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| IPTV in Asia: Making a splash |
Craig Stephen, Total Telecom magazine Issue: 29, 01 July 2005
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This year's America's Cup represents not just the stage for the world's premier yacht race, but also Alcatel's attempt to make a splash in the content market, having bought exclusive worldwide new media rights. It is another clear sign that telecoms vendors and operators are upping the ante for the biggest content plays to fill their fixed and wireless broadband networks.
"This removes the risk for operators of buying content and building infrastructure," said Michel Levy, Alcatel's vice president, marketing and business development, at the Broadband World Forum Asia in Yokohama in June.
The America's Cup deal extends Alcatel's content play by offering broadband multimedia services to a wider carrier group, particularly throughout Asia Pacific. "We are talking to all mobile operators in Asia Pacific," said Levy. "This year there is also a Chinese team taking part."
In another example of telecoms companies making significant inroads in content, Softbank in Japan scored a first in Asia when it secured over 5,000 film titles from major studios including Fox, Universal Studios and Dreamworks for its video on demand services in Japan. They have been offering the services for two years now.
"Deals can be done provided the right content protection is in place," said Ivan Verbesselt, vice president of Alcatel's entertainment unit.
Alcatel has developed a mobile kiosk platform that enables live and fully interactive viewing of the 32nd America's Cup race from mobile phones or Internet browsers. The contest and even individual yachts can be followed from multiple camera angles, and there is also video on demand and an accompanying interactive 3D video game thrown in.
Service providers can pick and choose what level of services they want: LA7, a TV broadcast subsidiary of Telecom Italia Media group, for instance, has signed up to offer live video streaming of the race to its 3G customers' phones.
Levy says traditionally Alcatel has focused on SMS and MMS alerts, with its mobile kiosk services targeted at tier two or three carriers that lacked the scale to negotiate content deals. But the latest, more ambitious project builds on the expertise gained from buying MNC, a mobile applications provider in July last year.
Levy would not reveal how far the network vendor would proceed as a content aggregator, but said over 100 carriers use its first generation mobile kiosk services.
According to Hass Aminian, president of sponsorship consultancy Redmandarin in Asia Pacific, delivering content in flexible packages will be increasingly important. "The consensus view is broadband wireless applications will be driven by news and content that allows immediacy and interaction," he says.
The potential of sport and new media was also put in the spotlight at the Broadband World Forum by Zhang Chunjiang, chairman of China Netcom and formerly a vice minister of telecommunications regulator the Ministry of Information Industry.
He said China's goal was to use the Olympics in Beijing in 2008 to boost broadband, and the country had hoped to show live multicasting of the games.
"However, unfortunately the IOC has said no in order to protect the interests of television broadcasters," said Zhang.
Such rulings present content conundrums for new media advocates.
"When is a TV set a computer and not a TV, and when is a mobile phone a TV?" asked Michael Payne, marketing and broadcast rights director for the Formula One Group during the recent meeting of the Asian Broadcasters Association.
Zhang's IOC complaint represents an obstacle the telecoms industry must overcome to persuade content owners to embrace new broadband platforms. As operators lay plans for IPTV or mobile television services, they will increasingly come up against the entrenched interests of incumbent broadcasters.
Moreover, some in the content industry remain sceptical of broadband delivery, still smarting from free peer-to-peer downloading of music files (see story, p.28).
"The content industry needs to see that broadband availability boosts revenues to provide an incentive to join," said Christian Unterberger, president, fixed networks at Siemens Communications.
"Piracy protection is still the primary concern of content owners," said Jeffrey Soong, CEO of Broadband Networks, a Hong Kong based IPTV consultancy.
But Soong argues content owners are introducing more packages to suit the need for telcos to offer more flexible service offerings on their large capacity IP-based networks. "Discovery Channel is now running 21 brands covering health, science, travel, etc. These (cover) 90 different channels. HBO has also added multiple brands and signature channels," he said. "PCCW in Hong Kong can carry in excess of 200 channels, and allows viewers to purchase a la carte programming rather than the usual 'take it or leave it' cable smorgasbords."
The difficult part for telcos is calculating whether more content means more profits. According to Soong, telcos must accept that television content is a long-term business. "Star TV in Asia took eight years to break even," he said.
Consultancy Media Partners Asia estimates Star TV, which is part of News Corp., is now the largest cable and satellite broadcaster in Asia by subscribers, and that its revenue will grow 16% to US$475 million in 2005 with EBITDA reaching US$109 million.
The IPTV market is still young, but one of IPTV's pioneers, PCCW, is showing encouraging signs. PCCW has rolled out 67 channels in 18 months on its NOW service and has over 400,000 customers to date. TV services were initially seen as a defensive move by the incumbent to shore up its broadband subscriber base. On that basis PCCW can point to a churn rate that is now less than 1%. In March, it reported that 53% of its 361,000 subscribers paid an average of HK$105 (US$13.50) per month for content services over and above basic Internet connections.
Some operators like Hutchison Global Communications, are providing network services for television content providers. At the Yokohama conference, Galaxy Television said it will use Alcatel's IPTV solution to re-launch its pay-TV service on HGC's broadband network in Hong Kong. Earlier attempts using satellite delivery mustered only 40,000 customers due to access difficulties within the territory's apartment blocks.
The two partners will cooperate with sales and bundling of products, explains a spokesperson for HGC. "We will be jointly marketing the TV service along with our own broadband, so there is co-branded advertising, single sales outlets and a single bill for customers," she says.
Not far behind television, gaming was highlighted at the Broadband World Forum as a key source of content where publishers are more than happy to embrace broadband delivery.
According to Yoav Tzruya, vice president, products and marketing strategy at Extent Technologies, online gaming works for both games publishers and telcos.
One reason for the gaming industry's support for online delivery compared to the movie industry is that piracy is not as big an issue. "Each game has a three-month window," said Tzruya. Broadband also grows the market by taking gaming from a niche audience to mass market.
Games can both reduce telcos' churn and lead to the adoption of higher bandwidth packages, claims Tzruya. He produced statistics based on research carried out by Extent on a sample of its carrier customers already using premium gaming content. This revealed that premium gaming customers were 75% less likely to churn on access service and spent an average of 30 hours gaming a month.
Tzruya claims that for every $10 in customer acquisition costs, it generates $100 in revenues. Total worldwide gaming revenues are currently US$30 billion, according to Tzruya. Surpassing the movie industry, these numbers could be hard for telcos to ignore. However, amongst the sample of telcos for Extent's research, only 2.5-3% of subscribers had signed up to premium gaming services, indicating that the service is unlikely to have the same broad pull as television for customers.
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| About Broadband Network Systems:
Headquartered in Hong Kong, and serving a diverse array of broadband service providers including telcos, cable systems, hospitality movie networks, and community and building service operators, Broadband Network Systems Ltd. (BNS) is a technology integrator, content aggregator, and solutions provider to broadband networks offering advanced value-added services such as video over IP
Media Contacts:
Anke Gill
Marketing Communications Manager
BNS Ltd
+852 90318036
agill@bnsltd.com
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