Published on ITWeb – by Lezette Engelbrecht

American comedian Ernie Kovaks called television a medium because “it is neither rare nor well done”, but with a glut of new delivery platforms coming in, the latter claim at least can be amended.

As consumers increasingly demand what they want, when they want, on whichever device they want, the categories of TV, video, and Internet are blurring into a mash-up of content delivered in new ways. The world of anytime video content has also become a reality thanks to the likes of YouTube, Joost and professional content sites such as Hulu and Netflix.

Broadband costs will have to come down for services like IPTV to gain a foothold in SA, says Frost & Sullivan analyst Vitalis Ozianyi.

But while new services and technologies are emerging to turn the traditional tube into a media-streaming super-machine, in SA this will remain the privilege of the few unless more people get broadband access, according to senior ICT analyst at Frost & Sullivan, Vitalis Ozianyi.

He notes that broadband is the best medium for IPTV and until more high-speed lines are available, the service will remain out of reach for the broader market.

“There’s an opportunity for ISPs to invest now in driving the penetration of fast Internet connectivity to users,” he notes, adding that as prices go down, usage will go up. He explains that ISPs could gain access to an additional revenue stream, as IPTV is a way to drive lots of traffic through the network.

IPTV is generally described as multimedia – including TV, video and audio – delivered using IP-based managed networks, while Internet video and Web TV are unmanaged services streamed through the public Internet, such as watching YouTube videos on a home PC. IPTV can be received on computer or on TV via a set-top box (STB), with present examples including the BBC’s iPlayer and AT&T’s U-Verse.

Video on demand (VOD) is broadly considered as any audio or video content provided on demand, from content providers or through the Internet, streamed over various devices for viewing at any time.

Locally, the Independent Communications Authority of SA has published a position paper on IPTV and VOD, saying it has decided not to regulate these services, but that existing guidelines for broadcasting and electronic communications services (ECS) apply. IPTV has been classified as a broadcasting service while VOD fits into the ECS category.

While many people use the Web to access a wider range of content, it hasn’t had any significant impact on the TV market as yet, says Ozianyi. “But in the next two to three years, some pay-TV providers like MultiChoice are likely to offer IPTV by partnering with major ISPs,” he adds.

As faster broadband connections are provided to homes in areas like gated communities and estates, says Ozianyi, there’s likely to be greater interest in acquiring set-top boxes, which allow users to watch thousands of TV channels from all over the world.

But Ozianyi stresses that costs will play a major role in how many people subscribe to IPTV services.

“In SA, the success of IPTV depends on the level of broadband penetration to the home and how fast ISPs roll it out to domestic users. If that happens it will open up the market for items such as STBs that speak IPTV, and allow more viewers access to these services.”

“So far, IPTV has been a non-starter in SA due to limited speed, data caps and poor performance,” says World Wide Worx MD, Arthur Goldstuck.

While the video revolution has not yet hit SA in a big way, it’s likely the trends of the US market will emerge here too, he says. ”However, the cost of data on a cellphone is a major constraint.

“For example, on the R60 a month BlackBerry Internet service, streaming content is the only form of data that is not covered by the unlimited Internet offering. On all services and phones, video off the Internet is going to be too expensive to use regularly.”

Side show

Early adopters will enjoy the service, but no one will use it as a replacement for TV.

Earlier this month, MultiChoice and etv partnered to release SA’s first digital terrestrial mobile broadcast offerings, with DStv Mobile providing a subscription-based bouquet of eight channels, while free-to-air broadcaster etv offers two channels through e.Mobile TV.

MultiChoice says while it’s still early days, the initial response has been good. The company adds that Nigeria and Ghana have experienced positive responses to DStv Mobile, with an upturn in March and April ahead of the World Cup. “Since then we have seen an incredible upsurge in the number of subscribers,” it says.

According to Goldstuck, his firm’s research suggests one out of 10 urban cellular users will be receptive to the concept of TV on mobiles. “But that doesn’t mean they will actually use it.”

He adds that TV broadcasts via DVB-H handsets will begin to grow now that licences have been issued and MultiChoice has announced its service, but remain limited by the small number of capable handsets in the market.

“Early adopters will enjoy the service, but no one will use it as a replacement for TV.”

ITWeb readers’ comments on news of the mobile TV offering provide a glimpse of what users really think, with calls for content to be expanded and doubts surrounding the practicality of watching a full-length show or movie on a tiny screen. Another applauded the service, compared to current mobile TV offerings running on 3G technology.

It seems the jury’s out on the success of mobile TV for now, but the fact that consumers are looking for a range of content, on any device, whenever they want, is virtually a given.

With nearly one-third of the world’s population set to be online by the end of this year, according to an International Telecommunication Union report, Web video is likely to climb to new levels, posing both a threat and opportunity to the pay-TV moguls.

“There is no doubt in my mind that video will account for more than 60% of the total Internet traffic in the next two years,” says John Kotsaftis, CEO of DStv Online.

“In most countries with high broadband penetration it already accounts for between 30% and 40% of the traffic. So Internet video is here to stay, and when one looks at successful models such as Netflix in the US and other on-demand services in the world, one would expect that pay-TV operators would adapt their business models to provide more choice to their customer online.”

A recent Pyramid Research report reveals new partnerships are being forged as consumer viewing habits evolve across devices and networks. “TV content providers have the potential to recover traditional TV advertising revenue that has been lost to the Internet by partnering with Internet video aggregators and ecosystem-based, Internet-based distribution solutions,” it adds.

Kotsaftis argues that traditional pay-TV operators outside the US have not yet been impacted, as they have adapted offerings to make their content go cross-platform and on-demand. Pay-TV businesses are also offering more live programming such as sport and local content, he adds, making their offering more attractive than content that’s generic in nature.

Goldstuck notes that services like Hulu, which allow subscribers to watch any show at any time online, are arriving in SA via DStv on Demand. However, he adds that this service is limited because only certain programming can be accessed for a certain time, and it only makes sense through service providers that offer uncapped services.

“Uncapped data is usually ‘shaped’, which means certain types of traffic get priority, and streaming services like video and music tend to deliver a rough experience.”

But Kotsaftis maintains that DStv on Demand has been successful across both online and STB platforms. “Coupled with this we have been very successful with short-form video formats on entertainment content,” he adds, saying video views are up fourfold on year-on-year from 2009.

Paul O’ Donovan, principal analyst for Gartner’s consumer electronics research group, notes that pay-TV operators recognise they must offer access to VOD either in partnership with companies like Netflix or in the case of satellite operators, through deals with local telcos.

“Pay TV operators are in a reasonably good position at the moment because the vast majority of home users don’t have the knowledge or equipment to get video via IP. So there’s a moment of opportunity, a period of time, where pay-TV can say: ‘We’ll help you access these services’.”

O’Donovan adds that if they don’t do something, they’ll undoubtedly lose revenue. “The only remaining alternative will be tying up content only they have access to, such as sports contracts, so they can only be accessed via the pay-TV platform. That’s their last option if they don’t grab the opportunity now.”

He foresees a significant number of more connected TVs coming to the market, because of pent-up demand and the huge amount of content on the Internet. “There’s a demand to watch programming when you want, not just when TV shows are on – people don’t want to wait months for a movie to be aired on cable.”

But he adds that for the consumer who isn’t PC-literate, there’s still a lot of mystery involved. “TV in the living room is all about an entertainment experience, and that’s really the point – whatever content it is, it must be in a format that suits TV.”