game
- The next phase: interactive TV
- Case study: Time Warner Cable: a frontrunner in VoD and ITV
- 1.2 How VoD works, and how much it costs
- The technical picture: VoD architecture
- Bandwidth requirements and cost dynamics per VoD stream
- 1.3 What' s holding VoD back: digital networks, content, broadband
- 1.4 Why we think IPTV VoD can be transformational
- The cable approach: network VoD
- The satellite approach: near-VoD and DVR-based VoD
- Why IPTV needs VoD: driving differentiation
- How telcos position VoD: some examples
Section 2: Telcos, IPTV, and the case for VoD
- 2.1 The emerging telco business model: bundles and video transformation
- 2.2 Making money from VoD: the case for lower churn and higher ARPU
- Why VoD is good for churn
- VoD, pay TV customer growth, and opportunities for up-sell
- Incremental revenue from VoD usage lifts ARPU levels
- More VoD revenue potential: advertising
Section 3: Breaking down IPTV VoD business models
- 3.1 IPTV VoD models are less attractive for now, but lucrative models
will come later
- Why IPTV VoD is not attractive in the medium term
- Two stages to more lucrative VoD models
- 3.2 Why VoD-only IPTV business models are difficult to pull off
- 3.3 What works: successful packaging strategies for VoD
- FoD: questionable economics
- Toward subscription-based VoD
- Case study: PCCW- from a-la-carte to subscriptions
Section 4: IPTV VoD content models
- 4.1 Content: the lifeblood of VoD
- Finding content that sells
- Case study: Verizon moves into local-content programming
- The long tail conundrum
- The TV-on-demand evolution
- 4.2 VoD Content sourcings models: Exclusivity is rare, so IPTV
operators are looking to create content
- Case study: France Telecom becomes a movie producer
- 4.3 VoD content pricing schemes: looking for margins
- The studio challenge and why IPTV VoD is not on top of the list
- The challenge of volume guarantees
- Avoiding napsterization
Section 5: IPTV VoD forecasts
- 5.1 Methodology
- 5.2 How big is the IPTV VoD addressable market?
- 5.3 IPTV VoD unit sales and revenue
APPENDIX
- IPTV Architecture Primer
- The head-end
- Transport
- The set-top box
List of exhibits
- Exhibit 1: Expanding world of video
- Exhibit 2: Evolution of VoD services
- Exhibit 3: VoD variations
- Exhibit 4: Time Warner Cable' s VoD and ITV services
- Exhibit 5: VoD network architecture
- Exhibit 6: Cost per VoD stream
- Exhibit 7: Penetration of two-way capable pay-TV services
- Exhibit 8: Global broadband household penetration
- Exhibit 9: Growth in pay-TV subscriptions and ARPU in France, the UK and the US
- Exhibit 10: IPTV minimum service pricing
- Exhibit 11: Comparative “per-use” VoD pricing by operator
- Exhibit 12: PCCW' s SVoD push
- Exhibit 13: Correlation between VoD viewing and number of VoD titles, Comcast
- Exhibit 14: TV-on-demand models
- Exhibit 15: Content sourcing model
- Exhibit 16: Programming costs per subscriber for selected players (US$)
- Exhibit 17: France Telecom' s VoD revenue breakdown
- Exhibit 18: IPTV VoD subscribers by region
- Exhibit 19: IPTV VoD unit sales by region
- Exhibit 20: IPTV VoD revenue by region
- Exhibit 21: IPTV VoD revenue breakdown into SVoD vs. per-use VoD
- Exhibit 22: IPTV technology value chain and vendors
- Exhibit 23: Operator Capex for IPTV architecture
- Exhibit 24: Video compression technology primer
- Exhibit 25: Comparative look at IPTV access technologies
