The phrase ipTV has been used in reference to several different technologies and services, becoming an umbrella term to describe the delivery of video content through a broadband connection to the consumer. IpTV does not require a licence or investment in broadcast transmitters and it sits outside Ofcom’s detailed regulatory regime for TV broadcasters. So it is attracting interest by a wide range of businesses. Online media owners, telecommunications companies, conventional TV broadcasters, content owners and even brand advertisers are investigating the launch of ipTV services.

IpTV services are arriving in the UK at a time when traditional TV broadcasting and the advertising it carries are undergoing a period of adjustment. Advances in technology and the resultant changes in consumer behaviour have provoked review of the mass audience advertising model that has long been the bedrock of this industry. As the number of channels on offer has grown from 3 to more than 500, audiences have become fragmented by the vast array of choice, allowing some finer targeting of audiences at the expense of the erosion of TV’s ability to reach very large audiences at once.

Simultaneously, the attitude of consumers to media and advertising is shifting. Today’s consumers have a stronger sense of individualism than ever before; they want greater control over how and when they consume media and are increasingly intolerant of attempts by media rights owners to limit the ways in which they can do so. This impacts upon attitudes to advertising, driving a preference for engagement on their own terms with advertising for goods and services of relevance to them, as opposed to the traditional approach of broadly targeted interruptions to editorial material.

IpTV services give greater control to the consumer, allowing them more choice of content, to be viewed as and when they want. So it is a timely arrival. But the provision of vast libraries of programming presents one of the major unknowns of the new medium. Who will be the new media owners? Will viewers pay for content? What will they buy or rent and at what cost? Will advertising adequately fund online retailers of TV programming? The intelligent search and personalisation techniques that IP technology offer will play a major role in overcoming this challenge. Ease of use is one of the common features of all successful technologies. It will mark the difference between successful and unsuccessful ipTV operators.

Content owners, from the major film studios to the smallest independent TV production companies are excited about the distribution opportunities presented by ipTV. For many content owners, ipTV presents the first realistic opportunity to sell programmes direct to consumers, rather than via a limited number of powerful intermediaries.

A new cast of distributors including the traditional broadcasters will take shape. Content owners will want to see their product available in the largest number of these outlets, whereas the new intermediaries will seek to create market saliency by offering content exclusively. It remains to be seen how this tension of marketing objectives will be resolved.

Defining ipTV

Internet Protocol Television, or ipTV, is a genuinely new development. Put simply, it defines television content delivered to the consumer via high-speed broadband connections.

There are two approaches to this: supply of programming over a closed network to a TV set-top box, and the viewing of video content via the open network of the world wide web on a PC monitor.

Whilst these two different models are often interchangeably labelled ipTV, it is the former that lays stronger claim to the term. IpTV is a closed, proprietary TV system such as a cable or satellite service but delivered through IP technology over a secure network.

Such services operate over the existing architecture of the internet, but it is important to recognise that they never interface with the open network of the world wide web. The infrastructure and access device are managed and operated by the service provider as a closed network or ‘walled garden’.

The viewing of video content on a PC linked to the internet has a number of labels but is, by consensus, more usually described as Internet TV. One of the main differentiators between this and ipTV is that consumers will have far greater control over what they watch. Whilst ipTV subscribers will be able to view programming at their own convenience, the choice of what they
watch, however extensive this might be, is ultimately determined by the service provider. Using Internet TV, consumers will be able to access the content they want, from wherever they want, unconfined by the schedule or rights arrangements of a single broadcaster.

These two delivery methods will elicit different consumer behaviour. However, the advertising principles that will come into play apply equally to both, even if they are executed in different ways.

For the purposes of this report we will use the phrase ipTV as an umbrella term referring to both models unless otherwise specified.