IPTV, Next-Gen Television: InternetTV

By Mitch Berman, Guest Author

Previous Posts:

* IPTV: Next-Gen Television?
* IPTV, Next-Gen Television: The Operators
* IPTV, Next-Gen Television: The Box

YouTube, Joost, Veoh, Babelgum, Azureus, BitTorrent… according to the San Jose Mercury, there are 247 different companies calling themselves “InternetTV”. All of them deliver video online to the PC or to mobile devices. Some focus on user-generated content (UGC). Some focus on delivering on-demand movies and television programs on a delayed basis. Some offer a combination of all three formats. Funny thing is that none of these companies have anything to do with the TV set. Yet, they call themselves Internet “TV”.

Are these companies a fore-runner of the next generation of television? Do they represent the promise of next-gen TV that include things like: compelling search capability, unlimited choice when I want, recommend and share playlists, watch video based on my interests and viewing history, choose my channels, create my own playlists, view relevant ads and offers, and more? In some cases, yes. However, since all of these companies are currently just PC-based, the jury is out as to whether they can ultimately transfer to a television audience. However, the DNA of each of these InternetTV providers is not well suited for television anyway. In fact, some of these companies have no intention of going to TV at all. Which, of course, begs a question as to why they even call themselves “InternetTV?”

Again, as I said in my previous posts, technology is not going to enter into this discussion. We will focus on Content, Business Model and Consumer Experience. However, it is worth mentioning that most of these companies use a P2P or downloading approach for the delivery of online video. YouTube is essentially a lone gun in “streaming” short form video (2 minutes on average).

A September 19th brief from the Center For Media Research stated that over 134 million Americans watched online video in July. According to a comScore recent release, “Nearly 75 percent of U.S. Internet users watched an average of three hours of online video during the month of July, with Americans viewing more than 9 billion videos online.” YouTube was the leader, representing 2.4 billion videos viewed (27% share of all videos), with Yahoo! sites coming in a distant second with 390 million (4.3%). Everyone else was at 3% or less. Mostly less. Some of these sites include some big name brands like Fox Interactive, Viacom Digital and Disney Online.

However, when one looks at actual online/PC viewing statistics, two things really stand out. According to comScores report, “The average online video duration was 2.7 minutes. The average online video viewer consumed a total of 68 videos during the month, or more than two a day.” Note that eMarketer’s study in March showed that film, sports and TV trailers, news clips, amateur and homemade videos tend to be the most popular online viewing (we’ll leave porn out of this discussion). These statistics are radically different from the current 283 million Americans who watch television in the U.S. for an average of over 7 hours a day, according to Nielsen.

The business model for so-called InternetTV has still not been solidified. Standard TV subscription and advertising models have not worked online to the PC. Just ask YouTube/Google. Three weeks ago, they launched a new ad model that nearly caused a riot within the YouTube community. Advertising and subscription models have not done well online via PC viewers. Not acceptable in that community. Yet they continue to be the foundation for revenue on the television set with TV viewers.

Content? Consumer experience? Note the type of content popular online to the PC. Short form. Human beings are not programmed to watch long form video (movies or their favorite TV shows) by themselves on a small screen (PC). Thus, Joost, Azureus and friends are going to find it difficult to monetize an audience with an anathema to subscription and advertising to a PC, no matter if they call themselves Internet”TV.” What’s in a name? TV viewers are not fooled.

One thing online video has done is prove that UGC is no fad and that it will change the video landscape, over time. It has already begun to change how TV networks and Hollywood studios do business. According to the Bear Stearns report last June, “… digital technology and economics are loosening barriers to entry in video production. This augurs a material increase in video content supply from many sources, which could lead to slowing growth for incumbents and a shift in value from content creators to aggregators/packagers.”

The Bear Stearns survey reported, “… UGC is the No.1 and No.2 most popular content category among men aged 18-34 and all respondents, respectively.” The question will now be, how will InternetTV companies relegated to the PC be able to monetize UGC? And, how can short form, disconnected videos play on TV in a compelling way to spur TV viewers to watch?

We stand on the threshold of a new era in television. IPTV is opening new doors for production, new business models and changes in consumer viewing behavior. The experience needs to be cool and at the same time, simple. It will be everything on demand, priced fairly with enabling services for search and personalization that enable the content. Those that understand this premise, will win big. The next generation of television is about putting the consumer in control.

This segment is a part in the series : IPTV, Next-Gen Television