Coming soon, television over the web (Dinosaur Media DeathWatch™)

Two years ago the big thing was VoIP, telephone over the internet. The new big thing is TV over the internet, and it's a tempting big new thing indeed, promising to represent a real challenge to cable.

At the least, it stands to force down the high price consumers pay to watch television. And as a competing distribution stream, IPTV could also usher in a flood of new, innovative programming choices.

The question is when? Technologies on the horizon have a way of staying on the horizon, defying their promoters' promises of sweeping through the marketplace any minute now.

The answer appears to be: sooner than you might think, and easily within several years, according to a new study.

Though still in its infancy, IPTV already has some 300 trials behind it worldwide, and services are up and running in some countries, despite some remaining bugs.

“It’s still very early in the game. The technology is very new, and the operators are still trying to figure out what it will be that will attract people to the offer,” says Denis McCauley, editor of a report on IPTV. “But it will become a viable competitor.” McCauley is director of global technology research for the Economist Intelligence Unit, which did the study with Accenture, a self-described global management consulting and technology services company.

Within a year, distributors should be able to offer content to rival cable and traditional TV. McCauley figures that within one to two years, any remaining bugs with the technology will be worked out and the quality will be as good as cable's.

Driving the challenge will be telephone companies, which with revenues from traditional voice services slumping are now pushing into broadband with a range of services. IPTV will enable them to offer so-called triple-play service of voice, internet and entertainment to lock in customers the way the cable companies are now doing with their triple-play offerings.

“The ability to offer IPTV has given the telcos the chance to offer this triple-play of voice, internet and media services, and thereby try to claw back ground that they have lost to the cable companies, primarily,” says McCauley.

Still, significant IPTV revenue could be years out for the telecoms, the Accenture study found. It was based on a survey of 302 high-level executives at telecom, broadcasting and media companies worldwide.

In fact, only 4 percent of those surveyed are very confident that IPTV will generate significant revenue for their industry in the coming year. Looking three years out 34 percent strongly believe that IPTV will be generating significant revenue, with 57 percent somewhat confident.

“If you are looking out five to seven years, I would guess that IPTV would maybe not be an equal competitor in terms of number of subscribers with cable, because IPTV is not cheap, but it is likely to be a viable competitor,” he says.

The key revenue generation area for IPTV over the next three years is seen by the respondents as being video on demand. Some 19 percent of respondents believed that VOD would be the most significant money-spinner in the next three years.

As for advertising, it managed only sixth place on the list of the anticipated revenue generators, with only 6 percent believing it would be the most significant form of revenue in three years' time.

But McCauley suspects that advertising will be more important than the survey would imply. “I’m not going to say that it will be the dominant source of revenue, but I think that it will be a more important source of revenue than our respondents said.”

Meanwhile, in online ratings for the week ended July 23, the top four parent companies remained the same. Microsoft was No. 1, followed by Yahoo, Time Warner, and Google. News Corp. jumped back above eBay for the fifth place spot by about 1,300 unique visitors, according to Nielsen//NetRatings. Top five brands remained the same: Yahoo, Google, MSN/Windows Live, Microsoft and AOL.

GUS Plc once again retained the top spot among advertisers, delivering 7.27 million impressions. Verizon took the second-place spot with a distant 1.71 million impressions, followed by NexTag, United Online and Netflix.

Sessions held steady at 16, and domains visited per person fell one from last week to 37. Average PC time per person fell about 3 percent from last week to 15 hours, 59 minutes, and 36 seconds.

Related story here.

http://online.wsj.com/article_print/SB115438951538422835.html

Big TV's Broadband Blitz
Networks Are Launching a Slew
Of Web Channels for All Tastes;
College Sports and Quilting Tips
By BROOKS BARNES
August 1, 2006; Page B1

Not long ago, video on the Web consisted of pirated TV shows and movies, amateur videos posted on blogs and a scattered array of news and sports programs mostly available by subscription. But suddenly, Web video is exploding -- fueled by high-speed connections, easier downloads and a flood of new entertainment offerings. Advertisers are moving in swiftly with TV-like commercials, feeding more growth.

Movie studios are negotiating with big digital platforms such as Apple Computer Inc. and Microsoft Corp. to allow sale of movie downloads. Search companies like MSN and Yahoo Inc. are buying programming and emerging as online video destinations in their own right. TV networks are jockeying for position, determined not to get caught flat-footed like the music industry did by file-sharing piracy. But producers also are wary of releasing too much content and seeing its value collapse.

This series explores the implications of the Web video boom for all the major players -- TV networks, film studios, Internet portals and consumer electronics.
* * *

When it comes to tapping into the boom in Web video, Big TV is in hot pursuit of an utterly foreign strategy: smaller is better. The networks are launching a blitz of broadband channels for decidedly niche audiences.

NBC Universal, a unit of General Electric Co., is developing video sites aimed at gay men (OutzoneTV.com), comedy fans (DotComedy.com) and TV junkies (BrilliantButCanceled.com). CBS Corp. operates Innertube, a Web channel with original video for teens and young adults, and theShowbuzz.com, dedicated to entertainment news and gossip. E.W. Scripps Co. is launching 12 video channels devoted to such narrow topics as woodworking, quilting and healthy eating.
[OutzoneTV.com is aimed at gay men]
OutzoneTV.com is aimed at gay men

Using such Internet-video sites is like flipping through channels on a TV with a computer mouse instead of a remote. A menu of programs pop up for on-demand selection. The content ranges from complete shows to clips and extra footage that didn't make a show's original cut. The sites are largely free but carry ads.

"We're on the verge of an explosion of these kinds of ultra-focused broadband channels," says Jordan Levin, a former Warner Bros. executive who recently co-founded a production and management company called Generate LLC in part to develop video content for the Web. "Just as television evolved from the broadcast networks to cable channels, now we're seeing another splintering of the audience."

TV companies see higher profits from distribution of their prime-time shows online rather than the smaller programming, and over the past year they've been working toward that goal. CBS's move to sell episodes of "CSI" on Google Video and Walt Disney Co.'s decision to hawk episodes of "Lost" on iTunes have been the equivalent of sonic booms in the media industry.

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