IPTV: Disrupting the Balance of Power in the US Media Industry

Michael Tang Kenneth Ying
MBA
Candidate
|
Class
of
2012
MBA
Candidate
|
Class
of
2012

Marshall
School
of
Business
Marshall
School
of
Business

University
of
Southern
California
University
of
Southern
California

Popovich
Hall
310
Popovich
Hall
310

Los
Angeles,
CA
90089-‐2632
Los
Angeles,
CA
90089-‐2632

IPTV:
Disrupting
the
Balance
of

Power
in
the
US
Media
Industry

Prepared
by
Michael
Tang
and
Kenneth
Ying
for
Professor
Omar
El
Sawy
(GSBA
556)

March
8,
2011

Image
source:
http://www.sxc.hu/photo/496914

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
1

Table
of
Contents

EXECUTIVE SUMMARY ............................................................................ 2
OVERVIEW OF IPTV WITHIN THE US MARKET ................................................ 3
IPTV
Reducing
Barriers
To
Entry
For
Video
Distribution
..............................................................................
3
Online
Content
Aggregators
Emerging
As
Disruptor
...................................................................................
4
THE IPTV ECOSYSTEM ............................................................................ 5
Relatively
Fragmented,
Leading
To
Multiple
Layers
Of
Intermediaries
.......................................................
5
Figure
1
–
Map
of
IPTV
Ecosystem
...........................................................................................................
5
Publishers
Originate
Professionally
Sourced
Video
Content
.....................................................................
5
Aggregators
Provide
Content
Owners
With
Secure
Distribution
And
Shared
Revenue
............................
5
IPTV
Receiver
Platforms
Set
To
Emerge
Into
Mainstream
...........................................................................
6
IPTV
Receiver
Platforms
Moving
Into
Financial
Intermediation
...............................................................
7
ECOSYSTEM HEALTH ASSESSMENT ............................................................. 8
High
Productivity,
Driven
By
Increasing
Consumer
Demand
and
Advertising
Revenue
..............................
8
Figure
2
–
North
America
Market
Size
for
Online
Video
Advertising
(ex
Mobile;
2004-‐2013p)
...............
9
Robustness
Highly
Dependent
Upon
Cooperation
From
Content
Owners
..................................................
9
Niches
Emerging
In
Amateur
Content,
Gaming
.........................................................................................
10
Overall,
Ecosystem
Healthy
With
Strong
Growth
Prospects
.....................................................................
11
GAME CHANGERS ................................................................................. 12
AllVid
Could
Dramatically
Increase
Consumer
Access
To
IPTV
Content
....................................................
12
Rollout
Of
4G
Networks
Enables
Wireless
IPTV
Content
Delivery
.............................................................
12
Dynamic
Ad
Placement
Brings
Targeted
Advertising
To
Television
...........................................................
13
APPENDIX .......................................................................................... 14
Exhibit
1
–
Map
of
IPTV
Ecosystem
(Landscape
Orientation)
....................................................................
14

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
2

EXECUTIVE
SUMMARY

The
Internet
Protocol
Television
(IPTV)
ecosystem
in
the
United
States
is
poised
to
move
into
the

mainstream,
driven
by
growing
consumer
demand
and
advertising
revenues.
High
productivity,
with

niches
emerging
in
amateur
content
and
online
gaming,
points
to
a
cautiously
healthy
ecosystem,
that
if

allowed
to
develop
fairly
and
unrestrictedly,
may
radically
alter
the
market
for
consumer
television.

Market
research
firm
Strategy
Analytics
predicts
revenue
from
the
US
IPTV
ecosystem
will
reach
$15

billion
by
2013,
while
PricewaterhouseCoopers
(PwC),
a
consultancy,
estimates
that
17
million

households
in
the
US
will
subscribe
to
IPTV
services
by
2013.
This
increase
represents
a
50%
compound

annual
growth
rate
over
the
period
from
2009
to
2013.1,2
The
majority
of
players
in
the
ecosystem—
from
IPTV
receiver
platform
manufacturers
to
content
owners
and
aggregators—exceeded
sales
and

revenue
targets
in
2010.
PwC
also
predicts
that
advertising
spend
for
online
video
will
reach
$3.5
billion

in
2012,
an
8.4%
compound
growth
annual
rate.3

The
health
of
the
ecosystem
faces
risks
from
content
owners
withdrawing
content
from
aggregators,

restricting
consumer
access
to
direct
distribution
channels.
In
the
absence
of
rich
premium
content

available
through
aggregators
such
as
Hulu
and
Netflix,
the
consumer
value
proposition
would
be

greatly
reduced,
significantly
hindering
the
further
development
of
the
ecosystem.

Several
game
changers
are
set
to
dramatically
alter
the
environment
of
the
IPTV
ecosystem:

• AllVid
could
significantly
increase
consumer
access
to
IPTV
content:
The
Federal

Communications
Commission
is
pushing
the
home
entertainment
industry
to
adopt
AllVid,
a

proposed
technology
that
aims
to
provide
consumers
with
a
universal
interface
to
paid
video

content.
In
theory,
this
technology
would
enable
IPTV
content
to
be
seamlessly
distributed

throughout
a
home
without
the
aid
of
set-‐top
boxes,
greatly
increasing
the
accessibility
of
IPTV

services.
As
such,
IPTV
content
would
be
placed
on
a
level
playing
field
with
cable
and
satellite

content,
greatly
increasing
IPTV’s
share
of
subscriber
and
advertising
revenues.
Furthermore,

AllVid
could
place
significant
pressure
upon
the
current
bundled
pricing
model
for
subscription

television,
leading
a
shift
towards
a
la
carte
pricing.

• Rollout
of
4G
networks
will
enable
wireless
IPTV
content
delivery:
Unlike
3G
networks,
4G

networks
provide
sufficient
bandwidth
for
IPTV
transmission,
resulting
in
increased
penetration

of
IPTV
services
to
mobile
devices
and
rural
markets.
Further
shifts
balance
of
power
from
cable

and
satellite
operators
to
wireless
providers,
with
increases
in
market
share
due
to
lower

deployment
costs.

• Dynamic
ad
placements
will
bring
targeted
advertising
to
television:
Integrating
viewing
data

with
online
behavior
and
transaction
history,
dynamic
ad
placement
allows
IPTV
providers
to

build
far
more
robust
user
profiles,
providing
advertisers
with
a
significantly
greater
value

proposition
than
that
offered
by
cable
and
satellite
providers.

1

“Global
entertainment
and
media
outlook
2009
–2013”,
PwC,
Jun
2009,
p
182

2

Viviek
Naik,
“U.S.
IPTV
to
hit
$15
Billion
in
Revenues
by
2013,
Study
Says”,
TMCNet,
Sep
2
2009,

http://iptv.tmcnet.com/topics/iptv/articles/63554-‐us-‐iptv-‐hit-‐15-‐billion-‐revenues-‐2013-‐study.htm,
accessed
Mar
5
2011

3

Ibid.

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
3

OVERVIEW
OF
IPTV
WITHIN
THE
US
MARKET

IPTV
Reducing
Barriers
To
Entry
For
Video
Distribution

Internet
Protocol
Television
(IPTV)
is
a
system
for
delivering
video
that
leverages
the
networks
and

protocols
of
the
internet,
replacing
traditional
broadcasting
technologies.
IPTV
is
a
rapidly
growing

market.
According
to
Strategy
Analytics,
a
market
research
firm,
revenue
from
the
US
IPTV
ecosystem

will
reach
~$15
billion
by
2013.4
PricewaterhouseCoopers
(PwC),
a
consultancy,
estimates
that
17
million

households
in
the
US
will
subscribe
to
IPTV
services
by
2013,
representing
~50%
compound
annual

growth
over
the
period
from
2009
to
2013.5

Broadly
speaking,
IPTV
dramatically
reduces
the
barriers
to
entry
for
video
distribution.

Broadcast
television,
the
first
technology
that
enabled
widespread
transmission
of
video,
requires
costly

licenses
for
access
to
spectrum,
a
finite
resource,
limiting
video
distribution
to
well-‐capitalized
entities.

Cable
television,
the
next
evolution
in
video
distribution,
brought
significantly
greater
capacity,
enabling

consumers
to
access
hundreds
of
channels
through
a
single
wire.
As
wiring
a
household
for
cable

required
significant
investment,
cities
created
natural
monopolies
by
awarding
exclusive
franchises
to

cable
companies,
giving
these
firms
significant
market
power.

Unlike
broadcast
and
cable,
IPTV
provides
a
relatively
open
platform
for
video
distribution.
Services
such

as
YouTube
and
Vimeo
enable
content
creators
to
reach
a
global
audience
with
negligible
upfront

investment.
There
are
two
key
properties
of
IPTV
that
enable
this
openness:

• Packet-‐switching:
With
broadcast
and
analog
cable,
all
channels
are
continuously
piped
through

the
transmission
medium,
regardless
of
whether
any
receiver
is
using
that
signal.
IPTV
uses
the

infrastructure
underlying
the
internet
for
video
transmission.
Instead
of
continuous

transmission,
with
IPTV,
a
video
stream
is
broken
into
discrete
packets
that
are
reassembled
by

the
receiver.
This
provides
a
fertile
platform
for
video-‐on-‐demand,
as
a
receiver’s
bandwidth

remains
open
until
a
video
stream
is
requested.

• Network
neutrality:
The
Federal
Communications
Commission
(FCC),
the
main

telecommunications
regulatory
body
in
the
United
States,
ruled
in
late
2010
that
internet

service
providers
(ISPs)
can
not
discriminate
between
their
own
services
and
those
provided
by

third-‐parties.6
In
recent
years,
tensions
have
escalated
between
ISPs
and
online
video

distributors,
such
as
Netflix,
over
high-‐bandwidth
use.
Prior
to
the
FCC’s
ruling,
Comcast,
the

largest
cable
company
in
the
United
States,
had
demanded
that
Netflix’s
content
delivery

provider,
Level
3
Communications,
pay
Comcast
as
compensation
for
handling
Netflix’s
incoming

traffic
to
Comcast
subscribers.7
By
upholding
network
neutrality,
the
FCC
maintains
the
status

quo
whereby
consumers
can
access
any
video
distributor
through
the
connection
provided
by

their
ISP.
This
is
a
significant
departure
from
the
business
models
of
cable
and
broadcast

4

Viviek
Naik,
“U.S.
IPTV
to
hit
$15
Billion
in
Revenues
by
2013,
Study
Says”,
TMCNet,
Sep
2
2009,

http://iptv.tmcnet.com/topics/iptv/articles/63554-‐us-‐iptv-‐hit-‐15-‐billion-‐revenues-‐2013-‐study.htm,
accessed
Mar
5
2011

5

“Global
entertainment
and
media
outlook
2009
–2013”,
PwC,
Jun
2009,
p
182

6

Jeffry
Bartash,
“FCC
approves
new
rules
governing
Internet”,
Marketwatch,
Dec
21
2010,
http://www.marketwatch.com/story/fcc-‐backs-‐new-‐
rules-‐governing-‐internet-‐2010-‐12-‐21,
accessed
Mar
6
2011

7

Jeffry
Bartash,
“Comcast
in
dispute
over
Netflix
downloads”,
Marketwatch,
Nov
30
2010,
http://www.marketwatch.com/story/comcast-‐in-‐
dispute-‐over-‐netflix-‐downloads-‐2010-‐11-‐30,
accessed
Mar
6
2011

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
4

television,
as
these
structures
historically
provided
telecommunications
firms
with
near
total

control
over
the
video
content
that
subscribers
could
receive
through
their
services.

Online
Content
Aggregators
Emerging
As
Disruptor

The
openness
enabled
by
IPTV
platforms
has
resulted
in
two
distinct
business
models
within
the
US

market:

• IPTV
as
a
product-‐line
extension
for
telecommunications
firms:
Prior
to
IPTV,

telecommunications
firms
lacked
the
capability
to
directly
offer
video
services
to
their

subscribers.
In
contrast,
cable
companies’
infrastructure
provided
sufficient
bandwidth
to
offer

voice,
data,
and
video
through
a
single
connection.
AT&T,
a
leading
US
provider
of
traditional

phone
and
DSL
data
services,
launched
an
ambitious
network
upgrade
in
2006
to
increase
the

capacity
of
its
infrastructure
to
support
an
IPTV
service
branded
as
“U-‐verse”.8
Executives
at

AT&T
have
stated
that
these
upgrades
require
a
“couple
billion”
in
capital
expenditures
each

year.
9
Services
such
as
U-‐verse
compete
directly
with
traditional
video
services
from
cable
and

satellite
firms.
Ongoing
subscriptions
for
access
to
a
basket
of
channels
are
the
primary
source

of
revenue.

• Online
content
aggregators:
Services
such
as
Netflix,
Amazon
Instant
Video,
iTunes,
Hulu,
and

YouTube
provide
consumers
with
a
library
of
video
content,
accessible
through
a
high-‐speed

internet
connection
across
multiple
platforms,
such
as
personal
computers,
mobile
devices,
and

televisions.
This
category
can
be
further
segmented
into
aggregators
that
focus
on
professional

content,
such
as
Netflix
and
Hulu,
and
those
that
focus
on
amateur
content,
such
as
YouTube

and
Vimeo.

These
online
content
aggregators
are
disrupting
the
business
model
of
the
traditional
subscription
video

services
offered
by
telecommunications,
cable,
and
satellite
companies,
unleashing
significant

whitespace
for
opportunistic
firms
to
capitalize
on
opportunities
within
the
IPTV
ecosystem.
As
such,
the

remainder
of
this
report
will
focus
on
IPTV
as
delivered
through
online
content
aggregators.

8

Peter
Grant,
“Business
Technology:
AT&T
Raises
TV
Stakes
With
Bigger
HD
Lineup;
Aiming
to
Trump
Cable,
Service
Adds
27
Channels;
Big
Test

of
Internet
Tools”,
The
Wall
Street
Journal,
Dec
19
2006,
via
ProQuest,
accessed
Mar
6
2011

9

Niraj
Sheth,
“AT&T
Rethinks
U-‐Verse
Spending
After
FCC
Move”,
The
Wall
Street
Journal,
Jun
15
2010,
via
ProQuest,
accessed
Mar
6
2011

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
5

THE
IPTV
ECOSYSTEM

Relatively
Fragmented,
Leading
To
Multiple
Layers
Of
Intermediaries

Figure
1
–
Map
of
IPTV
Ecosystem

IPTV%Ecosystem:%RelaAvely%Fragmented,%Leading%to%MulAple%Layers%of%Intermediaries%
Legend%(note:%size%of%arrows%represents%magnitude%of%ﬂows)%% ILLUSTRATIVE%
Financial+Flow+ Content+Flow+
AdverAsing%Networks%
B2B%TransacAons%

Content%Owners%/% Content%Aggregators% Content+Delivery+
Publishers% Networks+

Financial%Intermediaries%
C2B%TransacAons%

Internet+Service+
IPTV%Receiver%Pla.orms% Providers+

Electronics+Retailers+ Consumers%

Sources:+Team+analysis;+logos+reproduced+under+Fair+Use+excepCon+(17+U.S.C.+§+107)+for+nonLproﬁt+educaConal+purposes;+icons+obtained+from+iconarchive.com;+tv+image+obtained+from+sxc.hu+(royaltyLfree)+

Note:
A
larger
version
of
this
map
has
been
reproduced
in
the
Appendix
as
“Exhibit
1
–
Map
of
IPTV
Ecosystem
(Landscape

Orientation)”

Publishers
Originate
Professionally
Sourced
Video
Content

The
path
from
content
owners
and
publishers
to
the
end
consumer
crosses
multiple
boundaries
in
the

IPTV
ecosystem.
Media
companies,
such
as
ABC,
FOX,
and
NBC,
originate
the
flow
of
professionally

sourced
content.
Most
publishers
then
push
their
content
to
aggregators,
while
some
also
offer

consumers
direct
access
through
their
website.
For
those
publishers
that
offer
direct
access,
viewing
is

restricted
to
personal
computers.

Aggregators
Provide
Content
Owners
With
Secure
Distribution
And
Shared
Revenue

In
contrast,
aggregators
provide
consumers
the
ability
to
view
content
across
a
wider
variety
of

receivers,
such
as
smartphones,
dedicated
IPTV
set-‐top
boxes,
and
newer
high-‐end
televisions.
Content

owners
are
the
main
driver
behind
the
success
of
aggregators.
For
example,
Hulu,
one
of
the
most

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
6

successful
content
aggregators,
is
jointly
owned
by
Disney
(parent
of
ABC),
NBC,
and
FOX.10
Jeff
Zucker,

CEO
of
NBC
Universal,
explained
in
an
interview
with
The
Wall
Street
Journal
that
Hulu
came
about
as
a

way
to
“train
people
to
legally
view
[content]
online”.11
As
broadband
providers
increased
the
speed
of

their
offerings,
video
content
owners
feared
that
consumers
would
turn
towards
unauthorized

distribution
channels,
a
trend
that
had
cannibalized
much
of
the
revenue
within
the
music
industry.

Aggregators
offer
content
owners
with
a
secure
distribution
platform
and
established
business
model

for
monetizing
content.

Three
primary
business
models
have
emerged
from
online
aggregators:
pay-‐per
download,
subscription,

and
advertising
–
along
with
a
“freemium”
model
that
blends
elements
of
the
latter
two
business

models.

The
iTunes
Store
is
the
most
recognizable
operator
of
the
pay-‐per
download
model.
Consumers
must

pay
a
set
price
for
each
program
they
choose
to
view.

Netflix
is
an
example
of
a
subscription-‐based
model.
In
exchange
for
a
monthly
fee,
consumers
are

provided
unlimited
access
to
a
library
of
content.

YouTube
uses
an
advertising
supported
model,
leveraging
Google’s
strength
in
text
ads
as
an
extension

into
video.
In
an
interview
with
The
Wall
Street
Journal,
an
executive
with
Neo@Ogilvy,
a
digital
ad

agency,
explained
that
some
advertisers
are
not
comfortable
with
running
ads
alongside
user-‐generated

content.
This
has
complicated
Google’s
efforts
to
increase
YouTube’s
revenue,
resulting
in
continued

operating
losses.
12

Hulu
is
an
example
of
the
freemium
model.
The
company
offers
consumers
free
access
to
select
video

content
on
personal
computers.
For
a
monthly
fee,
consumers
can
upgrade
to
Hulu
Plus,
which
offers
a

wider
variety
of
content
across
multiple
viewing
platforms.

IPTV
Receiver
Platforms
Set
To
Emerge
Into
Mainstream

In
2010,
internet-‐connected
televisions
emerged,
bringing
online
content
aggregators
directly
into
the

living
room.
One
of
the
most
visible
illustrations
of
this
trend
is
Google’s
launch
of
Google
TV,
an
IPTV

receiver
platform
based
on
the
Android
operating
system.
Through
a
partnership
with
Sony,
Google’s

software
has
been
embedded
within
select
television
models.13
Google
has
also
licensed
its
software
to

manufacturers
of
set-‐top
boxes,
such
as
Logitech.
Through
these
deals,
Google
aims
to
enable

consumers
to
watch
video
from
any
website
directly
through
their
television,
providing
direct
access
to

content
owners.
The
business
model
for
Google
TV
is
similar
to
that
of
Android:
the
Google
TV
platform

is
available
to
device
manufacturers
without
charge
from
Google,
and
in
return,
Google
can
reach

consumers
in
the
living
room
with
advertisements.
Although
some
content
owners
have
been

supportive-‐notably
Time
Warner,
owner
of
HBO-‐have
reacted
negatively.
ABC,
NBC,
CBS,
and
Hulu
are

among
the
services
that
block
Google
TV
devices
from
viewing
video
content.14
By
creating
a
keystone

10

Paul
Thomasch,
“UPDATE
3-‐Disney
joins
Hulu
video
site,
takes
ownership
stake”,
Reuters,
Apr
30
2009,

http://www.forbes.com/feeds/afx/2009/04/30/afx6364646.html,
accessed
Mar
6
2011

11

Peter
Kafka,
“NBC
CEO
Jeff
Zucker:
Hulu
Will
Start
Breaking
Even
“Soon””,
The
Wall
Street
Journal,
May
28
2009,

http://d7.allthingsd.com/20090528/d7-‐interview-‐nbc-‐universal-‐ceo-‐jeff-‐zucker/,
accessed
Mar
6
2011

12

Kevin
J.
Delaney,
“Google
Push
To
Sell
Ads
On
YouTube
Hits
Snags
-‐-‐-‐
Video
Site
Is
Key
To
Diversification;
The
Lawsuit
Factor”,
The
Wall
Street

Journal,
Jul
9
2008,
via
Factiva,
accessed
Mar
6
2011

13

Don
Clark,
“Google
Unveils
Software
to
Join
TV,
Web”,
The
Wall
Street
Journal,
May
21
2010,
via
ProQuest,
accessed
Mar
6
2011

14

Sam
Schechner,
Amir
Efrati,
“Networks,
Google
Spar
Over
Web
TV”,
The
Wall
Street
Journal,
Oct
22
2010,
via
ProQuest,
accessed
Mar
6
2011

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
7

platform,
the
success
of
Google
TV
could
ultimately
supplant
more
established
players
such
as
Hulu
and

its
primary
owners:
ABC,
NBC,
and
FOX.

Other
companies
offering
IPTV
receiver
platforms
include
Apple
(Apple
TV),
Roku,
Microsoft
(Xbox
360

Mediaroom),
and
Cisco
(Videoscape).
While
these
platforms
are
increasing
availability
of
IPTV
in
the

living
room,
it
is
unlikely
that
cable
set-‐top
boxes,
the
most
common
add-‐on
device,
will
support
content

aggregators.
Content
aggregators
provide
an
alternative
source
for
video
content
distinct
from
the

traditional
subscription
model
offered
by
cable
companies.
Therefore,
for
a
cable
set-‐top
box
to
support

a
service
such
as
Netflix
or
Hulu
would
diminish
the
value
of
the
cable
operator’s
core
video
offerings.

Nevertheless,
the
continued
proliferation
of
IPTV
receiver
platforms
into
televisions
and
other
devices

will
increase
the
reach
of
content
aggregators
into
the
living
room.

IPTV
Receiver
Platforms
Moving
Into
Financial
Intermediation

Device
manufacturers
are
primarily
limited
to
one-‐off
revenue
from
a
consumer’s
initial
purchase
of
that

item.
In
contrast,
consumer
payments
to
publishers
and
aggregators
for
content
represent
an
on-‐going

revenue
stream.
Developers
of
IPTV
receiver
platforms
have
begun
to
recognize
this
opportunity
by

integrating
the
capability
to
purchase
content
directly
from
their
platform.

Apple’s
iTunes
Store
is
an
example
of
dominator
strategy
that
seeks
to
maximize
Apple’s
share
of
the

overall
ecosystem.
In
February
2011,
Apple
announced
that
companies
who
sell
digital
content
for

applications
on
iOS
devices
must
use
Apple’s
in-‐app
payment
mechanism
to
process
transactions.
In

exchange
for
30%
of
the
revenue
from
each
transaction,
Apple
would
provide
publishers
with
seamless

integration
into
iOS
devices.
Although
Apple
has
yet
to
publically
state
whether
online
video

aggregators,
such
as
Hulu
and
Netflix,
would
be
subject
to
the
new
rule,
other
aggregators
such
as

Rhapsody,
a
music
subscription
service,
have
stated
that
Apple’s
stance
is
“economically
untenable”.15

Apple,
as
an
existing
market
leader
in
Content
Aggregation
/
Financial
Intermediation
(iTunes
Music

Store),
Electronics
Retailers
(Apple
Store),
and
IPTV
Receiver
Platform
(iOS,
Apple
TV),
is
using
its
strong

market
position
to
capture
a
highly
attractive
space
within
the
IPTV
ecosystem.

15

Yukari
Iwatani
Kane,
Russell
Adams.
“Apple
Opens
a
Door,
Keeps
Keys”,
The
Wall
Street
Journal,
Feb
16
‘11,
via
ProQuest,
accessed
Mar
6
‘11

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
8

ECOSYSTEM
HEALTH
ASSESSMENT

The
health
of
the
ecosystem
will
be
evaluated
based
on
three
“critical
measures
of
health”:
productivity,

robustness,
and
niche
creation.16

High
Productivity,
Driven
By
Increasing
Consumer
Demand
and
Advertising
Revenue

The
primary
measure
of
productivity
of
an
ecosystem
is
the
ability
of
firms
within
that
ecosystem
to

generate
revenues.
For
the
evaluation
of
the
IPTV
ecosystem,
we
will
be
looking
at
value
and
cash

generation
through
three
primary
sources:
device
unit
sales,
subscriber/pay-‐per-‐view,
and
advertising.

Unit
sales
of
IPTV
receiver
platforms
have
been
growing
steadily
over
the
last
few
years.
In
2010,
Apple

and
Roku
both
announced
that
they
have
sold
one
million
units
of
the
Apple
TV
and
Roku
Player

respectively.17
Revenues
at
Roku
exceeded
$50
million
in
2010,
and
are
expected
to
reach
$100
million

in
2011.18
While
this
represents
just
a
small
proportion
of
the
US
television
market,
hitting
the
one-‐
millionth
unit
sales
mark
was
still
a
significant
milestone.
Demand
for
such
IPTV
receiver
sets
delivering

niche,
non-‐traditional
television
content
has
seen
an
uptick
in
recent
years.
While
it
took
Apple
four

years
to
hit
this
target
when
it
launched
the
Apple
TV
in
January
2007,
Roku
achieved
this
same
target
in

a
little
over
a
year.
19,20

Sales
of
other
non-‐dedicated
IPTV
devices
have
seen
even
faster
growth.
Game
consoles
such
as
the

Xbox
360,
PlayStation
3,
and
Nintendo
Wii
all
have
capabilities
to
connect
via
Wi-‐Fi
to
IPTV
content

aggregators
such
as
Netflix.
Since
its
launch,
the
Nintendo
Wii
has
generated
worldwide
sales
of
85

million
units
(33
million
in
the
US),
while
the
Xbox
360
and
PlayStation
3
has
sold
over
50
million
units

(19
million
in
the
US)
and
48
million
units
(12
million
in
the
US)
respectively.21,22,23
Furthermore,
many

consumer
electronic
goods
such
as
HD
television
sets
and
Blu-‐ray
players
by
LG,
Samsung,
Sony,
and

Philips
come
standard
with
Wi-‐Fi
connectivity,
providing
connectivity
to
IPTV
content
on
a
limited
basis.

In
late
2010,
Roku
announced
that
it
would
begin
licensing
its
platform
to
third-‐party
hardware

manufacturers.24
In
a
move
seen
as
a
direct
challenge
to
the
much
delayed
Google
TV
platform,
this
is

predicted
to
greatly
increase
market
penetration
for
Roku,
and
allow
many
more
consumers
access
to

IPTV
content
available
only
through
the
Roku
Channel
Store.

On
the
content
subscription
front,
content
aggregator
Netflix
announced
revenue
increases
of
34%,
with

a
52%
surge
in
profits
during
their
forth
quarter
earnings
call.25
The
Wall
Street
Journal
reported
that

Netflix’s
“movie-‐streaming
service
fueled
the
addition
of
3.1
million
subscribers
over
the
holidays”,

16

Marco
Iansiti,
Roy
Levien.
“Strategy
as
Ecology”,
Harvard
Business
Review.
Mar
2004,
p.
72

17

Tracey
Schelmetic,
“Apple
TV
and
Roku
to
Announce
Million-‐Sales
Milestone;
Google
TV
Lags”,
TMCNet,

http://iptv.tmcnet.com/topics/iptv/articles/128696-‐apple-‐tv-‐roku-‐announce-‐million-‐sales-‐milestones-‐google.htm,
accessed
Mar
05
2011

18

Ibid.

19

Wolfgang
Gruener,
“Apple’s
History
Lesson:
The
iPhone
and
AppleTV”,
TGDaily,
http://www.tgdaily.com/mobility-‐features/30712-‐apples-‐
history-‐lesson-‐the-‐iphone-‐and-‐appletv,
accessed
Mar
06
2011

20

Press
Release,
“Roku
Launches
Open
Platform
for
Delivery
of
Content
to
the
TV”,

http://www.roku.com/Libraries/Press_Releases/Roku_Channel_Store_Release.sflb.ashx,
Nov
2009,
accessed
Mar
06
2011

21

Nintendo
Co.
Ltd.
Consolidated
Financial
Highlights,
http://www.nintendo.co.jp/ir/pdf/2011/110127e.pdf,
accessed
Mar
06
2011

22

Tor
Thorsen,
“Xbox
Sells
50
million;
Kinect
ships
8
million”,
Gamespot,
http://ces.gamespot.com/story/6285921/xbox-‐360-‐sells-‐50-‐million-‐
kinect-‐8-‐million,
accessed
Mar
06
2011

23

“PlayStation®3
Worldwide
Hardware
Unit
Sales
|
CORPORATE
INFORMATION｜
Sony
Computer
Entertainment
Inc:”,

http://www.scei.co.jp/corporate/data/bizdataps3_sale_e.html,
accessed
Mar
06
2011

24

Mark
Hachman,
“Roku
Says
It
Will
License
Platform”,
PCMag,
http://www.pcmag.com/article2/0,2817,2371611,00.asp,
accessed
Mar
06
‘11

25

Nick
Wingfield,
“Netflix
Sees
Surge
in
Subscribers”,
The
Wall
Street
Journal,
Jan
27
2011,
via
Factiva,
accessed
Mar
06
2011

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
9

bringing
its
total
subscriber
base
to
over
20
million.26
Other
IPTV
subscription
based
content
aggregators

are
also
slowly
gaining
traction.
One
Touch
Intelligence
recently
estimated
that
Hulu
Plus,
a
relatively

new
entrant
into
the
subscription-‐based
IPTV
model,
has
achieved
4%
conversion
across
Hulu’s
total

user
base
of
30
million.27
Another
report
by
Screen
Digest
puts
Apple’s
iTunes
Store
at
the
forefront
of

on-‐demand
video
sales
and
rentals,
noting
that
overall
sales
increased
60%
in
2010
compared
to
2009.28

Online
video
advertising
has
experienced
a
resurgence
in
recent
years
as
“rising
broadband
penetration

and
increased
broadband
speeds”
has
increased
the
market
for
streaming
video,
and
made
online
video

advertising
feasible.29
PwC
predicts
that
online
“video
advertising
spend
in
North
America
will
grow
at

an
8.4%
compound
annual
rate
to
$3.5
billion
in
2012
from
$2.4
billion
in
2008.”30
Several
factors
are

driving
this
trend.
Multiple
studies
show
that
more
and
more
consumers
are
watching
television

programs
on
the
web,
climbing
to
22%
in
2010
from
8%
in
2006.31
In
addition,
research
from
comScore

indicates
“people
who
watch
TV
shows
online
will
tolerate
about
twice
the
amount
of
ads
the
medium

now
averages”.32
All
these
factors
working
together
are
predicted
to
drive
online
video
advertising

revenues
for
both
content
owners/creators
and
aggregators
in
the
years
ahead.

Figure
2
–
North
America
Market
Size
for
Online
Video
Advertising
(ex
Mobile;
2004-‐2013p)

Wired Internet rich media/video advertising market† (US$ millions)

North America 2004 2005 2006 2007 2008p 2009 2010 2011 2012 2013
United States 960 1,000 1,010 2,120 2,350 2,450 2,575 2,765 3,070 3,500
Canada NA NA NA 8 16 18 20 24 32 45
Total 960 1,000 1,010 2,128 2,366 2,468 2,595 2,789 3,102 3,545

†At average 2008 exchange rates.
Sources: Interactive Advertising Bureau, Interactive Advertising Bureau of Canada, PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Wired Internet rich media/video advertising market growth (%)
2009–13
North America 2004 2005 2006 2007 2008p 2009 2010 2011 2012 2013 CAGR
United States 46.6 4.2 1.0 109.9 10.8 4.3 5.1 7.4 11.0 14.0 8.3
Canada — — — — 100.0 12.5 11.1 20.0 33.3 40.6 23.0
Total 46.6 4.2 1.0 110.7 11.2 4.3 5.1 7.5 11.2 14.3 8.4


Source:
“Global
entertainment
and
media
outlook
2009
–2013”,
PwC,
Jun
2009

We expect declines in display and classiﬁed to offset Including e-mail, sponsorships, lead generation, and
Robustness
Highly
Dependent
Upon
Cthat
gains in search and video in 2009, with the result other categories, wired online advertising for the overall
overall wired Internet advertising will decrease. ooperation
From
Content
Owners
percent compound
forecast period will advance at a 5.8
annual rate to $32.9 billion in 2013 from $24.8 billion in
Robustness
oa 3.9 ecosystem
may
2009, easured
several
w2008.One
method
is
to
analyze
the
antensity
of

We expect
f
an
percent decline in be
mwith the
US falling by 4 percent and Canada by 3.5 percent.
ays.
The United States will increase at i 5.7 percent
rate compounded annually to $30.9 billion, and Canada
partnerships
w
Spending will ithin
the
e2010 as gains ith
content
aggregators
as
a
measure
of
the
quality
of
content

edge up in cosystem
w in search and
will grow by 7.7 percent on a compound annual basis
video offset declines in display and classiﬁed. In both
available
for
consumers.
Content
that
consumers
are
willing
tbillion. for
creates
value
that
can
be
divided

countries we expect mid-single-digit increases in 2011
to $2 o
pay

and double-digit growth in 2012–13.
and
shared
for
the
benefit
of
the
entire
ecosystem.

Wired

Internet
advertising

(US$ millions)

market

†

26

Ibid.
America
North 2004 2005 2006 2007 2008p 2009 2010 2011 2012 2013
27

Will
Richmond,
“Report:
Hulu
Plus
Starting
to
Get
Some
Traction”,
Seeking
Alpha,
http://seekingalpha.com/article/237232-‐report-‐hulu-‐plus-‐
United States 9,626 12,542 16,879 21,206 23,448 22,520 22,750 24,330 27,230 30,935
starting-‐to-‐get-‐some-‐traction,
accessed
Mar
06
2011

28

“Apple’s
iTunes
Store
Dominates
Online
DVD
Sales,
VOD”,
Studio
Briefing,
http://www.studiobriefing.net/2011/02/apples-‐itunes-‐store-‐ 1,970
Canada 341 527 844 1,164 1,360 1,313 1,336 1,407 1,641
dominates-‐online-‐dvd-‐sales-‐vod/,
accessed
Mar
06
2011
17,723
Total 9,967 13,069 22,370 24,808 23,833 24,086 25,737 28,871 32,905
29

“Global
entertainment
and
media
outlook
2009
–2013”,
PwC,
Jun
2009,
p.
155

†At average 2008 exchange rates.
30

Ibid.

31

Wayne
Friedman,
“TV
Trends:
More
Internet
TV
Viewers
Erode
Trad
Media”,
MediaDailyNews,

http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=124522,
accessed
Mar
06
2011

32

“Online
TV
Viewers
will
Tolerate
Twice
As
Many
Ads”,
Television
Broadcast,
http://www.televisionbroadcast.com/article/106518,
accessed

Mar
06
2011

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
10

Firms
in
the
IPTV
receiver
platform
niche
such
as
Roku
have
been
actively
seeking
new
channels
and

content
for
inclusion
into
their
channel
lineup.
With
over
100
channels
to
choose
from,
both
free
and

subscription
based,
Roku
is
a
leader
as
a
provider
of
non-‐traditional
television
content.
Roku
provides
a

broadcast
platform
for
niche
and
international
channels
to
deliver
their
content,
often
with
too
narrow

of
a
focus
to
appeal
to
traditional
cable
and
satellite
television
broadcasters.

Content
aggregators
such
as
Netflix
and
Hulu
are
also
adding
partners
to
continuously
boost
their

content
library.
Hulu,
as
a
joint
venture
of
Disney,
Fox,
and
NBC,
has
access
to
a
rich
library
of
content
to

draw
upon
from
its
equity
partners.
Most
notably
absent
from
the
Hulu
lineup
is
CBS
and
Warner

Brother’s
CW
network.
However,
what
has
been
regarded
as
Hulu’s
loss
is
Netflix’s
gain.
Netflix
recently

signed
a
deal
with
CBS
to
begin
distributing
CBS’s
content
to
its
subscribers.33

The
licensing
of
the
Roku
platform
and
Google
TV
platform
to
third-‐party
hardware
manufacturers

indicates
the
beginnings
of
a
convergence
between
standard
home-‐theater
equipment,
such
as
HDTVs

and
Blu-‐ray
players,
with
IPTV
hardware.
Until
recently,
IPTV
receivers
have
been
considered
a
niche

supplemental
device.
As
these
platforms
become
standard
equipment
in
consumer
electronic
goods,

they
become
more
accessible
to
the
mass
consumer,
increasing
the
robustness
of
the
ecosystem.

However,
the
continued
robustness
of
the
IPTV
ecosystem
hinges
on
content
owners
continuing
to

provide
aggregators
with
quality
content.
A
large
draw
for
consumers
towards
IPTV
today
is
the
result
of

the
rich
content
available
through
aggregators
such
as
Hulu
and
Netflix.
If
content
owners
shift
towards

a
dominator
strategy
by
withdrawing
content
from
aggregators
and
limiting
consumer
access
to
direct

distribution
channels,
a
reduced
consumer
value
proposition
could
lead
to
the
failure
of
the
ecosystem.

Niches
Emerging
In
Amateur
Content,
Gaming

The
growth
of
IPTV
has
spun
off
a
flurry
of
niche
creation
in
the
ecosystem.
Television
content

production
in
the
past
was
limited
to
large
studios
with
big
budgets,
and
supported
by
heavy
subscriber

fees
and
advertising
revenue.
With
IPTV,
independent
producers,
some
with
just
a
cell
phone
camera,

can
create
content
and
deliver
it
to
millions
of
viewers
through
content
aggregators
such
as
YouTube

and
Vimeo.
While
advertisers
have
hesitated
to
fully
embrace
amateur
content,
Google’s
acquisition
of

YouTube
illustrates
the
potential
for
monetizing
independent
and
amateur
video.

Gaming
through
IPTV
receiver
platforms
may
be
the
next
emerging
market
opportunity,
and
already,

this
is
generating
niche
creation
within
the
space.
With
the
integration
of
the
iPad
and
Apple
TV,
several

app
creators
have
designed
multiplayer
games
that
utilize
the
iPad
as
a
game
controller,
with
graphics

projected
onto
a
television
display
through
the
Apple
TV
set-‐top
box.
Furthermore,
rumors
in
the

blogosphere
hint
that
“new
code
in
the
iOS
4.3
beta
3
firmware
may
soon
support
online
gaming”.34

Roku
also
currently
offers
several
basic
games
through
its
Roku
Channel
Store.
As
the
market
for
gaming

emerges
within
the
IPTV
ecosystem,
niche
creation
is
sure
to
follow
as
entrepreneurs
seek
to
capture

value
from
this
market
segment.

33

“CBS
and
Netflix
announce
2-‐year
Licensing
Agreement
for
Library
Content”,
Daily
News,
http://www.dailynews.com/news/ci_17453787,

accessed
Mar
06
2011

34

Ross
Miller,
“Apple
TV
Gaming
Hinted
Strongly
in
iOS
4.3
beta
code”,
Engadget,
http://www.engadget.com/2011/02/09/apple-‐tv-‐gaming-‐
hinted-‐strongly-‐in-‐ios-‐4-‐3-‐beta-‐code/,
accessed
Mar
06
2011

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
11

Overall,
Ecosystem
Healthy
With
Strong
Growth
Prospects

As
the
ecology
of
IPTV
evolves,
forward-‐looking
statements
of
revenues
generated
by
the
ecosystem

seem
healthy;
robustness
of
the
ecosystem
is
strong,
but
not
without
the
absence
of
risks
that
could

destroy
the
ecosystem;
and
niche
creation
continues
to
advance
in
this
relatively
young
ecosystem.
All

this
points
to
a
cautiously
healthy
ecosystem.
Allowed
to
develop
fairly
and
unrestrictedly,
IPTV
is

expected
to
radically
alter
the
market
for
consumer
television.

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
12

GAME
CHANGERS

AllVid
Could
Dramatically
Increase
Consumer
Access
To
IPTV
Content

AllVid
is
an
IP
gateway
adaptor
proposed
by
the
Federal
Communications
Commission
(FCC)
as
a

replacement
for
the
failed
CableCARD
initiative.35
In
its
current
form,
the
AllVid
requirement
will

“require
U.S.
cable,
satellite
and
telecommunication
TV
operators
to
supply
all
their
customers
a
device

or
gateway
–
capable
of
delivering
as
many
as
six
different
IP
video
streams
to
TVs,
DVRs
or
other

equipment
in
the
home
–
beginning
no
later
than
the
end
of
2012.”36

The
implementation
of
AllVid
will
significantly
impact
the
IPTV
ecosystem,
as
it
places
IPTV
content
on

an
equal
playing
field
as
traditional
cable
television
content.
Viewers
will
be
able
to
search
for
content

across
the
entire
spectrum
of
IPTV
niche
channels,
as
well
as
traditional
channels
offered
by
cable,

satellite,
and
telecommunications
providers.
The
effect
of
this
is
two
fold.

First,
niche,
independent,
or
amateur
content
currently
only
available
on
an
IPTV
receiver
platform
such

as
Roku,
can
directly
compete
for
viewers,
subscribership,
and
advertising
dollars
against
the
much

larger
broadcast
and
cable
channels.
This
will
lead
to
an
expansion
of
such
niche
channels,
and
possible

migration
of
some
smaller
channels
from
a
broadcast
to
an
IP
platform.

Secondly,
content
owners
will
view
aggregators
like
Hulu
as
a
substitute
to
their
broadcast
channels,

causing
tension
in
the
relationship
between
the
content
owners
and
aggregators.
Furthermore,

fragmentation
of
the
channel
lineups
of
cable
and
satellite
operators
may
occur,
as
more
and
more

niche
channels
migrate
towards
the
IP
platform,
in
an
attempt
to
capture
value
through
direct

subscription.
As
a
result,
the
traditional
bundled
pricing
models
of
the
incumbent
cable
and
satellite

broadcasters
could
shift
towards
a
la
carte
pricing,
ending
the
current
common
industry
practice
of

cross-‐subsidizing
channels
within
a
content
owner’s
portfolio.

Rollout
Of
4G
Networks
Enables
Wireless
IPTV
Content
Delivery

4G,
the
forth
generation
cellular
wireless
standard,
promises
to
deliver
download
speeds
of
up
to
100

Mbps
over
a
wireless
cellular
network.37
This
will
enable
mobile
users
to
stream
multiple
channels
of
HD

video
content
on
their
mobile
devices,
and
more
importantly,
allow
users
to
unplug
from
fixed-‐line

broadband
connections.

The
biggest
limiting
factor
for
IPTV
growth
today
is
its
reliance
on
broadband
internet
connections.

While
broadband
penetration
in
the
US
reached
94.5%
in
2009,
broadband
speeds
still
lag
against
the

EU,
with
US
connections
averaging
9.54
Mbps.38,39
4G
connectivity,
without
the
need
to
improve
any

physical
wired
infrastructure,
while
providing
uninterrupted
mobile
coverage,
is
projected
to
solve
these

issues
and
impact
the
IPTV
ecosystem
in
several
ways.

35

Clint
Boulton,
“Google
Touts
AllVid
to
FCC
for
Google
TV”,
eWeek,
http://www.eweek.com/c/a/Web-‐Services-‐Web-‐20-‐and-‐SOA/Google-‐
Touts-‐AllVid-‐to-‐FCC-‐for-‐Google-‐TV-‐743680/,
accessed
Mar
06
2011

36

Todd
Spangler,
“FCC
AllVid
Rule
Would
Ban
The
Set-‐Top
As
We
Know
It”,
MultiChannel
News,
http://www.multichannel.com/article/451984-‐
FCC_AllVid_Rule_Would_Ban_The_Set_Top_As_We_Know_It_Analyst.php,
accessed
Mar
06
2011

37

“ITU
global
standard
for
international
mobile
telecommunications”,
http://www.itu.int/ITU-‐R/index.asp,
accessed
Mar
06
2011

38

“Study:
Americans
Lead
World
in
Broadband
Use
-‐
US
Broadband
Penetration
Jumps
to
94.5%
-‐
December
2009
Bandwidth
Report”,

http://www.websiteoptimization.com/bw/0912/,
accessed
Mar
06
2011

39

Tim
Conneally,
“US
Broadband
Speeds
Improve
in
2010,
Still
Second
Rate
Against
EU”,
Betanews,
http://www.betanews.com/article/US-‐
broadband-‐speeds-‐improved-‐in-‐2010-‐still-‐second-‐rate-‐against-‐EU/1297805705,
accessed
Mar
06
2011

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
13

First,
IPTV
receiver
platforms
will
integrate
support
for
embedded
wireless
chips
to
tap
into
4G
wireless

networks.
Wireless
chipmakers
such
as
Qualcomm
will
realize
an
uptick
in
demand
as
the
“internet
of

things”
concept
takes
hold
in
IPTV
consumer
electronic
products.
Furthermore,
fixed-‐line
broadband

providers,
such
as
Comcast
and
Time
Warner,
will
face
renewed
competition
from
wireless
broadband

providers,
such
as
AT&T
and
T-‐Mobile.

Second,
4G
connectivity
will
enable
real-‐time
interactivity
with
video
content,
and
new
niches
will
form

within
the
ecosystem
to
develop
interactive
content
and
ways
of
monetizing
such
activity.
Content

owners
and
producers
must
rethink
how
they
produce
television
content,
and
how
best
to
leverage
this

interactivity
for
maximum
profit
generation.
In
addition,
the
shift
toward
4G
will
reduce
bandwidth
unit

costs
for
operators,
whose
savings
can
then
be
passed
on
to
consumers.
Broadband
penetration
in
rural

areas
still
lags
that
of
urban
areas,
in
large
part
due
to
the
lower
potential
return
on
investment
fixed-‐
line
operators
face
in
rural
communities.
MatrixStream,
a
start-‐up
within
the
IPTV
ecosystem,
believes

that
mobile
operators
could
deploy
IPTV
networks
over
4G
networks
at
just
20%
of
the
cost
for
a
similar

deployment
over
a
fixed-‐line
network.40

Dynamic
Ad
Placement
Brings
Targeted
Advertising
To
Television

Cable
and
satellite
companies
are
experimenting
with
technologies
that
allow
them
to
provide
highly

targeted
ads
to
individual
households,
based
on
that
household’s
viewing
behavior
and
other
personal

and
demographic
data.41

The
concept
of
dynamic
ad
placement
is
not
new.
Internet
users
have
been
exposed
to
online
ads
that

aggregate
user
information
from
a
variety
sources
to
deliver
targeted
messaging.
With
dynamic
ad

placement
on
cable
and
satellite,
data
mining
companies
can
combine
viewing
data
with
frequent

shopper
cards
for
a
specific
address,
and
“turn
up
surprising
associations
such
as:
“Jersey
Shore”
viewers

are
frequent
buyers
of
yogurt.”42
The
fundamental
limitation
that
cable
and
satellite
companies
face
is

that
the
data
collected
is
aggregated
by
household,
meaning
that
a
teenager’s
constant
viewing
of
the

MTV
channel,
and
her
parent’s
shopping
behavior
may
combine
to
result
in
ads
being
shown
that
appeal

and
relate
to
neither.

With
IPTV,
and
especially
with
the
growth
in
IPTV
being
viewed
over
mobile
platforms,
user
data

collected
for
dynamic
ad
placement
can
be
far
more
individualized
than
what
traditional
cable
and

satellite
companies
can
obtain.
By
integrating
IPTV
viewing
data
with
online
behavior
and
transaction

history,
IPTV
providers
are
positioned
to
build
far
more
robust
user
profiles,
providing
advertisers
with
a

significantly
greater
value
proposition
than
that
offered
by
cable
and
satellite
providers.

40

“New
4G
IPTV
Platform
Includes
3D,
1080p,
HD
and
7.1
Surround
Sound”,
http://www.worldtvpc.com/blog/4g-‐iptv-‐platform-‐includes-‐3d-‐
1080p-‐hd-‐71-‐surround-‐sound/,
accessed
Mar
06
2011

41

Jessica
Vascellaro,
“TV’s
Next
Wave:
Tuning
Into
You”,
The
Wall
Street
Journal,
Mar
07
2011

42

Ibid.

IPTV%Ecosystem:%RelaAvely%Fragmented,%Leading%to%MulAple%Layers%of%Intermediaries%
Legend%(note:%size%of%arrows%represents%magnitude%of%ﬂows)%% ILLUSTRATIVE%
Financial+Flow+ Content+Flow+
AdverAsing%Networks%
APPENDIX

Content%Owners%/% Content%Aggregators% Content+Delivery+
Publishers% Networks+

B2B%TransacAons%
Financial%Intermediaries%

Internet+Service+
IPTV%Receiver%Pla.orms% Providers+
Exhibit
1
–
Map
of
IPTV
Ecosystem
(Landscape
Orientation)

C2B%TransacAons%
Electronics+Retailers+ Consumers%

Sources:+Team+analysis;+logos+reproduced+under+Fair+Use+excepCon+(17+U.S.C.+§+107)+for+nonLproﬁt+educaConal+purposes;+icons+obtained+from+iconarchive.com;+tv+image+obtained+from+sxc.hu+(royaltyLfree)+

IPTV:
Disrupting
the
Balance
of
Power
in
the
US
Media
Industry
|
14

IPTV: Disrupting the Balance of Power in the US Media Industry

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