It’s been a while since we’ve written about IPTV because of the immediacy of other developing media and their impact on local. There are nonetheless some interesting local implications for IPTV (examined before), though they will take longer to have an impact.
The most recent news from the IPTV world is that AT&T’s U-verse package has reached 100,000 subscribers. This is a drop in the bucket compared with competitive offerings from cable television incumbents. But is a good start for AT&T’s foray into the living room, which also beats Wall Street expectations, according to GigaOm. U-verse was also recently named “best business strategy” by Frost & Sullivan (I haven’t examined methodology yet).
This is generally part of the quad-play battle that will continue to play out as MSOs and Telcos step into each other’s territories. Cable will have the first run advantage in this territory battle, based on the simple reality that it’s easier to establish and roll out digital voice service than digital video. Indeed, telcos have to lay down costly fiber infrastructure and rip up new customers’ lawns and walls in some cases to get IPTV installed.
Initial IPTV service offerings will also be no better than cable service, partly due to the challenge in signing content agreements, which is something with which telcos have zero experience. But over time, this will change, and the key is that the underlying switched video architecture of IPTV will allow for much greater volumes of content and interactive ability. (see past post and a video from Rocketboom). IP-based ad targeting will also have a leg up on the neighborhood targeting that MSOs employ.
The Real Battle
But the main point is that AT&T, Verizon and other telcos that will wage this triple-play battle aren’t doing it for the customer retention benefits inherent in a product bundling strategy. This is attractive but clearly nowhere near enough to recoup the $50 billion-plus that they’ll collectively spend to deploy fiber networks and install service to the home.
Instead, owning the networks across these media and devices will allow these providers to move beyond being the “dumb pipe” to become content producers, aggregators and distributors, and to serve targeted (IP-based) advertising across devices. In other words, the real bundled service battle will be in developing and marketing the continuity of services and content across these devices, which will involve IP-based targeting down to the set-top box level.
So for AT&T, video is indeed an important element in its ability to serve more targeted ads to consumers across devices and on a local level. Add the synergies possible with its directory operations (video + mobile + IP based targeting + local sales force), and this will get interesting.
It’s a long way away, but the company just got a step closer to being the threat it could someday be in local video distribution and advertising.