For more than a decade, we’ve been hearing about the impending replacement of traditional video distribution methods with a new, better system called IPTV, for Internet Protocol Television. This was supposed to bring a large number of new features to the managed networks and associated set-top boxes used by telcos and pay TV operators. There have been several successful deployments, notably AT&T’s U-verse, but the promise has been largely unfulfilled: we haven’t seen the innovation that was supposed to be brought about by this technological change.
In the meantime, innovation has been on overdrive on the open Internet, both in terms of technical advancements and business model developments. The last few years have seen the emergence of large-scale streaming from companies like Hulu and Netflix, “catch up” services such as the BBC’s iPlayer, indie movies from new sites like SundanceNow, access to long-tail content via YouTube and others. The range of devices used to access this content over the Internet have also expanded to include PC/Mac, smartphones/tablets, and even TV sets, BluRay players and set-top boxes. In this space, Flash is the #1 platform for online video, enabling unparalleled reach and interactivity.
Today, this “over the top” distribution is primarily about video-on-demand. This meets consumers’ desire for time- and place-shifting, with the convenience of watching a movie or program on each viewer’s own schedule and on the device of their choice. However, the underlying technology has now evolved to the point where “linear content”, the industry term for TV channels that play 24×7, can also be delivered in real time over the top, opening drastically more flexibility for consumption. We anticipate that over the next few years, there will be a major shift from traditional television delivery over managed networks to distribution over the open Internet. And with Internet-connected TV sets getting smarter and more powerful every year, such as those running Adobe’s Flash/AIR runtimes for Digital Home consumer electronics products, consumers will be able to “watch TV” with radically more options for content sources and with a richer user experience.
We call this TVoIP or TV over Internet Protocol. This is meant to be much more than a mere transposition of the IPTV acronym; it is an intentional reference to VoIP (Voice over Internet Protocol), which we believe is a very good analogy of the changes that are underway in the video space. In the case of VoIP, which reached mainstream availability over the last decade, at a bare minimum it had to offer the equivalent level of service to the technology it was attempting trying to displace. For telephony, the legacy technology was switched voice, where bandwidth was allocated to each phone call; while this continues to be in use, VoIP is now widely available worldwide from a large number of service providers. However, replacing one transport technology with another is only the beginning; VoIP has made possible significant business model innovation, additional services such as speech-to-text and text-to-speech, and expansion to new points of consumption.
TVoIP will allow pay TV operators who are still using “traditional” technologies such as DVB or QAM for switched digital video distribution to leapfrog over companies that have adopted IPTV. On the other hand, IPTV providers can leverage their investment and extend that to open Internet delivery. But that, again, is just the beginning.
With TVoIP, distribution is largely decoupled from the actual delivery infrastructure, so we can expect to see an explosion in the sources for TV-like experiences. Any content aggregator with access to premium content can offer TV programming directly to consumers, under a variety of business models including advertising, subscription, and surely others that have yet to be invented. If the introduction of cable and satellite made it possible to go from four networks to hundreds of TV channels by changing the economics of content distribution, TVoIP will usher the era of tens of thousands of channels that can be arbitrarily “niche” — think of it as the long tail of television.
The user experience is also guaranteed to be very different from the traditional “switched” experience. For starters, consumers will have greater choice over which devices they use to “watch TV”; these devices are likely to be purchased at retail stores, offering an alternative to leased set-top-boxes. Interactivity will go well beyond channel up/down or the EPG grid, enabling rich interactions with content as well as with other users. Content and advertising can be personalized to a degree that neither switched nor IPTV delivery can support today.
There still remain some significant technical and business challenges to make this a reality. The current network infrastructure for consumer Internet delivery may not be capable of carrying this amount of content economically without some significant changes in business model. For instance, today Netflix’s VOD distribution accounts for around one third of all Internet traffic at peak time, according to some measurements. However, online video watching accounts for only about 5 hours a month for the average consumer, compared to close to 5 hours a day for “traditional” TV. There is a 30X gap between the two, and TVoIP aims to close that gap, which will only exacerbate bandwidth requirements. Telcos are already looking at models to monetize this increase in bandwidth requirement, which will be necessary in order to fund the network expansion required.
Another significant aspect has to do with content rights and the technologies used to manage and enforce those rights. Traditionally, rights for linear delivery have been negotiated separately from rights for Internet delivery, but that model is already being tested by a number of companies willing to push the envelope … and ruffle some feathers in the process. On the technology side, traditional “conditional access” providers have dominated the protection of content distribution over managed networks, but have not been able to make serious inroads into protection for Internet delivery.
Technologies such as Flash Access, which already meet stringent studio requirements for premium content, are achieving incredible reach on consumer-owned devices (and, increasingly, over operator-owned equipment such as set-top boxes). The upcoming version of Flash Access will incorporate significant new features to enable large scale protection for linear content, greatly expanding the type of experiences and business models that can be offered over the top.
The roll out of TVoIP will not happen overnight, and we don’t anticipate that traditional distribution technologies will be turned off any time soon, but the evolution to this model seems inevitable. Adobe’s Flash Platform is well positioned to help accelerate this transition and we are already working closely with early adopters to make TVoIP more than just a soon-to-be catchphrase.
Media & New Technologies