A general criticism leveled against Microsoft IPTV solution is that it is too feature rich and therefore requires lots of hardware. Microsoft is solving the issue through virtualization. Microsoft’s Mediaroom will be the first IPTV platform to offer virtualization support.
The benefits are as usual. However it is worth pointing out that virtualization can particularly bring benefits when the size of the deployment is small – “actually even when it’s relatively sizable such as serving around 30,000 subscribers in a large town or small city.” According to Microsoft, virtualization will help its IPTV customers speed time to market by up to three weeks.
Where large operators are concerned the virtualization can potentially help those looking to extend an existing service into new markets to serve lower density communities that serve up to 30,000 households. Additionally, for deployments of greater than 30,000 subscriber homes, a mix of virtualized and dedicated servers can provide the efficiency benefits.
Virtualization support in Mediaroom involves sharing the resources of a physical server – things like memory, disks, CPU cycles, and so on – among several “virtual servers”. This is possible because not all the services required by a Mediaroom deployment need all the hardware resources (CPU, memory, etc) all the time. So, virtualization allows Mediaroom to optimize the use of the available resources.
Reservation Telephone Cooperative is likely to be the first service provider to deploy TV services powered by Mediaroom with virtualization. Currently, there are more than 3 million subscribers to Mediaroom-powered TV services worldwide.
BigBand has won a supplier contract with Chunghwa Telecom for an IPTV advertising platform. BigBand was up against companies like Packetvision. Alcatel-Lucent (IPTV supplier to Chunghwa) also has its own ad platform. Factors leading to BigBand selection include the ability to facilitate a smooth migration path to future personalized SD and HD video services, scalability in media processing in MPEG2, and H.264 format, better interworking with Multimedi-On-Demand (MOD) SD and HD content, close collaboration with the MOD STBs (such as Hwacom STB models), encoders, etc.
It is not clear if the BigBand product will provide features like pay-per-click or whether there is any ad insertion available for local businesses. However according to the vendor, “the initial deployment will support Chunghwa’s advertising requirements.”
BigBand has implemented over 700 million advertising transactions a year, in more than 60 programming networks. In the IPTV market, besides Chunghwa, BigBand’s IPTV advertising solution is also deployed at LG Powercom, the operator in Korea, and is in trials with North American operators.
It has proven to be very difficult to make advertising money on VoD. Especially IPTV VOD since the subscriber numbers are still small. However operators are looking toward a more personalized approach to add greater value and bring in new entrants who thus far did not see the ROI. Targeted and addressable advertising, in addition to other personalized services, support this business imperative.
BigBand’s network-based platforms support linear, zoned advertising for geographic targeting, enable addressable advertising based on demographic and/ or behavioral information, and provide reporting and monitoring capabilities for feedback and statistics. Integration with the STB provides viewership information.
ZTE signed a major IPTV contract with CANTV recentlly. I talked to Jason Ying at ZTE about the company's perspective of IPTV potential in Latin America. CANTV target subscriber base for their IPTV offering is 1.26 million. We discussed couple of other issues as well .. such as ZTE's R&D investment in IPTV. Apparently ZTE has over 1,000 developers focussed on IPTV.
Amino sold its two millionth IPTV set-top box in December 2008, making it the third only vendor to achieve the milestone. Motorola and Sagem are the other two that have shipped more than 2 million IPTV STBs.
The 2m number excludes shipments from Tilgin, an IP STB vendor that Amino acquired sometime back. Tilgin cumulative shipments are 500K units. Amino plans to merge together the features in order to produce a better breed solution.
Majority of Amino customers have been tier 2s. The vendor is strong in Americas which accounts for nearly 55% of shipments till date. Europe accounts for 40% shipments. The company has not been able to make a strong impression on the Asian market though. Some of the Asian STB vendors have been offering aggressive pricing. Amino’s strategy is to license its technology to Asian manufacturing partners.
STB is the main cost component of an IPTV offering. All the silicon vendors are trying to achieve low cost. Huawei’s subsidiary in China is aiming at bringing the IP STB cost within the $50 range.
I would have expected Amino to be more interested in the VoIP products of Tilgin rather than the IP STB. It makes sense for Amino to diversify into VoIP in the residential gateway kind of sense. Tilgin's STB has a higher cost base and comes at a much higher price than what some of the Chinese vendors are able to make possible. It was obvioulsy a matter of time only. Tilgin's main IPTV customer was Belgacom who decided to switch over to Motorola's STB product instead.
Motorola leads the IP STB market worldwide with others now coming in as distant second. When Belgacom switched over to Motorola, Tilgin's sales dropped almost 90%. But, anyway I think Amino should have snapped the VoIP side of Tilgin's business as well.
Amino itself will find it tough to compete in a market that is expected to be dominated by the Chinese vendors who will push volume and sub $50 IP STBs within a year or so.
IPTV equipment sales in 2Q08 reached $229 million. The equipment sales tracked by iLocus include those of IPTV specific STB, Middleware, VoD, Encoder, and Security products.
IP STB formed majority of the sales generated. IP STB sales touched $146.8 million, down from $186 million in 1Q08. Motorola led the IP STB market with 36.4% market share during the quarter (by the number of units shipped). The total number of IP STB units shipped during the quarter was around 1.7 million.
As of the end of 2Q08, the total IPTV subscriber base worldwide is estimated at 17.8 million.
• 800k IPTV subscribers as of end 2Q08. Added 100k subscribers during 2Q08.
• hanaTV IPTV revenue was KRW 82 billion in 2Q08.
• Hanarotelecom has achieved a market share of 9% through strengthened VoIP.
• Wireline operators launched TV Portal services to prepare for the commercialization of IPTV.
• Korea Telecom had 707k MegaTV IPTV subscribers at the end of 2Q08, an increase of 139k during the quarter.
• MegaTV IPTV revenue during the quarter was $9.6 million U.S., up from $5 million U.S. in 1Q08.
• 3.13m broadband subscribers as of end 2Q08. Added 508k subscribers during 2Q08.
• In theory, same number of VoIP customers (i.e. 3.13m). Estimated IPTV sub base: 2.8m
• Free had 2.6 million unbundled subscribers at the end of the quarter. 83.4 % unbundled subscribers at the end of 2Q08.
• Introduced New Generation WiFi 802.11n during 2Q08
• Canal + Group Catch Up TV service available for the first time on TV during the Quarter.
• PCCW's installed base of IPTV subscribers reached 927k, an increase of 13% from a year earlier.
• The IPTV offering has further boosted its content line-up to more than 160 local and international channels at the end of 2Q08.
• The UEFA EURO 2008 had attracted new customer subscriptions to the Mega Sports Pack.
• Introduction during the quarter of the All-In-One Set-top-box with HD and digital terrestrial television during 2Q08.
• 508k IPTV subscribers. Net additions during the quarter: 73k. Number of subscribers increased 29% q-o-q
• “2.3% Local revenue decrease and the 5.6% Domestic Long Distance revenue decrease, mainly due to mobile and VoIP substitution”.
• 4.3m broadband subscribers (including ADSL and FTTB) at the end of the 2Q08. 3.5m ADSL subscribers, 782.4 thousand FTTX subscribers.
Huawei will put a new IPTV Set-Top Box chipset in commercial use towards the end of this year. The chipset is supposed to bring down the cost of IPTV STBs to an affordable level. In its second design iteration, the new solution will also cater for HD. The average cost of an IP STB in China right now is slightly less than $100. Outside China, the cost shoots upwards of $170 to $190.
IP STB forms the biggest cost component from deployment perspective and reduction in cost is certainly welcome as far as the operators and end users are concerned. Huawei will limit the usage of this new STB solely within its IPTV partners in opportunities where Huawei is the prime stakeholder.
It must be hard trying to sell hosted VoIP to SMEs in Europe. Which verticals have you found traction in?
Certainly some of the verticals are adopting it much more quickly. Some of the traditional business segments such as legal and accountancy firms are slower due to almost the definition of the style of their business. We have found traction among IT and media companies in particular. Recruitment consultants and travel agencies are also keen on trying VoIP. The overall response has been better than what we had expected.
What has been your unique selling point in trying to win business away from the incumbent Eircom?
We have a fiber based network. For business customers we offer both fiber and DSL access. In the residential segment we have laid fiber to the home, and we have just started offering 50mbps service. That is winning a lot of business away from the incumbents that are trying to sell their traditional leased line and premise-based PBX services. We also have our own transatlantic fiber infrastructure to support our growth in IP services.
What is the plan for the residential market?
We are focusing on the housing development projects and have over 80% penetration there. We are planning to offer triple play services there including IPTV.
Which vendors are you working with for IPTV and VoIP?
• 576k IPTV subscribers as of end 2Q08. Added 22k subscribers during 2Q08.
• Telefonica also has over 1.4 million pay TV subscribers in Latin America. Majority are non-IPTV subscribers. In Czech Repulic I think all the 97.9k pay TV subs are on IPTV.
AT&T: 549k IPTV subscribers, up 170k from previous quarter.
Verizon: 1.4 million IPTV subscribers, up 176k from previous quarter. IPTV penetration averaged 19.7 percent across all markets, up from 13.3 percent. IPTV available for sale to 7.0 million premises.
• Added 42,210 new IPTV subscribers during 2Q08. At the end of June 2008, the total Belgacom IPTV subscriber base was 391,460
• IPTV ARPU: EUR 17.6 compared to EUR 15.7 a year ago
• Added 8k new VoIP subscribers during 2Q08. At the end of June 2008, the total VoIP subscriber base 24k.
• During the quarter, Belgacom started offering Video-on-Demand and HD channels
• Belgacom customers that want only TV service running over their broadband connection can also avail of the service. Customers are not required to subscribe to Internet services.
• TeliaSonera ended 2Q08 with 427k IPTV subscribers.
• Added 20k new IPTV subscribers in 2Q08.
• Country by country results include:
Sweden ended with 320k IPTV subscribers, an increase of 2k in 2Q08.
Norway ended with 8k IPTV subscribers, an increase of 4k in 2Q08.
Lithuania ended with 35k IPTV subscribers, an increase of 10k in 2Q08.
Estonia ended with 64k IPTV subscribers, an increase of 4k in 2Q08.
Verimatrix, the pay-TV content security vendor, has closed Series C round of funding. The company is not disclosing the amount. The total amount from prior rounds adds up to $23m, which includes $2m in angel investments that were not announced. Sources suggest the investment is in the region of $7 million with post-money company valuation of $90 million.
The vendor has sold 5 million product licenses that include IPTV set-tops and PC clients. This number is obviously a little ahead of live subscriber numbers. Verimatrix had its first deployment in 2003 at Korea Telecom. It has an impressive list of tier ones IPTV customers including NTT, Belgacom, KPN, Tele2/Versatel, Telecom Italia and TeliaSonera.
Kasenna acquisition gives Espial a leadership position in IPTV VoD, and at the same time strengthens the company’s middleware portfolio. Espial will pay $6.7 million (in shares) to acquire Kasenna. Kasenna has one of the most advanced and open IPTV middleware platforms in the market from the applications point of view (Web services APIs and all). However its strength is IPTV VoD. Kasenna raised over $36 million in funding over the last four years. Intel Capital has been the main backer.
Kasenna VoD solution is used by major IPTV players like Neuf Cegetel and Fastweb. There are some deployments at cable companies as well. I am not sure whether the cable deployments are hybrid kind of installations (with VoD component being IP based). However Espial must be hoping to get some cable business with the help of Kasenna acquisition.
Since it is IP based TV, one could presume that the viewer stats would be similar to web stats. The difference however is that in IPTV, the client side is usually a very intelligent piece of software that ‘caches’ in a lot of intelligent info such as the program synopses etc. As such, a server alone will not pick up all the necessary bits. Someone like Oki – the vendor has just announced a stats solution – has to integrate a piece of utility on the STB as well.
OKI’s stats solution is built with the broadcaster in mind. JR had the end user in mind when he blogged this piece a few months back.
The Korea Communications Commission will start issuing IPTV licenses in August. Live TV over broadband internet has been given a green signal. Hanaro Telecom and Korea Telecom have been offering an over the top, VOD type IPTV service so far. The two collectively have signed up over 1.5 million IPTV subscribers so far. These two – and LG Dacom – have expressed intentions to invest over $350 million in IPTV services.
We need Web type APIs into IPTV middleware for tighter integration of applications on TV. There is already a wealth of apps available on Web. While some of these could be offered by CATV using DOCSIS transport, they are optimised for IP networks. The key to making them available over an IPTV subscription is leveraging the ergonomics of a TV remote control rather than let subscribers access these applications by browsing Web over a TV screen. Using something like Flickr on a TV with the help of a remote control calls for open APIs to the client and server side middleware. This is why Microsoft’s recent announcement (to open up its middleware) seems important.
The video conversation with Brian Caskey from UTStarcom below discusses some of this. We started by briefly talking about IPTV prospects in general. UTStarcom has so far adopted an end-to-end solutions approach to IPTV deployments rather than open APIs to its middleware.
There are over 1.3 million live IPTV subscribers on ECI’s MSAN product. The biggest such platform deployment for ECI is at France Telecom. Not all FT’s IPTV customers are on ECI MSAN though. Some are on Alcatel-Lucent platform. I am in touch with some other MSAN providers and will do a post early next month that provides a breakdown of IPTV subs by the type of MSAN they are being served by.
Attendance was low for sure. A lot of people walking along the central isle …. But exhibitors along the ends of the hall saw very little traffic.
Lots of Analysts and Press. Announcements were not so exciting though.
Exhibiting companies: mostly infrastructure guys. No startups, no emerging companies ….. and no debates around Telco 2.0 on the floor.
The overall theme appeared to be access again. Not much talk about apps. Some video and IPTV stuff was being talked about. Wimax and LTE ... not much around that topic either.
It seems plausible to assume that IP-In-IP-Out could have a major impact on the IPTV encoder business. IPTV encoders are somewhat analogous to media gateways in VoIP business. As the IP-IP peering in the VoIP world grows, the media gateway business should go away along with the change because the hardware needed to do the legacy-to-IP conversions are not required.
However just like VoIP media gateways are re-inventing in VoIP along the lines of transcoding etc, something similar is happening in the IPTV business. IPTV encoders are moving towards a more sophisticated mpeg2/mpeg-4 transcoding in addition to the conversions. So even in an IP-in-IP-out world, the encoder is at the center of the deployment. There are also compression challenges where a high bandwidth (HD) stream may be required to be compressed in order to cater for lower edge data rate.
Thierry Fautier, Director Telco Solutions, Harmonic discusses the subject in this conversation. He also lists some of the major IPTV market trends.
Verimatrix is among very few IPTV vendors that are able to re-use the existing wireline IPTV solution architecture to support Mobile TV. Extending the same architecture means that a telco – offering IPTV and looking to add mobility play – will be able to offer Mobile TV utilizing the existing Verimatrix content security solution in the network. No additional investments from security standpoint.
Other IPTV vendors, especially the middleware and the encoder vendors, have found it hard to replicate the wireline IPTV capabilities over in the mobile TV arena. Maybe things will change once IMS standards are in place for IPTV.
Verimatrix content security platform supports over 5 million end devices receiving IPTV services. I spoke to Steve Oetegenn, Chief Marketing Officer, Verimatrix at NXTcomm today. Steve thinks a standalone mobile TV offering may not be a huge market but when bundled with other services, it can create substantial value.
Espial has scored IPTV middleware licensing deal with Motorola. License is for full platform including client side as well as the server side middleware to be pre-integrated with Motorola IPTV STBs. Components will be licensed as per customer requirements.
Motorola is the leading IP STB supplier. As of 1Q08 it had shipped over 4.4 million units worldwide on a cumulative basis. Espial and Motorola will be actively working together across Europe and Asia.
Peter Blackmore is actually going to take charge as CEO of UTStarcom from July 1st. The present CEO - Hong Lu, an equally charming guy - updated us yesterday on NGN voice and the service providers they are trying to win over. Hong revealed that one of its softswitches in China (just outside Shenzen) is serving around 3 million subscribers. That is perhaps the biggest single softswitch POP I have heard about.
Anyway, back to the interview with Peter. I caught up with him right after the company’s analyst event here in New York today. We talked about (1) UTStarcom’s ability to cross sell its complementary triple play product lines to customers, (2) company’s strong focus on IPTV, (3) reasons for offloading the IP CDMA business, (4) strategy to address opportunities in Eastern Europe, and (5) strategy to address the issue of lower gross margins in the handset business.
Apart from the video content above, I would add the following notes from his presentation that we sat through earlier during the event:
There were an estimated 16.1 million IPTV subscribers worldwide at the end of 1Q08. More than half (estimated 8.4 million) were in EMEA, mainly the Western Europe. Asia Pacific has 5.6 million or 35% of the worldwide IPTV subscriber base. North America is lagging behind a little. However AT&T and Verizon (with its hybrid TV offering) in the US are likely to change that over the next two years.
NSN must have great confidence in the public Internet to tell Light Reading that it is planning a 400 Kbps real-time application service under a purely hosted model! We are still struggling with an 8 Kbps VoIP application over public Internet, guys.
IPTV offered like SaaS. That is not an alien concept. There are companies out there offering Over-The-Top IPTV service. However (1) they typically serve a particular small geography having bandwidth/QoS arrangements in place with the IP network provider, and (2) they tend to be smaller service providers.
• Added 43,931 new subscribers during 1Q08. At the end of March 2008, the total Belgacom IPTV subscriber base was 349,250
• IPTV ARPU: EUR 17.4 compared to EUR 13.4 a year ago
• Added 9k new VoIP subscribers during 1Q08. At the end of March 2008, the total VoIP subscribers 16k
• During the quarter Belgacom and Twentieth Century Fox reached an agreement to make Fox films available on demand via Belgacom TV, Belgacom’s IPTV service
This is for the first time that a major telecom service provider has acquired a major social networking company. There are several possible synergies in this deal. I will pick on one of them. And that is the small business (virtual PBX) offering bundled with the relevant Voice 2.0 apps (communications aware mashups).
All major service providers are exploring Voice 2.0 strategies. Only BT has gone public with its Web21C developer program so far. While most service providers recognize the value of teaming up with their existing telecom vendors to bring in the developers, these switch vendors in turn do not have access to all the developers. They definitely do not speak and Web services language and do not typically provide Web 2.0 APIs except a couple forward looking VoIP platform vendors. In order to gain access to a vast developer pool, service providers have to tap into social networking, which is one of the main driving forces behind Voice 2.0.
554k IPTV subscribers as of end 1Q08. Added 43k subscribers during 1Q08
IPTV penetration rate is 11.46% of the broadband subscribers
Telefonica also has over 1.2 million pay TV subscribers in Latin America. Majority are non-IPTV subscribers. In Czech Repulic I think all the 87k pay TV subs are on IPTV
• Telecom Italia ended 1Q08 with 136k IPTV subscribers, an increase of 56 thousand in the quarter.
• 1.5 million VoIP subscribers as of end 1Q08, which represents 23% penetration into retail broadband access lines.
United Telecom, a Bangalore based telecom company contracted by the Indian authorities to build out an advanced broadband network in the tourist hub state of Goa, will be offering triple play services in the state including IPTV. UTStarcom won the equipment contract that includes VoIP, IPTV, and GEPON gear - the whole lot.
United Telecom is itself a vendor supplying optical networking components to service providers like BSNL. And although Reliance and BSNL have already laid out broadband networks in Goa, United Telecom’s footprint is all fiber. In fact it has already laid out majority of the FTTH network in the state.
To my knowledge, there is no such thing out there yet. But there will be. A couple of companies are doing it at the client level (for Web TV) but the only source I came across that is doing it at server side middleware level is this thing called Toroid. There are not many details on the site.
There are several Internet TV companies coming up all over the world. I am sure they would want to get their hands on something like this. An Open Source IPTV middleware will help evolve and scale online video/TV to new heights.
There are a few drivers for Open Source IPTV middleware already. Several service providers are unhappy about the integration problems they face in putting together various IPTV components. Open Source will only compound those problems initially but those IPTV vendors looking to sell to Internet TV (as opposed to telco centric IPTV) companies will put interfaces into such a system. IPTV service providers are usually stuck with a small number of ecosystems that come pre-integrated with other IPTV network elements such as VoD servers and Encoders etc.
• 435k IPTV subscribers. Net additions during the quarter: 41k. Number of subscribers increased 10% q-o-q
• “1.3% Local revenue decrease and the 4.4% Domestic Long Distance revenue decrease, mainly due to mobile and VoIP substitution”.
• 4.28m broadband subscribers (including ADSL and FTTB) at the end of the 1Q08. 3.6m ADSL subscribers, 634.5 thousand FTTX subscribers, which is up 97.7 thousand in the quarter.
• TeliaSonera ended 1Q08 with 407 thousand IPTV subscribers.
• Added 28,000 new IPTV subscribers in 1Q08.
• Country by country results include:
o Sweden ended with 318 thousand IPTV subscribers, an increase of 14 thousand in 1Q08.
o Norway ended with 4 thousand IPTV subscribers, an increase of 2 thousand in 1Q08.
o Lithuania ended with 25 thousand IPTV subscribers, an increase of 7 thousand in 1Q08.
o Estonia ended with 60 thousand IPTV subscribers, an increase of 6 thousand in 1Q08.
o TeliaSonera has no IPTV subscribers in Finland or Denmark.
BSNL lost a massive 4.4 million landlines during 2007-08 according to the latest figures released. With an annual ARPU of $63 (Rs 2,500) that means a loss of $277 million in terms of revenues. Losses are due to several reasons. But we all know the main culprit is migration over to mobile subscription.
One of the ways to arrest that reduction in lines is IPTV, which BSNL was supposed to be heavily investing in. But I doubt that will help much. At the moment there are 3.13 million broadband users out of a modest total of 38 million landline connections, which means less than 10% of the landline users. Potential IPTV customers in India are just those 3.13 million broadband users. Actually not ... because of this user base around 60% must be enterprise users. So the net IPTV addressable market right now boils down to 1.25 million subscribers.
Telcos looking to secure their long term prospects have no choice but to invest in triple play. The voice and the data services are available from all. IPTV however is not yet widely implemented by telcos.
Those telcos who are planning to offer IPTV are upgrading their broadband infrastructure to support speeds of 8mbps and above. But by doing so they are enabling Over-The-Top TV or the Internet TV, which is being positioned as the biggest competitor to IPTV right now. Although I have come across speeds as low as 250kbps as requirements for streaming video, but the typical sort of throughput you require is in the region of 500kbps.
This writeup on Variety suggests that Korea Telecom has 550,000 IPTV subscribers. That means there must be a lot more Over-The-Top IPTV subscribers in the two countries than what I have estimated on last week's post.
So I guess collectively between Hanaro, Korea Telecom, and someone like USEN in Japan, the OTT IPTV subscriber base must be between 1.6m to 1.8m in the two countries. Of course the reason we bundle the two for OTT IPTV is because in both countries IPTV providers are not yet allowed to offer live TV.
Within a triple play bundle, the actual IPTV usage may be limited. If IPTV is relegated to a secondary TV service, what implications does that have for the industry?
The telecommunications market is very price sensitive and subscribers generally migrate to the operator who can give them best value for their spend. Service providers have realized they can increase subscriber stickiness with bundles. In some cases, their bundles are on such favourable terms that a household ends up with 2 TV services. The reality, though, is that as the introductory bundle pricing expires, customers are likely to settle for a single service. In the long term, the economics have to work both ways – the consumer will migrate to the best value and the operator has to offer profitable services. The consumer may end up with a combination of IP-only or IP plus cable or terrestrial. From their perspective, the delivery infrastructure is less a concern than the level of service and the richness of the TV service.
With consumers in France getting IPTV from the likes of Free and Neuf, there is no way of knowing how many are actually using the service. In the UK, BT customers do not rely on its IPTV service as their main TV source. This is something additional on top of the Sky service they have. A bit like using VoIP as a secondary line.
From what we’re seeing, this is likely geography specific. For example, the UK has a Freeview service which has about 3 to 4 million subscribers. It is a terrestrial service which you do not find in, say, North America because North America relies on cable as the distribution network of choice. Freeview provides around 50 digital channels. BT is piggybacking on Freeview for linear TV and they are using IPTV for on-demand TV. In this case, these services co-exist since the TV economics in the UK allow this.
We are rather late on the 4Q07 update. So I will keep it very brief. IPTV Set-Top boxes are the main revenue generators in IPTV equipment segment. 1.8 million IP STBs shipped in 4Q07 generated an estimated $202 million in revenues. Motorola leads. Other significant market leaders were Amino and Sagem.
IP STB generates more than the combined revenues of IPTV middleware-security-encoder-vod, all put together. So if you have connections in Taiwan and China, that is where most of the STB manufacturing action is talking place.
If the authorities remove restriction on live broadcasting, IPTV providers Hanaro Telecom and Korea Telecom plan to purchase $200 million worth of IP STBs together with LG Dacom in 2008. The deregulation to this effect is expected sometime in May this year.
The overall investment amount for IPTV is a whopping $15 billion that includes $10 billion for overall network upgrades and IPTV equipment purchases of about $350 million. IP STB is obviously biggest piece in the equipment purchase. The commitment by the companies to invest may speed up the expected deregulation which allows the IPTV providers to offer all types of broadcast content including live TV.
There is a somewhat similar regulation in Japan where IPTV providers (unless they are cable TV licensees as well) are not allowed to offer live TV. As in Korea, these Japanese providers are offering Over-The-Top TV (OTT TV). OTT in Korea and Japan have a collective subscriber base of over 1 million.
Electronic Programming Guides on TV are still living in the 20th century. They are not user friendly at all. Most of them look like interfaces for writing assembly level programming code. I think EPGs should be intelligent enough to suggest to the viewer what to watch based on the viewer’s viewing habits/preferences. If as a first generation proactive EPG, I had an integrated utility that gives me my usage statistics, I could use it for several things:
• 1.3 million VoIP/Broadband customers
• 740k IPTV subscribers, up 73% y-o-y
• Fastweb’s network has been extended to cover 11.4 million households or 50% of Italian population
There are over 20 IPTV middleware vendors generating meaningful traction. Keeping in view the growth prospects of overall IPTV equipment market over the next few quarters, this segment is likely to see some consolidation during 2008. Orca acquisition is a start to a wider vendor consolidation across IPTV equipment industry expected this year.
Encoder space is perhaps the most consolidated segment in IPTV market. There are around 6 major players left in that market now. Hardware oriented platforms usually commoditize faster and hence consolidate earlier. IPTV middleware is a software product.
COTS hardware has been around for more than a decade. What is keeping equipment makers from deploying these solutions?
A suitable COTS architecture has only been available for two years. Other COTS architectures like Compact PCI were basically enterprise technology. So COTS suitable for core telecom applications that can support five nines did not exist until ATCA availability. And ATCA availability goes back a couple of years.
I do see ATCA growing to be a multi-billion dollar business, but, as with all things in telecom, it will take time. The biggest complexity has not been about ATCA itself. It is about porting applications over to ATCA and, in particular, making a move to Linux. So moving to ATCA hardware is quite easy to do, but a lot of legacy applications simultaneously moving to ATCA are also moving from proprietary, 20-year–old, home-grown OSes to Linux.
One of the biggest motivations for using COTS hardware is the time-to-market factor. How far have vendors been able to achieve that in practice?
We have customers, who, using ATCA, have brought applications to market in under 12 months versus classic 24-to-36 month development period. We have a customer in Asia that chose our ATCA platform in Spring 2007 and, before the end of 2007, had live service up and running for a wireless application.
Can you perhaps name some of the application categorises that are being enabled by COTS hardware such as ATCA? How would you generalise the type of applications being ported over to ATCA platform?
ATCA will be the hardware of choice for a wide spectrum of applications. Over the last few years we have seen particular strength in the wireless arena: media gateway, RNC, SBC, and IMS applications like media server. IPTV has also been a very good adopter of using ATCA. From the fixed network side, we are seeing elements like access consolidator and echo cancellation as prime candidates.
Other than the integration issues that IPTV operators often stumble upon, being able to differentiate their service is a major challenge. IPTV is in its infancy and it has to work much harder to shake the equilibrium in the pay-TV services market dominated by the traditional broadcast mechanisms, the cable and satellite. So far IPTV has not been able to offer anything new to the end users who are essentially technology agnostic. They want a TV service. And wherefrom that comes, hardly matters.
All the IPTV deployments are in early stages and the operators are keeping the services simple. Another issue is, though we can potentially have very innovative and differentiated services over IPTV, the operators are only willing to offer such services once they reach a certain scale. This critical scale is supposed to be around 5 million subscribers market. Even France Telecom, the largest IPTV provider is far behind this number at the moment.
• 3.2 million residential broadband customers. Same number of VoIP subscribers in theory
• 750K IPTV subscribers, up from 600k at the end of June 2007
• In business VoIP, 40% of new data link customers take up VoIP
• 300k mobile customers which includes a small proportion of WiFi-GSM subscribers
What value does your product Accedo Application Provisioning Solution add to an IPTV installation?
Our product enables an operator to distribute value added applications in a cost efficient way to any STB. We have integrated it with all the leading STB manufacturers and many middleware platforms.
What kind of value added applications are IPTV service providers deploying?
Value added services are largely confined to gaming in IPTV deployments. Within that we see multiuser games in demand. With the traditional broadcast networks it was not possible to have multiuser capability. Over the IPTV it can be done easily.
How has the gaming and related applications bit done so far in the IPTV segment?
After the movies, gaming is the most interesting application for end consumers. We normally get 20-25% of subscriber base that play games on a monthly basis. It’s a very very high usage of casual gaming on the TV. TV is created for light entertainment. People like to play games like Suduko, Poker, etc. while waiting for their favorite programme to start.
If we are to believe in the upcoming applications renaissance, then we have not seen anything yet. New Web 2.0 / Voice 2.0 applications will keep coming every day. And while I have tested over a hundred so far, I am not going to test one every week, let alone one every day. One of the reasons is that for a lot of these services there is a downloadable. As such I have to go through the ritual of downloading and installing and testing and uninstalling (if I decide not to keep the application).
There has got to be a more efficient method of testing these new services. Perhaps a site that hosts a test account where feasible. The developers could work directly with the site owner to arrange a test account (or several such accounts). People like me would certainly want to use such sites rather than download-and-install things all the time.
Which markets are you finding more traction for IPTV these days?
IPTV is picking up in Asia and Eastern Europe. It is not doing so well Western Europe and North America. The only major player in North America is AT&T.
Within Asia what has been your experience in markets such as India, Japan and China?
China and Japan are 2 different markets. In Japan it is all about HD. In China we see 50-100 channels kind of set up and that is nearly all SD. We do not see HD in China yet. Another aspect about China is that some of the operators are not using middleware. Subscribers go up and down the channels on the remote control. Some of the deployments I have there are live TV channels. There is little conditional access and in most cases no video-on-demand. I am not aware of any installation in China that uses VOD.
Moving over to India there was a lot of noise recently from players like BSNL, MTNL and Bharti Airtel.
BSNL’s IPTV will be based on our solution. In fact all but Reliance are using our solution. Bharti has not started the service yet. In India the lowest number of channels you start with is 150. But it is mostly SD.
What will be the single biggest trend during 2008 in IPTV?
The main trend we are likely to see is the popularity of Internet TV. This is a major competition for IPTV providers going forward. Internet TV is especially gaining popularity in the US. If you log into the websites of content owners such as Fox you see good quality videos that you can download.
• Estimated 1.9 million VoIP subscribers at the end of 4Q07.
• 21CN update: More than 35% of UK core network already rebuilt,
• Wholesale Broadband Connect, ADSL2+ rollout from Spring 2008 with speeds of up to 24Mb available.
• During the quarter the number of IPTV subscribers more than doubled to 120k. Latest Feb figures released: 150k subscribers.
• Stopped marketing BT Fusion, the incumbent’s FMC services that had signed up under 50k subscribers.
I have not come across a lot of companies with an ASP model that are offering VoIP as well as IPTV.
That is right. We are trying to unify three services into one, which include communications, information, and entertainment. We have designed our IPTV services to incorporate social networking from day one. We enable real-time opinions and real-time ratings and multiple ways to communicate around the content.
You don’t own the last mile. So how can you reliably offer IPTV with all the QoS issues?
Our technology accommodates for a great deal of latency. We are also very light on the bandwidth consumption for IPTV delivery. Most services out there require 500 to 600 kbps kind of bi-directional connection. We don’t need that kind of bandwidth. We operate in about 280kbps kind of range.
You have over a million users. How does that subscriber base break down by the application subscription or usage?
We have near about 3 million users now. I would say that over 80% of our subscribers use the communications side which includes IM and VoIP. The IPTV side and Video-on-Demand is utilized by about 60% of the subscribers. There is obviously an overlap.
I think this would be another way to encourage local content. If you help monetize the local video content, you might have a few potential producers out there. Among various forms, local video content could take form of video interviews you do with various members of the community, something like a local community news magazine on TV. In terms of the platform that hosts this content, I think TV stands a much better chance than a website.
Advertising server companies like Packetvision and VoD server vendors like BitBand would need to provide capabilities in their platforms to monetize this video content. I am blogging about the local community content for the second time because I feel there is a genuine demand for such content worldwide. This is an area where Internet has done a very poor job so far. And local video content may not prove to be suitable through an online site since maintenance of the site would require a substantial commitment. Instead if you make such content available over the TV in form of VoD, it might work.
Providing IPTV service since: August 2007 (in Norway)
List of challenges: Integration between ERP systems and IPTV provisioning systems; STB problems; VOD software bugs; Content owners that do not allow the company to sell channels one at the time (only bundled in packages); difficulties raising enough capital; content distributors that own distribution infrastructure.
What sort of VoD content do you see out there in the IPTV market? Is it the same VoD content that you find with other forms of delivery?
The most popular content for VoD is recorded TV. You record the TV channels and you make that available on demand. The second most popular VoD content is movies. Local content is also becoming a big factor especially in IPTV services. These are the three major VoD content forms that are popular with IPTV users but none of these three are IPTV specific only.
What in your experience are VoD demand trends in emerging versus established markets?
In the US, the initial IPTV deployments do not necessarily have a VOD component. They rather focus on linear TV. You see more openness in deploying VoD in emerging markets versus the US where the traditional telcos have been more cautious about the introduction of new services. They typically go for linear TV first and then add some VoD and only later the real promise of IPTV services which is the new services over TV.
Are you involved in any hybrid offerings such as Verizon that is offering the VoD component over IP and the rest over legacy network?
We have a few customers in Israel, Far East and Europe, where the channels are being delivered over the air – either over satellite or over digital terrestrial – and the interactive on-demand content is delivered over IP connection through DSL or FTTH. We definitely see the hybrid approach as a trend.
When you evaluate central office of a telco for possible IPTV deployment, what would you ideally want to see there? What are the ingredients of a suitable telephone plant for an IPTV deployment?
• 4.102 million VoBB subscribers in France as of end 4Q07. Added 617k subscribers during 4Q07.
• VoBB subscriber base represents about 36% ADSL customer accounts.
• 677k VoBB customers outside France (mainly in the UK). Poland: 132k VoIP subscribers, other European countries 544k.
• IP TV Subscribers: France 1,149k, Poland 40k, other European countries 54k.
• Orange Unik FMC subscribers: 573k users as of October 2007, up from 468k users at end 3Q07.
Is there a need for a dedicated video search engine? People on Internet usually prefer to use just one search engine?
Search is all down to relevance and accuracy. The existing search engines were developed for text search and are optimized for textual web pages. Video search engines are optimized for analyzing all the components – moving pictures and sounds. This is where the technology from Blinkx comes into play. Our technology literally watches and listens to the video. We are able to understand frame by frame what is inside that video. That understanding allows us to deliver higher accuracy level and position on the video searching.
But Google and MSN type companies have also added video search capabilities.
If you look at Google for example, its focus on video search is around searching their own video content from YouTube and a little bit of external content. Yahoo has a video search engine which they acquired 8 years ago. That has never pushed on the front page because the accuracy is low. There have been products in the video space but not truly video search engines.
The only big player having a true video search engine is AOL. AOL got it by acquiring Truveo 3 years ago. But even AOL has not really pushed video search capabilities because Truveo is also dependent on reading and analyzing text rather than looking at the video content itself. For all these reasons the average user using text search engine isn’t really finding the videos they want.
How does your search engine really crawl the videos? I mean how is the visual analysis carried out?
We have a web spider which basically crawls the web. Every time it finds a web page it analyses the page for a video and if it finds video files on that page it goes further looking at how that video is positioned and analyses it from a visual point of view. Based on that it extracts words or text around that, which seem relevant to the video: things like titles, descriptions, tags, etc.
Once that is done, our software plays back that video. It is similar to a human being watching that video. We literally sit back and press the play button. When the video plays, the Blinkx system analyses the visual elements. It looks at things like text on the screen, it can also do some limited facial recognition as well that can spot the faces of famous people. Other than this we also analyze the speech track of the video. That helps in knowing the words spoken in the video.
We check all this information - text, visuals, speech - and combine them into a single conceptual record about the video. It checks what the video seems to be about, what the main context is that is all indexed into a search engine index. So when you come along with your search, you can do exact search to all these conceptual records we have.
Providing IPTV service since: Launched first of eight phases in June 2004. Have IPTV deployed in 72 towns in Central and Western Oklahoma.
Major challenges so far: Integration of IPTV solutions, keeping subscriber acquisition costs down in order to compete with incumbent Cable providers and the DBS providers.
Number of IPTV subscribers: 8500
IPTV equipment vendors: Set-top box: Amino, Entone and Scientific Atlanta Middleware: Myrio (NSN) Encoder: Tut/Motorola VOD Server: Harmonic Test and Monitoring: In house Security: Verimatrix Advertising Server: ETI
Verizon’s FiOS TV had 943k subscribers at the end of 2007, making it the third largest IPTV provider after France Telecom and PCCW. IPTV has been a part of Verizon FiOS TV service since its launch in 2005. FiOS TV utilizes a hybrid QAM / IP platform that uses QAM RF to deliver broadcast channel programming and IPTV to deliver video on-demand content. The middleware is largely proprietary with certain elements inherited from Microsoft. The set top box is sourced from Motorola.
An innovate aspect of Verizon’s FiOS TV service is the two-part realization of the whole-home media concept, something that no other (major) IPTV provider or MSO currently offers. Part one is “Home Media DVR” service, a multi-room DVR solution that is delivered by the IP-based FiOS in-home LAN and its IP-enabled STBs. It allows a customer to view different DVR-stored programs on up to three STB-connected TVs (DVR STB + 2 remote terminal STBs) simultaneously in their home with trick-play control and the ability to pause a program in one room and resume watching it in another room. Currently this service delivers SD streams to the two remote terminal STBs but Verizon has disclosed its near-term plans to add HD streaming to Home Media DVR in 1H08.
Great to see one of my predictions for 2008 coming true. AT&T is re-packaging and re-launching its VoIP offering. Having met less than exciting demand for its VoIP over DSL, the telco is re-launching the same offering over its much celebrated U-Verse fiber network. And that makes a lot of sense. The voice quality would certainly be much better. However pricing is rather depressing: $40 per month just for the voice plan!!
Technology developed by Blinkx, the video search company, can perhaps be an answer to the growing concerns over unwanted video content on the Internet. That is because Blinkx crawler virtually sees the content of the video that it is trying to tag and categorize for search purposes. The crawler technology visualizes and analyses the clip – like a human eye would do, according to the company - and accordingly stores the information in an index that is accessed in the retrieval mechanism to obtain the results.
There are several among us that are concerned about the unwanted video content on the Internet. Adult video content is obviously at the top of the list. May be the level of concern varies across cultures but these issues have to be dealt with in a sensitive manner across societies. Unfortunately we have not come up with a mechanism to really filter things properly. At most the adult websites will carry a statutory warning that you have to be over 18 in order to access the content. Neither that nor the parental control software has proven to carry out filtering adequately.
Service Details: Launched its Freewire IPTV service in September 2006 to UK University students living in on-campus accommodation - university halls of residence connected to JANET, the UK universities’ high speed broadband network -- and the initial launch was all free-to-air content. A pay service was launched in September 2007, the start of the new academic year, again to students in halls of residence. The next phase of development will see the Freewire being rolled out as an off-campus residential proposition using DSL in March 2008. Freewire also plans a white label IPTV solution.
Challenges: Content rights issues and regulatory environment as the service expands internationally. These aspects are often very different and provide a new set of challenges in each region that have a bearing on time to market. Currently Inuk Networks is launching Freewire in the Republic of Ireland and Canada.
Number of IPTV subscribers: Freewire is currently available in over 100,000 student bedrooms in halls of residence across the UK.
IPTV equipment vendors: Set-top box: Telsey, plus Inuk Networks own developed Virtual Set Top Box application for PCs & Macs Middleware: Zignal Encoder: Tandberg VOD Server: Edgeware Test and Monitoring: Various Security: Widevine Advertising Server: PacketVision
Challenges faced in deploying IPTV: The biggest challenge has been the expense of deploying IPTV. Being a small company and not having the deep pockets to afford leading edge technology has been the biggest challenge, as well as the buying power of ordering large quantities of set top boxes. At the same time, working through the uncharted territories, experimenting with unproven technology and trying to figure out what works with the company’s network has also been a major challenge related to IPTV.
Most memorable challenges so far: Being an early adopter in the IPTV space, the majority of Surewest challenges have been technology related. The company had to work closely with all of its technology partners to ensure workable integration across all of the components that comprise the IPTV ecosystem.
Number of IPTV subscribers: Over 20,000
Sources IPTV equipment from: Set-top box: Amino Middleware: Minerva Encoder: Variety of MPEG-2 encoders; uses BigBand BMR for IP encapsulation and rate clamping VOD Server: Kasenna Test and Monitoring: Ineoquest Security: Irdeto Access, Widevine Advertising Server: Outsourced through Viamedia
It has become an accepted norm to have multiple remote controllers in your room. One for you TV, one for DVD player, one for set-top box (not all TV functionalities are available on set-top box controller), one for your music system etc. If we turned things like word processor into an application, an alarm into an application, watch into an application etc, surely we can turn these TV remote controllers into software applications that can be downloaded on to mobile phones.
You have infrared in nearly all these devices – DVDs, TVs, music systems, mobiles. I saw one demo made by UTStarcom in China last year that integrated phone with a TV remote. It is part of the IPTV offering so that when you receive a call, there is a caller ID flashing on TV and you can take call using the phone capability integrated into the TV remote controller. Not quite what I am talking about here. I am talking about the reverse engineering. Turn remote control into a software application and put it on mobile.
Just projecting forward the discussion in Faisal’s post yesterday ….
“ …. Targeted advertising will do wonders if you have local businesses and corner shops being able to advertise on local household TVs. However the telcos and channels do not have the capability to sell ad slots to local small businesses though some have their own Yellow Pages salespeople. Generally speaking the ad agencies only work with major brand advertisers. What is needed for this market to scale and take off is a web-based ad /media-buying agency able to provide self-help ad creation, campaign management and ad slot purchase. There are a number of companies starting to offer these services e.g. Spot Runner in the US and Spotzer from the Netherlands.….”
The problem with Spot Runner type web based business in TV adverting is the lead time. In this particular case the lead time for an advertiser to see his ad run on the TV is 14 days. A clearinghouse that consists of Spot Runner type web interface and an advertising server (or a server that works through APIs with an existing IPTV advertising server) could in theory cut down the lead time to zero. That is if there is demand for such instant gratification from the advertisers’ side. The fact that IPTV uses open source TCP/IP, such a clearinghouse would be easier to set up in an IPTV environment rather than in a legacy cable/satellite headend environment.
And if we are to believe that IMS will soon control IPTV elements as well, then the peering providers could be ideal for starting such IPTV advertising clearinghouse business. Another possible candidate could be sites promoting local communities.
IPTV advertising focuses on and highlights one important aspect: more targeted advertising … to the extent that you for the first time enable local business advertising on an organized scale. I briefly spoke to UK based PacketVision on the subject. PacketVision works with operators and channels enabling them to beam different advertisements to different IPTV viewers determined by various factors which could be demographic, geographic or other factors like interests and preferences of these viewers.
Obviously this sort of advertising works if you have an updated and reliable database of demographic profiles. How is an operator or a channel going to have data on things like income, profession, interests, hobbies, gender etc about its customers so that it targets the right ad to the right person? According to PacketVision, initially the segmentation of the operator's TV subscribers will be based on what they (the telco) know about them e.g. location and perhaps the financial band. As they hold only a very limited amount of info on each subscriber the main targeting will be geographic to start with.
At the end of 3Q07 there were estimated 9.4 million IP TV subscribers worldwide. An estimated 23% of live IP TV subscribers are being served by proprietary IP TV middleware. Those who have been successful selling the middleware solution off-the-shelf are still typically confined to one or two large accounts. Thomson leads the pack because France Telecom is the leader among the service providers. France Telecom still accounts for a big majority of Thomson middleware deployment.
It is the quarterly reports time so I am all engrossed with vendor shipment and subscriber data (number crunching on steroids). That leaves little opportunity to update you on interactions with the gurus. I wanted to however do this short post on Raketu.
I had a chance to interact with Greg Parker, CEO of Raketu, yesterday. Raketu (which by the way means Rocket in Czech language) provides VoIP, IPTV, and some social networking capability – all off the public Internet. Kind of Triple Play ASP, if we take social networking aspect as the third play in the bundle. I have been struggling to coin new terms for some of the Voice 1.5 companies. But this one fits like dosa on flat pan.
• Fixed line reduction during the quarter: 16k consumer lines and 3k business lines. VoIP service launch is a recent development. Estimated subscribers: not more than 30k
• 3.8m ADSL subscribers. 378k FTTX subscribers
• 358k IPTV subscribers. Net additions during the quarter: 24k
• “3.9% Local revenue decrease and the 7.2% Domestic Long Distance revenue decrease, mainly due to mobile and VoIP substitution”
• Access line reduction of about 588k during the quarter. Some of that is VoIP substitution. Majority is mobile substitution. There is also some migration within AT&T’s fixed line to AT&T’s cellular services. The company added near about 2 million new mobile customers during the quarter
• Reduction in business voice lines during the quarter: 190k. Line reduction due to IPPBX and hosted VoIP, and other competitive factors
• CallVantage VoBB subscribers: not sure about the number. If they have 13 million broadband subscribers, 10% of that is around 1.3 million. So if we are talking about 10% penetration, AT&T might have over a million VoBB subscribers. That seems very unlikely though. One correction to our 2Q07 post on AT&T: the company uses Sylantro for business VoIP, and not for consumer VoIP. For consumer VoIP (CallVantage) AT&T uses its home grown solution.
I have asked nearly all major vendors about the carrier RFPs that require IMS-compliant IPTV solution set. There are no such RFPs floating around … precisely because there are no set IMS specs for IPTV technology. They are still being worked at by the Tispan standards group. It is however common for carriers to seek migration path toward IMS compliance in the IPTV equipment they procure. So what you have in the market is ‘IMS ready’ rather than ‘IMS compliant’ solutions. Thomson and Ericsson seem to be ahead of the curve.
The benefits of an IMS-compliant IPTV solution are obvious. Service providers will be able to offer both voice and IPTV services over the same core infrastructure, leveraging the same CSCF, the same HSS, and the same telephony feature server for instance. There is some interest in that for sure. But if video application server is connected to IMS then any SIP enabled client (which can include mobile phones) can reach this video application server, so that with the same platform you serve multiple devices. There seems to be more service provider interest in the latter.
What is the significance of the word ‘Ruckus’ in the company name?
‘Ruckus’ represents our spirit of making a lot of noise in the market. Most people basically said WiFi is unreliable technology and we are able to make it reliable enough to be used as a utility.
You seem more inclined towards leveraging WiFi for Video.
Yes. Look at iPhones and devices like that. Video is already in our culture, and if there is no cable involved they are going to love it even more.
White labeling in IP TV is probably the easiest. You have content aggregators who are already used to supplying various different custom packages to service providers. The server side middleware can easily be hosted on the wholesaler’s headend. Subscriber management, billing and other back office systems work could also be carried out by the wholesaler. Perhaps the only thing you require is a brandable EPG or the client interface, which has to have flexible GUI that allows the retailer to design the interface as required. I have seen some vendor demos that offer this functionality.
My guess is however that this model will only attract tier 3 service providers who do not have enough resources for the capex involved. That is what we see in white-labeled VoIP. When some of these tier 2 and tier 3 service providers get their hands on some cash, they will prefer to have their own infrastructure. The white label may also be tried by large operators who would like to get some hands-on experience with IP TV (VoIP examples: the early implementations of SBC with deltathree and BellSouth with Pcket8). Most of all, I think your local departmental store chain would be the prime candidate to offer white labeled IP TV (VoIP example: Tesco in the UK).
If you follow the IP TV market, you must have read a lot about Microsoft’s prospects in this promising global market. I will list some of the main points that I have come across. The reason Microsoft has had some traction in the market is because around the time when telcos started trialing IP TV some three or four years ago there were not many off the shelf middleware products out in the market. Having an early version of the IP TV middleware did not help Microsoft cement its place though. The telecos who deployed the solution found themselves 2 to 3 years delayed in their deployment plans.
And it is not just the delay, there are scalability problems as well. Numbers from AT&T and Deutsche Telekom in the past have pointed at Microsoft being able to support 600 subscribers per server. That is not exactly carrier grade. Microsoft also experienced problems at BT with their DRM software crashing, bringing down the IP TV service. Among the technical and middle management ranks at these telcos there is no great love for the Microsoft product. Microsoft IP TV deployments there are driven by top management relationships.
Amino regulatory filings in the UK indicate that the IP TV STB vendor has shipped 1.15 million IP TV STBs on a cumulative basis (as of June 2007). Amino was the market leader till 4Q06 in this segment. However Motorola ramped up quite fast during the first half of 2007. Motorola has shipped more than 2 million IP TV STBs so far.
Amino’s internal data analysis shows that a typical Amino enabled customer installs 1.4 IP STBs. So as of June 2007, Amino would be supporting an estimated 820k live IP TV subscribes worldwide.
Verimatrix, the IP TV content security vendor, raised further $5 million in funding taking the total funding raised so far to $20 million. The company has activated over 3 million IP TV set-top boxes that come pre-integrated with Verimatrix software. So if around 10.5 million IP TV STBs have been deployed so far, the vendor can claim around 30% market share in IP TV related content-security / DRM /CAS solutions.
Business model: The product sells as client component integrated with STB vendors and server component deployed by telcos at the headend. Verimatrix pre-integrates the client component with STBs free of charge. It makes money when the telco activates that license from the head-end. Verimatrix mostly sells direct to telcos. However the company also works with OEM partners such as Nokia-Siemens and Comverse. It has a fairly large ecosystem of partners which includes STB vendors, middleware vendors, encoder vendors etc.
(Customers, Sales, Geographic split of licenses, Strengths)
Like other set-top boxes, IP TV STBs do not sell one per home. Depending upon which country you are talking about, it is between 1 and 3 per home. Global average has been found to be around 1.4 per home. So if there are about 7.5 million IP TV subscribers worldwide, we are talking about a cumulative shipment of 10.5 million IP TV STBs worldwide.
Only Motorola and Amino have shipped over a million units. Other major vendors include UTStarcom, Thomson, Yuxing, and Sagem. And there are a couple dozen smaller vendors (doing brisk business with IP TV STBs though) based in China and Taiwan.
In North America, the average number of IP TV STBs per home is an impressive 2.7.
In IP TV, the client side of the camp is divided into those who put a lot of intelligence into the solution and those that use thin client architecture. The former would include Nokia-Siemens, Microsoft and Espial. Vendors like UTStarcom, Kasena, Orca, and Thomson all use thin clients. With thin clients the disadvantage is that you take several seconds to navigate through a few lines of EPG.
With the intelligent client you can browse through much faster. If you look at 14 days of programming, which is 2 weeks of data times 24 hours a day times 100 channels, that is a lot of EPG data. And what consumers really want today is better information and better guidance on what is on offer.
Video communication has been around for decades now. But certain anthropological issues have kept it at bay. Men prefer not to see the other bloke, and women do not want to be seen. Something pre-arranged has a chance here. Even when you do video chat on a client such as Skype you start off with a voice chat and then ask the other person to turn on the webcam. The other factor is that it will not work in mainstream business communication because there is no need and time for visual communication in the business world. So we are left with the residential offering with an emphasis on pre-arranged feature.
There is one additional cultural factor though: we associate video more with TV and not with a communication device such as a phone or a PC. We are used to seeing multiple people participating visually on TV rather than the visual communication being one-to-one. It is a one-to-many, many-to-one, and many-to-many communication. It is not a one-to-one communication.
VoIP is not alone when it comes to the use of proprietary session management software. Apparently IP TV segment is even worse. An estimated 23% of live IP TV subscribers are being served by proprietary IP TV middleware. Service providers that find it hard to trust off-the-shelf middleware include FastWeb, TeliaSonera, Verizon (a hybrid offer, not entirely IP TV), Neuf, and Telefonica.
The total number of IP TV subscribers worldwide is estimated at 7.5 million (as of June 2007). In comparison, out of the estimated 55.4 million consumer VoIP lines worldwide, about 18% were found to be hosted by proprietary call management software. As a younger sibling to VoIP within the triple play family, IP TV is treading the beaten track.
There was an aggregated total shipment of 1.4 million IP TV set-top boxes worldwide in the most recent quarter. Motorola leads the market followed by Amino. IP TV STBs generated $133.7 million in revenues. Average prices per unit ranged from $85 to $285 during the quarter.
You are based in Scandinavia. How are you doing on your home turf and what prospects have you explored outside your region?
Dreampark is currently the dominant IP TV middleware vendor in Scandinavian market covering Norway, Sweden, Finland and Denmark where we have approximately 70% of the market share in terms of number of operators on the IPTV field. We are trying to expand the business outside Scandinavia. We are looking across the Baltic sea towards Eastern and Central Europe. As of today we have about nine prospects outside Scandinavia.
You are very bullish on Eastern Europe. Can you tell us a bit about IP TV potential in that region?
Well, apart from the specific large IP TV deployments like France Telecom, Telefonica, Fastweb, PCCW, certainly the strongest growth is in Eastern Europe. For us also Eastern Europe represents the largest growth area. We are seeing a lot of growth in Russia, Estonia, Latvia and Slovenia. Obviously they are putting an infrastructure in to those countries that is driving IPTV. In addition, there is not a strong cable and satellite presence. So there is not so much competition.
You are a UK based company. What is the current status of IPTV market there?
In general, IPTV market in UK has been slow in comparison to other areas of Europe. The major reason is the dominance that Sky, the biggest satellite TV operator, holds in the market. With Sky having such a strong influence on both the content and broadcast, it becomes difficult to come in with a competitive offering.
How many subscribers are we talking about in the UK?
There are under 100,000 IPTV subscribers in UK at present.
We have over 10 deployments worldwide. They are mainly in Europe. We have some in Asia. We have Jazztel in Spain, Latvia Telecom, Georgia Telecom and Blockbuster in Israel as our customers.
In terms of the cumulative shipments, where do you stand at present?
We have shipped capacity of over 500,000 subscribers worldwide.
Who do you typically compete with in the RFPs?
We are mainly shortlisted with Alcatel and Nokia-Siemens.
Your undersatnding of Orca's market share in IP TV middleware?
By subscribers numbers, we are almost third in Europe.
When we talk of middleware in the IP TV context, we usually mean the server side. In the cable industry, however, most of what is called middleware is pure set top box software client, which is mainly an operating system for the set top box itself. In IP TV space also, most of the set top boxes already come with some kind of a standard software running on it whether it is Linux or other OS. It runs browser and APIs and therefore lot of the times the application itself. For the sake of convention though ... in the cable world the middleware is the full blown software for client side only. The IPTV world middleware on the other hand is mostly server side.
Set top boxes in DTH and Cable TV segments are already commoditized to an extent. IP TV set top box on the other hand could be saved from commoditization if there is a flow of new applications.
The IP nature of the IP set top means that it is a network device rather than a point TV device. This will tend to give it a longer life and more ways to differentiate than the cable set tops. Even cable set tops are beginning to have IP capability so that they can communicate with other devices as well. Up until a couple of years ago it was a closed environment. It was just the entertainment device.
IP TV Encoder Market, a brief report announced today by iLocus forecasts IPTV encoder equipment to generate $845 million per year by 2011. The report reveals that the present annual market size of IPTV encoder market is $53.1 million (April 2006 to March 2007).
Among the vendors Tandberg leads the market while Harmonic is ranked at number 2. EMEA was a strong region for the IPTV Encoder market during April 2006-March 2007. Revenue estimates for North America were $10.1 m; Asia Pacific and EMEA accounted for $16.8m and $26.2m respectively for the said period.
Can you brief us on your activities in IP TV market?
Bitband has been active in the nascent IPTV market for the last seven years. We started early on with an on demand video delivery platform specifically developed for the IP networks.
In terms of geography where can we find most of your installations?
We have half our installations in Europe, other half is equally split between US and Asia.
What IP TV product do you offer and what specific strategy have you adopted to address this market?
We are a provider of IPTV digital headend products. Our focus is delivering full solutions. At our core we have a multi-channel multi service delivery platform that allows a lot of customization from service provider end as well as end customer side. Our core product is streaming gateways that allows you to scale up- basically put together a full channel line up of Standard Definition( SD) and High Definition( HD) channels over an IP network.
How has your product evolved so far?
Our product evolution has been one of encoding and transcoding MPEG-2 to a lower bit rate or to a constant bit rate for the networking side.
An integrated SBC for voice and TV services .... that would be a step toward a universal CSCF (IMS lingo). Satellite channels are typically transported down in MPEG2 format. For IP TV, you have to convert MPEG2 feeds into MPEG4 to gain compression efficiency to go over an ADSL network.
In the early days of this market that is what used to happen. What companies used to do was to decode the MPEG2 back to base band and re-encode an MPEG4: a bit like what they used to do in the VoIP world … convert VoIP into TDM and then again TDM to VoIP for the purposes of peering.
Over the last couple of years, there has been a move from customized solution (phase 1) to open platform solution (phase 2) in the IP TV market. In the first phase the challenge that the market had was to really make television work over the broadband infrastructure. The challenge was: can robust television services be delivered over a broadband IP network.
In that phase a number of unique close systems were designed to enable the early adopters to go to market with a robust set of TV services. That was the right thing to do back then because all the constituent parts were not mature yet. There were so many moving parts in a way that it was better to really focus on a closed set of permutations. Further in phase one of the market, there were issues to do with QoS, video compression, multicast features, fast channel change features, and selection of set top boxes. Those bits have been ironed out now.
This is what I have been hearing from vendors recently:
Eastern Europe : will draw a great deal of attention in the coming years since the region now has a good IP infrastructure, and a number of digital TV providers already exist in the market.
Japan: will grow very fast due to favorable environment for deregulation, consumer behavior, competition, and access to capital.
US: will continue to be stymied until carriers switch from non-scalable Microsoft platform!!!!
Western Europe: already well addressed by vendors and service providers
Other new regions: China and US will become hot markets with the predictable migration of cablecos to hybrid cable / IPTV offerings.
In order for the telcos in North America to compete against the cable operators, the IPTV technology has to be really mature and be feature rich. You have in North America to offer HD and PVR if you want to compete against cable. Only now with the nextgen set top boxes is it possible for an operator in the US to offer HD and PVR and deliver the services over their bandwidth constrained ADSL networks. On the other hand, in rural America, cable is not as strong as the cable operators have not invested as much.
In Europe you do not have a strong cable presence. IP TV in Europe would sell even if it offered just SD and without VOD because cable operators are not so strong there.
Companies like Alcatel-Lucent are working on system-on-chip design for set-top box (STB) whereby the STB functionality will reside inside the TV. There are both advantages as well as disadvantages in incorporating STB functionalities directly into televisions. For example, on one hand this can help operators reduce costs because they typically subsidize the STB. On the other hand, the STB technology will change much faster than the frequency with which consumers change their TVs. The consumers could therefore not be able to benefit from all the new enhancements.
There are certain new requirements in the home. There is need for a home gateway. That will be a separate item and not embedded necessarily inside the TV. The decoding capability is likely to move to the TV set. The trend we see is that certain bits of the set top box functionality will move inside the TV. The other bits of functionality will become richer and more powerful and become part of a home gateway. That could be good for IPTV because the cost for installation of IP TV will come down overtime. At the same time, functionality of the home gateway will enable new applications including wireless capability.
Home entertainment solutions, such as the PlayStation, Xbox and Wii, are enabling services that could bring them in direct competition with IP set-top boxes. Today most IP STBs do not offer gaming at the level proposed by any of the Home Entertainment Solutions (HESs) like Xbox or Wii. Going forward there are two ways to look at it.
Either the HESs are going to become STBs or the STBs are also going to have HES features. It is expected that Sony and Microsoft will have their HESs also become reasonably priced STBs. Microsoft has already announced this type of plan and their announcement of Mediaroom (merger of their IPTV middleware and the Mediacenter) is certainly taking us in that direction.
Flash could become part of set top boxes as it is a very good substitute to HTML or other user interface presentation layer. In France, Free makes YouTube-like channel available to their IP TV subscriber that allows subscriber to upload their home-made videos to a specific Free channel, and it is all Flash based.
Flash has a video codec that can be used in IP TV offering. However, Flash was not originally designed for video so it requires some work to do this properly (Bluestreak does a good job at it). And Flash is proprietary so that there are interoperability and scalability issues if used in a video environment that is very non-heterogeneous such as the mobile video world.
Minerva has been involved in video-over-IP space since late 90’s. The company is one of the pioneers in the world of IPTV. The main product Minerva sells is iTVManager. iTVManager has two components: middleware and applications. Applications include EPG delivery, pay per view, video-on-demand, PVR etc. The middleware itself has two components: a back office server component and a client component that resides on the subscriber’s set-top box.
A bit about Minerva’s background?
We have been traditionally engaged on two major fronts: video processing (i.e. video encoding and transcoding systems) and service delivery (i.e. middleware and applications). Over the past couple of years we have been morphing into a pure software infrastructure vendor.
Which geographic region are you mainly focused on?
Our initial focus was in the United States, targeting small and medium size independent operators. We are now gaining significant traction with large operators in Canada, the United States, Latin America and Europe.
Can you share some numbers with us related to your deployments?
We have over 120 installations worldwide. Surewest, one of our customers, has the largest IPTV deployment in the US. Large operators in both North and South America will launch services by the end of the year, significantly boosting the number of subscribers enjoying television services powered by Minerva software.
If we are to believe what they say, then China is going to be the largest IPTV market soon. Microsoft seems to have delayed IP TV plans of many including AT&T and BT. France Telecom’s subscriber take-up seems to have slowed down a little while Telecom Italia is finding it hard to get the service launched. Even the trail blazer Fastweb admits to a modest subscriber number of 170k or so. But China also has certain challenges to overcome before it dominates the IP TV scene. An important issue is the proper structuring of AVS (China’s homegrown Audio Video Standard) eco-system there.
The Chinese government has understood that the MPEG-LA royalty scheme is a very expensive proposition for China. It has instead put its weight behind an alternative to MPEG-4 but the players will need to iron out the standards quickly because the more non-AVS solutions are deployed the more difficult it will be to backtrack. The IPTV vendors who do both MPEG-4 and AVS will do better simply because the customer has the choice. Envivio, for instance, has a working partnership going with all major Chinese integrators (Huawei, UTS and ZTE) with their AVS encoders and they are being trialed by all of the major Chinese telcos.
favourable terms that a household ends up with 2 TV services. The reality, though, is that as the introductory bundle pricing expires, customers are likely to settle for a single service. In the long term, the economics have to work both ways – the consumer will migrate to the best value and the operator has to offer profitable services. The consumer may end up with a combination of IP-only or IP plus cable or terrestrial. From their perspective, the delivery infrastructure is less a concern than the level of service and the richness of the TV service. 
applications that can support five nines did not exist until ATCA availability. And ATCA availability goes back a couple of years. 
networking from day one. We enable real-time opinions and real-time ratings and multiple ways to communicate around the content. 
also becoming a big factor especially in IPTV services. These are the three major VoD content forms that are popular with IPTV users but none of these three are IPTV specific only.
Search is all down to relevance and accuracy. The existing search engines were developed for text search and are optimized for textual web pages. Video search engines are optimized for analyzing all the components – moving pictures and sounds. This is where the technology from Blinkx comes into play. Our technology literally watches and listens to the video. We are able to understand frame by frame what is inside that video. That understanding allows us to deliver higher accuracy level and position on the video searching. 
Most people basically said WiFi is unreliable technology and we are able to make it reliable enough to be used as a utility. 
