Here at GigaOm’s NewTeeVee Live event, it’s a who’s who of players in the small but growing online video space.
AT&T’s $6 billion investment in its U-Verse IPTV rollout will get 8 million subscribers by the end of the year and 18 billion by the end of ’08, hopes AT&T group president Ralph de la Vega. Citing numbers from Frost & Sullivan, he also claims there will be 38 billion total IPTV subscribers in the U.S. by 2013.
Driving this growth will be the technical advantages IPTV has over cable, which were explored in the TKG report From Reach to Targeting: Television in the Internet Age, as well as here on the blog.
“Switched video allows for a huge amount of content,” said de la Vega, taking a dig at cable’s video architecture. “Given fragmentation of video content, would you send 300 channels of predetermined content over one pipe for users to choose from? If you were building a new television business in today’s content environment, you wouldn’t do it that way.”
The point is that the underlying technology for IPTV (explained here) allows for a lot more content and interactivity than cable. But the current product isn’t there yet. There are other bottlenecks to actually aggregate and serve all this content, including licensing and copyright issues. This is particularly challenging when you talk about sharing content among “three screens,” which de la Vega spent a bunch of time discussing.
His answer to some of these content challenges is to bring in new types of content that wants to get on television and is less encumbered by the legacy licensing structure that is limiting to the interactivity and syndication he is talking about.
“We want to tap into content providers from nontraditional sources,” he said. “This will be entrepreneurial content that falls somewhere between YouTube and prime time. In the chasm between the two, there is a huge opportunity for these content producers to work with us and with content networks.”
This is the long-tail promise of IPTV, but the success of this content aggregation will have to be proved over time and will ultimately determine IPTV’s value proposition over cable, and the realization of AT&T’s vision.
TV as the Web?
The other benefits of this architecture and its interactivity are things such as searching Yellowpages.com, as we’ve discussed in the past, as well as sending content to a mobile phone, programming a DVR from a mobile phone, watching tens of shows at once, buying products from online retailers (V-commerce, as de la Vega called it), checking flight status, viewing photos — the list goes on and on.
But how will hardware evolve to do justice to these scenarios? This point wasn’t addressed by de la Vega, but eventually we will hit a wall with what is possible with a traditional television remote. At the same time, the keyboards and mice people are used to aren’t likely to migrate to the living room. Perhaps some sort of tablet device is in store.
Lastly, this video architecture will have better targeted advertising implications (same as PC-based IP targeting) in the ability to target down to the set-top box level. This is compared with the neighborhood or ZIP code targeting of cable television.
“Ads will be relevant because we’ll know your fragment and target acutely to it,” says de la Vega. “It won’t be viewed as intrusive.”
Much of this will need to be seen in practice, but the possibilities are intriguing. And if de la Vega’s rollout projections are correct, we’ll be able to see it soon.
For a firsthand account of IPTV, read Peter Krasilovsky’s anecdotal post on his initial reactions as a U-Verse subscriber.