Video on the Wire

Implications: We’ve been hearing about ITV for ten years, and online TVs since WebTV popped up. Many of us have tried at one time or another to get (and pay for) a movie via the internet, only to be sadly disappointed in either the time it took, the quirkiness of the PC, the poor sound quality and the intermittent picture quality. Like the old expression “I’ll believe it when I see it,” well we’ll see it when we believe (in) it. That’s not to say that all the above cited service won’t be available, or that one or two of them may actually become successful to some degree, but IPTV is not going to quickly or easily replace FOA, Cable, Satellite and DVD (no mater how you get one.)

Analysis: Remember when you used to turn on the TV, wait for the tubes to warm up, and then would wiggle the rabbit ears to tune in one of the three or four stations in your town? No, too young? Guess what, you’ve missed nothing. Do you remember when you used to turn on the TV, wait for the CRT to warm up and then turn a knob to get the set top box to give you the channel you wanted, you had maybe 20 then. Still no? That’s alright, you're still not missing anything. OK, surely you remember turning on the TV, setting the volume with the remote, then laying that aside and selecting one of the hundred channels from the STB (either cable or satellite).

Do you remember going down to the local mom & pop corner video rental store and getting a VHS tape with an almost new (as in the same year of release) movie and taking it home to watch? What’s VHS? OK, do you remember going to the mega store and renting a DVD? Sure you do, you might even still be doing it. Some of you are probably having your DVDs sent to you by Netflix, reducing your travel time to going to the mailbox. And all of you are probably renting movies from your cable or satellite provider. A few of you may have video-on-demand, or near VOD, from your cable supplier – talk about instant gratification, wow. Well forget about it, that’s yesterday’s news. Now you will be able to download and play instantly zillions of movies from all sorts of distributors and eventually the studios themselves. This is the age of the internet – IP everything and now VOD. Some folks are calling it IPTV, and some are suggesting it might even lead to the oft promised and longingly hoped for ITV.

Consider the following:

• The ranks of Internet Protocol Television (IPTV) subscribers grew dramatically in 2006. However, the real excitement is just beginning, as subscribers rise to more than 65 million by 2010. The growth of IPTV will contribute to a telecom operator revenue stream of about $18 billion by 2009. At the other end of the value chain, sales of semiconductors for IPTV across all categories will grow to $7.8 billion by 2009.

• Illegal video downloads outpace legal downloads four to one. Increased levels of broadband access, powerful and speedy PCs equipped with DVD readers and writers, portable video devices and next generation file-sharing services are making downloading of video content faster and easier than ever.

• According to the NPD Group, among US households with members who regularly use the Internet, 8% (six million households) downloaded at least one digital video file from a P2P service for free in the third quarter of 2006, compared with 2% of households that downloaded a paid video file.

• ABI Research forecasts the IPTV take-up in mainland China to pass the 23 million subscriber mark by 2012.

• The founders of the Skype internet telephony service are launching what they describe as the world's first broadcast quality internet TV service. Following speculation about a service dubbed The Venice Project, the online television software is now being unveiled under the name Joost. It is designed to enable broadcasters to get their programmes in front of a global internet audience. It will allow viewers to access all kinds of television over the internet.

• BT Vision, in England launched in December, offers video-on-demand via broadband, and Channel Four Television says its 4OD service promises DVD-quality programs to download to your computer.

• Indya.com, the Internet portal wholly-owned by the STAR Group, announced the launch of its digital entertainment store, which makes some of IndiaR17;s most popular entertainment content available for download including popular “K- Serial” Kahaani Ghar Ghar Kii, The Great Indian Laughter Challenge and Koffee With Karan. The service is available worldwide and targeted at South Asian audiences in the U.S., U.K., Canada and Southeast Asia.

• Babelgum says its service, launching in March, would also use peer-to-peer technology to stream video at "near-TV resolution."

• In November 2006 China’s Jiangsu Telecom network announced an expansion effort to meet subscribers' demand for IPTV, VOD, and other advanced IP services. IPTV is the Chinese government's platform of choice because it is aligned to its long-term plan of unifying broadband, Internet, and television.

• Netflix is launching a streaming service with no downloads or burns, complicated viewing hours or quota system. The service is called “Watch Now” and it says will take 10-15 second to start watching. The studios are: NBC Universal, Sony Pictures, MGM, 20th Century Fox, Paramount Pictures, Warner Brothers, Lion’s Gate and New Line Cinema.

• User-generated video Web sites such as YouTube and MySpace have millions of clips, but face big challenges turning traffic to cash. Although 44 billion video streams--55 percent of all video content consumed in the U.S.--will be created by 2010, the market will account for only 15 percent of total revenues. User-generated video made up 47 percent of the total online video market in the U.S. last year, said Screen Digest.

• "More than 60 percent of China's video-sharing Web sites will be forced to retreat from their businesses due to funding and profitability pressures this year," said Fu Xinghua, an analyst with Analysys International. "Currently, few video-sharing Web sites make a profit in China. Most of them try to profit from online advertising but very few can make ends meet solely on that because operation costs of these kind of companies are really high."

So far, when it comes to making money, the online video explosion is mostly about potential. Studios selling TV shows and movies for download, and Web sites like YouTube that link ads to user-generated content, stand to reap billions from the Internet's hottest trend. But companies whose products exist largely outside the public view are already profiting handsomely. Led by Cisco Systems the network equipment makers are seeing their gear bought by service providers who must upgrade their networks to accommodate surging Internet traffic and booming broadband demand. And, back from the dead is another go at ITV. Zodiac Interactive today announced the general availability of TVLocalSearch. This application allows consumers to use the TV and search for local businesses without interrupting the viewing experience. Like its online counterpart, TVLocalSearch is free for consumers,and says the company, easy to use, and gives viewers relevant information when they want it. TVLocalSearch is further enhanced by Zodiac's TVCallME service, which allows viewers to be instantly connected to the local business by telephone with a click of the remote.

What do I think? Well we’ve been hearing about ITV for ten years, and online TVs since WebTV popped up. Many of us have tried at one time or another to get (and pay for) a movie via the internet, only to be sadly disappointed in either the time it took, the quirkiness of the PC, they poor sound quality and the intermittent picture quality. Like the old expression “I’ll believe it when I see it,” well we’ll see it when we believe (in) it. That’s not to say that all the above cited service won’t be avail able, or that one or two of them may actually become successful to some degree, but IPTV is not going to quickly or easily replace FOA, Cable, Satellite, and DVD (no mater how you get one.) Plus these new IP services are facing a declining market a less people watch less TV in favor of other forms of entertainment or just no time to be entertained. Yes, not having to walk all the way to the mailbox to get a Netflix movie would indeed be a major labor savings, as long as I have to watch it on a PC or a screen driven from a PC, it will not be a totally pleasant experience – sorry.

Case in point, having bought and downloaded Mission Impossible 3, and wiring up the PC’s audio out to the A/V system, and the VGA out to the projector, we had to interrupt the viewing pleasure (just when Tom Cruise was getting the poop beat out of him, something we’ve all wanted to do) to deal with the “Automatic downloads will now begin” message on the screen – and not once, several times. The lack of lip synch although annoying was something we kinda got used to, but I wouldn’t be willing go back for more. Video on the wire? Not just yet, but keep trying, you might get it right some day. And when that day comes, most likely it will be on an Apple, or in the Batmobile.