The news of the pending shut down of IP Prime has produced all kinds of commentary about the viability of IPTV, especially for smaller telecom carriers. It’s understandable – questions will be raised anytime a high profile project like IP Prime shuts down, especially in the dramatic way that it did. But before we draw any conclusions from this development, I think we need to put it in a little more context.
First and foremost, we have to recognize the scale of IPTV. From both a technology and corporate culture perspective, IPTV represents arguably the largest transformational development in the history of most telecom carriers. Undertaking it is unlike anything most telephone companies have ever done. It cannot be viewed with short term binoculars. It must be viewed with patient, long term focus. If there is anything I don’t understand about SES’s decision, it’s their apparent short term view. While they have been planning IP Prime for several years, it has only been commercially available for at best, two. In my view, by pulling the plug now, they made a very short term, maybe even rash, decision.
SES has/had some smart people working on IP Prime. They had to know going in that it would take more time before expected returns could materialize. Perhaps there’s something else going on here that we’re not privy to. Maybe a tactical move against a business partner or two. Or perhaps my initial reaction rings true – realization by SES that IPTV systems integration is a core competency that they simply don’t possess – better to cut losses now than dig an even deeper hole. Whatever the case, I think it would be wrong to draw conclusions about the wholesale IPTV business model, or the overall IPTV market in North America.
I’ll be the first to admit that this market is not without its challenges – both technical and market. There is much work to be done on all sides to get it where it needs to be. IPTV vendors need to do a better job in ensuring the technology works and their products interoperate with others. Fewer press releases touting glorious new advanced features and more tried and proven field tests in real market conditions for the core video service is probably warranted. Some smaller service providers probably could use some fine tuning of their marketing DNA. Relying on local presence, good reputation, and a bill stuffer or two is not going to be enough to move the video needle in some markets. More aggressive marketing and sales tactics which may cause some companies to get outside of their comfort zone may be warranted.
As the title of this post suggests, we’re in the very early stages of a marathon with IPTV. Some recent business decisions and market commentary approach this issue as if it were a sprint. Is IPTV as we know it today the answer for every company? Absolutely not. Individual market conditions should dictate service provider IPTV strategy. But I think we all can agree that service providers of all sizes will need robust broadband networks that enable the delivery of content and entertainment experiences to the end user. The end goal for all is to leverage that experience for more meaningful and deeper customer relationships, which ultimately leads to better margins and profits. IPTV can play a role in achieving that goal. But it’s a long term prospect and service providers have to be okay with recognizing that future IPTV iterations may look very different than present day realities. Flexibility, both technically and financially is key. I’m not a marathon runner, but I’ve heard that one winning strategy entails always keeping the finish line in mind. You’re not exactly sure how you’re going to get there, but if you plan on getting there, you better be prepared to overcome a myriad of challenges. There will be good stretches and bad ones, but that’s why they call it a marathon, not a sprint.
The elephant in the room is OTT video. How can smaller carriers risk millions on IPTV, if the trend is for customers to get video for free from the Internet. One could argue its too much of a risk.
I agree that IPTV is more a marathon than a sprint, but the marathon has been on-going now for almost 8 years with very little to show outside the sub growth for the larger Tier-1 providers. However, the tier 2/3 market still holds tremendous promise for the vast majority of the US looking for an alternative to cable and DBS. There has simply been a continual confluence of events that has kept IPTV from its true promise – MPEG-4 transition, STB availability, etc. I think SES’ departure from the space has to do more with freeing up the massive transponder capacity they set aside for IP-Prime for more near-term revenue opportunities. In this economy and for a publicly traded company, it’s the smart play for now.
As for OTT Video, it will always be an adjunct to true IPTV, an ancillary service offering to move telcos from being a me-too service against cable and DBS. OTT holds great promise, but will unlikely replace traditional TV services.
The comments by the writer are spot on. IPTV is in its “toddler” phase and will, one day, become a viable model.
Yes broadband needs to improve in the US, but so does the platform. We have NGN (Next Generation Network) transport available today, but getting the multiple forms of content in and out of that transport is challenging.
It is time for service providers to funnel dollars into NGN solutions that may take a year or 2 to develop and another year or 2 to deploy, but deliver multi-point solutions not single-point fixes as they do with their existing networks. It’s a marathon. They need the right equipment to run in it and fit is everything.
With all do respect to service providers, they have been battling for our eyeballs in the trenches and may have lost sight of the key to it all…the EXPERIENCE. The experience at the head end, ease of provisioning/scaling/adding and removing services/balancing etc. and the experience at the subscriber end.
I think the visionaries have been espousing these ideas and it is now time to take action. Marathoners know that the hardest part is committing to, planning and executing the gruling training. If you train well, plan well and work your plan, the finish line comes sooner and the experience more gratifying.
Great article, and I strongly agree it was a business decision first. Given the challenging economy (and to Anthony’s point), focusing on core business is a good move. Also, it’s being reported that IP Prime’s 60+ customers had a total of about 10,000 subs — about 166 subs per Telco. Not a whole lot of revenue for a whole lot of expense (considering that SES has had to establish and manage each of these Telco relationships, furnish them with professional services and infrastructure to make it all work, etc.)
And on top of that, IPTV technologies have been a moving target throughout the “launch phase” of IPTV, which is really just ending now, after a decade. Think back to all the different moving parts – and how each of those parts has evolved: middleware, MPEG encoding, HDTV, security, interactivity and advertising, etc. Think of the “1st generation” IPTV operators that either deployed greenfield or migrated to IPTV from Next Level. They all have battle scars and they ALL have spent a lot of money, time and resources.
So, yes, IPTV is a marathon. And I wouldn’t jump to the conclusion that SES’ shutdown of IP Prime is an indictment against IPTV, or that IPTV has somehow “failed.”
In fact, I’m of the opinion that video and the technologies behind IPTV will be one of the areas that is NOT hit very hard by the current economy. Other than the network vendors, most of the people I’ve spoken with informally are reporting healthy sales pipelines and some good wins on the horizon.
The elephant in the room is OTT video. How can smaller carriers risk millions on IPTV, if the trend is for customers to get video for free from the Internet. One could argue its too much of a risk.
xrapid
Relying on local presence, good reputation, and a bill stuffer or two is not going to be enough to move the video needle in some markets.