1. Overview of business models and
market analysis of IP-TV
Author: Keith Baker
Division: Appied Technologies Eindhoven
Date: May 2007

2. Overview
Where and how can IP-TV get into the market?
Who will pay for it?
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 2

3. Definition
• ADSL : Common form of broadband • Non-Linear TV
connection in retail, but asymmetric On-demand video services
• BD : Blu-Ray Disc • Peering : Virtual zero costs access
• BD-Live : Online BD media with to bandwidth for ISPs and other bulk
MHP (java) interactivity users: e.g. BBC only pays 0.1 cents
• Bittorrent : Social protocol on per MB/s per year
internet used for video files transfer • P2P : File sharing network that uses
• DOCIS : Cable Modem standard broadband internet
• FTTH : Fibre To The Home • TV without Frontiers
e.g. Nuenen Net Legal Framework for European
• iMP : a broadband service the BBC broadcasting.
gave demos of in 2006, but has • VDSL : Future DSL technology
since run into problems.
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 3

4. IPTV definitions of Philips
• IP-TV
–Managed Network
–Minimal Walled Garden
–QOS, DRM and services
–Most managed network are propriety technology
• ISV Internet Video Services
–Open internet protocols
–Google Youtube, Pirate Bay,……
–Streaming, P2P progressive down-load, pod-cast
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 4

5. Media was (and still is) important
• Media still has impact
–Not 1930/1940 “War of Worlds” radio broadcast:
nor the Nazi radio propaganda in WWII
–Populations are hardened and very very cynical
• Look at major industries such as Sport
–Position of the monopoly is most important:
• Sky and the English Football Monopoly
• Plan used of DVB technology by News Corp
• Political influence is still important at EU level
–“TV without Frontiers”
–Non-linear content : Battle EU v Nations State
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 5

6. What do people actually pay for: Football
“War with 22 men and a ball”
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 6

7. Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 7

8. What Media do we pay for ?
Wal*Mart = 1/3
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 8

9. Content is Not King :
Economics confused the Telcos
10000
1000
100
Cable TV
10 Internet
$ 1 Phone
0.1 Dial-up Internet
Mobile
0.01
SMS
0.001
0.0001 The Evolution of Price Discrimination
in Transportation and its Implications
Monthly cost Price $ per MB for the Internet. 2004
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 9

10. EU-National Communication Authorities Interest in IP-TV
http://www.ofcom.org.uk/research/tv/reports/videoregulation/videoregulation.pdf
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 10

11. Television
Roadblocks – 1. New media rights issues Power struggle
Platforms ask
aggregators to
organise new media
Aggregators see new rights and
media as a platform independently act as
Distributors
by-pass and want aggregators in new
Producers place want all media
mobile, Internet and media space
high value on new rights to protect
other new media
media rights their traditional
rights.
value chain.
Internet
On-demand Mobile Viewer
Production content Distribution content Aggregation content Platforms content
Producer/studio sales TV channels Cable/DTH
IPTV
Viewer currently
Platforms and broadcasters denied anytime,
Content owners juggle anywhere access
Library content still hold market power
Deal-or-no-deal economics
needs new in most content negotiations
contracts
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 11

12. Television
Roadblocks – 4. Reluctance to license
Unwillingness to damage existing
TV LOG JAM!
revenue streams holding back Licensing by
new media exploitation technology/business
DVD Dist. model is increasingly
Stakeholders irrelevant
expanding into Broadcasters DVD Dist.
all areas of
stakeholders value chain
mobile mobile
Internet Internet mobile
Internet IPTV IPTV Internet Viewer
Theatres DVD Dist. Cable/DTH Cable/DTH Broadcasters
Production content
content Cinema Video On-demand Pay TV Free TV
€€ €€€€ € €€€ €€
Exhibition rental rental subscription Advertising New media
windows
generate
retail retail PPV PPV lowest
revenue
subscription download
Business
models Similar
expansion of Advertising All media rights for given
business models time window seen as one
PPV solution, but economic
barriers currently too great
T1> T2> T3> T4> T5>
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 12

13. Television
Roadblocks – 3. Regulation of new media TV
distribution
New and ‘old’ media platforms New entrants to
offered aggregated content on platform market
different terms (eg. ‘must carry’) operate under more
IPTV liberal telecoms
regimes
Internet
On-demand Mobile Viewer
Aggregation content Platforms content
TV channels Cable/DTH
Viewer protection in
Traditional players subject to mobile and Internet
broadcast, cable & satellite space and lack of level
directives with relevant advertising playing-field
content and advertising are concerns
restrictions
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 13

14. Can’t Pay Won’t Pay for IPTV managed
networks
• What is the way forward
• Who will pay?
• Short-cut to the answer!
• Not an Economic issue anymore:
but a Social issue.
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 14

15. Social Issues
• Openness to Media : Participation (Another slide)
–Youtube
–Blindness to “unlawful” use of Copyrighted media
• Multi-Task
–Multi-screened room
• PVR and Advertising
–Needs creativity and market influence
• Viewing information
–IPTV specific problem
–Turn very nasty if distributors think they own
customer information: see RFID!
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 15

16. Generation Gap : < 20 year old : broadband hit the
families
Couch Potatoes Net-aware and Live
Open
Cohort - Young
< 20 years
Gagetteers
-$ >30 years
Passives
>20 years
+$$$ Involved
Limited
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 16
Passive

17. If IP-TV can’t make it alone then Team-up
• Game platforms
–XBOX360
–PS3
• PC : ISV Google and Yahoo
–Maybe unavoidable
• Disaggregation by Retailers : Wal*mart
– E-Bay : Skype and Joost or Zattoo
• Traditional Media : Hollywood
– DVD download or BD-Live
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 17

18. Can’t Pay Won’t Pay for VOD : P2P
• P2P network use Internet friendly protocols for the virtual zero
cost distribution of large files.
• Disputed P2P networks popular since 2004
–such as Bittorrent are already by over 600,000 users
Europe to receive US HDTV content: e.g. 24, Battlestar-
Galactica, Enterprise, Desperate Housewives. etc.
• Bittorrent protocol in inherently scalable:
–could be used any infinite number of users; provide they are
social minded, and have internet bandwidth to share
• P2P video streaming is effective for “Flash Crowds”
–New canalizing trick for broadcasters
–Hunt for the crowd not hang on the channel number
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 18

19. : P2P : Bittorrent Technology
Capture and upload
Download and burn : DIVX
P2P Distribution
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 19

20. P2P Killer Broadband Applications
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 20

21. BBC iMP player : Mis-fired P2P network
Based on
Kontiki’s OMN
Killed by Flag-ship Channel owners
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 21

22. Taming of P2P happening fast in 2006/7
• Bittorrent accepted by some Studios
• E-bay Skype launch : The Venice Project
• Fastweb Owner move to BabelGum
• Many of the P2P technology vendors doing deals
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 22

23. Wal*Mart ?
• Walton’s one of most influential families in the World
–Influence the Clinton’s
• Wal*Mart has power and influence
–Changed the DVD content market in 2004
–Even Apple fears Wal*Mart for iTV product
• Wal*Mart sent mail to Apple in Oct. after iTV
• Where is the gain to Wal-Mart?
–Loyalty lock on the customer: coupons e.g. Sam’s
Club, own TV channel
–Disaggregation of advertising costs
–Cornering of traditional broadcast network to
“Senior market”
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 23

24. BD Eco-system + IP-TV
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 24

25. Create a HDTV P2P Network for Wal-Mart
Retailer Driven :Wal-Mart
Invest more
4-6 Mb/s for faster
download
Peering
Network
Massive network
bandwidth
paid by retailers
P2P Distribution
Media Player Option
Media PC Option
Blu-Ray Option
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 25

26. IP-TV Future
• If you can’t beat them join them : i.e. another network
• There are many options?
–EU Media Policy : Subsidy income for friendly pan
European channel
–Wal*mart : Disaggregation process
• Loyality cards
• Marketing information : Product
• Focussed + Controlled advertising
–E-Bay with Skype + Paypal : Micropayment
–Zattoo :
• But forget the simple Triple play to the customer
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 26

27. Vision of Future
• Packaging of Content for Multi-Display Home
Viewing
• Move away from Linear content: Channels and EPG
• Scenario : Maxima Report
–From film Minority Report plus BD Technology :
BD-Live MHP like for interactivity
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 27

28. Empathic Internet: a New “Soccer” monopoly
An Empathic automotive product
“Theory of Mind”
Philips Applied Technologies, Keith Baker, <2005-07-22>, <DSE-050002I> 28