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The Role of Standards in the Diffusion of IPTV in Western Europe

The Role of Standards in the Diffusion of IPTV in Western Europe

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Published by Bert Kok
MBA Thesis about the role of standards in the diffusion of IPTV.
MBA Thesis about the role of standards in the diffusion of IPTV.

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Published by: Bert Kok on Nov 01, 2010
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The  role  of  standards  in  the  diffusion  of  IPTV  in  Western  Europe  

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Index  
  Index ....................................................................................................................................................... 2   Abstract................................................................................................................................................... 3   Acknowledgements................................................................................................................................. 5   Research  project ..................................................................................................................................... 6   Part  1:  The  world  of  IPTV ...................................................................................................................... 10   1.  1   1.2   1.3   Interactive  TV:  IPTV  versus  WebTV  (walled  garden  vs.  open  garden) .................................. 11   The  evolution  of  (IP)TV.......................................................................................................... 13   The  IPTV  value  chain  and  landscape ..................................................................................... 15  

Part  2:  The  diffusion  of  IPTV ................................................................................................................. 19   2.1   2.2   2.3   The  current  position  of  IPTV  on  the  diffusion  curve ............................................................. 20   The  diffusion  of  (interactive)  innovations ............................................................................. 23   Factors  (theory)  about  the  diffusion  of  IPTV......................................................................... 24  

Part  3:  Our  research.............................................................................................................................. 28   3.1   3.2   3.3   3.4   3.5   3.6   Data  collection ...................................................................................................................... 29   Results  of  our  quantitative  research ..................................................................................... 31   Results  of  our  qualitative  research  (interviews) ................................................................... 35   Conclusions ........................................................................................................................... 37   Reflection .............................................................................................................................. 39   Suggestions ........................................................................................................................... 41  

Appendices............................................................................................................................................ 43   Appendix  1:   Reference .................................................................................................................. 44   Appendix  2:   Interview  questionnaires .......................................................................................... 46   Appendix  3:   Survey  results ............................................................................................................ 48   Appendix  4:   Interviews.................................................................................................................. 60  

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Abstract  
  The  diffusion  process  of  IPTV  (as  opposed  to  Web  TV)  progresses  slower  than  most  who  are  involved   in  IPTV  expect  and/or  predicted.   For  our  master  thesis  at  the  MBA  Crossmedia  (Lemniscaat  School  of  Management)  we  decided  to   investigate  why  the  IPTV  diffusion  is  progressing  slower  than  we  expect  and  what  factors  are   influencing  this.  Because  we  expected  a  resemblance  to  the  diffusion  patterns  of  technological   innovations  like  VHS/BetaMax/V2000,  DVD-­‐A/SACD  and  HD-­‐DVD/Blu-­‐ray,  which  were  settled  after  a   standards  war,  we  decided  to  focus  on  the  role  of  standards  in  the  diffusion  of  IPTV.   We  started  by  investigating  if  this  subject  had  already  been  studied  earlier,  but  could  not  find   anything  on  the  role  of  standards  with  regard  to  IPTV.  We  therefore  formulated  these  two   hypotheses  to  scope  down  our  research:   Hypothesis  1:  The  primary  reason  for  the  slow  adoption  of  interactive  TV  (and  therefore  IPTV)  by   consumers  is  the  lack  of  useful  content/applications/services   Hypothesis  2:  The  primary  reason  for  the  lack  of  useful  content/applications/services  for  IPTV  is  the   reluctance  of  publishers  to  provide/develop  such  content/applications/services  because  they  are   unaware  of  the  possibilities  and  held  back  by  the  technological  complexity,  the  plethora  of   (middleware)  platforms  and  the  absence  of  a  dominant  standard.   Or,  in  a  more  visual  representation:  

    After  studying  relevant  theoretical  material,  we  found  a  lot  of  studies  regarding  technological   innovations  and  diffusion  patterns,  mainly  based  on  the  works  of  Everett  Rogers.  From  these  works   we  concluded  that  the  diffusion  curve  for  interactive  innovations  has  a  steeper  slope  than  those  of   other  innovations,  which  means  that  it  is  harder  to  reach  critical  mass,  but  the  adoption  rate  goes   quick  once  critical  mass  is  reached.   By  studying  the  number  and  growth  of  IPTV  subscribers  in  Western  Europe  since  2001,  we  verified   that  IPTV  is  still  in  the  early  stages  on  the  adoption  curve.  To  find  out  why,  we  conducted  an  online  
The  role  of  standards  in  the  diffusion  of  IPTV  in  Western  Europe  

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  survey  to  investigate  the  views  of  IPTV  related  companies  and  conducted  interviews  with  relevant   players  from  the  industry  and  publishing  companies.   In  our  survey  we  found  support  for  our  first  hypothesis:  consumers  regard  the  absence  of  relevant   content,  applications  and  services  as  the  main  factor  for  the  slow  adoption.  Of  course,  the  behavioral   change  that  is  needed  to  convert  the  TV  from  a  passive  medium  to  an  active  channel  also  plays  an   important  role  and  takes  time.   Our  findings  with  regard  to  the  second  hypothesis,  the  role  of  standardization,  were  less  supportive   of  our  hypothesis.  We  found  that  the  lack  of  a  valid  business  model  is  the  primary  reason  for   publishers  not  to  invest  in  content,  applications  and  services  for  IPTV.    Even  though  standardization  is   seen  as  an  important  factor  (bottleneck),  the  industry  shows  a  reluctance  to  standardize  the   (middleware)  platform  if  this  means  abandoning  past  investments  (sunk  cost)  or  strategic  alliances.   As  we  found  in  studies  regarding  adoption  curves  of  innovations,  a  disruptive  innovation  can  cause  a   radical  speedup  in  the  diffusion.  This  circumvents  the  (lack  of)  platform  standardization  by  shifting   towards  application-­‐  or  service  standardization  due  to  customer  demand/expectations.  Our  hope  is   on  (low  interactive)  services  like  YouTube  integration,  Video  on  Demand  (including  “Uitzending   Gemist”)  and  remote  PVR  to  become  widely  accepted.  This  will  at  least  provide  the  (broad)   infrastructure  for  interactive  services,  so  new  applications  and  services  can  emerge.  Amongst  them   may  be  new  breakthrough  innovations  that  accelerate  the  diffusion  of  (real)  IPTV.   Based  on  our  research  findings  we  feel  that  a  quick  breakthrough  of  IPTV  in  the  near  future  is  not   very  likely.  We  expect  WebTV,  which  is  less  affected  by  the  factors  we  found,  to  have  a  better  chance   of  conquering  our  living  rooms.  The  openness  and  less  restrictiveness  of  WebTV  may  result  in   different  (unanticipated?)  use  of  the  technology,  which  could  lead  to  more  disruptive  applications   and  services  for  interactive  TV.  

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Acknowledgements  
  A  lot  of  people  have  contributed  to  this  master  thesis.  Our  special  thanks  goes  out  to  our  supervisor   Erik  Huizer,  professor  at  the  University  of  Utrecht  and  professor  Steef  Peters  of  the  Lemniscaat   School  of  Management.  Of  course  we  would  also  like  to  thank  our  partners  Annelou  Aalders  and   Dorien  Turk  for  their  great  support  and  patience.     Prof.  Dr.  Ir.  Erik  Huizer   Prof.  Steef  Peters   Dr.  Lidwien  van  de  Wijngaert   Alexander  Schultz-­‐Heyn  (chairman  Deutscher  IPTV  Verband)   Hans  Broekhuis,  Tele2   Marcel  Kuil,  Rabobank   Bart  van  Oortmerssen,  AD   Robert  Timmer,  Philips   Bram  Tullemans,  NPO   Gartner   LinkedIn  groups   Annelou  Aalders   Dorien  Turk  

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Research  project  
  Research  objectives   The  diffusion  process  of  IPTV  (as  opposed  to  WebTV)  progresses  slower  than  most  who  are  involved   in  IPTV  expect  and/or  predicted  (IDC  press  release  “European  Telcos  Become  Entertainment   Providers  Through  Launch  of  IPTV  Services”,  2005;  iSuppli  predicted  in  August  2006  that  global  IPTV   subscribers  would  grow  to  slightly  more  than  63  million  in  2010  (compound  annual  growth  rate  of   92.1%),  while  the  Multimedia  Research  Group  forecast  in  October  2006  that  global  IPTV  subscribers   would  grow  from  4.3  million  in  2005  to  36.8  million  in  2009  and  to  50.5  million  in  2010.  In  Western   Europe,  Gartner  (April  2006)  forecast  that  the  IPTV  subscriber  market  would  reach  3.3  million   subscribers  in  2006  and  16.7  million  in  2010.)  In  reality,  we  found  all  these  forecasts  to  be  optimistic   (chapter  xx).   For  our  master  thesis  at  the  MBA  Crossmedia  (Lemniscaat  School  of  Management)  we  decided  to   investigate  why  the  IPTV  diffusion  is  progressing  slower  than  we  expect  and  what  factors  are   influencing  this.  Because  we  expected  a  resemblance  to  the  diffusion  patterns  of  technological   innovations  like  VHS/BetaMax/V2000,  DVD-­‐A/SACD  and  HD-­‐DVD/Blu-­‐ray,  which  were  settled  after  a   standards  war,  we  decided  to  focus  on  the  role  of  standards  in  the  diffusion  of  IPTV.     We  started  our  research  from  the  consumers  (end-­‐users)  point  of  view.  Our  guess  was  that  the  lack   of  adoption  (besides  the  lack  of  knowledge  of  the  technology  and  its  applications  in  general)  was  due   to  the  lack  of  useful  applications  and  services that  are  generally  provided  by  publishers.  These   publishers  however  are  reluctant  to  invest  in  IPTV,  either  because  they  do  not  know  (enough)  about   the  existence  and  possibilities  of  IPTV  in  general,  or  are  held  back  because  of  the  scattered   (fragmented)  landscape  of  platforms  for  which  they  have  to  develop  their  applications  and  services.   We  started  this  research  because  we  strongly  felt  that  there  is  a  distinct  correlation  between  the   adoption  rate  of  IPTV  (by  consumers),  the  content,  applications  and  services  that  are  being  exposed   (by  publishers)  and  the  absence  of  a  dominant  platform  standard  (used  by  telco’s  and  cable   companies).    

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  In  other  words:    

    We  were  strengthened  in  this  hypothesis  by  looking  at  similar  struggles  in  neighboring  fields  like   video  standards  (VHS,  Betamax,  V2000),  HD  audio  (Super  Audio  CD,  HDCD,  DVD-­‐Audio),  mobile   communications  (NMT,  GSM)  and  HD  video  (HD-­‐DVD,  Blu-­‐ray  DVD).   Typically  in  these  cases,  technological  companies  start  by  introducing  rival  technologies,  hoping  to   set  the  standard,  thereby  sending  out  a  mixed  message  (doubt)  to  other  companies  and  end  users,   resulting  in  reluctance  to  adopt  by  other  companies  in  the  chain  and  consumers  in  particular.  In   these  examples  critical  mass  was  not  reached  until  the  “standards  war”  was  decided  on.  General   acceptance  however  accelerated  quickly  after  a  standard  became  dominant.   Prior  to  our  research,  having  peeked  at  some  of  the  possibilities  IPTV  can  offer  as  part  of  the  media-­‐ channels  that  we  have  at  our  grasp,  we  had  a  hunch  that  the  technical  possibilities  might  be  limiting   the  progress.  After  diving  in  some  more,  we  found  that  the  technology,  in  general,  is  ready,  but  the   landscape  is  scattered  with  proprietary  solutions,  platforms,  semi-­‐standards  etc.   In  our  study  we  investigated  how  players  in  the  IPTV-­‐  or  IPTV-­‐related  industries  are  looking  at  this   situation  and  if  they  are  willing  to  comply  to  facilitate  faster  growth.   For  our  research,  we  broke  the  general  hypothesis  down  into  two  parts:   Hypothesis  1:  The  primary  reason  for  the  slow  adoption  of  interactive  TV  (and  therefore  IPTV)  by   consumers  is  the  lack  of  useful  content/applications/services   Hypothesis  2:  The  primary  reason  for  the  lack  of  useful  content/applications/services  for  IPTV  is  the   reluctance  of  publishers  to  provide/develop  such  content/applications/services  because  they  are   unaware  of  the  possibilities  and  held  back  by  the  technological  complexity,  the  plethora  of   (middleware)  platforms  and  the  absence  of  a  dominant  standard.   Our  main  goal  is  to  explore,  investigate  and  draw  conclusions  on  the  role  of  standards  in  the  diffusion   process  of  IPTV  in  Western  Europe.  

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    Relevance   The  results  of  our  research  are  of  importance  to  stakeholders  involved  in  the  IPTV  area,  ranging  from   telecommunications  companies,  broadcasters,  content  production  companies  and  publishers.  Much   money  is  lost  if  a  technology  fails  to  see  success.  Even  more  money  is  lost  in  the  battle  for  setting  a   standard.  Several  respondents  to  our  survey  and  the  participants  in  our  interviews  have  expressed   their  interest  in  our  findings.   In  addition  to  investigating  the  relationship  between  (the  lack  of)  standards  and  the  speed  of   diffusion,  we  also  provide  suggestions  that  could  help  speed  up  the  adoption  process.     Approach   For  our  research  we  decided  on  the  following  approach:   -­‐ -­‐ -­‐ Desk-­‐research  on  the  world  of  IPTV   Literature  study  on  the  diffusion  process  of  (interactive)  innovations   Estimate  the  current  position  of  the  IPTV  diffusion  on  the  diffusion  curve  by  researching  the   curve  and  comparing  to  similar  technology  diffusion  curves   Use  the  Technology  Acceptance  Model  (TAM)  and  the  research  of  Baaren  et  al  (Baaren  et  al,   2009)  regarding  the  underlying  factors  which  lead  to  Perceived  Usefulness  (PU)  and   Perceived  Ease  of  Use  (PEOU)  to  find  out  which  factors  influence  the  diffusion  process  of   IPTV   Do  a  survey  amongst  IPTV  providers  to  investigate:   o the  view  of  market  players  on  these  factors   o the  view  of  market  players  on  the  role  of  standards   o the  level  of  standardization   o the  intentions  (strategy)  of  market  players  in  the  coming  years  with  regard  to   standardization  (willingness  to  comply)   -­‐ Do  interviews  with  key  (publishing)  players  to:   o Gain  insight  in  their  views  on  the  status  of  IPTV   o Gain  insight  in  their  opinion  with  regard  to  the  role  of  standards   o Test  our  hypothesis  with  regard  to  publishers   -­‐ Analyze  the  results  to  test  whether  they  support  our  hypotheses  

-­‐

-­‐

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  -­‐ -­‐ -­‐   Draw  conclusions  from  the  results   Reflect  on  our  research  process   Add  our  suggestions  for  players  in  the  IPTV-­‐area  

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Part  1:  The  world  of  IPTV

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1.  1   Interactive  TV:  IPTV  versus  WebTV  (walled  garden  vs.  open  garden)  
  IPTV  is  a  form  of  interactive  television.  Interactive  television  is  a  technology  where  television  (one-­‐ way,  broadcast)  is  extended  with  interactive  features  (e.g.  video  on  demand,  respond  to  events  on   television  etc),  creating  a  two-­‐way  link  for  communication  and  thereby  opening  a  whole  new  range   of  possibilities  for  new  content,  applications  and  services.  Although  we  cannot  oversee  the  full   spectrum  of  possibilities  that  interactive  TV  has  to  offer,  some  of  the  most  obvious  applications  are   already  available  for  use.   Interactive  TV  can  either  be  delivered  via  Digital  Video  Broadcasting  (DVB)  or  via  the  Internet   Protocol  (IP).  There  are  generally  two  types  of  IP-­‐based  interactive  television,  IPTV  and  WebTV  (or   Internet  TV).  This  paper  focuses  on  IPTV  as  opposed  to  WebTV.  While  both  technologies  are  similar  in   many  aspects  (both  generally  use  the  IP  protocol,  are  digital,  offer  interaction  possibilities  between   user  and  broadcaster),  they  differ  in  accessibility  [Cooper  &  Lovelace,  2006].   IPTV  requires  a  set-­‐top  box,  a  subscription  to  an  IPTV  provider,  and  is  generally  distributed  over  a   private  network  in  a  distributer-­‐managed  (walled  garden)  environment,  offering  a  high  quality  of   service.   WebTV  on  the  other  hand  is  distributed  over  the  public  Internet  (open  garden),  trying  to  reach  a   global  audience  on  a  best  effort  basis.             Both  are  part  of  the  evolution  of  TV  viewing  in  general  and  the  technological  advancements  in  that   area.  The  similarities  between  the  two  approaches  show  signs  of  a  convergence  in  media  channels   and  consumption  patterns.  

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  Content,  applications  and  services   Contrary  to  DVB-­‐based  standards  for  interactive  TV,  IPTV  is  not  standardized.  This  results  in  the   absence  of  well-­‐defined  objective  norms  for  compression,  transfer  rates  and  other  facets  that   determine  the  quality  of  service.  On  the  other  side,  use  of  the  IP  protocol,  next  to  offering  a  return   path,  opens  opportunities  for  integration  with  other  IP-­‐based  services.   The  technical  possibilities  of  IPTV  make  a  wide  range  of  applications  possible,  ranging  from  (low   interactive)  applications  and  services  like  Content  on  Demand  (the  daily  news  on  your  TV,  an   interactive  Electronic  Program  Guide,  web  browsing  on  your  TV  etc),  Video  on  Demand  (You  Tube,   Rent-­‐A-­‐Video),  Personal  Video  Recorder  (PVR)  facilities,  to  a  (fully  interactive)  TV  quiz  where  viewers   can  participate  using  their  remote  control  and  much  more.   The  current  IPTV  offering  of  applications  and  services  is  still  limited.  Most  television  companies  start   their  offering  with  plain  Content  on  Demand  and  low  interactive  applications  and  services  like  Video   on  Demand  and  PVR-­‐functionality.  We  believe  this  is  mainly  because  of  the  standardized  solutions   for  this  functionality  provided  out  of  the  box  by  the  platform  providers,  but  this  is  ground  for  further   studies.    

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1.2  
 

The  evolution  of  (IP)TV  

    The  evolution  of  television  is  a  complex  process  that  involves  many  players  with  different   backgrounds.  They  have  made  contributions  to  make  television  what  it  is  today:  the  most  popular   mass  medium  in  the  world.  For  the  purpose  of  this  thesis  we  have  simplified  this  process.  We   distinguish  5  phases  in  the  history  of  television.     1. The  first  television  broadcasts   2. The  switch  from  black  &  white  to  color  television   3. From  4:3  to  widescreen   4. From  Standard  Definition  (SD)  to  High  Definition  (HD)   5. From  non-­‐interactive  to  interactive  

 
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  In  the  past  90  years  television  has  come  a  long  way:  from  the  poor  picture  quality  in  black  &  white  in   the  beginning  of  the  20th  century,  to  the  high  definition  television  with  the  possibility  of  interactivity   now.  One  of  the  most  important  turning  points  in  this  history  was  of  course  the  first  television   broadcasts  in  the  1920’s.  The  introduction  of  color  television  –  technically  first  possible  in  the  1940’s   with  mass  introduction  in  the  1960’s  –  was  another  pivotal  moment.  The  transition  from  4:3  aspect   ratio  to  widescreen  television  was  the  next  big  step.  This  transition  started  in  the  1980’s,  but  is  a   process  still  going  on  today.  In  The  Netherlands  for  instance,  widescreen  was  introduced  in  2007.   Many  other  viewers  in  the  world  still  watch  in  4:3.  The  introduction  of  High  Definition  television  in   the  1990’s  is  one  of  the  most  recent  developments.  HD  was  analogue  at  first,  digital  HD  surfaced   after  2000.  The  introduction  of  HD  has  had  a  big  impact  on  both  broadcast  television  as  well  as   storage  devices  as  DVD.  But  while  the  transition  to  High  Definition  has  just  started  and  is  still  going   on,  another  significant  step  has  been  made.  Up  till  now  television  has  been  mostly  non-­‐interactive.   The  use  of  the  remote  control  was  up  till  recent  the  most  interactive  part  of  watching  television.  But   with  the  introduction  of  IPTV  and  the  possibility  of  real  interaction  with  viewers,  this  has  changed   dramatically.  As  IPTV  spreads  television  makers  and  viewers  are  gradually  discovering  the   possibilities  of  interactive  television,  such  as  video  on  demand.   We  won’t  elaborate  further  on  the  breakthroughs  that  have  been  made  through  the  years  in  the   distribution  of  television  and  the  picture  quality.  But  it  is  clear  that  television  has  evolved  enormously   through  the  years.        

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1.3  
 

The  IPTV  value  chain  and  landscape  

There  are  different  approaches  in  defining  the  value  chain  in  a  particular  market.  Ricardo  Murer  says   in  ‘The  IPTV  Value  Chain  (April  2008):  “The  value  chain  can  be  defined  as  a  number  of  organizations,   resources  and  specific  knowledge,  all  connected  and  involved  in  creating  and  delivering  value  to  final   customers.  The  value  chain,  also  involves  production  and  sales  cycles,  as  well  as  suppliers  of  the  most   diverse  and  different  sectors  such  as  logistics  companies  involved  in  the  distribution  of  products  for  a   network  of  stores”.   So,  at  first  glance  the  value  chain  of  IPTV  seems  very  complicated.  But  after  closer  inspection,  all   involved  actors  in  the  value  chain  can  be  categorized  in  three  domains.  One  the  one  hand  there  are   the  content  providers.  The  companies  that  provide  distribution  for  IPTV  are  the  other  main  category   in  the  value  chain.  Finally,  there  are  the  customers  who  have  the  possibility  to  interact  with  both   distributors  as  content  providers.   We  have  found  that  a  much-­‐used  model  developed  by  Michael  Porter  suits  our  research  objectives.   First  of  all  the  model  is  relatively  simple.  Furthermore,  the  general  value  system  of  Porter  can  be   easily  applied  to  the  IPTV  value  chain.  The  producer  is  a  supplier  of  content  towards  the  broadcaster   and  the  distributor  who,  via  their  channels  is  able  to  buy  and  receive  the  content  (P.  Deumer,   Internet  TV  &  the  Dutch  broadcast  value  chain,  November  2008).     Single  Industry  Value  Chain   Generally  speaking,  one  company  is  not  able  to  bring  a  product  to  the  market  all  by  itself.  In   "Competitive  Advantage"  (1985)  Michael  Porter  describes  a  general  value  system  made  up  by  a   supplier,  a  channel  and  a  buyer.    

  This  ‘Single  Industry  Value  System’  can  also  be  applied  to  IPTV.  At  first  glance  the  IPTV  value  chain   looks  rather  complicated.  Many  different  actors  have  a  role.  There  are  of  course  the  telecom   operators  and  cable  TV  operators.  But  also  Internet  portals  play  a  role,  and  so  do  content  providers,   telecom  equipment  suppliers,  middleware  software  providers,  advertising  agencies  and  last  but  not   least  consumers.   The  value  chain  and  business  model  of  IPTV  is  quite  different  from  the  value  chain  of  traditional   broadcast  television  and  it  would  be  a  mistake  to  regard  IPTV  as  just  TV.  IPTV  uses  the  consumption   experience  of  TV,  but  is  actually  something  quite  different.  The  value  chain  and  business  model  of   IPTV  is  actually  a  combination  of  4  mature  models  already  in  place  in  the  market:  TV,  IP,  Telecom  and   Digital  Media.    

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    Roles   In  essence  there  are  four  roles  to  be  distinguished  in  the  IPTV  value  chain.  That  of  content  provider   (the  supplier  in  Porter’s  model),  the  service  provider  and  network  provider  (the  channel),  and  the   consumer  (the  buyer).   Schematically  this  would  look  like  this:  

(   Source:  ‘Global  Standards  of  IPTV  and  its  infrastructural  framework’,  presentation  by  Chae  Sub  Lee,  Telecommunications   Technology  Association  of  Korea)  

We  describe  these  4  roles  in  the  value  chain  as  follows:   • Content  provider  

  This  is  the  phase  in  the  value  chain  in  which  content  is  created  and  purchased  and  turned  into   a  service  or  channel.  The  amount  of  advertising  that  is  placed  on  the  channel  and  editorial   control  over  the  type  of  content  on  the  channel  is  determined  in  this  phase.  The  content  provider   provides  a  variety  of  content  for  IPTV  service.   • Service  provider     This  is  the  part  in  the  value  chain  in  which  channel  services  are  aggregated  and  made  available   for  distribution  in  the  form  of  a  commercial  offering.  To  provide  IPTV  service,  the  service   provider  is  responsible  for  management  of  customer  information,  product  scheduling,  billings   and  user  authentication.     • Network  Provider   Customer   Here  consumers  can  directly  access  the  services  and  content  using  a  setup  box.   The  network  provider  must  transmit  the  service  across  a  network  to  the  customer.     •  

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    European  Market   There’s  no  doubt  that  Western  Europe  leads  the  world  in  IPTV  deployment.  But  as  in  the  rest  of  the   world,  there  are  big  regional  differences  in  Europe.  The  prediction  for  2009  (US  Research  firm   Strategy  Analytics)  is  that  the  number  of  households  with  IPTV  in  Western  Europe  will  grow  with  a   staggering  70%  from  10  million  at  the  end  of  2008  to  16,9  million  at  the  end  of  this  year.  France  is   leading  the  pack  in  Europe  by  a  big  margin:  6,2  million  French  households  had  IPTV  by  the  end  of   2008.   France     Researchers  in  the  industry  say  that  the  reason  for  the  strong  diffusion  of  IPTV  in  France  lies  in  the   strong  policy  of  the  regulatory  body.  That  has  been  policing  the  unbundling  of  local  loops  in  an  early   stage,  so  alternative  operators  could  offer  technologies  like  ADSL2+  without  having  to  rely  on  the   established  telco’s.  This  also  stimulated  strong  competition  in  fixed  phone  lines.  The  result  was   attractively  priced  triple-­‐play  packages.   By  the  end  of  2008  France  had  6,2  million  households  with  access  to  IPTV-­‐services.  Iliad,  which  trades   under  the  name  Free  in  France,  is  easily  the  largest  IPTV  provider  in  the  world  with  3,1  million  IPTV-­‐ enabled  customers.  France  Telecom  reported  2,1  million  IPTV  subscribers  by  the  end  of  2008  and   Neuf  Cegetel  1  million  subscribers.   Spain   Telefonica  and  Jazztel  Spanish  cable  operator  ONO  has  a  predominantly  digital  subscriber  base  but   this  has  not  stopped  Telefonica  from  emerging  as  one  of  the  most  successful  incumbents  in  the   European  market.  With  more  than  600.000  subscribers,  it  is  the  second-­‐biggest  incumbent  player  in   Europe.  Unlike  DT  that  delayed  its  IPTV  investment,  Telefonica  launched  its  Imagenio  IPTV  service   back  in  2004  and  got  early  success  in  a  country  where  there  was  not  significant  pay-­‐TV  penetration.   Belgium    The  use  of  smart  programming  offers  has  also  been  behind  the  success  of  Belgacom’s  IPTV  service,   which  had  more  than  550,000  subscribers  in  Q1  2009.  Belgacom  has  been  able  to  secure  a  deal  with   Warner  Bros.  to  provide  selected  feature  film  titles  on  demand  at  the  same  time  as  they  are  released   to  DVD.  This  has  proved  to  be  a  key  driver  in  its  take-­‐up  rates  in  Belgium.   Belgacom  has  had  more  success  in  the  southern  French-­‐speaking  Walloon  region  because  of  the  lack   of  a  strong  cable  operator  in  this  region.  In  the  north  in  Flanders,  there  is  one  dominant  cable   operator  that  is  digitalizing  its  service.     United  Kingdom   Total  538.000  IPTV  households.  Tiscali  (100.000  households  Q4  2008),  Freewire  (reaches  40.000   students  in  the  UK),  BT  (398.000  households  Q4  2008).   IPTV  has  similarly  struggled  in  the  U.K.  where  the  presence  of  a  strong  pay-­‐TV  operator,  News   Corporation’s  Sky  Television,  has  made  it  difficult  for  BT  or  any  other  player  to  gain  a  significant   market  position.  But  unlike  parts  of  mainland  Europe,  SkyTV  is  not  considered  a  utility  service  and   has  had  to  win  market  share  off  its  own  back.   In  the  late  1980s  it  was  launched  into  a  market  with  a  limited  number  of  free  to  air  channels  and  no  
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  pay-­‐TV  and  gained  its  market  strength  through  the  1990’s  by  securing  key  football  rights.  Other  ISPs   are  also  offering  free  or  heavily  discounted  broadband  access,  which  lessens  the  appeal  of  BT’s  triple   play  package.  In  the  U.S.,  Verizon  executives  have  confirmed  it  is  the  attraction  of  high-­‐speed   internet  rather  than  multi-­‐channel  television  that  is  selling  subscribers  to  its  FiOS  service.   Another  key  handicap  for  IPTV  in  the  U.K.  is  the  low  access  speeds  on  its  core  networks.  BT  currently   uses  R-­‐ADSL,  which  delivers  maximum  download  speeds  of  up  to  8  Mbs.  Although  there  are  now   plans  to  upgrade  to  ADSL2+  in  France,  ADSL2+  infrastructure  has  already  been  widely  deployed  and   major  operators  are  starting  to  roll-­‐out  fiber  in  the  major  cities.   Germany   By  the  end  of  2008  there  were  536.000  households  with  IPTV  in  Germany.  But  the  forecasts  are  that   this  number  will  grow  sharply  in  the  coming  years  to  1,2  million  households  by  the  end  of  2009  and   1,8  million  by  the  end  of  2010.   The  dynamic  take  up  of  IPTV  in  France  contrasts  with  Germany  where  Deutsche  Telecom  has  had  to   drop  its  prices  twice  in  an  attempt  to  kick  start  demand.  The  German  market  seems  to  be  very  price   sensitive  with  low  average  TV  ARPU  rates.  But  with  the  local  cable  system  still  very  much  analog  he   says  DT  has  a  “window  of  opportunity”  to  grow  its  market.  DT  cut  the  subscription  price  by  25   percent  last  year  and  re-­‐branded  the  service  to  Entertain  IPTV.    Italy   Total  525.000  households.  Telecom  Italia  (Alice  with  325.000),  Fastweb  (200.000).  In  Italy,  despite   the  lack  of  a  cable  industry,  IPTV  has  struggled.  Telecom  Italia  added  111,000  IPTV  subscribers  in  Q4   2008,  giving  a  total  of  325.000  by  the  end  of  2008.  This  number  has  risen  to  365.000  at  the  end  of  Q1   2009.  Competitor  carrier  Fastweb  was  one  of  the  first  players  to  offer  IPTV,  but  until  recently  it  was   held  back  by  its  limited  reach  and  Italy’s  low  propensity  for  pay-­‐TV  services.  It  has  only  200,000   subscribers  to  show  for  the  six-­‐year-­‐old  service.    Tiscali  started  with  IPTV  in  Italy  but  that  was  a   disaster.  Tiscali  discontinued  the  service  at  the  end  of  2008.    Netherlands   In  the  Netherlands  there  are  about  250.000  households  with  IPTV.  The  main  players  are  Tele2   (195.000  subscribers)  and  KPN  with  45.000  subscribers).  Also,  cable  company  Ziggo  has  recently   started  with  IPTV.  No  numbers  about  subscribers  are  available  yet.  

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Part  2:  The  diffusion  of  IPTV

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2.1  
 

The  current  position  of  IPTV  on  the  diffusion  curve  

Current  situation   Although  the  number  of  subscribers  of  IPTV  has  been  growing  rapidly  the  last  years,  the  total  number   is  still  comparatively  small  to  the  total  number  of  TV-­‐viewers  in  the  world  (22  million  vs  1.2  billion).   Almost  22  million  people  have  access  to  IPTV  in  the  last  quarter  of  2008,  according  to  the  most   recent  figures  that  were  published  during  the  World  IPTV  Forum  in  London  (research  Point  Topic).   The  numbers  show  that  the  North  American  IPTV  market  has  more  than  doubled  in  size  in  2008  –   with  growth  of  113  percent,  despite  the  global  economic  downturn.  IPTV  global  subscriber  totals   have  now  reached  21.8  million,  which  is  an  increase  of  63  percent  on  the  end  of  2007  figures.    
Region 2007 Q4 Total 2008 Q4 Total

Western Europe North America South & East Asia Asia-Pacific Eastern Europe Latin America Middle East & Africa

7.045.860 1.774.671 1.840.000 2.199.828 465.223 8.991 10.000

10.388.000 3.835.544 3.615.000 3.082.182 884.466 21.495 10.000

Global Total

13.344.573

21.836.687

 

 

Source:  Data  provided  for  the  Broadband  Forum  by  Point  Topic  (www.point-topic.com)

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Growth   A  recent  report  by  the  Multimedia  Research  Group  (may  2009)  is  forecasting  that  the  number  of   global  IPTV  subscribers  will  grow  from  26.7  million  in  2009  to  81  million  in  2013,  which  is  an  annual   growth  rate  of  32%.  (see  figure  below).    

  Revenues   In  terms  of  service  revenue,  the  Global  IPTV  market  is  worth  $6.7  billion  in  2009  (report  Multimedia   Research  Group)  and  growing  to  $19.9  billion  in  2013,  a  compound  annual  growth  rate  of  31%  (see   figure  below).  By  2013,  Europe  and  North  America  will  generate  a  larger  share  of  global  revenue,  due   to  very  low  Average  Revenues  Per  User  (ARPU)  in  China  and  India,  the  fastest  growing  markets  in   Asia.  

   

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  Diffusion   Since  the  introduction  in  various  countries  in  the  world  in  2002  IPTV  has  grown  fast.  In  2002  there   were  about  65.000  households  with  IPTV.  This  number  has  grown  to  almost  22  million  by  the  end  of   2008  (Point  Topic).    Still,  this  a  relative  small  number  compared  to  the  total  number  of  households   with  television  access  worldwide,  about  1,2  billion.  22  million  households  with  IPTV  is  not  more  than   1,75%  of  the  total  number  of  households  with  television.  It  seems  that  IPTV  has  still  a  long  way  to  go   to  become  a  mainstream  product.   There  are  many  problems  that  influence  the  diffusion  of  IPTV.  Despite  7  years  of  experience  with   IPTV  it’s  requirements  are  still  fragmented.  The  suppliers  of  technology,  such  as  Microsoft,  are  even   today  struggling  to  find  sizeable  customers  to  which  they  can  sell  their  products.  The  market  for  IPTV   is  geographically  fragmented  by  deployment  type  (cable,  satellite  or  terrestrial)  and  by  regional   differences  in  digital-­‐TV  requirements.  Available  bandwidth  and  data  rates  also  vary  among   broadband  infrastructures.  And  last  but  not  least:  the  scalability  and  management  of  content,  billing   and  customer  systems  are  also  of  concern  and  form  an  obstacle  for  the  diffusion.  These  factors  also   apply  to  other  distribution  systems  as  cable,  satellite  and  terrestrial  broadcast,  with  a  big  exception.   They  are  all  systems  for  ‘one-­‐to-­‐many’,  one  way  broadcast  distribution,  while  IPTV  is  ‘one-­‐to-­‐one’   and  provides  a  return  path.  This  makes  the  diffusion  of  IPTV  much  more  complex.  In  this  regard,     The  diffusion  of  IPTV  is  in  the  early  stages.  With  almost  22  million  subscribers  worldwide,  IPTV  is  still   at  the  beginning  of  the  S-­‐curve.  Reaching  critical  mass  seems  far  away.

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2.2  
 

The  diffusion  of  (interactive)  innovations  

To  find  out  what  influences  the  diffusion  of  IPTV  we  researched  the  works  of  Everett  Rogers  on  the   diffusion  process,  and  specifically  the  diffusion  curve  for  interactive  innovations.    

  “Interactive  innovations  are  distinctive  in  that  their  adoption  depends  on  the  perceived  number  of   others  who  have  already  adopted  the  innovation.  Thus  their  rate  of  adoption  does  not  take  off  in  the   familiar  “S”  shape  until  a  critical  mass  of  adopters  has  been  reached.”  [The  diffusion  of  interactive   communication  innovations  and  the  critical  mass:  the  adoption  of  telecommunications  services  by   German  banks,  Mahler  &  Rogers,  1999]   As  Mahler  &  Rogers  conclude,  the  curve  for  interactive  communication  innovations  displays  a   stronger  curved  line,  putting  (even)  more  emphasis  on  reaching  critical  mass,  but  resulting  in  a   sharper  uprise  once  critical  mass  is  reached.   Not  (ever)  reaching  critical  mass  often  leads  to  end-­‐of-­‐life  for  the  innovation  (e.g.  CD-­‐i).   To  investigate  how  the  curve  evolves  for  IPTV  and  what  factors  influence  the  adoption,  we  will  make   use  of  the  TAM-­‐model  and  the  research  of  Van  Baaren  et  al  into  underlying  factors  that  lead  to  PU  or   PEOU.  

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 2.3   Factors  (theory)  about  the  diffusion  of  IPTV  
  To  investigate  the  process  towards  reaching  critical  mass  we  found  that  the  Technology  Acceptance   Model  (TAM)  (Davis,  1989)  gives  insight  into  how  likely  the  attitude  towards  adoption  of  IPTV  is.   The  TAM  model  states  that  the  likelihood  for  adopting  a  certain  technology  is  determined  by  two   factors:  perceived  usefulness  (PU)  and  perceived  ease  of  use  (PEOU).   We  translated  those  factors  to  our  research  as  follows:   Perceived  usefulness   1  -­‐  Content/applications/services    publishers       Awareness   Technological  complexity  /  plethora  of  platforms  /  absence  of  standard  

2  -­‐  Marketing   Perceived  ease  of  use           1  -­‐  Technology  (user  interface,  interaction  design,  graphical  design)   2  –  Marketing  

We  used  these  factors  in  our  questionnaire,  on  which  we  based  our  survey  to  find  out  how  experts  in   the  field  weigh  these  factors  in  their  decisions  and  asked  the  key  players  in  the  interviews  about  their   viewpoints  with  regards  to  these  factors.  Although  the  TAM  gives  a  general  insight  into  the  likelihood   of  attitude  towards  adoption,  it  does  not  take  into  account  the  underlying  factors  that  lead  to  PU  and   PEOU  (Baaren  et  al,  2009).  As  Baaren  et  al  discovered,  to  further  explain  what  factors  help  or  hinder   the  adoption  process,  one  has  to  take  into  account  the  underlying  factors  for  attitude  towards   adoption:   • individual  factors   o end-­‐user  and  technology  match,  e.g.  knowledge,  visual  experience,  match  of  needs,   uses,  gratifications,   o characteristics  of  the  technology)   • contextual  (system)  factors  (Lin,  2003)   o partners,  friends,  relatives,  peers  (Venkatesh  et.  al.  2003,  Quiring  2006),   o organizations  (marketing),  news  media  (Weber  &  Evans,  2002)   In  our  research  on  IPTV  we  assume  that  IPTV  scores  low  on  most  individual  factors.  Consumers   hardly  know  of  its  existence,  the  visual  experience  is  still  very  rudimentary  and  the  match  of  needs,  

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  uses  and  gratifications  is  still  low.  We  believe  this  is  due  to  the  lack  of  useful  applications  and  services   for  IPTV.   We  assume  that  the  absence  of  useful  services  and  applications  is  caused  by  the  reluctance  of   publishers  to  invest  in  this  technology.  In  our  research  we  will  investigate  this  reluctance  and  the   underlying  causes:  lack  of  knowledge,  absence  of  viable  (proven)  business  models,  complexity   regarding  the  intellectual  property  rights  (specifically  good  mechanisms  for  Digital  Rights   Management)  and  (as  we  believe  and  will  investigate  in  this  research),  the  lack  of  standardization   and  the  resulting  scattered  landscape  of  technological  platforms.   Although  behavior  and  the  visual  experience  also  play  a  role  in  the  diffusion  process,  we  will  not  go   deeply  into  these  factors.   On  the  contextual  factors  we  also  assume  IPTV  to  score  low  because  not  many  people  have  access  to   IPTV  or  knowledge  of  having  it  at  all.  There  has  not  been  much  marketing  or  attention  from  news   media  for  IPTV,  as  we  expect,  because  of  the  small  target  group  and  the  absence  of  relevant  content,   applications  and  services.  In  our  research  we  will  mainly  investigate  if  the  IPTV  providers  agree  on   our  assumptions  on  IPTV  adoption,  the  relation  with  the  standardization  process  (or  the  absence   thereof)  and  their  willingness  to  move  towards  a  more  standardized  technology  platform.     Behavioral  fit   Next  to  technological  advancements,  a  change  in  user  interface  (experience)  and  behavior  (cultural   change)  is  required  for  the  adoption  of  IPTV.  Where  current  TV  viewing  is  generally  considered  to  be   a  “lean  back”  experience,  interactivity  is  typical  “lean  forward”  behavior.   In  this  context  “lean  back”  refers  to  the  lean  back  “couch  position”,  in  which  the  tv  viewer  (passively)   consumes  content  (programs)  that  is  being  broadcast.  It  is  specifically  meant  to  stipulate  that  tv   viewing  is  generally  considered  a  passive,  leisure-­‐like  activity.  Lean  forward  hints  at  the  position   people  assume  while  working  on  a  computer  or  on  a  video  game,  in  other  words:  being  active.  The   shift  towards  the  use  of  IPTV  requires  at  least  a  shift  in  behavioral  patterns,  which  is  generally  a  slow   process.   Critics  of  television  often  point  out  that  the  nature  of  television  programs  encourages  passivity   [Casey  et  al,  2002].   It  is  often  thought  that  television  viewing  is  an  isolating,  anti-­‐social  experience,  but  ethnographic   studies  (Lull,  1990)  have  shown  that  TV  and  other  mass  media,  rarely  mentioned  as  vital  forces  in  the   construction  or  maintenance  of  interpersonal  relations,  can  now  be  seen  to  play  central  roles  in  the   methods  which  families  and  other  social  units  employ  to  interact  normatively  -­‐  Oehlberg  et  al,  2006.   According  to  Oehlberg  et  al,  this  passivity  could  be  explained,  at  least  in  part,  by  the  fact  that  the   television  set  tends  to  dominate  most  channels  of  communication  (both  audio  and  visual)  and,  as   such,  it  might  not  be  conducive  to  interactive  exchanges  between  audience  members.  However,  their   experiments  [Oehlberg  et  al,  2006]  revealed  that  television  viewers  are  quite  adept  at   communicating  with  each  other  during  a  show.  To  do  so,  they  rely  on  a  set  of  interaction  rules  that  
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  allow  them  to  simultaneously  socialize  with  each  other  around  the  TV  and  maintain  the  flow  of  the   program  they  are  watching.   Where  the  distinction  between  “lean  forward”  and  “lean  back”  behavior  is  mainly  used  in  the  field  of   marketing,  scientific  research  usually  makes  a  distinction  based  on  the  distance  between  the  user   and  the  viewing  device.   1ft   3ft   10ft   100ft     mobile  device   computer   tv   Billboard   Personal   Personal   Shared   Public   highly  interactive,  …   (inter)active,  …   Mainly  passive   passive  

As  shown  in  table  x,  different  media  are  used  for  different  purposes  with  regard  to  social  interaction   and  interactivity.     Breakthrough  innovations   As  Carayannis  et  al  [Carayannis  et  al,  2003]  discovered,  cultural  change  does  take  a  long  time  unless  a   breakthrough  innovation,  which  drastically  changes  behavior,  pops  up.   It  is  not  the  technology  that  causes  the  behavioral  change  directly,  but  its  application.  There  are   several  applications  that  already  changed  our  (tv  related)  behavior  during  the  past  few  years.   An  example  is  the  use  of  YouTube  videos  in  parties.  Several  people  at  parties  nowadays  share  the   latest  YouTube  videos  they  liked  and  share  their  emotions  on  those,  or  use  YouTube  as  a  mechanism   for  music-­‐  and  video  requests.  Broadcasters  gratefully  incorporate  these  functions  into  their  set  top   boxes,  thereby  giving  more  use  to  IPTV.   Another  good  example  of  an  application  that  accelerated  a  pattern  change  in  our  television  viewing   behavior  is  the  Digital  Video  Recorder  (DVR),  which  introduced  delayed  viewing  instead  of  or  next  to   real  time  viewing.  In  the  USA  this  was  mainly  set  off  by  the  introduction  of  TiVo,  which  never  took  off   in  Europe.  Digital  video  recorders  have  however  found  their  way  into  the  living  room  in  Europe  also.   In  The  Netherlands  “Uitzending  gemist”  is  a  good  example  of  the  delayed  viewing,  resulting  in   shifting  media  usage.   These  applications  are  indeed  disruptive,  since  they  change  our  media  consumption  patterns  (e.g.   pause,  skip  ads),  have  a  huge  impact  on  existing  business  models  (e.g.  tv  advertising)  and  result  in   completely  new  business  models  (e.g.?).  This  kind  of  innovation,  even  though  often  instigated  from   Internet  TV  applications,  is  helping  consumers  to  change  their  behavior  and  get  used  to   interactiveness  on  TV.  This  strengthens  us  in  the  thoughts  that  the  change  in  behavior  is  already   underway.  The  availability  of  “perceived  useful”  applications  heavily  influences  these  changes.   In  this  paper  we  do  not  explore  the  behavioral  changes  any  further,  but  it  is  certainly  ground  for   further  research.    

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  Since  our  TV  viewing  behavior  is  still  mainly  “lean  back”,  or  passive,  the  necessary  change  in  behavior   complicates  (=slows)  the  diffusion  process.    The  diffusion  process  is  therefore  still  mainly  dependent   on  the  applications  and  services  that  are  available  to  end-­‐users.     Useful  applications  and  services   Companies  introducing  IPTV  typically  start  their  offering  with  services  that  require  a  low  entry  point   with  regard  to  the  behavioral  change  (learning  curve).  Typically,  the  IPTV  offering  starts  with   applications  for  delayed  viewing  (DVR  functionality  without  a  DRV  device)  and  Video  on  Demand   (VOD),  which  is  a  small  step  from  (physically)  renting  a  video.   These  changes  slowly  introduce  interactive  behavior  to  a  once  non-­‐interactive  medium  and  facilitate   our  getting  used  to  these  possibilities,  thereby  altering  our  behavioral  patterns.   The  convergence  from  media  usage  and  change  from  passive  to  (inter)active  does  however  require   an  evolution  in  user  interface  design  and  user  interaction  design,  as  Obrist  et  al  [Obrist  et  al,  2008]   have  concluded  in  their  study  “Usability  &  User  Experience:  Preliminary  Results  from  Evaluating  an   IPTV  Community  Platform".   Much  research  in  this  field  has  been  done  by  Jacob  Nielsen.  He  compares  the  main  user  interface   characteristics  between  traditional  television  and  computers:  

  In  this  paper  we  will  however  not  go  deeper  into  the  subject  of  user  interface  and  user  interaction   design.  We  merely  want  to  state  this  as  an  important  factor  that  hinders  the  adoption  rate.  
 

 
 

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Part  3:  Our  research

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3.1  

Data  collection  

For  our  research  we  did  a  quantitative  study  amongst  industry  players  to  investigate  their  opinion  on   the  diffusion  of  IPTV  and  the  role  of  standards,  and  a  qualitative  study  (interviews)  with  key  players   from  broadcasters  and  publishers  to  investigate  the  content  and  services  side.   Online  survey   For  our  quantitative  study  on  the  role  of  standards  in  the  diffusion  process  of  IPTV  we  set  up  an   online  survey.  In  this  survey  we  asked  industry  players  in  IPTV-­‐related  companies:   • • • • • • • • about  their  customer  base/market  share   about  their  current  IPTV  offering   what  services  they  are  planning  to  offer  in  the  coming  years   their  strategy  on  platform  selection  and  what  factors  influence(d)  their  platform  selection   their  plans  to  change  the  platform  selection  within  the  next  few  years   their  view  on  the  role  of  standards   their  view  on  the  main  factors  that  prevent  IPTV  to  reach  critical  mass   their  view  on  what  prevents  publishers  to  create  content  and  services  

Our  objective  in  this  survey  was  to  investigate  what  view  industry  players  within  the  IPTV  domain   have  on  the  diffusion  process  of  IPTV  and  in  particular  on  these  questions  regarding  our  hypotheses:   • • • • Why  are  customers  not  mass-­‐adopting  IPTV?   Why  are  publishers  not  creating  more  content/services  for  IPTV?   What  is  the  view  of  the  industry  on  the  mixed  platform  situation  in  relation  to  the  adoption   rate  and  the  absence  of  content/services   Are  industry  players  willing  to  /  planning  to  standardize  their  platforms  

We  aimed  to  reach  30+  respondents  for  the  online  survey  and  5  interviews.   In  our  first  attempt  of  getting  respondents  for  the  online  survey  we  approached  several  (over  70)   IPTV-­‐related  websites,  trade-­‐organizations,  umbrella-­‐organizations,  major  consulting  firms  and   individual  contacts  we  have  in  the  IPTV  domain.  This  resulted  in  some  response,  but  did  not  come   close  to  the  30+  respondents  we  were  aiming  for.     After  a  brainstorm  session  on  how  to  raise  more  responses,  we  decided  to  try  to  make  use  of  our   social  media  channels  to  get  a  better  response.  We  particularly  posted  our  survey-­‐request  in  the   LinkedIn  groups  “IPTV”,  “IPTV  Forum”,  “IPTV  Middleware”,  “Set-­‐top  Box  &  IDTV,  Mediacenter  DVB   and  IP  /  CI+”  and  “HDTV  Group”.  This  had  an  overwhelming  result  on  the  response  on  our  survey:     within  3  weeks  we  attracted  144  respondents  from  all  major  countries  in  Western  Europe  and  a  lot   of  email  from  group  members.  56  respondents  completed  the  full  survey,  including  full  personal   details,  while  on  average  70  respondents  answered  the  questions  that  related  to  our  hypotheses.   Interviews  with  key  players   For  our  interviews  we  contacted  12  IPTV-­‐related  companies.  This  resulted  in  5  interviews  with  key   players  in  media-­‐  or  media-­‐related  companies:  

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  • • • • • Tele2   Netherlands  Public  Broadcasting  (NPO)   Rabobank   Philips   AD  Nieuwsmedia  

In  the  interviews  we  mainly  focused  on:   • • • • • their  views  on  IPTV  and  its  adoption  process   their  current  IPTV  offering   the  position  of  publishers  towards  IPTV   their  views  on  the  role  of  standards   their  vision,  strategy  and  plans  regarding  IPTV  

  The  interviews  were  very  open  and  gave  us,  besides  answers  to  our  questions,  a  lot  of  side-­‐ information  regarding  the  players,  their  views  on  IPTV  and  their  future  plans.

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3.2  
 

Results  of  our  quantitative  research  

Survey  population   Our  online  survey  was  conducted  using  Survey  Monkey  (http://www.surveymonkey.com).  We  used   our  personal  network  in  the  IPTV  world,  augmented  by  the  use  of  postings  in  relevant  LinkedIn   groups  to  draw  respondents  to  our  survey.  It  resulted  in  a  total  of  145  respondents  from  over  14   countries:  

  Our  survey  population  consisted  almost  fully  of  experts  in  IPTV  or  IPTV-­‐related  companies.  44%  of   our  respondents  work  for  telecommunications  companies  in  Western  Europe,  16%  came  from   broadcasting  companies.   Most  respondents  work  in  large  companies,  although  also  smaller  companies  took  part:  

 
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  Our  respondents  are  mainly  working  in  technical  functions  (CTO,  Tech  manager).   The  companies  our  respondents  work  for  (still)  have  a  small  market  share  in  the  TV  area  (52%  show  a   market  share  of  <5%).  We  believe  this  has  a  high  correlation  with  the  response  from   telecommunications  companies  that  are  relative  newcomers  in  the  TV  distribution  chain  as  a  result   of  the  digitization  and  their  existing  (physical)  network  infrastructure.  They  show  a  small  number  of   subscribers  for  TV  (51%  have  <50.000  TV  subscribers),  digital  TV  (57%  have  <50.000  digital  TV   subscribers),  and  IPTV  subscribers  (69%  have  <50.000  IPTV  subscribers).     View  on  standardization   Our  survey  focuses  on  the  role  of  standards.  We  started  by  investigating  the  views  of  our   respondents  on  standardization  and  the  role  of  standardization  in  the  diffusion  of  IPTV.  Our   respondents  indicate  that  they  regard  standardization  as  important  (56%  of  our  respondents  say   standardization  is  very  important,  44%  say  a  dominant  platform  for  IPTV  is  important).     Current  services  and  fees   We  asked  our  respondents  what  TV  add-­‐on  services  they  currently  offer  their  subscribers.  84%  offer   Video  on  Demand  (VoD)  services,  69%  offer  HDTV,  63%  offer  DVR  services.  In  general  there  are  3   options  for  asking  fees  on  IPTV  services  with  a  different  granularity:  a  general  access  fee,  a  fee  per   service  and  a  pay  per  view  fee.  Most  of  our  respondents  (71%)  ask  a  subscriptions  fee  for  (in  general)   access  to  their  IPTV  services,  46%  ask  a  per  service  subscription  fee,  54%  ask  a  pay  per  view  fee.       Expected  changes  in  the  coming  years   When  asked  for  their  expectations  for  the  coming  years  we  see  that  our  respondents  expect  a   noticeable  change  (growth)  in  the  number  of  subscribers  (27%  of  respondents  expect  to  have   <50.000  subscribers,  20%  expect  to  have  50.000-­‐100.000  subscribers).   With  regard  to  the  applications  and  services,  several  new  applications  and  services  are  expected  to   be  added:    

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    The  diffusion  of  IPTV   Our  respondents  show  a  very  coherent  opinion  on  the  relevance  of  applications  and  services  in  the   diffusion:  81%  think  applications  and  services  are  important  for  the  adoption  by  consumers  and  90%   think  content  (information)  is  important  for  the  adoption  by  consumers.   The  views  on  what  is  the  main  bottleneck  (for  consumers)  in  the  current  diffusion  process  differ:   • • • 36%  think  knowledge  of  existence   39%  of  our  respondents  think  (the  absence  of)  content  and  services   25%  think  the  ease  of  use  

As  can  be  expected,  our  respondents  agree  on  the  importance  of  ease  of  use  (94%  marked  it  as   important)  and  price  (76%  marked  it  as  important).   On  the  questions  regarding  why  publishers  are  reluctant  to  create  content,  products  and  services  for   IPTV,  the  opinions  differ  somewhat:   • • • 20%  (only!)  feel  that  publishers  are  not  familiar  with  the  possibilities  of  IPTV   35%  think  the  lack  of  a  good  business  model  is  the  bottleneck  for  publishers   21%  think  the  lack  of  platform  standardization  is  the  bottleneck  for  publishers  

Half  of  our  respondents  (50%)  feel  that  the  absence  of  a  dominant  platform  standard  slows  the   diffusion  of  IPTV.     IPTV  middleware  platforms   In  our  investigation  on  the  platforms  that  are  currently  being  used  by  our  respondents  we  found  a   scattered  landscape:   [Bert:  diagram  platform  use]   • • 23%  use  a  custom  (proprietary)  platform   18%  use  Microsoft  Mediaroom  

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  • 42%  use  not-­‐top  5  platform  

When  asked  what  factors  influenced  or  dictated  the  platform  selection  we  found  that:   • • • 38%  selected  the  platform  for  backend-­‐integrations  possibilities  and/or  architectural  fit   26%  selected  the  platform  for  the  available  applications   29%  selected  the  platform  for  strategic  (alliance)  reasons  

Although  the  respondents  tend  to  agree  on  the  importance  of  standardization  69%  expect  NOT  to   change  platforms  within  the  next  2  years.  This  is  probably  related  to  strategic  contracts  and   investments.  [ed:  we  did  not  ask  for  their  motivation]    

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3.3  
 

Results  of  our  qualitative  research  (interviews)  

We  have  interviewed  managers  from  five  companies  in  the  Netherlands  about  their  views  on  IPTV.   They  operate  in  very  different  markets,  but  all  have  one  thing  in  common:  they  play  a  role  in  IPTV  or   interactive  television  in  the  Netherlands.   Bram  Tullemans  of  the  Netherlands  Public  Broadcasting  (NPO)  says  that  the  main  obstacle  for   implementing  interactive  television  is  the  cable  companies.  According  to  Tullemans  it  is  difficult  to   realize  a  return  channel  within  the  infrastructure  of  the  cable  companies.  That  is  why  the  Dutch   public  broadcasters  look  at  mobile  technology  to  provide  a  return  channel.  Content  is  not  an  issue,   says  Tullemans.  “The  content  will  be  produced  once  the  technology  is  available”.   Marcel  Kuil  of  The  Rabobank  believes  that  content  can  play  a  role  in  promoting  the  diffusion  of  IPTV.   That  is  why  the  Rabobank  is  so  active  in  this  field.  Kuil  thinks  that  IPTV  is  completely  unknown  to  the   public.  Therefore  most  people  don’t  see  the  possibilities,  says  Kuil.  It  doesn’t  help  that  there  are  no   technical  standards,  but  Kuil  sees  progress  in  this  area.   Hans  Broekhuis  of  Tele2  is  very  outspoken  about  the  technology  of  IPTV.  He  thinks  that  technology   isn’t  the  issue  anymore.  Neither  is  content,  says  Broekhuis.  “The  premium  content  is  there”.  The   diffusion  of  IPTV  is  mostly  a  marketing  issue,  believes  Broekhuis.  “People  will  have  to  be  convinced  of   the  benefits.  Otherwise  it  will  never  work”.   Bart  van  Oortmerssen  of  the  newspaper  AD  Nieuwsmedia  doesn’t  think  that  the  absence  of   standards  in  IPTV  is  a  real  problem.  He  says  this  based  on  his  experience  with  Net  TV  of  Philips.  “If   you  have  the  content  in  order  and  if  the  code  is  right,  it  should  be  no  problem”.   Robert  Timmer  of  Philips  believes  that  there  has  to  be  a  sustainable  business  model  for  IPTV.   Otherwise  the  lifespan  for  this  technology  could  be  very  short.  Content  and  services  for  interactive   television  provide  the  real  added  value  for  the  consumer,  says  Timmer.  At  the  same  time,  standards   are  very  important,  according  to  Timmer.  “It’s  no  use  without  standards”.     Most  of  the  managers  we  interviewed  think  that  IPTV  is  still  in  it’s  infant  years.  According  to  them,   the  breakthrough  for  this  technology  is  not  to  be  expected  in  the  near  future.  As  Robert  Timmer  of   Philips  puts  it:  “Broadcast  will  be  around  for  a  long  time  to  come”.   We  specifically  asked  the  interviewees  about  the  role  of  standards  and  the  availability  of  content  and   services  in  the  diffusion  of  IPTV.  Striking  was  that  none  of  the  interviewed  managers  see  the  lack  of   standards  as  an  obstacle.  The  technology  has  evolved  so  much  that  this  is  no  longer  the  biggest   problem,  they  said.  Although  Philips  and  NPO  are  convinced  that  standards  could  help  the  diffusion,   they  don’t  see  it  as  a  major  issue.  The  other  three,  Tele2,  Rabobank  and  AD  Nieuwsmedia,  say  that   technology  is  no  longer  a  bottleneck.   The  interviewed  managers  see  two  important  factors  why  IPTV  is  still  an  emerging  technology:   1. The  network.  In  the  Netherlands  the  cable  companies  are  still  the  dominant  distribution   channel  for  television.  These  cable  companies  hardly  offer  any  IPTV  services  to  their   customers,  while  being  very  reluctant  to  open  their  network  to  other  content  providers.  This   means  that  the  current  content  offering  for  the  cable  TV  customers  has  hardly  changed.  In   this  situation  it  is  hard  to  persuade  consumers  to  make  the  switch  to  IPTV,  especially  when   there  not  convinced  of  the  added  value.  
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  2. The  content.  The  conclusion  from  the  interviews  is  that  there  is  just  not  enough  content   being  produced  for  IPTV.  Most  of  the  services  are  based  on  existing  content.  As  Bram   Tullemans  of  the  public  broadcasting  company  NPO  puts  it:  “The  amount  of  content  that  is   really  interesting  for  the  consumer  just  isn’t  there.  There  is  no  added  value  in  IPTV  yet”.    

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3.4  
 

Conclusions  

We  started  our  research  by  stating  our  2  hypotheses:   Hypothesis  1:  The  primary  reason  for  the  slow  adoption  of  interactive  TV  (and  therefore  IPTV)  by   consumers  is  the  lack  of  useful  content/applications/services   Hypothesis  2:  The  primary  reason  for  the  lack  of  useful  content/applications/services  for  IPTV  is  the   reluctance  of  publishers  to  provide/develop  such  content/applications/services  because  they  are   unaware  of  the  possibilities  and  held  back  by  the  technological  complexity,  the  plethora  of   (middleware)  platforms  and  the  absence  of  a  dominant  standard.   From  our  desk  research  we  could,  by  comparing  the  IPTV  number  of  subscribers  to  other  (related)   innovation  adoption  curves  (color  TV,  digital  TV,  etc),  establish  the  position  of  IPTV  on  the  adoption   curve  (Rogers)  as  still  in  the  early  stages.   In  our  quantitative  research  we  investigated  the  views  of  our  respondents  on  the  TAM  factors  (PU   (mainly)  and  PEOU)  of  IPTV.  We  found  that  knowledge  of  existence  (36%)  and  (the  absence  of)   content  and  services  (39%)  are  considered  the  most  important  factors  with  regard  to  PU.  Our   respondents  show  a  very  coherent  opinion  on  the  relevance  of  applications  and  services  in  the   diffusion:  81%  think  applications  and  services  are  important  for  the  adoption  by  consumers  and  90%   think  content  (information)  is  important  for  the  adoption  by  consumers.   Our  respondents  agree  on  the  importance  of  ease  of  use  (PEOU,  94%  marked  it  as  important),  but  we   did  not  ask  enough  specific  questions  with  regard  to  PEOU  to  draw  any  conclusions  on  that.     While  we  (the  researchers)  feel  that  consumers  are  not  adopting  IPTV  (primarily)  because  of  the  lack   of  knowledge  of  its  existence  (which  in  fact  may  be  due  to  the  absence  of  relevant  content,   applications  and  services),  our  respondents  regard  the  absence  of  content,  applications  and  services   as  the  primary  reason  (75%)  for  the  slow  adoption.  94%  think  that  (perceived)  ease  of  use  is  of  key   importance  to  the  adoption  by  consumers,  but  only  25%  feel  that  this  is  the  main  bottleneck     We  can  therefore  conclude  that  our  respondents  agree  with  hypothesis  1.   Furthermore,  we  investigated  if  the  IPTV  providers  agree  on  our  assumptions  on  IPTV  adoption,  the   relation  with  the  standardization  process  (or  the  absence  thereof)  and  their  willingness  to  move   towards  a  more  standardized  technology  platform.     The  content,  applications  and  services  comes  from  publishers.  Of  our  research  group  only  20%  regard   the  lack  of  knowledge  of  the  existence  of  IPTV  among  publishers  as  the  reason  for  publishers  not  to   jump  at  IPTV.  36%  feel  that  the  lack  of  a  good  business  model  is  the  primary  reason  for  this.  We  have   tried  to  verify  this  in  the  in-­‐depth  discussions  in  our  qualitative  research  (interviews).   Publishers  and  other  important  players  in  the  IPTV  world  in  the  Netherlands  do  see  the  lack  of  good   content  as  an  important  obstacle  for  the  diffusion  of  IPTV.  The  companies  we  interviewed  in  our   qualitative  research  agree  that  there  is  hardly  any  specific  content  being  produced  for  IPTV.  There  is   just  no  demand  for  it  at  the  moment,  therefore  there  is  no  business  model  for  the  publishers.  The  
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  dominant  players  in  the  distribution  of  tv  in  the  Netherlands,  the  cable  companies,  hardly  offer  any   interactive  content.  Video  on  demand  and  “Uitzending  Gemist”  are  the  only  exceptions,  but  they  are   entirely  based  on  existing  content.  The  interviewed  managers  see  this  network  issue  as  the  most   important  reason  that  IPTV  is  still  an  emerging  technology.     With  regard  to  the  role  of  standards  in  the  diffusion  process:  the  (middleware)  platform  landscape  is   scattered.  And,  although  50%  think  the  absence  of  a  dominant  platform  standard  slows  the  diffusion   of  IPTV,  69%  of  respondents  do  not  expect  to  change  platforms  over  the  next  two  years.  This  is  not   very  promising  for  speeding  up  the  diffusion  process.   With  regard  to  hypothesis  2,  we  can  therefore  conclude  that  our  research  has  revealed  little  support   for  this  hypothesis.  Our  respondents  consider  the  lack  of  a  valid  business  model  far  more  important   than  the  lack  of  (platform)  standardization.   Although  we  still  believe  in  a  strong  role  for  standardization  and  our  respondent  tend  to  agree  on   that,  we  found  that  there  is  very  little  willingness,  let  alone  eagerness,  to  standardize  in  the  industry.   Even  with  the  support  of  sound  theoretical  bases  like  the  adoption  curve  for  interactive  innovations   (Rogers)  and  the  examples  from  neighboring  fields  like  Video2000/Betamax/VHS,  Blu-­‐ray/HD-­‐DVD,   SACD/DVD-­‐A,  the  industry  seems  reluctant  to  standardize  at  the  price  of  abandoning  past   investments  (sunk  cost)  and  strategic  alliances.   As  we  described,  a  disruptive  innovation  can  cause  a  radical  speedup  in  the  diffusion.  This   circumvents  the  (lack  of)  platform  standardization  by  shifting  towards  application-­‐  or  service   standardization  due  to  customer  demand/expectations.  Our  hope  is  on  (low  interactive)  services  like   YouTube-­‐integration,  Video  on  Demand  (including  “Uitzending  Gemist”)  and  remote  PVR  to  become   widely  accepted.  This  will  at  least  provide  the  (broad)  infrastructure  for  interactive  services,  so  new   applications  and  services  can  emerge.  Amongst  them  may  be  new  breakthrough  innovations  which   accelerate  the  diffusion  of  (real)  IPTV.   Based  on  our  research  findings  we  feel  that  a  quick  breakthrough  of  IPTV  in  the  near  future  is  not   very  likely.  We  expect  WebTV,  which  is  less  affected  by  the  factors  we  found,  to  have  a  better  chance   of  conquering  our  living  rooms.  The  openness  and  lack  of  restrictions  of  WebTV  may  result  in   different  (unanticipated?)  use  of  the  technology,  which  could  lead  to  more  disruptive  applications   and  services  for  interactive  TV.  

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  3.5  
  Looking  back  at  the  thesis  process  we  lived  through  the  previous  year,  we  can  conclude  we  had  quite   a  struggle.   We  started  off  very  eager  and  enthusiastic  about  our  hypotheses.  At  that  moment  in  time  we  were   submerged  in  the  world  of  IPTV  because  of  the  Deutsche  Telekom  Interactive  TV  award  and  reaching   the  finals  with  3-­‐frogs  (which  one  of  the  authors  is  a  partner  in).   Finding  the  relevant  theoretical  models  for  our  research  by  reading  up  on  recent  theoretical  material   was  our  first  major  bottleneck.  We  found  that  we  were  not  used  to  reading  extensive  research   material  and  interpreting  the  findings.  Investing  more  time  and  effort  during  this  phase  in  starting  to   write  our  thesis  document  would  have  saved  us  a  lot  of  time  in  the  analysis  phase  and  the  final  phase   of  writing  our  thesis  document,  but  we  did  not.   Even  though  it  was  not  easy  to  combine  our  day  jobs  with  finishing  our  thesis,  in  the  early  phases  of   our  thesis  (mainly  the  research  phase),  we  were  able  to  get  up  to  speed  rather  quickly.  This  resulted   in  a  swift  setting  up  the  quantitative  part  of  our  research  (survey  questions).  Finding  relevant   respondents  turned  out  to  be  a  lot  harder  than  expected.   After  contacting  over  30  companies  in  the  IPTV  area  we  found  that  we  could  hardly  raise  any   respondents  for  our  research.  Even  close  personal  contacts  did  not  result  in  much  response.  After  re-­‐ evaluating  our  approach  we  decided  to  test  if  we  could  leverage  our  experience  in  the  use  of  new   media  to  our  advantage  by  using  LinkedIn  and  Twitter  for  reaching  our  respondents.    Especially  the   use  of  LinkedIn  groups  on  the  topic  of  IPTV  resulted  in  a  large  set  of  respondents  in  a  short  period  of   time.   Setting  up  the  interviews  was  even  harder.  We  contacted  over  20  companies  in  7  European  countries   for  an  interview  that  resulted  in  only  3  interviews.  Through  our  personal  contacts  we  finally  raised   this  number  to  5  interviews.  The  interviews  were  very  interesting  and  insightful  though.   Because  our  research  took  place  during  the  Credit  Crisis,  this  may  have  played  an  important  role  in   our  struggle  for  respondents  and  may  even  have  influenced  some  of  the  factors  we  have   investigated.   During  the  analysis  phase  we  discovered  that  it  would  have  been  a  good  idea  to  also  do  a  survey   amongst  consumers  to  investigate  their  views  on  interactive  TV.  We  have  not  done  that  survey,  but   this  is  strongly  suggested  as  follow  up  research.   The  hardest  part  of  our  thesis,  after  preparing  our  research,  setting  up  the  survey,  conducting  the   interviews  and  analyzing  the  results,  was  creating  our  thesis  report.  This  phase  took  us  over  6   months,  while  our  motivation  was  low,  the  problems  of  the  Credit  Crisis  were  fully  influencing  our   daily  business  and  we  already  had  our  findings  analyzed.  

Reflection  

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  At  the  start  we  decided  to  divide  the  different  parts  of  our  research  between  the  two  of  us  with   clean-­‐cut  pieces  of  work.  During  the  process  we  found  we  mostly  needed  each  other  to  stay   motivated  and  make  progress.  It  took  a  lot  of  effort  to  stay  on  track  and  (mainly)  to  finish  our  work,   but  we  came  out  as  better  friends  and  partners  in  a  new  venture  (Journalist.nl),  partly  as  a  result  of   this  process.   Looking  back,  the  memories  of  our  struggle  will  faint  and  will  be  replaced  with  pride  about  finishing   our  thesis  and  earning  our  MBA  degree.  

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3.6  
 

Suggestions  

Suggestions  for  follow-­‐up  research:   • Consumers  and  the  adoption  of  IPTV   In  our  research  we  have  focused  on  the  role  of  IPTV-­‐providers  and  publishers.  Of  course   consumers  also  play  a  big  role  in  the  diffusion  of  this  relatively  new  technology.  There  are  a   number  of  (commercial)  market  research  companies  that  have  data  about  consumer   behavior  with  regard  to  IPTV.  We  have  found  that  there  is  hardly  any  independent  scientific   research  in  this  field.  Therefore  we  think  a  study  about  consumers  and  the  adoption  of  IPTV   would  be  a  good  idea.   • The  relationship  between  the  existing  platform  in  use  with  IPTV  providers  and  the  adoption   of  new  standards   A  maturing  industry  like  IPTV  attracts  new  standards.  At  the  same  time  these  standards  seem   to  face  resistance  from  IPTV  providers.  They  seem  to  be  reluctant  to  give  up  their  existing   technology  and  argue  there  is  no  need  for  change.  A  study  on  the  relationship  between   existing  platforms  in  use  with  IPTV  providers  and  the  adaption  of  new  standards  would  be   very  useful.   • The  cost  of  not  standardizing   The  lack  of  standards  in  the  IPTV  industry  could  prove  to  be  very  costly  in  the  long  run.  It   would  be  interesting  to  do  a  study  on  the  financial  benefits  if  a  standard  would  be  adopted   by  the  industry.   • The  role  of  social  media  in  research   For  this  master  thesis  we  have  used  the  social  network  LinkedIn  to  promote  our  web  survey   among  professionals  in  the  IPTV  world.  This  worked  remarkably  well.  We  recommend  a  study   on  the  use  of  social  media  (LinkedIn,  Facebook,  Twitter)  in  scientific  research.   • The  influence  of  design  and  interface  on  the  adoption  curve   We  think  that  the  design  of  most  interfaces  used  in  IPTV  can  be  improved.  In  out  view   functionality,  perceived  usefulness  and  perceived  ease  of  use  play  an  important  role  in  the   diffusion.  A  user  interface  that  is  intuitive  and  allow  users  to  really  personalize  and  customize   their  TV  viewing  could  help  the  spread  of  the  technology  enormously.  We  think  a  study  on   the  influence  of  interfaces  and  design  on  the  adoption  curve  is  very  desirable.   • The  role  of  standards  in  the  diffusion  of  Web  TV   The  main  subject  of  our  master  thesis  is  the  role  of  standards  in  the  diffusion  of  IPTV.  It   would  be  interesting  to  see  if  and  to  what  extent  standards  play  a  role  in  the  diffusion  of   Web  TV.      
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  Suggestions  for  IPTV  players:   • • • • • Be  an  enabler  instead  of  a  publisher,  help  publishers  to  make  money   Be  more  flexible  when  it  comes  to  the  adaptation  of  new  standards   Learn  from  neighboring  fields  such  as  Blu-­‐Ray   Invest  to  boost  quality  of  services  offered  in  terms  of  both  content  and  service  availability   Introduce  subscription  music  services  and  gaming  on  demand.  This  would  add  would  great   value  for  customers.

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Appendices  

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Appendix  1:   Reference  
 
[IPTV  &  WebTV  -­‐  Hype  oder  Revolution  der  TV-­‐Landschaft?  -­‐  Jakob  J.  Assmann  -­‐  Institut  für  Information,  Organisation  und   Management,  2007]   Technological  forecasting  and  scenarios  matter:  Research  into  the  use  of  information  and  communication  technology  in  the   home  environment  in  2010  –  H.  Bouwman,  P.  van  der  Duin,  2003   Wikipedia,  History  of  Television:  http://en.wikipedia.org/wiki/History_of_television     Federal  Communications  Commission,  Historical  periods  in  television  technology:  http://www.fcc.gov/omd/history/tv/     Edwin  Howard  Reitan,  Jr.  History  of  the  early  colour  television:  http://novia.net/~ereitan/     Wikipedia,  Aspect  Ratio:  http://en.wikipedia.org/wiki/Aspect_ratio     Wikipedia,  Digital  Television:  http://en.wikipedia.org/wiki/Digital_television     The  evolution  of  broadcast  TV  technology:  http://www.mlesat.com/evolutio.html     Porter,  M.  E.  (1979):  How  Competitive  Forces  Shape  Strategy.  Harvard  Business  Review,  91-­‐101.   ‘Global  Standards  of  IPTV  and  its  infrastructural  framework’,  presentation  by  Chae  Sub  Lee,  Telecommunications   Technology  Association  of  Korea.   Deumer,  P.  (2008),  Internet  TV  &  the  Dutch  broadcast  value  chain.   IPTV-­‐News  (http://www.iptv-­‐news.com/iptv_news/march_09/iptv_households_in_western_europe_reach_10mn_at_end-­‐ 2008),   IPTV-­‐News  (http://www.iptv-­‐news.com/iptv_news/june_09_2/dutch_cable_households_exceed_2mn)   IPTV-­‐Watch  (http://www.iptv-­‐watch.co.uk/18062009-­‐iptv-­‐booming-­‐in-­‐germany.html)   Personal  TV:  A  Qualitative  Study  of  Mobile  TV  Users  –  Cui,  Chipchase,  Jung,  2005   The  television  will  be  revolutionized:  effects  of  PVRs  and  file  sharing  on  television  watching  –  Brown,  Barkhuus,  2006   “I  Just  Want  to  See  the  News”  –  Interactivity  in  Mobile  Environments  –  Hubel,  Theilmann,  Theilmann,  2007   Is  TV  Dead?  Consumer  Behavior  in  the  Digital  TV  Environment  and  Beyond  -­‐  Gali  Einav  and  John  Carey,  2009   IPTV  &  WebTV  -­‐  Hype  oder  Revolution  der  TV-­‐Landschaft?  -­‐  Jakob  J.  Assmann  -­‐  Institut  für  Information,  Organisation  und   Management,  2007   Making  TV  Meaningful:  Consumers  and  IPTV  Applications  –  D.  Iyer,  K.  Scherf,  2006  -­‐  Parks  Associates   Open  IPTV  Forum  –  Toward  an  open  IPTV  standard  -­‐  Mats  Cedervall,  Uwe  Horn,  Yunchao  Hu,  Ignacio  Más  Ivars  and  Thomas   Näsström,  2007  –  Ericsson  review   Baas  over  de  buis.  De  kansen  en  bedreigingen  voor  reclame  bij  een  transformatie  van  analoge  naar  digitale  televisie  -­‐  J.J.L.   Nagtegaal,  2005  -­‐  Erasmus  Universiteit  Rotterdam   Betekent  IPTV  het  einde  van  de  huidige  commerciële  zenders  –  S.  Pool  ,  J.  Sinnige,  M.  Zantinge,  2006  -­‐  Hogeschool  Utrecht   Studie  naar  de  technologie  en  mogelijkheden  van  iDTV  –  S.  Mahieu,  2006  –  PIH   IPTV  business  models:  profit  and  loss  in  the  telco  TV  space  –  ScreenDigest,  2008  

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Potential  user  factors  driving  adoption  of  IPTV  –  Dong  Hee  Shin,  2006   Technical  innovations,  standardization  and  regional  comparison,  a  case  study  in  mobile  communications  –  Sadahiko  Kano,   2000   IPTV  &  WebTV  -­‐  Hype  oder  Revolution  der  TV-­‐Landschaft?  -­‐  Jakob  J.  Assmann  -­‐  Institut  für  Information,  Organisation  und   Management,  2007   The  role  of  standards  in  innovation  and  diffusion  of  broadband  mobile  services:  The  case  of  South  Korea  –  Yoo,  Lyytinen,   Yang,  2005   The  diffusion  of  interactive  communication  innovations  and  the  critical  mass:  the  adoption  of  telecommunications  services   by  German  banks,  Mahler  &  Rogers,  1999   Social  TV:  Designing  for  Distributed,  Sociable  Television  Viewing  –  Oehlberg  et  al  –  Stanford  University,  2006  

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Appendix  2:   Interview  questionnaire  
Interview guide “The role of standards in the diffusion of IPTV” 1. Company / person

• Can you give a brief history of your career? • Why did your company select IPTV as the distribution standard o Out of necessity (no alternative)? o Because it was the best alternative? • How did your company get involved in IPTV? • What is your company’s view on the IPTV market • What is your company's strategy in the IPTV-market (R&D, product, standards)? o What is your company’s view of the current IPTV-market (for instance competition, technology, standards, applications, hardware)?
2. Landscape / value chain

• What company’s and organizations do you interact with? o What role(s) o How would you describe the relationship of your company with these actors?

3. (Technical) standards

• What standard(s) does your company use/support and why? • Is your company involved in the development of these standards o Are you involved in IPTV standardization? • Which actors are involved in the development of the IPTV standard? • Do you see standards as a key aspect that affects the diffusion of IPTV in your country? • What other technological aspects play a role in this regard?

4. Content and services

• Do you think that content and services play a role in the diffusion of IPTV? o And do you think that is any different for other distribution standards like DVB? • Does your company play an active role in stimulating the creation of content and services specific for IPTV?

5. Diffusion

• What is your view on the current diffusion of IPTV in your country and in the rest of the world? o which (f)actors influence the diffusion in your opinion? • What – in your view – are the reasons for the big regional differences in the diffusion op IPTV in the world? • Can you compare the present IPTV to the diffusion of other technology, for instance Blu-ray?
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  Interview guide “Publishers and Interactive Television” 1.

• Can you give a brief history of your career? • What range of products/brands does you company publish? • On what media-channels / devices does your company publish products/content? • Does your company currently publish content/applications/services for Interactive Television? • What is your company’s strategy on Interactive Television? o What is your company’s view of the current IPTV-market (for instance competition, technology, standards, applications, hardware, business model)?
2. Landscape / value chain

Company / person

• What companies and organizations do you interact with specifically for interactive television? o what role(s) o How would you describe the relationship of your company with these actors?
3. Content and services

• Do you think that content and services play a role in the diffusion of IPTV? • Does your company play an active role in stimulating the creation of content and services specific for IPTV?

4. Diffusion

• What is your view on the current diffusion of IPTV in your country and in the rest of the world? o which (f)actors influence the diffusion in your opinion? • What – in your view – are the reasons for the big regional differences in the diffusion op IPTV in the world?

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Appendix  3:   Survey  results  

 

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Appendix  4:   Interviews  
Interview  Bram  Tullemans,  Nederlandse  Publieke  Omroep  (NPO)   Date:  April  22nd  2009   Bram  Tullemans  is  senior  policy  adviser  of  the  department  DTU  (Distribution,  Technology  and   Broadcasting)  of  the  NPO,  the  Netherlands  Public  Broadcasting.  NPO  is  the  organization  in  the   Netherlands  which  by  law  stimulates  cooperation  and  coordination  between  the  Dutch  national   public  broadcasters.   Can  you  give  a  brief  history  of  your  career?   “I  work  for  the  NPO  now  for  1  year.  Before  I  was  employed  as  director/producer  at  the  cross  media   department  of  publisher  IDG.  Before  this  I  worked  as  a  freelancer  and  at  the  technical  department  of   Artis/Planetarium”.   Does  the  NPO  currently  publish  content  or  services  for  interactive  television?   “The  NPO  is  involved  in  a  number  of  trials  with  interactive  TV,  especially  with  the  so  called  ‘red   button’  technology.  We  are  focussing  on  offering  related  content  with  this  technology  and  the  ability   to  switch  to  on-­‐demand  functions.  But  these  are  all  in  the  trial  phase.  There  are  no  existing  programs   at  this  moment  which  use  interactivity.  The  last  program  we  had  was  a  TV-­‐show  around  choirs  in   which  the  audience  could  vote  through  sms  and  influence  the  programming”.   What  are  the  difficulties  you  experience  with  implementing  interactive  television?   “We  find  that  interactivity  is  hard  to  realize  with  the  cable  companies,  who  are  still  the  main   distribution  channel  in  the  Netherlands.  The  service  has  to  meet  the  specific  technical  requirements   of  the  different  platforms  the  cable  company’s  use.  So  for  each  company  you  have  to  adapt  the   service  each  time.  It  is  also  difficult  to  realize  a  return  channel  within  the  infrastructure  of  the  cable   companies.  This  of  course  makes  development  complicated.  It  doesn’t  help  that  providers  such  as   cable  companies  are  reluctant  to  release  information  that  is  gathered  through  interactive  television.   This  is  why  we  also  look  at  mobile  technology  to  provide  a  return  channel.  We  consider  the  ‘red   button’  technology  as  the  easiest  to  implement.  You  can  use  this  for  instance  for  accessing  related   content  which  can  be  easily  put  in  place  beforehand”.   What  is  the  reason  that  there  is  still  no  specific  content  available  for  interactive  television  at  this   moment  within  the  Dutch  public  broadcasters?   “That  kind  of  content  will  be  produced  once  the  technology  is  available.  For  the  broadcasters  it’s   always  the  dilemma  of  weighing  possibilities  against  cost.  The  makers  of  TV-­‐shows  regularly  express   the  desire  to  interact  with  the  public  and  they  do  for  instance  through  SMS,  mail  and  Twitter.  But   producing  an  interactive  program  is  still  a  bridge  too  far”.   What  is  the  strategy  of  NPO  with  regard  to  interactive  television?   “Interactive  television  is  coming  and  we  want  to  be  ready  for  it.  That  is  why  we  are  conducting   experiments  with  red  button  with  the  cable  companies  on  the  one  hand  and  the  exploration  of  
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  interactivity  through  other  platforms  such  as  mobile  on  the  other  hand.  We  have  created  budget  to   facilitate  this.  If  the  technology  proves  itself  and  TV  makers  want  to  use  it  than  we  will  find  money  to   produce  specific  content  for  IPTV.  For  instance  we  are  working  on  our  own  ‘red  button’  technology.   But  xml-­‐communication  is  also  an  important  issue.  We  are  using  the  subtitles  of  programmes  to   index  this  content.  We  are  also  working  on  a  project  with  visual  radio  in  which  users  can  also  upload   content”.   What  is  the  view  of  NPO  on  the  current  IPTV  market?   “We  talk  to  a  lot  of  different  parties  who  are  involved  in  IPTV.  A  lot.  But  no  one  seems  to  reach  the   threshold  in  which  you  can  make  this  technology  work.  Almost  no  one  reached  an  install  base  of   50.000,  which  is  considered  to  be  the  minimum  for  a  viable  business  case”.   Which  factors  influence  the  diffusion  of  IPTV?   “Well,  there  are  many  reasons  that  IPTV  is  still  an  emerging  technology.  First  there  is  the  network.  It   is  just  not  ready  yet.  You  have  to  deal  with  so  many  companies  who  are  involved  in  the  whole   process  between  broadcaster  and  provider,  but  also  between  consumer  and  provider.  There  are  so   may  factors  you  can’t  control.  Also  bandwidth  is  still  an  issue.  If  you  are  going  to  use  the  web  for  very   large  data  files,  the  providers  want  to  get  paid.  This  makes  the  internet  providers  most  suited  for   IPTV,  by  the  way.  On  the  other  hand  there  is  the  content.  The  public  broadcasters  have  interesting   content  for  IPTV  and  we  we’re  the  first  to  be  on  the  platforms  of  KPN  and  Tele2.  But  the  amount  of   content  that  is  really  interesting  for  the  consumer  just  isn’t  there  yet.  There  is  no  real  added  value  in   IPTV  yet”.   What  role  do  standards  play  in  the  diffusion  of  IPTV?   “The  lack  of  a  standard  is  a  bottleneck.  It  makes  the  market  unclear.  And  it  makes  it  difficult  to   develop.  Standards  are  indispensible.  With  IPTV  things  have  remained  to  open  in  my  view.  Here  at   NPO  we  believe  in  a  ‘hybrid’  model.  Broadcasting  through  DVB-­‐T  and  using  the  cable  or  Internet  as   return  channel.  I  am  a  member  of  a  working  group  of  the  European  Broadcasting  Union  which  is   working  on  this.  Of  course  we  are  also  talking  with  Philips  and  Samsung  about  new  developments  as   Net  TV.”   We  seem  to  be  in  a  sort  of  Catch  22  when  it  comes  to  IPTV.  No  standards,  no  content,  no  business   model.  What  is  your  view?   “Yes,  we  seem  to  be  in  a  Catch  22.  But  we  can  break  free.  This  will  require  an  extensive  lobby  with  all   involved  parties.  We  are  developing  content  for  interactive  TV,  but  it’s  trial  and  error.  For  instance   the  ‘red  button’  is  incredibly  hard  to  realize.  There  is  no  standard.  Interactivity  is  not  something  you   can  put  out  there  ready  to  be  picked  up.  Also  here  within  the  Dutch  public  broadcasting  system   budgets  are  still  divided  between  TV,  radio  and  internet.  This  is  hard  to  break  through.  A  TV-­‐show  is   still  produced  for  TV,  and  not  for  interactivity”.   What  are  the  reasons  for  the  big  regional  differences  in  the  diffusion  of  IPTV?   “The  differences  in  infrastructure  play  a  big  role,  mainly  the  difference  in  bandwidth.  But  it  is  also  a   question  of  availability  of  the  content”.  
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  Interview  Marcel  Kuil,  Rabobank   Date:  May  7th  2009.   Marcel  Kuil  is  program  manager  for  the  one  of  the  largest  banks  in  the  Netherlands,  Rabobank.  He  is   currently  responsible  for  the  New  Media  program  of  the  Rabobank.  Marcel  has  worked  most  of  his   career  at  Rabobank.  After  a  year  at  the  national  post  company  PTT,  Marcel  started  at  Rabobank  in   1983.  He  has  a  background  in  information  technology  and  business  economics.   The  Rabobank  is  very  active  in  the  field  of  new  media  and  started  Rabobank  TV  more  than  4  years   ago.  The  bank  also  acts  as  a  telecom  provider  with  Rabo  Mobiel.   What  is  your  company’s  strategy  on  interactive  television?   “We  focussed  on  the  principal  that  all  our  video  content  should  be  accessible  through  one  technical   platform,  and  that  platform  had  to  be  IP-­‐based.  We  started  with  Windows  Media  Centre  as  our   primary  platform.  Initially  our  technological  infrastructure  for  video  was  developed  and  maintained   by  Logica  CMG.”   “Our  starting  point  was  the  combination  of  fun  and  the  possibility  to  do  financial  transactions  and   other  banking  affairs  on  your  tv.  That  means  that  you  can  log  on  to  your  banking  accounts  on  your  tv.   Security  is  a  big  issue  in  this  regard.  That’s  why  we  chose  for  IP.  Via  Open  TV  –  like  UPC  is  using  –  you   can’t  set  up  a  secure  connection.  That  is  of  course  crucial  for  a  bank  like  ours”.   What  technical  platform  are  you  using?   “itv.rabobank.nl”  is  available  on  the  following  stb’s:  Windows  Media  Center,  Daily  Media,  KPN  Mine,   Mediamall,  gaming  platforms  such  as  the  Wii,  Xbox  360  and  Playstation,  Net  TV  by  Philips  (CE   HTML).”   What  is  the  strategy  of  Rabobank  on  IPTV?   “The  Rabobank  is  present  on  many  IP-­‐based  platforms.  It’s  important  to  generate  some  sort  of  mass   and  to  reach  as  many  people  as  we  can.  We  are  also  available  on  non  IP-­‐based  platforms  like  UPC  &   Tele2  where  no  secure  connection  is  possible.  There  we  only  offer  our  (video)  content,  but   subscribers  can’t  do  banking  affairs.  Mass  is  critical,  so  that’s  why  we  are  on  all  of  these  platforms.     “We  do  see  that  internet  and  tv  are  growing  much  closer.  The  basis  was  IP,  the  top  layer  could  be   different  for  different  platforms”.   Does  Rabobank  produce  content  especially  for  IPTV?   “No,  Rabobank  doesn’t  produce  content  especially  for  IPTV.  We  do  make  content  for  mobile   platforms,  internet  and  TV  environments.  We  do  experiment  with  red  button  technology  in  the  TV-­‐ environment,  for  instance  with  UPC.  But  the  question  is:  how  do  you  get  people  on  this  interactive   platform?  They  need  an  incentive.  I  think  the  cable  company’s  could  be  more  active  in  this  field”.   What  kind  of  content  do  you  produce  for  TV?    
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  “Besides  sports  –  the  Rabobank  is  a  big  sport  sponsor  i.e.g.  cycling  and  hockey  –  we  focus  on  local   content.  Our  local  banks  are  very  active  in  sponsoring  events.  We  try  to  encourage  the  production  of   video  of  these  events.  That  content  we  can  use  on  our  video  platform.  And  it  also  increases  the   involvement  of  our  clients.  Community  building  might  be  a  big  word,  but  we  do  encourage  this.   Besides  this  our  extensive  video  archive  is  also  very  important.  And  last  but  not  least  there  is  the   ‘fulfilment’  aspect.  Clients  can  use  the  TV-­‐platform  for  instance  to  make  an  appointment  with  one  of   our  advisers”.   “TV  is  no  longer  just  a  broadcast  platform.  TV  is  an  added  channel.  Internet  is  the  most  important   way  of  communicating  with  our  clients.  After  that  it’s  our  offices  and  branches.  Mobile  is  in  third   place,  followed  by  iTV  as  an  extra  channel”.   “We  operate  our  own  technical  platform.  That  may  change  in  the  near  future  but  not  when  it  comes   to  banking  transactions.  We  do  this  via  secure  internet  connections,  and  we  are  not  planning  on   doing  this  any  other  way.  This  is  also  something  we  emphasize  with  cable  providers”.   What  role  do  content  and  services  play  in  the  diffusion  of  IPTV?   “Somewhere  something  has  got  to  give.  Content  can  play  this  role.  That’s  why  we  are  so  active  in  this   field.  With  our  sponsoring  content  we  have  an  edge  over  other  companies.  We  try  to  persuade  other   companies  to  be  present  on  these  kinds  of  platforms.  It  is  not  in  our  interest  if  we  are  on  our  own.  So   we  discuss  these  technologies  with  our  (banking)  competitors”.   What  is  your  view  of  the  current  diffusion  of  IPTV?   “IPTV  is  completely  unknown  to  the  public.  A  digital  box  that  provides  better  picture  quality  and   better  sound  quality,  that  is  something  users  understand.  But  the  other  possibilities?  Sure,  they  know   about  Video  On  Demand  and  stuff  like  that,  the  rest  is  completely  unknown.  Of  course  it  doesn’t  help   that  every  provider  has  his  own  hardware.  But  there  is  a  lot  going  on  to  tune  the  technical  problems.   The  content  is  no  problem  as  far  as  I  can  see.  That’s  available  if  we  need  it”.  

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  Interview  Hans  Broekhuis,  Tele2.   Date:  May  25th  2009   Hans  Broekhuis  is  Director  TV  Marketing  and  Content  for  Tele2  in  the  Netherlands.  He  is  responsible   for  the  triple  play  offering  of  Tele  2  in  the  Netherlands.  He  manages  a  team  of  7  persons,  who  cover   the  areas  of  sales,  marketing  and  communication  and  technology.  Hans  works  for  Tele  2  since  2000.   Before  this  he  was  consultant  with  DDV  Telecommunication  Consultancy.  He  studied  Business   Management  at  the  Vrije  Universiteit  in  Amsterdam.   How  did  Tele2  get  involved  in  IPTV?   “It  started  when  Tele2  (then  Versatel)  acquired  the  TV  rights  of  the  Dutch  soccer  competition  in   2005.  We  chose  for  the  technology  of  Samsung  for  distribution  and  setup  a  completely  new  IP   network  in  eight  months”.   What  is  your  company’s  view  on  the  IPTV  market?   “I  think  there  is  no  market  for  IPTV.  But  there  is  a  market  for  interactive  television.  What  technology   is  used  is  of  no  importance.  There  are  many  developments  in  interactive  television.  The  past  ten   years  there  was  a  lot  of  discussion  about  which  technology  to  use.  We’ve  grown  past  that  now.  I   think  that  the  technology  is  ready  to  enable  growth  of  interactive  television.  But  this  is  mainly  a   marketing  issue.  As  I  said  technology  isn’t  the  problem  anymore.  But  neither  is  the  content.  The   premium  content  is  there,  in  our  case  soccer  and  movies.  We  see  a  growing  demand  for  Video  On   Demand  and  for  postponed  viewing.  Our  customers  want  to  see  TV  shows  when  it  suits  them.  Of   course  IPTV  enables  us  to  use  the  preference  of  customers  to  adjust  the  offering  we  make  to  them.   We  can  add  intelligence  to  our  systems.  I  don’t  believe  in  the  red  button  technology  at  the  moment.   It  has  no  added  value  yet,  producers  are  not  ready  for  it  and  the  business  case  is  also  unclear”.   What  role  do  standards  play  in  your  opinion?   “Technology  isn’t  the  issue  anymore.  VOD,  the  possibility  to  playback  missed  broadcasts  (‘Uitzending   Gemist’,  ed),  it’s  all  there.  It  would  be  more  convenient  if  there  were  standards,  but  the  lack  of  them   isn’t  a  make  or  break.  The  movement  that  we  see  now  is  that  IPTV  is  evolving  more  to  services  that   are  delivered  in  a  format  that  is  based  on  a  standard.”   What  is  the  strategy  of  Tele2  in  the  IPTV  market?   “We  are  constantly  working  to  improve  our  platform.  This  is  a  real  challenge.  We  want  to  offer   services  on  our  platform  that  will  be  used  by  our  customers.  Services  that  they  are  willing  to  pay  for.   The  consumer  now  is  much  more  interested  in  an  easy  and  cheap  offer.  From  a  marketing   perspective  this  works  much  better  than  offering  interactive  services.  It  is  still  a  challenge  to  to  make   clear  to  our  customers  what  interactive  services  are  and  to  convince  them  to  use  them”.   Is  Tele2  involved  in  the  development  of  standards?   “No,  not  active  at  this  moment.  When  it  comes  to  technology  we  prefer  to  work  with  smaller   companies.  They  operate  faster  and  are  more  flexible.  And,  that’s  also  very  important,  they  are  more   innovative”.  
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  What  standard  does  Tele2  use  at  this  moment?   “We  use  middleware  from  Samsung  and  have  built  our  own  platform”.   What  are  the  important  developments  regarding  IPTV  you  see  at  the  moment?   “Three  things  as  far  as  I’m  concerned.  First  of  all  the  market  for  IPTV  is  very  difficult.  It’s  hard  to   attack  the  companies  that  have  a  monopoly:  the  cable  companies  and  the  companies  that  use   satellite.  In  this  situation  it’s  hard  to  persuade  the  consumer  to  make  the  switch  to  IPTV.  Second   thing  is  that  if  people  have  a  setup  box  at  home,  it’s  hard  to  get  them  to  actually  use  the  system.  A   lot  of  people  still  have  cable  also.  The  third  issue  is  the  interactive  services.  People  have  to  start  using   them  en  start  paying  for  them.  People  will  have  to  be  convinced  of  the  benefits.  Otherwise  it  will   never  work.”   “Another  important  thing  is  internet  integration.  This  is  definitely  coming.  And  it’s  a  stimulus  for  the   complete  IPTV-­‐industry.    Net  TV  for  instance  from  Philips  is  also  very  important.  Once  the  internet   integration  breaks  through,  well  then  IPTV  could  really  fly”.  

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  Interview  Bart  van  Oortmerssen,  AD  Nieuwsmedia.   Date:  May  28th,  2009   Bart  van  Oortmerssen  is  editorial  manager  of  the  multimedia  department  of  the  Dutch  newspaper   Algemeen  Dagblad,  which  changed  it’s  official  name  to  AD  recently.  Algemeen  Dagblad  has  a   circulation  of  460.000.  On  internet  AD.nl  has  3,9  million  unique  visitors  per  month  and  is  the  fourth   largest  news  site  in  the  Netherlands.  Bart  has  almost  25  years  of  experience  in  journalism.  He  started   at  the  regional  newspaper  Utrechts  Nieuwsblad,  which  later  became  a  part  of  AD  Nieuwsmedia.  Bart   studied  Dutch  language  at  the  Universiteit  van  Utrecht.  He  started  at  the  sports  desk  of  Utrechts   Nieuwsblad  and  after  that  worked  at  various  desks  at  the  paper.  Later  he  became  chief  editor  of  the   sports  desk  and  later  of  the  central  news  desk.  The  internet  department  of  the  paper  was  part  of  the   central  news  desk.  After  the  merger  of  Utrechts  Nieuwsblad  with  AD,  Bart  became  deputy  editor-­‐in-­‐ chief  in  charge  of  the  multimedia  department.   How  did  AD  Nieuwsmedia  become  involved  in  IPTV?   “The  Algemeen  Dagblad  was  asked  by  Philips  to  participate  in  Net  TV.  One  of  our  goals  is  to  be   present  on  more  platforms  than  just  print  and  Internet.  Our  content  offering  on  Philips  Net  TV  is   virtually  the  same  as  on  Internet.  We  just  do  a  conversion  to  CE  HTML”.   Does  AD  Nieuwsmedia  have  a  strategy  for  television  and  IPTV?   “Our  strategy  is  to  be  on  as  many  channels  that  we  can  to  make  our  brand  stronger.  Our  UPS’s  are   regional  news,  sports  and  consumer  related  journalism  and  we  try  to  be  present  on  all  platforms.  But   this  is  mainly  focussed  on  print,  internet  and  mobile.  We  have  studied  the  possibilities  for  us  on   television.  We  had  the  ambition  to  offer  complete  programs  besides  the  short  video  items  we  offer   on  internet  at  the  moment.  But  we  concluded  that  there  is  no  business  model  for  us  when  it  comes   to  television.  We  are  making  the  transition  from  traditional  newspaper  company  to  Multimedia   Company  and  that  is  hard  enough.  We  haven’t  put  time  into  interactive  concepts  because  we  want   to  see  what  happens  with  Net  TV.  If  this  proves  to  be  a  success,  we  are  able  to  roll  out  interactive   services  fast.  But  we  have  to  develop  these  services  on  the  basis  of  our  current  activities  and   content”.   Did  you  look  at  other  media  companies  in  the  world  to  see  what  their  strategy  is  with  regard  to  IPTV?   “No,  we  didn’t,  as  far  as  I  know”.   Do  you  see  a  role  for  a  media  company  such  as  AD  Nieuwsmedia  in  IPTV?   “We  don’t  have  a  strategy  for  interactive  television  and  the  role  we  could  play  in  that  field.  There  is  a   vision  for  internet,  not  for  TV”.   What  role  do  standards  play  do  you  think?   “I  don’t  think  that  the  absence  of  standards  in  IPTV  are  a  real  problem.  If  you  have  your  content  in   order  and  if  the  code  is  right,  it  should  be  no  problem.  That  is  my  experience  with  Net  TV.  It’s  just  a   question  of  a  different  front  end.  The  back  end  stays  the  same  as  far  as  we’re  concerned”.   Do  you  produce  specific  content  for  IPTV?  
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  “No,  we  don’t.  Our  motto  is:  produce  once  and  use  many.  If  there  is  a  demand  for  channel  bound   content  we  could  consider  it.  But  it’s  always  a  question  of  cost  and  revenue”.  

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  Interview  Robert  Timmer,  Philips   Date:  June  22th  2009.   Robert  Timmer  is  Senior  Director  Net  TV  of  the  Business  Unit  Television  of  Philips  Consumer  Lifestyle.   He  studied  business  economics  at  the  University  of  Groningen  in  the  Netherlands.  He  started  as  a   temporary  employee  at  Philips  in  1987.  Robert  worked  for  the  business  unit  Domestic  Appliances  and   Personal  car.  In  1999  he  switched  to  Consumer  Electronics  and  especially  audio.  He  was  stationed  in   Asia  for  10  years  and  worked  in  Hong  Kong,  Taipei  and  Singapore.  In  2004  he  moved  back  to  the   Netherlands  and  started  for  the  Connected  Planet  Group  of  Philips.  It’s  task  was  to  develop   consumer  electronics  with  a  internet  connection  and  to  standardize  the  technology  involved.     “My  task  was  to  give  direction  to  standardization  from  a  commercial  standpoint.  Technology  is  great,   but  it  has  to  be  implementable  in  practice.  That’s  all  about  the  interface  and  a  lot  of  commercial   issues  are  involved.  At  Connected  Planet  we  focussed  on  home  networking.  Consumer  electronics   that  can  talk  to  each  other”.   Robert  is  currently  responsible  for  a  new  product  of  Philips:  Net  TV.  This  a  television  with  built-­‐in   internet  connection.  Net  TV  uses  CE-­‐HTML  a  new  standard  for  internet  browsing  with  consumer   electronics  like  TV’s.     What  is  the  role  of  content  and  services  for  instance  with  Net  TV,  but  also  in  IPTV?   “The  value  of  the  consumer  is  in  the  content  and  services  that  can  be  obtained  from  outside.  Here   we  have  learned  one  important  lesson.  There  has  to  be  a  sustainable  business  model.  If  there  is  no   business  model,  the  life  span  of  a  new  product  will  be  very  short.  But  this  can  be  a  very  indirect   model.  It  can  be  generating  traffic  to  a  website,  for  instance.  But  somewhere  money  has  to  be  made.   What  we  realized  is  that  consumers  are  not  waiting  for  Philips  services.  Services  are  very  specific.   People  expect  news  from  established  brands.  It’s  all  about  facilitating  these  services  and  getting   people  enthusiastic  for  them.  It  has  to  make  business  sense  to  the  consumer.  If  you  put  a  lot  of  these   services  together  –  like  we  did  with  Net  TV  –  that  is  also  interesting  for  us  business  wise.  For  instance   we  could  generate  revenue  with  the  services  we  offer  on  Net  TV  through  a  revenue  share”.   What  was  the  difficulty  with  developing  NET  TV?   “If  you  want  to  integrate  these  services  into  a  system  like  Net  TV  you  have  to  design  an  ecosystem.   Basically  that  means  a  browser.  Almost  all  consumers,  especially  in  the  Netherlands  –  have  internet   access.  The  challenge  for  us  was  how  to  build  in  a  browser  into  a  television.  That  was  a  bog   conceptual  challenge.  With  TV  you  don’t  have  some  essential  interactive  elements  –  like  a  mouse   and  keyboard  –  that  you  have  on  a  PC.  That’s  why  Philips  –  together  with  Samsung  and  Intel  –   developed  CE-­‐HTML.  In  2007  that  resulted  in  the  standard  CEA  2014.  This  a  browser  for  televisions   with  what  we  call  ‘spatial  navigation’.  This  also  included  a  MPEG4  decoder  for  playing  media  objects.   This  was  really  the  break  through  for  the  standard,  because  High  Definition  TV  also  uses  MPEG4”.   Is  Net  TV  IPTV?  

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  “No.  To  me  IPTV  is  broadcast  television  that’s  been  done  by  a  vertical  operator  using  IP.  What  we  are   doing  with  Net  TV  is  internet  television.  NET  TV  is  about  everything  but  broadcast.  NET  TV  is  two   things  in  one.  It’s  broadcast  on  the  one  hand,  and  internet  using  a  browser  on  the  other.  Consumers   use  two  cables  to  connect  TV.  One  for  the  TV-­‐signal  and  one  for  the  internet  connection.  The  system   is  not  hybrid  yet.  But  of  course  this  is  where  it  is  going:  the  link  between  internet  and  broadcast”.   How  do  you  see  the  future  of  television?   “Broadcast  will  be  around  for  a  long  time  to  come.  There  are  still  a  lot  of  programs  that  millions  of   people  want  to  see.  It’s  part  of  their  life.  We  think  that  there  are  three  kinds  of  screens:  the  phone  (1   ft),  the  personal  computer  (2ft,  with  complete  interaction)  and  the  TV  (10  ft).  Mobile  and  TV  have  a   lot  of  similarities,  except  that  mobile  has  become  much  more  personal.  On  each  of  these  3  screens   communication,  information  and  entertainment  are  important.  But  on  mobile  communication  is  the   dominant  factor,  on  the  PC  it’s  information  and  on  the  TV  it’s  entertainment”.   What  about  the  role  of    Philips  in  this  development?   “I  think  that  Philips  can’t  be  just  a  supplier  of  hardware.  That’s  a  strategy  that  can’t  be  maintained  in   the  long  run.  The  margin  on  TV’s  has  gone  down  considerably  the  last  years.  To  capitalize  the  added   value  in  TV’s  is  becoming  much  harder.  There  is  overcapacity  in  the  market  and  the  competition  is   killing.  So  the  future  for  us  is  in  the  combination  of  TV  and  services.  Actually  that  is  not  so  much   different  that  the  manufacturing  of  cd-­‐players.  There  we  made  more  in  licensing  than  on  the  players   themselves.  Consumer  Electronics  are  worth  nothing  without  content  or  services.  It’s  all  about  the   way  to  get  these  content  and  services  to  the  appliance”.   How  do  you  see  the  role  of  Philips  in  developing  standards  for  IPTV?   “We  can  do  two  things.  Wait  to  see  how  the  technology  develops  to  maturity.  Or  actively  pursuing   corporation  with  other  to  setup  something  together.  We  have  a  two-­‐track  policy.  We  talk  to  a  lot  of   stakeholders  within  the  Open  IPTV  Forum.  We  talk  to  broadcasters,  operators,  content  providers  and   colleague  CE-­‐manufacturers  from  Japan,  Korea  and  China.  But  while  we’re  doing  this  we  are  also   rolling  out  our  own  technology,  Net  TV”.  The  thin  sis  with  these  standardizing  body’s  that  discussions   tend  to  become  religious  in  character.  But  you  can  talk  endlessly  about  these  issues,  if  you  want  to   go  forward  someone  has  to  do  it.  We  have  built  the  portal  of  Net  TV  on  IBM  web  share.  We  use  open   standards  to  get  more  acceptability.  We  are  prepared  to  share  our  platform  for  reuse”.   So  standards  are  important  to  you?   “It’s  no  use  without  standards.  The  biggest  compliment  to  us  would  be  if  Panasonic  and  Sony  take   over  our  standard.  I  am  convinced  that  they  want  to,  but  we’re  not  there  yet”.   Your  view  on  the  rol  of  content  and  services?   “We  have  built  a  portal  into  Net  TV  where  we  offer  services  of  others  to  the  consumer.  For  this  you   need  a  good  user  interface.  The  TV  is  not  as  smart  as  a  computer,  but  in  our  platform  the  real   intelligence  is  in  the  backend.  We  have  taken  a  step  back  in  the  value  chain.  We  aggregate  services   and  content  with  the  possibility  to  make  money  with  advertising  and  through  revenue  sharing.  Of  

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  course  the  Electronic  Program  Guide  is  very  important  is  this.  We  see  the  EPG  as  an  extension  of  the   user  interface.  And  in  the  case  of  Net  TV  we  do  claim  ownership  of  the  EPG”.   “For  us  there  are  two  kinds  of  content  providers.  The  ones  who  are  already  in  TV  and  the  ones  that   are  not.  We  want  to  talk  to  both.  For  newspapers  it  is  very  interesting  to  be  on  the  ‘third’  screen,   besides  mobile  and  PC.  Don’t  forget  that  2,5  person  watch  a  TV  and  they  are  usually  in  a  well  defined   environment.  Net  TV  offers  newspapers  a  low  cost  opportunity  to  get  on  TV.  On  the  other  hand  you   have  the  companies  that  are  already  on  TV,  the  broadcasters.  A  lot  of  them  feel  like  ‘sitting  ducks’,   because  the  fight  for  the  attention  of  the  consumer  is  so  fierce.  That’s  why  they  offer  postponed   viewing  via  internet,  as  long  as  these  viewers  are  in  the  ratings  and  the  revenue  from  advertising   goes  to  them.  But  there  is  a  problem  with  that.  The  cost  of  viewing  through  internet  are  4  times  as   high  as  through  broadcast.  That  is  why  I  can’t  see  broadcast  disappearing  in  the  short  future.  There  is   no  cheaper  system  available”.   What’s  your  view  on  the  regional  differences  in  the  diffusion  of  IPTV?   “France  stands  out  with  a  reported  6,5  million  IPTV  subscribers.  But  I  don’t  regard  the  French  IPTV  as   real  IPTV.  It’s  just  broadcast  over  IP.  The  geographical  differences  see  to  have  a  historic  background.   For  instance,  in  the  Netherlands  it’s  a  political  issue.  Here  there  is  no  open  market.  De  broadcasters   have  become  addicted  to  the  operators.  The  operators  pay  broadcasters  like  RTL  and  SBS  for  their   content.  In  China  TV  is  mostly  terrestrial.  There  is  an  opportunity  for  interactive  TV  in  China  because   the  normal  TV  is  so  incredibly  boring.  The  United  States  is  the  country  of  exclusivity.  But  the   differences  between  countries  will  be  diminished.  Internet  will  become  the  big  equalizer  in  this   regard”.   How  about  the  comparison  between  the  diffusion  of  Blu-­‐Ray  and  IPTV?  Blu-­‐Ray  has  finally  taken  off   after  there  was  a  standard  accepted  by  the  manufacturers.   “Yes,  I  do  see  a  lot  of  similarities.  NET  TV  can  become  that  standard  as  far  as  I’m  concerned.  And  I’m   not  just  saying  this  because  I  work  for  Philips.  Net  TV  has  been  put  together  exceptionally  well.  And  it   uses  existing  technology  and  open  standards”.  

The  role  of  standards  in  the  diffusion  of  IPTV  in  Western  Europe  

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