It was puzzling to attend the IPTV Forum that was recently organized in London, UK. The event talks up the IPTV market, where a range of suppliers show case how they can help telcos drive TV and video services over broadband pipelines. Those that are familiar with our views know that we have for years expressed our views and concerns, via advisory and consulting capabilities, on IPTV implementations and how telcos are setting up loss making business operations.
Walking around at their year's show gave an impression of a healthy IPTV market, at least based on suppliers. However, in confidential conversations with various telcos it is apparent that the industry is now coming to terms with the fact that IPTV today is a disaster. Telcos are throwing money out the window, and the optimistic projections provided by suppliers have failed to come to fruitions Instead of making money on IPTV, telcos are handing over large sums of corporate profits to content owners, vendors and chipset companies.
Consequently, telcos are increasingly re-evaluating IPTV road-maps and how their infrastructure investments can be utilised to drive other revenue sources. The show therefore reflected the maturing of the IPTV markets in Europe with buzz words focusing on OTT (over the top) service integration. OTT services have by many operators been considered as competitors in the IPTV space, since OTT services may dilute revenue streams from operators to third parties. For years our recommendations to the IPTV operators has been to explore how to integrate OTT services in their service platform. We will monitor this change in our 2010 update on the Western European service delivery platform market report.
Next stop: CDN service provisioning?
Lastly, the next step for operators is likely to be providing CDN (content delivery network) services. This has been our advise to operators for years. CDN service delivery is much more closely aligned with a network operator's business than content and media services. Take Akamai, one of the large CDN providers, as an example. It's net profits are about 15% of revenue. Contrast this with xx% net losses for most IPTV operators.
CDN service provisioning for IPTV operators was not a theme at the IPTV Forum 2010, however, maybe the industry will mature enough by 2011? Let's see in a years time.
