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Why Do We Care So Much About IPTV?

By: 23 February 2006

Here is a great introductory article on the nuts and bolts of IPTV technology. Why is this important or relevant to local? The architecture of IPTV systems will allow for a two way street of communication between users and servers much like the IP architecture of the web which makes it much more interactive than television today as we know it. And that interactivity or "pull" of information and content will enable the geographic and contextually relevant advertising opportunities that we've seen flourish on the web.

From the article;

This speaks to the basic difference between IPTV and the QAM system that has dominated cable and satellite TV to date. With QAM, all channels are sent into the home, where the set-top box or boxes decide which channel to watch.

"If 250 channels are being broadcast into your home," Graczyk said, "the set-top ignores the 249 you’re not watching and displays the one you are. But those extra 249 take up a huge amount of bandwidth."

With IPTV, each set-top box in the home sends a request to a server located at the service provider, and the server sends back just the channel requested. Regardless of the number of channels available, even if many are HD, the amount of capacity into the home need only be enough to handle one channel per set-top box plus enough for data and voice.

One channel being called up at a time – instead of 250 channels always available to channel surf – is technically much like the way we web surf. Each time a channel is chosen, the server knows it. How service providers of IPTV systems (mostly telcos) use this valuable information to serve up contextually relevant ads (or partner with those who can) is the question. How the fragmented universe of local and small businesses will be addressed by a sales channel is also an important question. As we've said in the past, telco-owned directory businesses could utilize existing feet on the street to do the heavy lifting, and offer IPTV to SMEs as part of a cross platform sales strategy. The ability or willingness of SME’s to create video ads (creative, rather than directional) will also be an important area to address, which is why Spot Runner is so intriguing.

I recently attended VenturWire’s Network Ventures conference in San Jose where there was a great session entitled Tune into the Network Getting Ready for IPTV. Shawn Carolan, Managing Director of Menlo Ventures had some interesting things to say;

What will make IPTV take off are services that are compelling. VOD is pretty compelling, but one that is very interesting that still isn't ready from a software infrastructure standpoint, is really targeted advertising. It has some privacy concerns, but look at what Google has done on the web. If you search for keyword you'll get organic search results surrounded by sponsored results. Well it turns out that people click more on the sponsored results than the organic results by 25 percent. Why is that? The reason is because it is very well selected and targeted ads, and I think well targeted ads become content to the user.

From a user standpoint, IPTV is also starting to get a great deal of attention with recent studies done on user awareness and interest by Jupiter Research, Points North Group, and Harris Interactive.

The San Francisco Chronicle also came out with a good introductory piece this week on IPTV business models, and the service rollouts underway by telecoms. And the Rocky Mountain News has a piece on the legal battle around franchise laws and content regulation of IPTV (does it fall under the guidelines of the Web, or that of cable television).

That's enough to keep you busy for now. But in addition to continuing editorial coverage, we'll be talking about IPTV (upcoming shameless plug warning) at our upcoming Drilling Down on Local conference during the following panel. Hope to see you there.

1,000,001 Channels: But Is Anybody Watching?
TV used to be simple for everyone. But the newly fragmenting world of video search, mobile TV, on-demand cable and IPTV makes the range of potential consumer choices staggering. What are the new technologies that are rapidly turning TV from a mass medium to one that is highly personalized? What is the new consumer "video consumption" model, and what are the implications for networks, content producers and advertisers? Will a million "Wayne's Worlds" and the potential "Tower of Babel" effect destroy the medium for advertisers or open it up to a range of exciting new possibilities, including some for SMEs?



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