The following article is taken from current study project “The advent of IP to TV” prepared for the School of Management and Information (SMI) at Steinbeis Hochschule Berlin by Nikolaus Reinelt, Master candidate Media MBA, Class of 2005. See here for TOC, study paper partly available on request.

Taken a long term perspective, it is most likely that [IPTV and its] nascent closed and managed networks establish on the market. Bundled Triple Play offerings will fill up customer bases of IPTV providers and lock them into prepared service packages. Main competitive advantages for IPTV providers in this scenario stem from their Walled Gardens capability of ‘one face to the customer’ billing relation and their lean back product shaping. For telcos and cablers this implies also the saving from the decline in revenues of traditional core businesses. In best case even new customers will be attracted. Cablers and other access providers have to catch up (or, in some markets, take care not to fall back) with their own service bundles and work fiercely on the deployment of interactive enhancements of their offerings if they want to stay up-to-date with the interactive scalability of IP enabled platforms.

A core driver on open systems and broadband TV will be Microsoft. The Media Center has captured a key position in their end-consumer strategy, meaning that it will be marketed strongly, not only in terms of its TV features, but also as a one-stop entertainment device. Issues of intercompabilty and interface design will determine acceptance and herefore intensity of market pull for PC oriented solutions. X-Box and Playstation will have another stake in the embrace of business models for the reconfigured media environment by finding their particular role in the comfort zones, either outranking or complementing other solutions.
Decision makers in their projections should always be aware that the attention span of customers is not endless and after having decided for one or two services, the consideration set already will be fairly well-served. The economies of attention require value capture to be understood as a function of attention scarcity. Companies will prosper, if they can realize scale and scope effects in production or distribution for an efficient allocation of the scarce attention.

For a start, in the era of participation, new media will co-exist with old. It is indeed already increasingly hard to tell when one becomes the other. True, ever more people will upload short video clips to one of the many content aggregators or contribute in peer production activities. But that is not going to substitute the creative wizardry of a Steven Spielberg or the journalistic competence and value of the BBC’s great network of reporters. Instead microchunked media will offer many possibilities for differentiation of content providers and platforms At the same time it will be contributing to the disruption of wide parts of the media landscape. Especially when hurdles for accessing broadband connected PCs will be diminished and new platforms to control value capture will emerge. As we move from broadcast model to narrowcast (or multicast and point-to-point) many interactive services or business models have to be tried out.
It is just rational that broadcasters in this shift follow a bimodal strategy. Providing contents for fluid media experiences on disparate channels is part of the larger strategic adjusting to the afore mentioned intermediary role. Cooperating with gatekeepers of the new distribution hubs (IPTV providers, payTV operators or internet start-ups), they are placing an open bet on the various modes for incorporating the audience, no matter what happens. At least they will gain time to adapt their processes and structures before the next level of convergence between PCs and televised entertainment is reached.

The difference in the advent of IP to TV compared to the days of yore of interactive television is that now, driven by technical progress and convergence, core businesses of market players are being threatened and consumer behavior has evolved in a larger context to more individualization and fragmentation. Penetration of the internet and its undisputed benefits accelerated learning and strengthened demand for true interactive services.
All trends listed in this paper already imply inherently most assets of the broad interactive television term: On-demand content, user interaction on backchannel, Walled Garden services, EPGs and others. IPTV can thereby under many aspects clearly be considered as interactive Television. Taken the fact that iTV is an umbrella term for any form of interactivity involved with television sets, it does not surprise that there are more than 50 definitions attached to iTV and nearby topics. The view held here is that true interactive television puts needs of viewers for interaction through an enhanced television experience in the middle. An interaction that is executed by an integrated backchannel. Interactive television over IP is, due to its disruptive nature and its technical proximity to the internet, a promising approach to solve the situation between broadcasters/distributors/CE-manufacturers that paralyzed many markets for a long time.
IPTV is as such interactive TV although not through the backdoor – it will be coming to homes right next to its own backchannel.

Lately i found a decent approach to conceptualize business logics, that lay within TV over IP solutions. Munich´s university LMU is researching with their project intermedia in this realm. They´re approaching the convergence topic with an interdisciplinary team from economics, communication and computer sciences. Particularly interesting for me is the economic and organizational perspective, namely represented by Prof. Picot, who is well renonwed for his work in information technologies impact on organizational structure (note for example his last book on virtual cooperations.)

Business web of MSTV TV over IP solution (Intermedia LMU Munich 2005)

In this illustration, the grade of stickyness to the technical IPTV solution in the regard of being a core business or strength is been descriped as shaper>adaptors (inner/outer) and independent adaptors (affiliates).
Opposite to the MS business web, Cisco’s efforts to build an propriatary network looks like this.

For more on MSTV’s strategy and their ‘ecosystem’ see this article (german).
Complete, very clear and comprehensive presentation can be found here.

The following article is taken from upcoming study “Global IPTV: Learning from Industry Leaders” published by sapient and thebrainbehind (tbb). More on this comprehensive and in-depth overview of the fast growing IP-TV business segment and order forms on tbb´s studies homebase.

“Today the boundaries between inner and outer forces of the media are confused. And our four-century preoccupation with print has fixed our attention on so limited an aspect of the media that we find it very hard to release our attention to the whole range of media influence. What I wish to show is that today we experience, in reverse, what pre-literate men faced with the advent of writing.”

When Marshal McLuhan predicted in `55 the bluring of the industries borderlines, he could only see a first sketch of what was about to begin. His assumptions and theories based on the advent of televised media and wired, instant communication finally comes to deploy it´s potential, half a century later: After years of hype, TV over the net now comes into its own. With landmark steps as Disney/ABC´s ice-breaking coorperation with iTunes, Time Warner´s “In2TV” and the BBC´s archive opening (IMP), 2005 might well find it´s entry to history as a siginificant year of media evolution. “The damn has broken”, as Intels CEO Paul Otellini stated recently. The Giants decisions to leverage the webs distribution power fully pushed the whole marketplace in an irreversible process of change.
However, those industry news are still only the peak of what we can see. Beyond the frozen surface, aside corporate media´s own newsflash there is another, even broader shift underway. Grassroot type of media and entertainment production brings the real revolution to consumers homes.
The ‘Pew Internet & American Life Project’ determined, that half of all teens in the US have created a blog or webpage, posted original artwork, photography, stories or videos online or remixed online content into their own new creations in the last year.
Terry Heaton – an US broadcast industry expert – calls this ‘the unbundled awakening’.

“This awakening of creativity among our youth — and their ability to do something with it — is the essence of what’s known as Web 2.0. We’ve moved past the early adopter stage with young people, and that will continue to flourish next year.”

The massive growth in participatory media is also shown evidently in the most recent numbers of Blogsphere´s prefered watchtool: Technocrati.

Source: http://www.sifry.com

Due to the service 50.000 posts are submitted every hour. This gives a glimpse of the potential in this field. More, the unassailable power of broadcasters in dominating eyeballs and advertising spendings is suddenly in question.
February 9th, one of the most popular vlogs, Rocketboom accomplished a thoroughly observed bidding process for ad space targeted to it´s daily viewership of 130.000. They met their planed reserve of $40.000, which equals $8000 (CPM $62). A reasonable price for up to one minute of advertising, compared to an average CPM of let´s say Channel 4´s ‘The Daily Show’ comes to round about $1050. Plus: Production costs are included in the new incumbents offerings!
It is just a question of time, that the yield management of such hand-made media becomes mature. Meanwhile for many other independent home producers it´s no longer off-limits to think about ways of capitalizing their creativity and the interest of their audience in it. Deals of pioneering Rocketboom with Tivo and Akimbo give them hope, to be able to compete with traditional media, especially in their own niche. And new startup content aggregators as Brightcove, Ourmedia or Mefeedia get a buzz, whilst they work fiercely on developing solutions to make multicast videowonderworld happen. The significance to established companies is exemplified in AOL´s/IAC´s Brightcove $16.2m engagement, which put Barry Diller in charge of the video distributer in spe. The service, which still is under development, will create a seamless flash based (and thus browser/plugin agnostic) integration to websites and has already announced a long-term partnership with Old Media´s Gem the New York Times and their lately acquired about.com site.

What we experience now is a overwhelming change in both demand and supply side, that thrive on the ‘ecosystem’ to unseen levels of complexity and dynamic evolvement. It is this reverse process McLuhan reffered to. Surely it is confusing sometimes, but in our opinion, by all complementary and network effects employed, it will result in overall growth of televised media.