Advanced Television

PwC: IPTV ROI not easy

November 21, 2007

Companies implementing IPTV will need to manage their approach carefully in order to deliver a profit, according to PricewaterhouseCoopers. Companies need to ensure that their strategy and delivery offers an adequate return on investment that is in line with their service roll-out and minimises the market entry risks.

A hybrid approach to IPTV, based on delivering broadcast TV over subscriber-agnostic technologies such as satellite and digital terrestrial television, alongside on-demand and interactive content over broadband, is one option to help lower the market entry cost, maximise service reach, and retain future flexibility as the market and service evolves.

Colin Light, TMT director at PwC believes that companies will need to learn from mistakes of the past. He commented: “If companies invest heavily in network capacity for IPTV they could struggle to make a return on this investment due to the lead time in reaching all of their potential subscribers through ongoing broadband roll-out, especially in light of intense competition in the provision of triple and quad play. Differentiation from traditional broadcast TV will be key for the IPTV service provider. But the real contribution to the company's overall portfolio and profits needs to come by attracting the mass market.”

Telco, satellite, cable and terrestrial operators are all coming at the IPTV scenario from different positions but are ultimately after the same customer. They are competing for position and tackling complex issues but are having differing levels of success. David Lancefield, TMT partner added: “IPTV is the hotbed for true convergence – showing the money from IPTV will require telcos to transform, both culturally and as an organisation, into areas that until now were occupied by media companies. Content acquisition and advertising sales will need to become core competencies for every telco launching IPTV.”

The importance of content cannot be underestimated and, in this mix of content delivery and interactivity, a detailed appreciation of rights packages and their value will be crucial. More significantly, IPTV provides a real-time and direct feedback path from the consumer to the provider. This paves the way for targeting very specific audience groups of subscribers, giving providers a virtually unprecedented opportunity to create 'stickiness' among consumers by offering them a community-based platform with the option of user-generated content.

Light added: “Subscriber acquisition and market growth are important goals for new entrants to the TV world, but even these can be based on well-balanced portfolios and rights acquisition. In the IPTV world, big is not always better in content acquisition, and so premium rights purchases (such as expensive football rights) may not be sufficient to secure the mass market subscriber base as the operator rolls out services across the country.”

Categories: IPTV, OTT, Research, Research Library