HD: A Must-Have for IPTV in North America
April 2007
During the NAB 2007 conference, MRG’s Bulletin Editor, Jose Alvear, moderated a panel session entitled “IPTV Wanted...Must Do HD” with company reps from Microsoft, Calix, Modulus Video, and AT&T.
The panelists provided a good cross section of the front to end IPTV experience and spoke about the drivers and challenges to HD over IPTV. Microsoft’s Channel Manager, Bruce Churchill, pointed out that many people change how they watch TV after getting an HD set. “Many people with HD only watch HD content, or channel surf HD channels first,” he said.
Overall, all the panelists agreed that HD is a must-have experience for IPTV customers. In 2006, digital TV sets outsold standard sets by 46% in the U.S. and total HDTV sets were at 11 million. And with the analog switch-off date (February 2009) fast approaching in the U.S., providers will have to be nimble to keep customers happy.
The U.S. is one of the biggest IPTV HDTV markets. According to MRG research, 15% of IPTV households (about 274,000) in the U.S. already have HD sets. This number will climb to 85% (8.82 million) by 2011, driven by the move to HD and the popularity of HDTVs.
HD is already a “must-have” for most IPTV service providers. If an IPTV provider can offer more HD channels than cable or satellite, it might be able to compete and convince customers to switch to IPTV.
Following is a breakdown of HD offerings in the U.S.
| Provider |
HD Channels |
Price |
| AT&T U-Verse |
25 HD channels |
$10/month |
| Verizon FiOS TV |
20 HD channels
(16 national, 4-5 local) |
$9.99/month |
| DirecTV |
Over 200 HD
(NFL games) |
$9.99/month |
| Comcast |
15 HD Channels |
$5/month |
DirecTV has the most HD channels, but most of those are sports programming. Removing those extra channels, AT&T’s U-verse, an IPTV service, is beating cable and satellite. Comcast has the fewest HD channels, but charges a lower monthly fee also.
This HD advantage is what IPTV providers must push for since IPTV is still a difficult sell for new customers. In fact, AT&T recently announced that it was offering free HD service for 1 year for new subscribers of its U-Verse service.
In the U.S. where cable competition and satellite competition is strong, IPTV service providers have to differentiate their services with HD including HD DVRs. They must also provide better quality than competing HD services. Also, satellite and cable providers have been known to scale back the HD bitrate which means potential quality problems that IPTV operators can exploit.
One thing that can help the economics of delivering HD is to lower the video bitrate. On the NAB exhibit floor, Grass Valley/Thomson was demonstrating its Mustang encoding chip which claims to deliver high-motion HD video at 4 to 5Mbps, which is about half the bitrate of current MPEG-4/AVC encoders that range from 8 Mbps and 12 Mbps. Lower bitrates means more HD channels for providers and consumers and that’s what everyone is after.
IPTV will lead the HD market based on MPEG-4/AVC—faster than cable or digital terrestrial. As providers switch to HD, MPEG-2 equipment will become obsolete. MRG research shows that revenue from MPEG-2 set-top boxes and headends will disappear by 2008 or 2009 and be replaced by MPEG-4 SD and HD equipment.
For more information about HD/AVC IPTV encoders and set-top boxes, see MRG’s new IPTV Global Forecast — 2007 to 2011, April 2007 or visit our website at www.mrgco.com/iptv/gf0407.html.
For more information, consult our: MRG, Inc., April 2007 IPTV Bulletin
Packet Vision Looks to IPTV Advertising
April 2007
With the success of many IPTV deployments, people are starting to ask: What about IPTV advertising? Packet Vision is answering that call by “providing targeting TV advertising to specific households via IPTV.”
Charlie Horrell, CEO of Packet Vision, says that the company’s technology supports local ad insertion, interactive and targeted advertising that can be tailored to match the demographics of individual households and even altered in real-time to reflect viewers’ reactions.
Founded in 2004, Packet Vision is a relatively new company and just recently announced its first customer trial in the US with Alaskan IPTV operator MTA.
Packet Vision’s ad server sits on the edge of the network, cuts in advertising and outputs 200 independent video streams. Aside from the hardware, the system also comes with sales and a traffic management software system so that providers can easily track and manage advertising campaigns.
Horrell said, “telcos are busy getting subscribers and are not focused on advertising much.” But as IPTV subscribers hit the critical mass, he believes providers will start IPTV advertising.
Packet Vision is interested in talking with everyone in the IPTV space, but is specifically looking at the mature European market such as France, Italy and Spain. But they are also interested in U.S. providers like AT&T and Verizon.
There are three types of data that can be gathered by Packet Vision’s technology: CRM information from the telco provider, the address or location, and tracking via IP tools such as channel changes and clicks.
Horrell said Packet Vision is using a “zero-risk, low capital investment model” which means the company will provide the server for free, in exchange for getting a percentage of revenues.
“One-to-one advertising hasn’t gotten very far. It’s more like one to many ones,” said Horrell. He says that viewers will see more relevant advertisements, which can prevent “channel hopping” and start new ad models for TV advertising.
Targeted advertising capabilities are great, but most service providers aren’t even selling conventional linear advertising yet.
“Most of the pieces of the jigsaw to turn IPTV into a mass revolution are in place, and the service that Packet Vision is providing will be the catalyst to turn opportunity into revenue for players in this market,” said Richard Scott George, GM of Packet Vision.
Servers and insertion devices are such a small percentage of the total cost of a system that we think that few system operators will trade off servers for a percentage of revenues. However, there could be a significant opportunity for a vendor that offers a complete, turnkey ad sales and delivery service, including hardware and software along with a qualified local and national ad sales force, in return for a share of ad revenues.
For more information, consult our: MRG, Inc., April 2007 IPTV Bulletin
|
