The Future Of Television – IPTV

TV advertisers are already under threat from the new generation of TV set-top boxes, which allow viewers to fast forward through advertisement breaks. Research from media buying agency PHD reveal that homes with personal video recorders (PVRs) are skipping through 77% of ad breaks during the 42% of shows that are recorded (see PVRs Causing Increasing Threat To Advertisers).

IPTV provides pictures as good as television from digital, terrestrial, cable or satellite providers, but allows viewers to select what they want to watch from libraries of millions of movies and videos, making todays multi-channel choice seem archaic.

Microsoft began to invest in IPTV a decade ago, and the medium is expected to launch in the US by the middle of 2005 and in Europe towards the end of the year. US telecoms giant, Verizon Communications, announced its intention to use Microsoft’s software for its IPTV rollout.

Video Networks is already providing broadband entertainment through its HomeChoice service in the UK, with broadcast channels and on-demand programming being delivered to customers homes via the phone line directly to the television set.

Verizon’s service is reported to initially comprise an interactive programme guide, high-definition television broadcasts, digital video recorder and video-on-demand services. It is expected to launch in the middle of the year, although it is not known which regions will receive the services.

Microsoft is about to have its IPTV technology adopted in Europe, and sources at British Telecom privately admit that the company has plans for launching IPTV in the UK, according to a report in The Business.

Last summer, Bluewin, a division of Swiss telecoms group, Swisscom, announced plans to run the first European commercial trials of the Microsoft television system, initially providing 600 homes with 25 channels via broadband telephone lines (see Trials Of Microsoft TV Begin In Europe).

Soon-to-be released statistics from the British Market Research Bureau (BMRB) reveal that the internet and television sectors are beginning to converge to produce a new medium that is different from either of its predecessors. Unlike the current private way that the internet is viewed on a PC, the new medium is expected to be used as a shared entertainment unit for the household.

Meanwhile, research from Point-Topic states that IPTV is now part of many operators’ plans, however as the service has a high-cost, low-margin business and a wide range of factors will determine the success or failure of the different services.

Point-Topic cite competitively priced bundles as the most important factor in holding on to customers in the face of cable competition. New types of broadband network have also helped, with competitive operators building new networks based on internet protocol (IP) only, thus enabling them to get services to the market more quickly and cheaply.

IP networks can also support voice services, with Yahoo in Japan, FastWeb in Italy and Neuf in France operating purpose-built networks, offering consumers the ability to use voice over IP (VoIP) services.

A report from Global Information Incorporated has predicted that VoIP will reach nearly 20 million households worldwide by 2010 (see VoIP To Reach 20 Million Households By 2010).

Although the advent of IPTV is forecast to cause problems for advertisers, industry sources point out the advertising industry is nothing if not resourceful and is already considering new ways of penetrating the new medium. Sponsorship, pop-up adverts and product placements are all ways in which TV advertising could migrate to the new medium.