IPTV

As a technology, IPTV is not difficult to understand. It involves broadcast content being streamed over a broadband IP network, rather than a traditional analogue or the more advanced digital terrestrial transmission methods.

The integration with other Web-based services can be seamless. IPTV promises a consolidated entertainment and internet centre - based on the common denominator of IP - where you can perform a wide range of actions, literally at the click of a button. Interestingly, the government (via its Sentech arm) is adamant that the analogue system currently in use will be done away with before 2015. Between now, and then, Sentech should be migrating to a digital terrestrial network.

However, if the recent noise made by Telkom Media is anything to go by, the local consumer will have a mature IPTV offering promising to be far superior to a digital terrestrial network, well before this generous deadline eight years from now.

After a long period of caged secrecy over what exactly Telkom Media plans to do, this new broadcast player recently rolled out the red carpet to technology journalists. Members of the Telkom Media team demonstrated IPTV (in a limited form) in a live environment, and outlined the essential business plan.

Innovation

IBM SA`s integrated communications services manager Graham Steenkamp says IPTV offers two core benefits over the current satellite TV and analogue TV offerings.

"The first of these benefits relates to price - it should hopefully be cheaper, and the second is the `on-demand` nature of the service, allowing the viewer to watch what they want, when they want to."

Telkom Media has been piloting IPTV at its Pretoria offices for over a year, in partnership with Microsoft and Alcatel-Lucent. Visibly, it is the only South African company with a serious IPTV plan - though some of the other 17 pay-TV licence applicants also appear to have plans for the technology.

Rikus Matthyser, the chief operations and strategy director at Telkom Media, says the real beauty of IPTV lies in the innovations it brings - such as allowing viewers to upload their own home movies to the central network and invite friends to watch them.

In addition, it will be possible to give movies additional interactivity, such as instant messaging, e-commerce (where items like a movie star`s sunglasses can be ordered and purchased), and multiple camera angles of a single sports scene.

There will also be greater interactivity in advertising. Matthyser uses the example of a luxury car advert, where the user should be able to "take control" of the camera and view the inside of the car, for instance.

The IPTV broadcaster will benefit from extremely accurate stats on consumer viewing habits. Currently, the channel ratings can only be estimated and extrapolated from a relatively small number of study participants.

Evolution of advertising

This knock-on effect on marketing is something that local marketing expert Chris Moerdyk feels strongly about.

IPTV will give the consumer the freedom to manage what they want to watch and when they want to watch it, and multiple camera angles will allow the viewer to control the camera to whatever interests them, he notes. This is expected to have a significant impact on the advertising industry in South Africa.

And, as the delivery of television evolves, Moerdyk warns that it is crucial for the SA advertising industry to adapt to these changes.

"Advertising agencies will have to up their game. They will need to seriously start searching for different formats that are going to get the attention of the viewers in the future as the current methods are becoming increasingly inefficient," adds Moerdyk.

"If advertisers continue to stick with the stereotype method of creating commercials to flight during commercial breaks, advertising as such will be severely affected," Moerdyk stresses.

He points out that we do not have to look far into the future to get a glimpse of what the advertising industry is up against. The introduction of the MultiChoice PVR has revealed that in the future, fewer people will physically sit through commercial breaks:

Unlike its US comparison TiVo, the PVR comes with the "ad-skip" function disabled; though one can, of course, fast-forward through pre-recorded content. Many wonder whether it is just a matter of time until the PVR allows a person to skip through all adverts, even when watching live TV.

But Moerdyk says that traditional broadcast advertising is having less and less of an impression on the viewer, in any case. "Research in Holland shows that 72% of viewers do not take notice of traditional TV commercial breaks at all."

Running scared?

iWeek questioned MultiChoice (whose 20-year pay-TV monopoly is now in its final stretch) on issues around new competitors, its own video-on-demand trials, and what new innovations it will be bringing to the market to compete with the richer functionality IPTV promises, compared to satellite and PVR technology.

"We unfortunately cannot answer these [questions] at this point, given the sensitivity of where we are with regards to the licensing process," says MultiChoice`s GM of communications, Marilyn Watson.

Out of about 1.3 million Southern African subscribers, South Africa at the moment has just under 100 000 using the MultiChoice PVR service.

Moerdyk points out that these viewers have a taste of being in control of what they watch and, more importantly, when they watch it.

In line with these changes taking place in the broadcasting space, the `branded content` industry is rapidly growing, he adds.

In places where pay TV is mature (like the US, Japan and Holland), advertisers are spending relatively small amounts to create programmes in which they place their products, rather than spending exorbitant amounts creating commercials.

He adds that this content is given to networks free of charge - taking "a huge burn of the networks" which struggle to finance content that is needed 24 hours a day, seven days a week.

Trial`s findings

As Telkom stalwart, and a widely-respected industry leader, Matthyser`s reputation is certainly too good to risk on a fly-by-night venture. Having now permanently moved across to Telkom Media, he speaks with a zest of inspiration about what the future might hold, for TV, that is.

"We would launch an IPTV service about nine to twelve months after the award of the [pay-TV] licence," he says.

But whether Telkom Media gets a licence from ICASA has still not been formally decided. And, if it is to happen, it could be any time this year. But the R7.5 billion Telkom plans to invest in its new subsidiary does display a certain confidence that the licence awarding will be a mere formality.

Matthyser suggests that an IPTV bouquet should cost the consumer about R320 per month. It is obvious that significant network upgrades will have to be done at the consumer`s premises to make each individual IPTV-capable.

One of the trial`s main findings, he tells iWeek, is that the distance between the local exchange and the end-user has a significant impact on the quality of service. Michelle Garden adds that the encoding and ingestion of content has also proved to be an unexpectedly "long and challenging process".

Matthyser adds that another result from the trial is that people appreciate even the rather rudimentary features, like being able to pause, fast-forward and rewind. "A good way to watch the rugby is to rewind from the end of the game, back to the beginning - that way, at least by the time you`ve finished, your team hasn`t lost!"

Business Plan

Telkom Media will also offer a low-cost satellite option of about R100 per month, in an aggressive attempt to target the LSM 6, 7 and 8 income brackets, which Matthyser says MultiChoice has failed to penetrate due to its high prices (R440 per month).

The more extensive IPTV offering will focus on the higher LSMs, he explains.

"The business plan is that we will start pay-back in year eight of operations - that would be three years faster than DStv did it in," he notes, adding that this would equate to a critical mass of 600 000 subscribers by year eight.

Talks around content provisioning are already under way, he points out: "We have started discussions with some major international content providers."