This past summer, when I was leaving AOL, one of the offers I seriously entertained was to run the consumer IPTV business of one of the biggest Indian conglomerates. India is an exciting market - large, young and growing very fast. I however turned down the offer because we were not ready to move back (offer came as a surprise, thru an old IIT batchmate), and I felt the IPTV market in India is still a few years away before attaining a critical threshold.
Phone companies, globally, are pouring billions of dollars into IPTV services mainly as a counter-strike against cable TV companies that have broken into the phone business using another IP technology, VoIP, stealing customers and driving down prices. Phone companies however face a greater challenge, as IPTV and video over DSL are relatively unproven technologies as compared to VoIP.
But nobody is arguing against the disruptive potential of IPTV service. It could transform today's video experience thru richly interactive, personalized and converged TV services for live broadcast, video-on-demand, PVR, peer-to-peer messaging, etc.
Understandably, most of the focus so far has been on the technology side of the equation (delivery mechanism, set-top-box, software, last-mile issue, etc). I however believe that uniqueness of the content and related services will be the critical differentiator for IPTV's long run success. This provides a great opportunity for content firms.
General content categories would be interactive TV content, Internet content and games. Few examples: interactive TV content that includes one-screen voting on shows like American Idol to decide winners, audience participation in game shows, viewers solving crimes on the CSI show, video games on the TV for casual gamers (~45MM in the U.S - largest online gaming segment with very heavy usage), interactive informational shows/educational courses (e.g., Discovery projects its Cosmeo online homework help service could be a $500M annual business when expanded globally), Internet TV (exponentially increasing Internet video on TV), etc.
In markets like N. America, S. Korea, and parts of Europe where cable and satellite already cover over 90% of the market, instead of re-purposing existing cable/satellite programming, IPTV service providers need to come up with original content that leverages interactivity and bandwidth advantages of the IPTV platform to differentiate and give users a reason to switch.
In other markets where the free, over-the-air, broadcast channels predominate with limited cable and satellite penetration (most of the large European countries such as France, Italy, and Spain; Hong Kong, Japan, China, India, etc), competition may be low for IPTV providers. But they still need to invest in unique, interactive programming to promote adoption as user resistance to spending on TV services is high in these markets.
Though the current global IPTV installed base pales compared to that for cable & satellite, encouraging signs are finally emerging. PCCW, world's largest IPTV provider out of Hong Kong, the most penetrated global market, last month reached the 500,000 subs milestone ahead of its projection.