MRG in the Media - MRG Multimedia Research Group Inc.

IPTV Rollouts: The Road Ahead
Investments In Network Upgrades And Rights Management Are Required For Rolling Out And Running IPTV

For anyone even considering deploying an IPTV service, the task may seem daunting. Indeed, there are many challenging steps and elements involved to do it properly which involve considerable investment. Yet given the limited number of rollouts currently available and/or in progress, the potential for telcos entering the space is considerable, although it may not be easy.

Rights issues are one of the first considerations once network issues are resolved. “You need the right to deliver video to end-users via the local franchising authority or regional/state authority where regulations permit,” said Keith Wymbs, representative for IPTV headend equipment provider Tut Systems. “You also need the right to distribute channels to end-users, typically known as affiliate rights from the content owner.” While it may seem counter-intuitive, a telco must ensure it will have the needed content to attract customers in the first place.

“Providers will negotiate broadcast rights with major content owners (sports, movies, TV, news, archive, etc.) and provide a high quality service with a package of channels. Many of these channels will be offered as video on demand packages, but some might be multicasted,” said Smith. Gary Schultz, principal analyst at Multimedia Research Group, added, “Differentiation of service and personalization of service is needed. A new IPTV service has to be better than the local multi-channel service, and the quality (video picture quality and quality of the overall experience) needs to be better than the competition at the same price.”

Once back-end billing and monitoring systems are in place, testing is essential. “For pre-rollout, the mantra is test, test, test, with a focus on scalability, component interoperability, and Quality of Experience from the user's perspective. If the field rep takes hours to solve a problem or do an installation, the customer perception is this is not a high quality operation. That can lead to cancellation (churn). So rollout has to be the result of significant testing and training of field and customer service people. Having excellent online test, measurement, diagnostic and repair tools in the customer service center therefore becomes crucial to a successful rollout, and just as important is having well trained field maintenance people with those same tools,” said Schultz.

Schultz offered the following for during and after the rollout phase: “Capturing feedback during rollout is crucial. Make certain qualified customer service people are on deck to handle surprises (both at the help desks and in the field). IPTV is hard to roll out during the first 6 months especially. Knowing how to diagnose and re-set malfunctioning STBs, for example, has been reported as a key issue in rolling out an IPTV service.

“You also need better than adequate marketing and promotion. The ad budget and initial promotional sales incentives budget needs to be big enough to continue the campaigns throughout the year. Remember, the competition will fight back with their own offerings and package deals. Also, be prepared to deepen and/or broaden your IPTV services when this happens. Remember that IPTV is 100 percent bi-directional (whereas many or most multichannel competitors are not 100 percent two-way), so you should look carefully on various ways to exploit that advantage.” Indeed, interactivity is one of the most exciting promises IPTV offers, so don’t forget to include that in your rollout plans. Considering all the other challenges involved, it will be the least of your worries.

IPTV Market Expected To Soar
Global Growth Is On Track For 50.5 Million Subscribers By 2010 With Revenues Topping $12.2 Billion

Watching TV in the living room is about to get a whole lot more interesting with the improved experience offered by IPTV slowly becoming a reality in the U.S. If you’re in Europe or Asia, you’re much more likely to be enjoying those benefits now, as those markets are much further along in deployments and subscribers. Regardless, the worldwide IPTV market is growing at a rapid pace, and telcos and cable operators that don’t overcome the challenges involved in deploying IPTV will soon be left behind.

“We believe the global IPTV market will reach approx. 50.5 million subscribers in 2010,” said Gary Schultz, principal analyst at Multimedia Research Group. “The drive by telcos everywhere to increase their revenue base, plus innovative service provisioning, plus better overall quality of service and user choice will drive the markets. Europe and Asia will still be ahead, with 41 percent and 32 percent share of market (in their respective telco markets). North America should grow to about 23 percent share of market, up from its current level of about 15 percent.”

“Large incumbent telcos are driving much of the growth in Europe and Asia, whereas in North America, the small independent IPTV providers are driving much of the growth. Deployments at incumbent carriers such as France Telecom and Telefonica in Europe and PCCW in Hong Kong are now together serving nearly 1.5 million IPTV subscribers, and are projected to experience significantly more growth,” said Schultz. He added that competitive (non-incumbent) IPTV providers such as FastWeb from Italy, Free and Neuf from France, and spin-offs from France Telecom also are leading in innovation and subscriber growth in their markets.

Given the much larger amount of content available online, primarily in the form of user-created short and long form video clips, cable and telecom providers will likely embrace Internet video as a complement to their own IPTV offerings (which normally resemble standard cable programming) rather than position themselves as direct competitors. “Cable operators and telecoms can capture some of the online content and route it to a TV STB (Set-Top Box) for consumption there,” said Gary Schultz, principal analyst at Multimedia Research Group. “Internet video can be repurposed and re-routed to portals and communities of interest that communicate through STBs and TV sets.” Cable operator Comcast is already offering a similar service using thePlatform publishing system, which allows digital media to be sent over any network to any device.

Both Internet video and IPTV offer interactivity, but IPTV brings these capabilities to the TV screen. This includes features such as caller ID and SMS (short messaging service) along with more targeted advertising. According to Schultz, the user interface is a large issue that cannot be overlooked, at least when it comes to presenting video content in the living room. “The operators and carriers cannot just create a web page on a TV screen and hope it will succeed,” he said.

As far as content formats, MPEG4 AVC will emerge globally as the format of choice for IPTV according to Schultz. However, as Crandon cautioned, “MPEG4 content is not yet readily available today, but as content providers move into the next generation of media, you’ll start seeing this format as the standard -- I would guess by mid to late next year.”

Indeed, both Internet TV and IPTV will be around for the foreseeable future, both filling unique needs in the marketplace. As Richter explained, “The future prospects for both are very bright. Web-based video will continue to expand as companies continue to find innovative ways to provide it to consumers, and as the amount of content available continues to grow. IPTV will continue to fill a huge demand for high-quality video content delivered to consumers’ television screens, and the service will continue to improve as companies find innovative ways to take advantage of the opportunities an all-IP platform provides for integration across services and platforms.”

Yet for IPTV to truly succeed, expensive telecom and cable infrastructure upgrades still need to be completed, along with acquiring rights to mainstream studio content. But as Schultz reminds us, “Internet video offered on IPTV has a good future due to the demand for "long tail" content (short form, long form). We think IPTV and cable carriers will offer it as a means to defeat churn and build loyalty among subscribers.” The addition of Internet video to standard cable-like IPTV programming could attract viewers who would otherwise be glued to the computer screen.

Concurrent Faces Sales Undertow
VOD Vendor Hit By Staff Layoffs, Sell-Off Rumors

On-demand video may be a booming market, but apparently it hasn't been kind to Concurrent Computer Corp. lately.

"From what we're seeing right now, you can't be just a VOD company," said Gary Schultz, principal analyst and president of Multimedia Research Group Inc.

Among the rumored companies hunting for on-demand technology are Motorola Inc. and Cisco Systems Inc. Of the two, Motorola may have the greater need, Schultz said.

"You look at how Motorola stacks up against Cisco — particularly with some of [Scientific-Atlanta's] new offerings — and it just has kind of got to happen." Schultz said.

ANT Software: it remains to be seen how Microsoft and Cisco IPTV solutions will evolve

As a pioneer of a new technology, called IPTV (Internet Protocol Television), that delivers digital TV services to subscribers using the IP protocol over a broadband connection, UK-based ANT Software has already obtained some support from large players, including some well-known names in Taiwan. However, since the growing market has now attracted some industry giants, such as Microsoft and Cisco, the ambitious pioneers may soon face a challenge from those who have significant experience in displacing early and promising solutions with their own offerings, which are not necessarily better, but always strongly pushed from the marketing side. DigiTimes.com recently talked to Stephen Reeder, ANT’s head of product strategy, about the market situation and how the company sees its position in the developing industry.

Q: ANT Software claims that more than 70% of the world's IPTV deployments depend on its software. How did you get this estimate? How do you plan to maintain this leadership, having such strong competitors as Microsoft and Cisco?

A: The claim is derived from the number of units of product that ANT ships to IPTV set-top box (STB) companies taken as a percentage of the global numbers that research companies such as the Multimedia Research Group (MRG) provide to the industry. Whilst this is not an exact science, we continually seek to ensure that this claim remains valid and will modify it upwards or downwards as the market grows.

Neither Microsoft nor Cisco are competitors of ANT's since our technology can be seen as wholly complementary to their solutions. It remains to be seen how their solutions will evolve once they have started volume deployment.

ANT’s head of product strategy Stephen Reeder: “46% of our 2005 revenues came from APAC.”
Photo: company

The number of global IPTV subscribers will grow from 4.3 million in 2005 to 36.8 million in 2009, and Europe will lead the market over this period, followed by Asia and North America, according to the US-based Multimedia Research Group (MRG).

For this article, only the third point is serious; the others are facetious. Thee is no way that video is just another IP application running on a telephone network.

“Deploying IP video is a very large effort that becomes more difficult as the network becomes larger because the problems tend to compound themselves,” said Bob Larribeau, program director for IPTV at MRG Research.

MRG has identified several key areas that service providers must addres when provisioning an IPTV network:

When it comes to video on demand — a key piece of any IPTV offering — measurable quality assurance goes out the window, Larribeau said.

“QoS does not work when you go to video on demand because you’re sending unique streams to the subscriber and your network becomes dominated by video traffic,” Laribeau explained. “That means there are very few lower priority packets to discard, not enough to discard when congestion occurs and you have to start discarding video or voice-over-IP packets. That’s not a good situation and that’s an issue in terms of how these networks are engineered and deployed.”

“It’s a reasonable guess to say that half the calls to the telco center on IPTV are going to be related to problems in the home. Service providers need to look very seriously at what they can do to manage, or at least monitor, the home networks so they can quickly resolve these issues and possibly even anticipate them,” he said.

Just as an overview, the network must be provisioned to deliver top quality video because, despite all their flaws, most cable companies have learned how to do at least that much. That puts a quality measuring stick in the ground.

“The effect on the user experience is that problems are much higher nd the tolerance is much lower,” Larribeau said. “You have a guy who spent $10,000 to $20,000 on a home entertainment system and he as a choice of whether he can go to IPTV with a telco or cable provider or satellite provider. If the IPTV company and the service provider can’t give a quality experience as good or better than the other guy, they’re just not going to get the business.”

Even with the best quality DeMuth said, carriers should moderate expectations anyway.

"..Paul Erickson, a media analyst at IMS Research, says, 'I think there's every reason to believe that this will only strengthen the prospects of IPTV success in the United States, given the combined entity's size, resources, bargaining power and commitment to deploying video services. I'm sure that cable MSOs and satellite operators are wary of this development, as it only means that the competition from the telco side (once the merger completes) has the potential to be much stronger and earlier than expected.' Adds Bob Larribeau, a media analyst at MRG, 'It certainly gives AT&T a larger presence. This will help them with the content providers.' "

Ever More Channels, Ever Faster TV, Web Move Closer Yet, Using a Telephone Line

AT&T declined to detail how much it plans to charge subscribers for IPTV, though it said it would be competitive with cable and satellite prices. In parts of Europe and Asia, as well as just north in Sacramento, IPTV has already been installed. By 2009, the IPTV industry is projected to hit $3.4 billion in revenue with 8.8 million subscribers, according to the Multimedia Research Group. That's still a small dent in the cable television industry, which draws about 70 million to 75 millon subscribers today.

"Cable and satellite services are already good," said Bob Larribeau, a program director at Multimedia Research Group. "It's going to be tough to pull subscribers away."

IPTV In The U.S.: BellSouth Predicts 2007 Service Launch

Bob Larribeau, a media analyst at MRG, is not surprised BellSouth is taking its time in rolling out IPTV services. "I think BellSouth's strategy is consistent with the way that it has rolled out other services, such as DSL and ISDN," he says. "It has taken a slower approach and used opportunity-driven deployment strategies. While it took a little longer, BellSouth deployed these services as aggressively as did SBC (which since has taken back the brand name AT&T) and Verizon. I expect that BellSouth will follow the same path with IPTV."

U.S. IPTV: For Qwest, The Dual Approach Is Best

"... Bob Larribeau, a senior analyst at MRG, tells Inside Digital TV he believes the dynamics in the United States are more difficult for IPTV than they are in Europe. 'The competitive situation in the United States is very difficult, and we expect that the regional holding companies will have a 9-percent market share by the end of 2009,' he adds. 'It will be tough going for them but they have little choice. They must have counter strategies to the strong cable-telephony offerings. In most European countries, the prospects for IPTV are stronger than they are in the United States.'"

Tuesday, November 29, 2005

Are brains triumphing over budgets when it comes to optimizing networks for the delivery of video? While many have been transfixed on the alleged technical advantages of IPTV networks over cable, it appears this is fast becoming a reality.

But carriers driving video to the home must be careful to use infrastructure that not only supports IP multicast, but also enables high resiliency, and channel-changing performance along with guaranteed QoS.

While a cable network transmits all channels to each user, an IPTV network transmits only the channels the viewer is actually watching (see Figure 1). This means that an IPTV network can offer an unlimited number of channels, while the number of channels that can be offered on a cable network is limited by the 850-MHz spectrum allocated on its hybrid fiber coax plant.

The Multimedia Research Group report “Scaling of IPTV Networks” has made it clear that high performance in an IPTV network requires purpose-built access systems. Specifically, these platforms must support higher bandwidth to each subscriber along with rapid channel changes.

In addition, they must scale to deliver a high number of unique TV channels to individual subscribers while maintaining high QoS. The underlying solution to this problem is to use IP multicasting technology.

SBC is talking about providing 20 Mbps to 25 Mbps to each broadband IPTV subscriber using Project Lightspeed. This is only the start. Many homes will require 40 Mbps or more as early as 2008.

Broadband VoIP services will be added to the data and IPTV services, the number of TV devices will grow, and the number of high definition (HD) TV devices will increase significantly. HD DVRs will become an important part of this calculation. The typical broadband data connection will increase from 3 Mbps to 10 Mbps.

IP multicast enables IPTV networks to carry broadcast channels efficiently. With IP multicast, only one copy of each channel is carried across the network to the access systems, independent of the number of subscribers watching it.

This means that a Gigabit Ethernet link can support 250 standard definition (SD) channels using MPEG-2 and 300 channels using MPEG-4 AVC, assuming 80 percent SD and 20 percent HD. Additional Gigabit Ethernet links will be required to support more channels.

Clearly, the network side capacity of the access system is a fundamental limitation of the number of channels an IPTV network can support. A large access system with only two or three Gigabit Ethernet network links will be hard pressed to support these requirements.

In actuality, approximately 1,000 subscribers connected to a single access system typically will be watching no more than 50 of the 250 to 300 channels available. This means that with multicasting, the actual load on the network connection from the access system can be significantly less than the worst case outlined above.

But taking advantage of this can increase channel-switching time, which many service providers see as undesirable, since Internet Group Management Protocol (IGMP) must be processed at the edge router that serves the IPTV video headend.
Newer Services

On the other hand, newer services such as video on demand (VoD) and network-based personal video recording (NPVR) change the requirement substantially (see Figure 2). Each VoD subscriber or NPVR user receives a unique stream: Even if two people are watching the same content, they almost certainly will not start or stop it at exactly the same instant.

As a result, every video stream will require its own dedicated bandwidth across the access network. In the worst case (with 100 percent HD video streams), the 1,000 subscribers on an access system would require 10 Gigabit Ethernet network links.

With multiple Gigabit Ethernet network links, a purpose-built access platform can handle these bandwidth requirements. A full configuration of 672 ADSL ports with 28 Gigabit Ethernet network links in one system would deliver up to 42 Mbps per subscriber.

A full configuration of 896 PON connections can have up to 31 Mbps per subscriber. The statistical nature of the broadband data traffic would push the effective bandwidth per subscriber up to 40 Mbps to 50 Mbps.

The dominance of IPTV and VoIP traffic means that most traffic is high priority. This complicates traffic management. In a transport network the solution is to overprovision: build excess capacity into the network to insure that all traffic types are served.

Bandwidth is more precious in the access network than the transport network. In the transport network it is relatively easy to deploy another set of links and increase capacity.

In the access network, there is generally no such opportunity. Providing more bandwidth to the home usually requires a technology upgrade: moving to ADSL-2+, VDSL, BPON or GPON. This can be an expensive, time-consuming process.

Telephone companies must consider purpose-built IPTV access systems to provide the large number of channels required for a competitive service, to handle increasing numbers of unique video streams, and to support techniques such as admission control to provide improved QoS management in the access network.

Bob Larribeau is founder and chairman of the California ISDN Users’ Group and senior analyst at the Multimedia Research Group. (bob@larribeau.com)

ABC, Affiliates Clash Over Hit Show iPod Downloads

By Louis Trager

Some tension between ABC and affiliates may be overblown and some may be inevitable, given the shifting competitive landscape, said Pres. Gary Schultz of MRG research. "[T]he music model that works with iPod doesn't translate well to the video model," he told us by e-mail. "The bigger issue is the on-demand to the settop (DVR) and sharing to the handheld from there. The big concern by U.S. (content owning) networks (especially the 3-letter ones) is making content available from a networked DVR (usually called nPVR), where people can fastforward thru ads. This issue won't go away any time soon, since the 3 letter networks and their affiliates have been losing share of market in TV spot advertising steadily for the last 20 years."

By Bob Larribeau, Sr. Analyst, Multimedia Research Group, Inc.

There has been a lot of talk about the technical advantages of IP TV networks over cable, specifically, that IP TV networks can support an unlimited number of channels because they receive only one channel at a time. But carriers must be careful to use infrastructure that supports not only IP multicast, but which also enables high resiliency, and channel-changing performance along with guaranteed quality of service.

Carrier Bandwidth Budgets Dictate IP Multicasting

SBC is talking about providing 20 to 25 Mbps to support each broadband IP TV subscriber with its Project Lightspeed deployment. We think that this is only the start. We believe that many homes will require 40 Mbps or more as early as 2008. Broadband VoIP services will be added to the data and IP TV services, the number TV devices will grow and the number of High Definition (HD) TV devices will increase significantly. HD DVRs will become an important part of this calculation. We also expect that the typical broadband data connection will increase from 3 Mbps to 10 Mbps.

IP multicast is the technology that enables IP TV networks to efficiently carry broadcast channels. With IP multicast, only one copy of each channel is carried across the network to the access systems, independent of the number of subscribers that are watching it. This means that a Gigabit Ethernet link can support 250 Standard Definition (SD) channels using MPEG-2 and 300 channels using MPEG-4 AVC, assuming 80 percent SD and 20 percent HD. It will require additional Gigabit Ethernet links to support more channels. Clearly the network side capacity of the access system is a fundamental limitation of the number of channels that an IP TV network can support. A large access system with only two or three Gigabit Ethernet network links will be hard pressed to support these requirements.

Bob Larribeau, a senior analyst at U.S. research group MRG, comments, “I believe that Siemens saw the Alcatel/ Microsoft partnership as a combination that threatens to dominate the IPTV deployments of large carriers globally. It has certainly been very successful in North America. IPTV has become a strategic part of broadband deployments. Siemens has to counter the Alcatel/ Microsoft partnership or put its position in the broadband market into peril.”

DVB — Scene (pg 12)
Edition No. 15, September 2005
Click here for full article.
www.dvb.org

In a fiercely competitive converging technologies market, interest is quickly moving to IPTV as a viable option for telcos to compete head-to-head with cable and satellite service providers. It is important in the early stages of any burgeoning technology to give careful consideration to upfront
investments and early partnerships to ensure both long term success and minimised financial risks. . .

When choosing a vendor, telcos should keep in mind that vendors have a responsibility to prove they are capable and have the experience to deploy interactive TV services.

The Analyst View The deal with Microsoft TV is major coup for Microsoft, given BT’s status as one of the world’s largest telcos. Bob Larribeau, a senior analyst at MRG, a U.S. based research group, tells Inside Digital TV, “From Microsoft’s perspective, it is an important deal. Getting a carrier of BT’s stature is a real plum. Telecom Italia is in the trial programme but it is taking a low profile, whereas BT seems to be taking a much stronger profile. This helps Microsoft’s profile, for sure, and it has a system that is about ready for release at this point.”

Triple Play Shaping Up for a Grand Slam

Research firms predict rapid growth in IPTV network services as a direct consequence of the broadband expansion boom. Multimedia Research Group (www.mrgco.com), a Sunnyvale, Calif. market trend spotter, forecasts a steep adoption curve with an estimated 1.9 million subscribers in 2004 swelling to 25.3 million in 2008. According to Gary Schultz, principal analyst, the compelling economic logic behind triple play focuses on a commoditization of switched voice traffic, ubiquitous IP standards with universal applications and declining cost structures for deploying on-demand infrastructure. "Service providers on both sides see the future goal as one to reduce capital risk and get access to profitable services more quickly," says Schultz.

IPTV Subscribers Projected to grow from 1.9 Million in 2004 to over 25.3 Million in 2008

July 2005

According to Multimedia Research Group (MRG), the number of IPTV subscribers will grow from 1.9 million in 2004 to 25.3 million in 2008 which is a compound annual growth rate of 79 percent.

In their Global Forecast - 2004 to 2008, MRG details the key IPTV industry growth events including:
-Plans by SBC and BellSouth to deploy large IPTV networks in the U.S.
-Plans by Verizon to use IPTV technology for Video On Demand services to supple-ment its RF based broadband video service over its Fiber to the Premise (FTTP) access network.
-The introduction of Video On Demand IPTV services by China Telecom.
-The broad deployment of IPTV services in many countries in Europe.
-The continued growth of subscribers by the major established IPTV service providers such as, Free in France, PCCW in Hong Kong, and FastWeb in Italy.

MRG forecasts that the number of DSL subscribers will grow from 109 million in 2004 to 204 million in 2008 which is a compound annual growth rate of 17 percent. Because the initial implementations of IPTV are primarily telephone companies, MRG uses DSL subscribers as the base for the IPTV subscribers.

"Supercomm organizers this year hope to build on the telecom revival evident at last year’s conference.

This year’s show will see more significant announcements from key vendors — Cisco, Lucent, Juniper, Sun, Avici, Riverstone Networks and others — as well as important technology demonstrations intended to prove that next-generation services are ready for prime time . . .

On the enterprise business side, the white-hot service is Ethernet as a replacement for leased lines. For consumers, it’s IPTV coming to a fiber near you as telcos and cable companies jockey for your remote . . .

Market tracker MRG says the number of IPTV subscribers will grow from 2 million in 2004 to 25 million in 2008. While those numbers are not staggering, the revenue opportunity they represent is more impressive: Subscriber revenue of $635 million in 2004 will grow to $7.2 billion in 2008, according to MRG . . ."

A Journey Into the Unknown

In an attempt to re-energise their fixed-line networks, a string of major incumbents around the world are moving into unchartered IPTV and ‘triple-play’ territory

After more than one hundred years of existence, a long list of incumbents are now moving beyond voice and data and entering the world of interactive video and digital TV. For some, this has created an identity crisis. “We don’t want to be perceived as being a telecom company anymore,” says Helmut Leopold, managing director of platform and technology development at Telekom Austria. “We want to be seen as a multimedia company. We want to have a brand for the home.” . . .

Faced with mature cable and satellite competition in the TV space, telcos are going to find it hard to develop and market unique selling points (USPs) for their own triple-play offering. “It’s one thing to launch an IPTV service to pre-empt a cable triple-play service [adding telephony] and quite another to go up against strong cable triple-players players [as in the US],” says Bob Larribeau, senior analyst with MRG, a US-based research group. “The bar is then raised when competition is present and telcos need to find better content.” . . .

Home entertainment and computing technologies are rapidly merging and the latest TV revolutions are just around the corner, creating new openings for resellers. But they'll have to know their product to avoid misleading customers, reports Paul Bray . . .

When is a computer not a computer? When it's a set-top box, personal video recorder (PVR), DVD player, home cinema, hi-fi, TV set, or any of the other devices that have popped up over the past few years. . .

"IPTV is seen as an opportunity for telcos to win back customers from the satellite and cable companies that have offered voice calls, TV and internet access," says Karthik Ranjan, director of product marketing at IPTV set-top box maker Amino. This model is already working in the US and France, adds Ranjan, and Home Choice and Kingston Communications are offering IPTV services in London and Yorkshire.

Eran Wagner, vice-president of interactive TV at IPTV specialist Amdocs, says that because it does not require a dedicated tuner for each concurrent channel, IPTV can offer as many simultaneous channels as the bandwidth will support, says. Amdocs cites figures from research firm MRG, predicting an increase in the worldwide IPTV subscriber base from 2.1 million to 27 million by 2008.

"IPTV is expected to provide a broader range of entertainment, with personalised content, including video-on-demand, PVR, personalised interactive services, and blended services such as voice over IP [VoIP], video conferencing, home security and even refrigerator replenishment," says Wagner.

IP TV market worth €8.5bn by 2007 - report

The next year will see significant growth in the DSL sector, as Asia and Europe push forward with new broadband infrastructures, including IP TV (Internet Protocol TV) services, according to a new report from market analysts MRG.

The report, IP TV Business Case and Global Forecast 2004 – 2007, improvements in MPEG-2 compression, the introduction of MPEG-4, newer Windows Media technologies, and the prominent role of ADSL2+ and FTTP (Fibre to the Premise) technologies will driving service revenue alone to over €8.5bn by 2007, up from €330m in 2003.

With Asian and European regions in build-up mode, North American telecommunications and data providers are now working towards similar plans for IP TV.

At the start of 2004, worldwide DSL penetration has surpassed 64m subscribers, creating several layers of opportunity for IP TV providers and related hardware vendors. This report identifies and forecasts current subscribers for existing IP services in Asia, Europe, and North America, and also provides global macro forecasts for IP TV subscriber and revenue growth.

"IPTV is the digital cable of Asia," stated Gary Schultz, MRG’s research director. "Telco TV is not a flash in the pan, but is quickly becoming a prime mover of telecom strategy."

"Telcos are using a wide variety of aggressive IP TV business models to meet their objectives," said Bob Larribeau, a senior analyst with MRG. "It now looks like 2005 will be the ‘Year of IP TV’ if current trends persist."

Europe Tunes In to IPTV

While this week's NCTA 2005 show in San Francisco is already attracting a lot of attention and generating a lot of news, across the Atlantic the telco video market is hotting up. . .

More and more European service providers are latching on to TV and video services as a way to attract broadband customers and fend off competitors, and they are now moving quickly to deploy the required equipment and roll out services.

The region already boasts a number of triple-play and IPTV deployments, but they are mostly isolated and specialist rollouts. . .

The number of IPTV subscribers worldwide is forecasted to grow from 1.9 million in 2004 to 25.3 million in 2008, according to analysts at Multimedia Research Group (MRG) Inc. They predict this will lead to growth in IPTV-generated revenues from $635 million in 2004 to $7.2 billion in 2008 (see MRG Predicts IPTV Growth).

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THAMES TECH WIRE - March 14, 2005
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Sunnyvale, California -- Worldwide subscribers to IPTV services, which deliver TV, video-on-demand and other video services over broadband networks, will grow from 1.9 million in 2004 to 25.3 million by 2008, according to a report from Multimedia Research Group (MRG). Associated revenue growth is forecasted to rise from 473 million euro (£330 million) in 2004 to 5.4 billion euro (£3.8 billion) over the same period. The firm cited plans by SBC and BellSouth to deploy large IPTV networks in the U.S., as well as Verizon's plans to use IPTV to offer video-on-demand to its subscribers. Further afield, the deployment of IPTV video-on-demand by China Telecom and continued subscriber growth for established IPTV providers Free in France, PCCW in Hong Kong and FastWeb in Italy will also contribute to the rapid growth of the IPTV market, MRG said.

MRG Reports Shifts among Global IP TV Markets

Tekrati – The Industry Analyst Reporter, October 17, 2004 online edition

The October MRG IP TV market leader tracking service shows that while smaller companies continue to enter the IP TV hardware and software business, larger companies are taking aggressive steps to become large-scale system IP TV integrators.

The new IP TV Market Leader Report, October 2004 from MRG, Inc, a component of MRG's IP TV Tracking Service, documents and analyzes the recent competitive position of over 55 companies in six product sectors, based on deploy,ments by over 170 telco TV operators world-wide, serving about 2 million subscribers.

"We've been surprised by how fast Alcatel and Motorola originally seized the lead in access equipment and integration services through aggressive acquisition and partnership programs," states Bob Larribeau, Sr. MRG Analyst. "Now other large multinationals like Thales, Siemens and UTStarcom are using a similar approach."

Still in its early stage of development, the IP TV (Telco TV) market is prone to quick shifts and unpredictable market dynamics. For example, while Motorola's position retains its "dominant" rating in the Access, STB (Set-top Box), and Middleware product sectors for North America, Microsoft wins a "participant" status with "upside growth opportunity" for its increased participation in the Middleware sector in Europe and in the U.S. Meantime, leading VOD (Video-on-Demand) vendor Kasenna is seeing increased competition from Bitband in one region; and Optibase, a global leader in the Video Headend sector, is seeing strong competition from Tut and Tandberg in specific regions. All totaled, over 55 hardware/software suppliers are rated for their "market position" and "growth opportunity" in the Asian, European, North American, "ROW" regions in six market sectors.

The newly added product sector, Content Protection and Digital Rights Management (CP/DRM), is included because of the recent upsurge in the demand for content protection. "By adding CP/DRM to the analysis, we've tapped into one of the most dynamic elements of the IP TV market," states Gary Schultz, MRG CEO. "Shifting consumer demand for premium content means operators have increased their need for content security solutions."

The IPTV Market Leader Report is available for $3,950 (single printed version); or it is included at no cost as part of the IPTV Tracking Service.

MRG analysts and publications have been quoted frequently in the national press, including The Wall Street Journal, Investor's Business Daily, Reuters, and The Washington Post. MRG has also been been featured in Forbes, and on TechTV, among others...

Time Warner Cable Teams with Sprint, MCI

New Telephony, December 12, 2003 online edition
By Charlotte Wolter

Sprint Corp. and MCI both announced that they are working with Time Warner Cable to provide interconnection services to deliver voice- over-IP to Time Warner Cable VoIP customers. . .The Time Warner announcement comes at the same time as the release of a new report by MRG Research Inc. on the business case for telephony in cable systems, particularly voice over IP.

The report, "Cable Telephony Business Case and North American Forecast - 2004 to 2007," examines two possible scenarios for deployment, facilities based IP voicein which the cable operator deploys infrastructure, and outsourcing, which is reselling a voice-over-IP service operated by another provider.

In either case, the cost efficiencies, flexibility in deployment and ease of deploying new features are all significantly greater than traditional telephony, the report says. The report says that the break-even point for services deployed by a cable operator can be within 32 and 35 months, a quick return on investment.

New Telephony is a weekly newsletter and web site about IP communications, published by The IP Voice, a publishing and consulting firm. It features news, news analysis, guest articles, new product listings, updates on standards activities and link to standards Web sites, and numerous resources for the IP communications Industry.

For more information on the VoIP market, consult the report "Cable Telephony Business Case and North American Forecast – 2004 to 2007" For more information, contact info@mrgco.com or 408-524-9767

Will ETV, ITV Win In Digital Video Market?

Inside Digital TV, 30 April 2003
By Gary Schultz, Research Director/President, MRG, Inc.

Conventional wisdom says that Europe will go iTV (Interactive TV, e.g. instant weather, gaming, and sports interactive services) and the US will go ETV (Enhanced TV, e.g. on-demand services such as VOD, SVOD and inboard PVRs). We disagree.

Our research shows that staying afloat in today’s multi-channel markets in Europe or North America will require careful navigation by digital cable, terrestrial, and satellite operators. People may get really excited about iTV when it comes to soccer and football, but will they pay for it? Just because BSkyB did the pioneering work on iTV (and is increasingly providing integrated PVRs, or Personal Video Recorders, in some set-tops), doesn’t mean that every other European carrier hereafter will do the same. Therefore, financial stability will prevail as the guiding principal in 2003-2005; and digital households SOM (Share of Market) will remain the same despite a continued growth from 90 million to over 126 million digital households (worldwide) in 2003-2005.

The point here is that each digital multi-channel market starts at a different point due to local technical, political, and economic conditions. The same is true with ITV/ETV. While the presence of many multi-channel carriers spurs competition in a certain market, so do local economics. The more multi-channel competition exists on a local level, the faster ETV/ITV competition will grow. Sweden, the UK and Germany can be seen as examples.

So if it’s true that two strong multichannel video services spawn more growth in ETV/ITV services, then why did (PVR-supplier) TiVo leave the UK in 2002? Besides the high cost and complexity of installing the stand-alone PVR boxes, the established carriers didn’t embrace TiVo (since BskyB had its own PVR, as did EchoStar in the U.S.). So will more multi-channel services bring parallel services to the European markets?

What is clear, is that ETV/ITV is merging with the Tsunami of Triple Play #1 (VOD/VoIP/ HSD) and Triple Play #2 (VOD/integrated PVR/HD) wherever two strong multi-channel services are in play. Again, all of these services in Europe in 2004-2005 will be inexpensive enough to roll out at less than 10 Euro per month per user; and all already possess a demonstrated ability to generate revenue-positive results in 24 months or less for the service operator. Yet, will people pay for them?

Free multi-channel DTT will change Europe’s markets

The drivers will differ between digital terrestrial (DTT), digital cable and satellite for Europe. For DTT (Digital Terrestrial free-view), the keyword is survival. We see the Berlin deployment of free multi-channel (and subsequent analog switch-off in mid 2003 for Berlin) as probably the boldest DTT multi-channel experiment in Europe at the moment. The Berlin plan is brilliant in its simplicity. If the Berlin trial rollout succeeds, Deutsche Telecom will feel free to sell its cable holdings while rolling out a robust (free) multi-channel video service over DTT. That in turn will spur the sale of the remaining unsold German cable systems and subsequent system upgrades much faster, making Berlin (and Germany) a possible leader in innovative 2-way cable services in the 2006-2010 period. Of course, much rests on who buys the German cable systems and how much funding they are willing to commit in the early phases. For example, if John Malone is (finally) successful in buying and upgrading the Berlin cable system, he is likely to roll out some early versions of Triple play (VoIP, VOD, HSD).

Multi-channel DTT in the UK also will profoundly impact Telewest (cable) and BSkyB (satellite) if successful. So far, progress of the re-introduction of multichannel DTT looks like a winner.

Standards will fuel global video markets

The fact is, as MHP (Multimedia Home Platform) and OCAP (OpenCable Application Platform), the twin European and US STB middleware standards are rolling out, and with the possible additional thrust provided by DVB-GEM (DVB-sponsored Globally Executable MHP) standard rolling out, both Europe and the U.S. will see much more market personalization than before. That means that by 2010, the menu of choices in a digital cable system in Berlin and Boston may actually be closer to each other than those of, say, Berlin and Zurich, due to more similar consumer demand between Berlin and Boston. European digital multi-channel services will, simply, become much more sensitive to local tastes due to competition and the lowered costs of all the services.

One problem with iTV continues to be the big question about whether people will pay for it. Currently, it is supported by sponsors and/or the service operator (in both Europe and US markets). On the other hand, with on-demand (VOD and/or PVR services), consumers know what they are paying for; with interactive services, they’re still used to getting it for free. Therefore a pay-basis for interactive services still has yet to prove itself, whereas on-demand services in Europe (often called Pay Per View) have a head-start in so far as being a revenue-generator.

Things to remember about digital multi-channel

Since global digital video markets are becoming more alike rather than differing from each other, success of ITV/ETV services will rest on the competitive mix of multi-channel services in each market.

For more information on the global digital video market, MRG’s “Home Gateway Report: Worldwide Multi-Carrier Digital Settop & Services Analysis & Forecast 2003-2006”; Gary Schultz, Research Director/President, MRG, Inc. Sunnyvale, CA./USA, Contact: info@mrgco.com. Tel: +1 408 524 9767

eMarketer, Inc., 17 April 2003

MRG projects that 36 million people in North America will subscribe to digital cable by the end of 2007. Of those subscribers, 18 million will be have VOD capabilities.

According to Multimedia Research Group (MRG), the amount of digital cable subscribers in North America with VOD capabilities will jump from 3.85 million last year to 18 million by the end of 2007. MRG believes VOD services will drive the US cable industry to a successful future, helped along by "high-end" channels like HBO. Overall, MRG anticipates that there will be 36 million digital cable subscribers by the end of 2007 in North America.

The MGR findings are from the company's "Home Gateway Report: Worldwide Multi-Carrier Digital Settop & Services Analysis & Forecast 2003-2006," published in April 2003.

Settop Box to Top 29.5 Million Units

CTAM Research Links, April 2003

Worldwide revenue growth for digital video settops is estimated to begin at $6 billion in 2003 and increase to about $7.34 billion in 2005, a recent Multimedia Research Group, Inc. report finds. Accordingly, total digital households worldwide should grow to over 126 million households in 2005.

Cable's siege gun: video-on-demand
Charter and peers rely on service in war with satellite

By David B. Wilkerson, CBS.MarketWatch.com, April 2002

War against churn

The toughest challenge for a cable operator is keeping its customers, particularly subscribers to digital cable.

Charter's Motorola digital boxes are among the most advanced in the industry, offering a number of features:

"I think VOD has been accepted by our customer base, and does set the expectation for interactive digital television," said Steve Silva, chief technical officer at Charter, in an interview.

Silva says about 40 percent of what consumers buy are recent theatrical movies, and the other 60 percent is a mixture of library films, children's programming, various cable specials, adult programming and other sub-genres.

Customer approval

"In our surveys, we found the fact that these services are available improves the customer's overall satisfaction with Charter by over 74 percent," Silva said. "So we're very pleased with the early adoption of the product. The customers' enjoyment experience is very reliable, and it's DVD quality."

Getting more channels and program choices is an obvious hook, but part of the allure of VOD is lies in an even simpler idea, says Gary Schultz, director of research and chief executive of Multimedia Research Group.

"What happens is, people suddenly fall in love with the IPG [interactive program guide]," Schultz said. "And the reason for this is that once they see how easy it is to use an IPG, then they never want to go back. They tell the cable company, 'Why didn't you tell us how easy this is to use?'"

What Schultz refers to is a much more sophisticated interface than the rolling program guide that might occupy a channel on your existing cable lineup. That older guide is "horrid, it's terrible," Schultz says. "It's like reading the Yellow Pages from A-Z."

Charter's on-screen interface brings up a main menu, where there are several options, such as "New Releases." Hitting the OK button on your remote takes you to a list of movies. Selecting a given feature presents a synopsis, year the film was made, the actors, and other relevant data. Another box marked "Preview" allows you to see clips from the film.

Giving consumers what they want
Cablevision, Fox stake out video-on-demand ground

By David B. Wilkerson, CBS.MarketWatch.com, June 2002

SAN FRANCISCO (CBS.MW) -- More than anything else, compelling content is the main thing that keeps people coming back to any medium, but some viewers are always going to be hard to please.

Media critic Alan Caruba -- who wouldn't even fork out the money for digital cable -- says he can't imagine paying for a video-on-demand subscription. "Given that the price of cable service has been going up steadily with no perceivable improvement in the content, the notion of paying more money in order to have greater selection just seems self-defeating," Caruba said.

If all subscription video-on-demand offered anyone was old episodes of "Hee Haw" or "That's Incredible," cable companies would be the laughingstocks of the media world. But if video-on-demand players hope for any foothold, cable operators and holders of film and television rights will have to collaborate to make strong material available.

Agreements like the one allowing Comcast Communications (CMCSK: news, chart, profile) to offer time-shifted NBC News programming such as "Today," and "NBC Nightly News with Tom Brokaw" will be much easier to negotiate than deals like the Cablevision-Fox pact, Arenson said, because the news shows normally have no life beyond their initial airing.

Two big drivers must be convenience and ease of use, says Gary Schultz, president and founder of Multimedia Research Group, a Sunnyvale, Calif. telecommunications research firm.

Users must be able to find and call up on-demand selections easily, he said, and be able to switch back and forth from the on-demand environment back to traditional linear TV viewing in a smooth, seamless manner.

"Another focus has to be on always having fresh material," Schultz said. "You can't just put the same set of titles out there, because then people say, why should I check the listings? They have to be changed at least once a week."

Schultz studied viewers who subscribe to AOL's HBO on Demand service, which offers 150 program titles a month, including original shows like "The Sopranos" and "Sex and the City," as well as theatrical films.

"One of the things we see is that people who watch shows on SVOD do it to get caught up on shows they missed," he said. "Sometimes they'll even watch a show they've taped on VHS, just because of the convenience of being able to just press a button and see it in the on-demand environment."

Once people become accustomed to a robust SVOD service and like what they see, the results are encouraging, said Schultz. "But if you're [a cable operator], and you're thinking of doing this, you'd better be ready to get a lot of hits on your servers, because the demand ramps up very quickly. One thing you can't do is offer this service and not be able to deliver."

The consensus suggests the DVR industry is about to pick up momentum as either a stand-alone box or as part of a set-top box. The catalysts include competition between cable TV and satellite TV for the premium TV subscribers, the fall of prices for DVR systems selling at retail and enhancements that are expected to make DVRs easier to use and more attractive to consumers.

About 80% of the 50 largest cable operators plan to implement DVR technology in the next 12 months, according to the Multimedia Research Group, Sunnyvale, CA. As slow as they have moved in the deployment of interactive TV, the cable companies know that subscriber churn, or the likelihood that consumers might drop their subscriptions for a better deal, is much lower with DVR households. Consumers with DVRs are more likely to order premium channels, says Ken Morse, chief technical officer at Lawrenceville, GA-based Scientific-Atlanta Inc.'s PowerTV unit.

Analysts say that hitting that price threshold will make DVRs accessible to a couple of million consumers, and the more the price falls the more acceptance the boxes will enjoy. Andrew Wolfe, chief technology officer of SONICblue, says that his company will deploy a $300 box at retail before year-end.

Dean Takahashi is a senior writer at Red Herring magazine. He can be reached via e-mail at dean.takahashi@redherring.com.

"Home Gateway 2002: Worldwide Cable Market Forecast for Digital Settop & Related VOD, PVR & ITV Services -- 2002-2005" study also offers scenarios how cable operators can reach profitability in 12 to 18 months by adding SVOD, VOD and PVR services.