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IPTV India Progress Report 2009 by Knowledgefaber - Market Analysis

The IPTV India Progress Report by KnowledgeFaber, published in April 2009, analyzes the growth and challenges of IPTV services in India and globally. It highlights the rapid expansion of the IPTV market, particularly in countries like Hong Kong and France, while noting that Indian service providers such as BSNL and MTNL are early movers in this space. The report also identifies key inhibitors such as broadband penetration and quality of service that may affect IPTV's success in India.

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IPTV India Progress Report By Knowledgefaber Published: April, 2009 Knowledgefaber
Access content on home TV from relatives, friends…peer to Interactive peer downloads gaming Broadcast video IPTV Services Skip Advertising Knowledgefaber
Research Methodology • Knowledgefaber researchers have been tracking the IPTV space in India and globally on an ongoing basis • Numerous Interviews (primary research) with key industry participants from Telcos, equipment providers, technology providers in India • Interviews with experts from around the world who had experience of IPTV deployments and service provisioning • Secondary research including but not limited to annual reports, company websites, journals, magazines, literature shared by participants, web search Disclaimer: Information contained in the report has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Neither Knowledgefaber or its affiliates, officers, directors, employees, owners, representatives nor any of its data or content providers shall be liable for any errors or for any actions taken in reliance thereon Knowledgefaber
IPTV Globally and in India IPTV India Dynamics IPTV Readiness and Challenges IPTV Subscriber Base Growth and Opportunity Knowledgefaber
Global IPTV market has been growing rapidly since last 3 to 4 years The term IPTV was First Commercial In September 2003, It was projected that At the end of 2008 first used in 1995 by Deployment: Kingston PCCW, Hong Kong’s number of subscribers global IPTV subscriber a company called Communications, a incumbent fixed-line will grow from 3.7 million was 23 million and Precept Software. regional operator, became one of subscribers in 2005 to revenue was around Precept designed telecommunications the first wireline 36.9 million in 2009 that $5.9 billion as per and built an internet operator in UK, operators in the world to didn’t happen industry estimates video product launched Kingston launch an IPTV service named "IP/TV". Interactive Television, an IPTV over DSL in1999 Source: Knowledgefaber analysis, estimates by various research firms Knowledgefaber
Hong Kong, France, Taiwan and Belgium are leading the pack in terms of penetration Global Top 10 IPTV Markets, by Penetration (2009) Highlights 55.21% • Hong Kong is leading in penetration level while France is leading in terms of 30.03% subscribers. 10.88% 9.88% 6.43% • There are currently around a hundred and twenty IPTV providers in over sixty countries, with Europe and the far eastern 3.98% markets taking the top spots. 3.90% 2.35% • In addition, main broadcasters in UK like the iPlayer from the BBC provide online 1.13% catch up* services and Channel Four provide VoD services. 0.74% Note: Penetration is defined as % of IPTV subscriber among Broadband users. *Online catch-up service allows viewers to catch up (watch) on BBC telly missed in the week Source: Informa Telecoms and media Knowledgefaber
Hong Kong’s PCCW has shown the way to succeed in IPTV through its NOW TV… Turning Free TV into Money Maker Strong Infrastructure to Support IPTV • PCCW, the incumbent carrier in Hong Kong launched its IPTV back in 2003, providing • PCCW reports that 93 percent of households broadband customers with a set-top box and in Hong Kong experience 6 Mbps of 23 TV channels as a starter pack all for free downstream speed on its ADSL network. under the name NOW TV. • PCCW now delivers more than 160 channels • Later It secured some unique content -- to its customers over VDSL and fiber-to-the- namely, English Premiership soccer -- and home (FTTH) broadband connections. developed some IPTV channels of its own, including multiple sports channels and a business news service. • PCCW’s exclusive offerings forced end-users interested in such content to subscribe to PCCW Attaining Dual Benefits NOW TV, thereby turning a free TV into money maker. • As intended, NOW TV has made PCCW’s broadband service more attractive. • Additionally, since the introduction of NOW TV, customer loss has halved to less than 1 Significant Growth over the Years percent, clearly indicating increased loyalty levels, thus ensuring continued revenues for broadband while gaining additional revenues • From 361,000 subscribers at end of 2004, through IPTV. PCCW’s IPTV subscriber base grew to 932,000 by the end of September 2008, of which 668,000 pay monthly fees to buy additional channels or IPTV packages. By pulling together an impressive and exclusive list of content along with supporting advanced infrastructure, PCCW has become the world’s largest IPTV provider Source: Industry Interview, Pyramid research, Industry reports Knowledgefaber
What is happening in India • Early movers in this field are BSNL and MTNL. MTNL rolled out it's IPTV service in Mumbai on Oct-2006 marking the first IPTV deployment in India • Bharti Airtel and Reliance Communications were given the go ahead to launch their IPTV services in the Indian market in Feb-2008 by TRAI • Airtel has launched its service in Jan-2009 while Reliance is still testing its services • Drivers – – Interactivity – Value added services – Customer-end benefit – Fuelling broadband demand • Inhibitors– – Broadband penetration and n/w capability – QOS (Quality of service) – Content Readiness and cost – Cost of service for user – Regulatory framework – Other infrastructural problems Source: Knowledgefaber research and analysis Knowledgefaber
IPTV Service Providers in India Company Description Product/ Services Tie-Ups/Partnership (only illustrative list given here) BSNL • BSNL has been offering • Company is providing triple play • Aksh Optifibre, Cable and optical fibre manufacturer has IPTV services in several service featuring telephone, collaboration with state-run Bharat Sanchar Nigam Limited cities of India, some of broadband internet and TV (BSNL) for delivery of Interactive Personalized Television these includes Kolkata, • Additional services like pause, (IPTV) on its broadband network in the north Indian Market Bangalore, Ahmedabad, fast forward VOD(video on- • IOL Broadband (India on Line Broadband) has a tie up with Gurgaon, Jaipur, demand) (BSNL) for Internet Protocol television (IPTV) services to Chandigarh, etc BSNL subscribers • BSNL Kolkata started • Smart Digivision has a contract with BSNL to provide IPTV its services in Aug-07 services to its customers in 53 cities • Verimatrix, a provider of content security technology solutions for pay-TV networks, has announced that it is providing Verimatrix Video Content Authority System (VCAS) for IPTV ( News - Alert) to protect IPTV services to Bharat Sanchar Nigam Limited (BSNL) customers MTNL • MTNL is offering IPTV • Triple play services including • MTNL and IOL Broadband are in IPTV deal, in which IOL will services in Mumbai and telephone, Broadband internet, provide IPTV content to broadband subscriber of MTNL Delhi so far and TV is provided • Aksh has a agreement with MTNL to provide IPTV • IPTV services in Delhi • Video on Demand and other broadband content services to MTNL subscribers in Delhi started in Oct-06 vale added services are and Mumbai available Bharti- • In its first phase Bharti- • Company is offering triple play • IBM provides software and IT requirements for Bharti Airtel' Airtel Airtel has started advantage of telephony, non-mobile businesses which include Direct to Home (DTH), providing IPTV services broadband and TV. Company is Internet Protocol TV (IPTV), to customers of NCR also giving services like Video- enterprise services and broadband (Delhi, Gurgaon, and on-Demand, Time shift TV, and • UTStarcom has a contract with Bharti Airtel to supply its Noida) interactive 2.0 (includes options RollingStream end-to-end IPTV solution • Bharti Airtel started its like freedom of ordering pizzas services in Jan-2000 and movie tickets from TV set) Reliance • IPTV services of • Triple play services • Reliance Communications Ltd. and Microsoft Corp. has a Reliance are under test • Real-time Video-on-Demand, partnership to deliver Reliance’s Internet Protocol Television and expected to be High definition, subtitling and (IPTV) service, which is powered by the Microsoft launched soon audio language choice, Digital Mediaroom IPTV software platform commercially video recording, etc. Knowledgefaber
Most of the IPTV market in India is still in Stage 1 Stage 1 Stage 2 Stage 3 Underlying DSL, ADSL Infrastructure and ADSL2+ Services offered SD TV channels, some VAS, QOS satisfactory Compression MPEG-2, Technology MPEG-4 Players (Country): MTNL, BSNL (India), Airtel (India) Underlying ADSL2+, VDSL Infrastructure Underlying Fibre, possibly Infrastructure WiMAX, LTE Services offered Triple play with good QOS, HD Services offered HD TV, Whole TV, serve homes Home DVR with multiple TV, DVR Compression MPEG-4 and Technology Possibly Compression MPEG-4 MPEG-7 Technology Players: PCCW (Hong Kong), AT&T (USA), Verizon (USA) Source: Industry interview and News reports Knowledgefaber
IPTV Globally and in India IPTV India Dynamics IPTV Readiness and Challenges IPTV Subscriber Base Growth and Opportunity Knowledgefaber
IPTV value-chain in India Equipment and Technology Network and Service Provisioning Customer Subscribes Sub- Equipment Software contracts Franchisee/Third Subscrib Players /Hardware Systems & Telcos Owner Revenue Party Provider es Systems Others Sharing Broadcaster, content creator • Video Headend • IPTV middleware • Copper wire and DSL • Content Aggregation, • Decoder + Streamer (homegrown systems technology network Content Distribution • VoD / nVoD Servers have seen in the case • Content sourcing Network, Content • Switches of many global • Procures hardware and Sourcing • DSLAM carriers) software • Technology deployment • IP-STB • Digital rights • Uses Telcos DSL Roles • xDSL Modem management (DRM) network for service technology provisioning • Content Related s/w • Branding, and packaging • Buys Set-top box • Branding, and • IP-STB • Billing • Installation • Buys IPTV Packages packaging • xDSL Modem • Service monitoring • Service Provisioning • Pulls content and • Installation and network probes • Billing advertisement • Customer support • CAS, IP-Scrambler • Customer support • Tech geek, subscribes to • Alcatel-Lucent, • Microsoft, UTStarcom • MTNL • Aksh Optifibre Ltd. Example every new technology Ericsson AB, Nokia • Digisoft, Envivio, • BSNL (Manufacturer of fiber, s • Hi-Speed Broadband Siemens Networks Harmonic, I-Make, • Bharti (Airtel) copper wire, etc.) Subscriber and video Nortel Networks, Verimatrix • Reliance • Time Broadband enthusiast • NSN, UTStarcom • Viaccess, Thomson • XYZ (Confidential) Services Pvt. Ltd. • Homes with more than 1 or • Mototech • Smart Digivision 2 TVs and interested in • Thomson, Sagem triple play and single service provider Note: To some extent IPTV related R&D work is also being done here in India by some players such as UTStarcom, NDS, etc. Sun and Tech Mahindra along with AMD have a IPTV lab at the Tech Mahindra facility in Pune Knowledgefaber
Two business model have emerged in this market State owned companies are using franchise model while private players opting for there own channel. • Airtel IPTV is based on the existing • Franchise model includes two DSL network, and Airtel is going all entities a content provider and an by itself with the help of technology infrastructure owner. Content partners. provider will broadcast content and • UTStarcom has a contract with utilize the infrastructure of other Bharti Airtel to supply its entity. RollingStream end-to- end IPTV • Advantages – New ideas and solution capital into the business and high speed-up the deployment of IPTV. • Companies like BSNL and MTNL are using this through IOL to provide IPTV services in various parts of India Franchise model ( Call it Telcos going by MVNO concept of IPTV themselves market) Note: In the both the models revenue generation process, technology tie-ups and content tie-ups are almost similar Source: Company website, News articles, Industry interviews Knowledgefaber
IPTV Globally and in India IPTV India Dynamics IPTV Readiness and Challenges IPTV Subscriber Base Growth and Opportunity Knowledgefaber
IPTV is exciting for stakeholders but making it work would be a huge challenge in India Is India ready for IPTV? Will the Threat of companies substitutes? IPTV make or lose money? Knowledgefaber
Is India ready for IPTV? You can sense from the stakeholder’s response that IPTV is going to take some time to gather critical mass • Telecom players (read carriers) are not very aggressively pushing IPTV right now. • Infact the same players are heavily involved in their DTH service promotions. • We believe that IPTV will take some years to gain scale and will directly depend on telcos push and broadband penetration • Its success would depend on how seriously the top 4 telcos (with broadband infrastructure) take it up. Their involvement and creation of push would depend on the rate of return and the point of break even Knowledgefaber
Threat of substitutes? Compare DTH versus IPTV “Just providing video Programs/video on demand through IPTV does not seem to be a viable business model in India since cable and DTH have already established a very large viewership base for themselves. Telcos and IPTV service providers have to come out with newer applications that can catch the attention of consumers. Unless IPTV establishes a unique selling proposition (USP), it will not be a popular choice for TV viewing” - Mahendra Nayak, Domain Head- Embedded Systems, Product Design Services, Tata Elxsi Limited PARAMETER DTH IPTV • High cost of the DSL line and right of • Cost per line is much lower as no way permissions Cost for Operator requirement of a physical line to home • Expensive hardware and software for handling the complex systems • Content creators (broadcasters) • Content creators are relatively less actively/aggressively pursue DTH interested to partner with IPTV Content Access operators to partner with them operators, and charge higher fees • DTH is considered most suitable for • For IPTV, the cable connectivity needs geographically large countries like the to be physical drawn until the customer Accessibility and US, Brazil, India because cost of a point, resulting in high installation DTH connection for customers charges for customers Cost for • IPTV’s Access to remote customers anywhere in country is the same Customers • Connectivity can be given even for might not be possible for many more people in remote villages years Source: Knowledgefaber Analysis, Industry Interviews Knowledgefaber
Will the companies Inhibitors seems to outweigh the drivers in the current make or lose money? scenario Drivers Inhibitors Source: Knowledgefaber analysis, industry interviews Knowledgefaber
Will the companies Drivers make or lose money? Driver Description • Option to choose from various available programs (including already broadcasted content), freedom to watch or skip advertisements and high level of interactivity • Parents can have a full knowledge/control of what kind of programs there kids watch and they Interactivity can control their timings, so as kids can study in exam time and watch there saved cartoon later in vacations • Customer have a option to watch two simultaneously broadcasted programs. For ex: IPL match Value-Added and soap opera • Availability of good and creative content, additional ‘killer applications’ like Video on Demand, services Music on Demand, karaoke, Internet on TV, voice/video conferencing, program guides, greetings, and home to home chat Customer- • Video quality of DTH is highly dependent on weather quality, but with IPTV this problem is end solved as this is provided through DSL cables mostly • TV sets with limited no. of channels can also watch as many channels as provided by service benefits provider as set top box removes the limit of number of channels available on TV set Fuelling • Triple play package can work as a booster for broadband penetration as this will increase broadband broadband subscription along with high ARPU customer base for companies, therefore telcos would push it further demand Source: Knowledgefaber research and analysis Knowledgefaber
Will the companies make or lose Inhibitors money? Inhibitors Description • Broadband penetration is still a big challenge in India Broadband • There is a high cost of RoW permission charged , other high capital costs associated with last penetration mile distribution network and cost of services for users and n/w • IPTV requires at least 1.5 Mbps line (with MPEG-4) for basic services at a good QOS and 8 Mbps line (with MPEG-4) for HDTV services. Some part of the broadband networks are not capability ready yet • Services provided till last year have been no less than disappointing. There are video freezing, QOS frames freezing and other such problems. The old generation copper network and low bandwidth is just not going to work for IPTV. Add to that content handling capability issues. • There is a lack of high definition content available as Indian sops and other content is still Content produced in traditional formats readiness & Cost • Broadcasters are not offering the right prices to the IPTV players • IPTV is still costly as compared to its competitors like DTH and traditional cable (as low as $4 Cost of services per month in some cases), and it is difficult to convince price conscious Indian consumers to for user shell out that extra cost • Regulator framework in this area is not yet clear as government is still working on nitty-gritty's of policy regulating this fast evolving technology rich system, there aren't much examples Regulatory available of a emerging market adopting this technology • One of the power of IPTV to provide internet based channels is also not working in its favor as framework they are still not allowed in India due to censorship issues associated with them. Some of the smoke is getting cleared on this issue though • DTH has been immensely successful in remote areas where cable TV could not reach • Complex content delivery platform having integration challenges associated with IPTV are big Other and costly. Content distribution networks require high level of expertise to manage, which is not easy to find Infrastructure • It requires expensive servers/equipment/software solutions to provide IPTV services. With the problems subscriber numbers expected to be low, it looks like a risky proposition Source: Knowledgefaber research and analysis Knowledgefaber
Broadband penetration Broadband penetration in India compared to global and n/w capability Scenario is very low Broadband penetration in India is one of the lowest in the world. IPTV’s success is directly dependant on that. Broadband penetration needs to grow at a much faster pace. Maybe VDSL, WiMAX or LTE can save the day for IPTV? Source: Knowledgefaber research and analysis, CIA world fact book, OECD, TRAI, Broadband world forum, Cisco, Point Topic Knowledgefaber
Broadband IPTV requires at least 1.5 Mbps line (with MPEG-4) for penetration basic services at a good QOS and 8 Mbps line (with and n/w capability MPEG-4) for HDTV services. Some part of the broadband networks in India are not ready yet T4 – 274 Mbps OC3 – 155 Mbps 100 Mbps IPTV needs 1.5 Mbps* speed for T3 – 45 Mbps basic services E3 – 34.368 Mbps like SDTV channels Ethernet – 10 Mbps broadcasting… T2 – 6.312 Mbps Cable Modem – 4 Mbps E1 - 2.048 Mbps DSL/T1 - 1500 kbps …and requires 8 1 Mbps Mbps* for HDTV services Satellite - 400 kbps ISDN - 128 kbps 100 kbps Kbps = 1000 bits/second V 92 modem - 56 kbps Mbps = 1000000 bits/second 28.8 modem - 28.8 kbps 14.4 modem - 14.4 kbps Note: *with MPEG-4 compression technology Source: Knowledgefaber research and analysis Knowledgefaber
Regulatory Following are the requirements from the regulatory side framework that will help IPTV’s growth in India IPTV market would require the following from the regulatory standpoint Status (WIP/Cleared) Storage and replay of IPTV content without any editing or modification should be allowed and defined as a part of the IPTV transmission. Time shift WIP TV is a big advantage of IPTV All broadcast channels from all sources must participate on IPTV platform Cleared (similar to DTH) Amendments to down-linking rules to include IPTV as a form of distribution Cleared as it is the case with the DTH and cable television. Pricing and revenue sharing should be defined and mandated for IPTV at each step. It should be done for all the parties involved such as Broadcaster, Content aggregator/Content Delivery Network (CDN) and the Telecom WIP Operator/others. Similar Pricing and revenue sharing mandate exists for cable CAS Purchase of content for IPTV should come under the Copyright Act 1957. IPTV needs to be defined and provisioned for legitimate usage of copyright under this act. Premium content is expensive and is also one of the WIP opportunities for IPTV. In order to invest in procuring copyright of such content, stable well defined regulations are a precursor. Internet content will be a part of IPTV on both computer and TV. Regulation of Internet content should be within the scope of prevailing Internet WIP regulations. Knowledgefaber
Content readiness & Cost Content poses challenge and opportunities as well • With respect to content there are various costs which are involved and it totally depends on what route does the player take: - Fixed fee deal with the broadcaster - works in case telcos are extremely sure of the subscriber ramp up. With IPTV, telcos are not sure of that - Ala carte price per channel • Content cost which is aside of linear channel-- and this is the differentiating part. Worldwide for mature IPTV operators in Europe and satellite TV operators in USA and Australia, the revenue from these services already account for 15-18%. Also, the gross margin is extremely high for these services, sometimes to the tune of 30-40% which is quite contrary to what you get in the linear channel which is around 5-10% • Opportunity – The case where Belgacom outbid cable and TV companies for the rights to broadcast Belgian football, paying about 36 Million Euros a year for three years. The case in point are the exclusive rights to a major sporting events or other events such as Film awards or celebrity tours. Exclusive TV content like IPL or other cricket tournaments can be game-changers for IPTV players. There are two main models of telco access to exclusive TV content: buy the full rights, or “sublet” from a right-owner. But the challenge is that as more telcos seek exclusive content to make their TV offering relevant, the value of content is set to appreciate even further. • IPTV players require something similar to what DTH players enjoy today through lobbying and petitions. Tariff regulation at the wholesale level - between the broadcasters and the DTH operators - has already happened with the rule that DTH operators had to pay only 50% of what CAS and cable operators were paying to broadcasters for content. So while CAS operators have to pay Rs 5 to broadcasters per channel, DTH companies pay Rs 2.5. Knowledgefaber
Will the Cost per line for IPTV is high and the number of companies make or lose subscribers are still very low; break-even might take money? several years but telcos would go for it • The cost per line for providing IPTV services for a Telco is in the range of $1000 to $2000 per user. Main components of cost being Access and head-end technology, Transport network and technology, Software & video platform technology. • For players with a network in place (all top telcos in India), cost per line would be in the range of $1000 • The cost of setting up is high for a brand-new rollout and is in the range of $2000 for a green field operation • Since the number of subscribers are going to be low, telcos need to provide aggressive pricing, to increase penetration. But currently, the pricing w.r.t customer i.e. cost/ MB delivered is several times of that in Europe and that is precisely because of the high infrastructure cost, bandwidth ( national + international ) cost. The high prices will hinder penetration • The ROI is going to be pick up only slowly and the break-even would take several years (say 6 to 10 years). Still, it makes sense for the telecom players to diversify to triple play of voice, data and video so as to ensure new revenue streams and ensure return on investment on their fixed lines • Also as the voice ARPUs are suffering, IPTV would make a lot of sense going forward • IPTV ARPUs for PCCW had grown at a rate of about 30% (NOW TV's ARPU in June 2008 grew by 28% from a year ago to HK$213) while satellite TV ARPUs for US providers such as DirecTV had grown at a rate of just 2%-4%. This can be seen as a positive point by the telcos in India • At least a 6-7 years time is expected for a telco to do break-even. Those who are able to do it sooner would be real winners Knowledgefaber
IPTV Globally and in India IPTV India Dynamics IPTV Readiness and Challenges IPTV Subscriber Base Growth and Opportunity Knowledgefaber
Growth of IPTV depends upon broadband subscriptions growth… Verified by various sources such as Assocham (30.1 million by 2013) Source: Knowledgefaber Research and Analysis Knowledgefaber
What are the subscriber …and IPTV penetration within broadband subscribers. numbers and projections? Next 5 years will see tremendous boom in the market 3500 Scenario 2 – Broadband subscriber base sky- rockets and major push 7.00 for IPTV from Telcos IPTV penetration (in percentage) 5.16 3.71 2.67 0.45 1.92 Source: Knowledgefaber Research and Analysis Knowledgefaber
India IPTV status is “Not OK” as of now, and the progress is slow with positive outlook reflected by entry of new players Time Expected to reach Status 2009 atleast next level of Status Categories (Great, OK, Not OK) (Short, Medium, Long Period)) Content readiness and cost Not OK Medium Unified standards development Not OK Medium Pricing and Promotions Not OK Short Capability of expected leaders OK Medium/Long Favorable Regulations Not OK Long Customer understanding of product proposition Not OK Short/Medium Access and head-end technology OK Medium Set-top box technology Great -- Broadband/transport infrastructure and technology Not OK Long Software & Video platform technology Great -- Note: Short period is about <2 years while Long period is about >4 years Source: Knowledgefaber Research and Analysis Knowledgefaber
Recommendations • On demand – Please contact us! Knowledgefaber
Appendix Knowledgefaber
Knowledgefaber research in the IPTV goes beyond this report • Entire demand and supply side dynamics and market analysis • Studying all the tie-ups, technology partnerships, deals in India across the IPTV value-chain • Deeper value chain analysis with profit pool analysis • Detailed ROI and break-even analysis • Successful case studies from France, Hong Kong, Taiwan, Korea, US, Belgium, etc. • Trends in technology, regulatory, market, and customers • Customer preferences and opinions in terms of cost, prices, usage, QOS feedback, etc. If you have a research or consulting requirement in the IPTV area or other Telecom subject, please contact us for a discussion at: relationship@knowledgefaber.com or call us at 91-80-41231576 Knowledgefaber
What is IPTV? • Internet Protocol Television (IPTV) is the delivery of broadcast-quality television and/or video signals to subscribers. This is done over a broadband connection using the Internet Protocol • While IP stands for Internet Protocol, this does not actually mean that television content is streaming over the Internet. IP is simply the same method, protocol or technology that enables you to access the Internet. IP- delivered television content is delivered using this technology. IPTV, unlike Internet TV, is primarily a TV experience rather than a PC experience and is meant as an alternative to cable and satellite • IPTV operates on a premise that's different from traditional satellite or cable television. In IPTV only selected programming and on-demand content are delivered to the consumer, while on satellite and cable, all channels are being pushed all the time to the consumer's home. • IPTV's ability to provide two-way communication (you request a programme from the TV guide and the programme is delivered to you) offers interactivity for the customer. Movies, past TV shows and other content can be distributed on demand, and service providers can tailor the requested content and advertising based on the customer's preferences Knowledgefaber
IPTV system at a glance Content Sources Content Access Equipment Content Creation Decoder + Content Broadcasting Billing / SMS Streamer CAS, Content Transmission IP-Scrambler Middleware VoD / nVoD Servers IP Network with IGMP Support Subscribers TV Viewers IP-STB xDSL Modem DSLAM Ethernet Switch TV Viewers IP-STB PC Users PC Users Knowledgefaber
Typical bandwidth requirements for IPTV Knowledgefaber
Service provisioning quad play; Consumer market segments User INR 1500 per month Knowledgefaber
DSL constitutes majority of the market share for the broadband market in India Market Share Break-up of Broadband Subscriber Base By Technology (2007) Service Description • DSL technology uses the infrastructure of Digital existing copper telephone infrastructure to facilitate high-speed data connections Subscriber • DSL uses high frequency, while regular Line (DSL) telephone uses low frequency on the same telephone line • A cable modem is a type of modem that provides access to a data signal sent over cable television. Cable • These are primarily used to deliver broadband Modem Internet access in the form of cable internet, taking advantage of the high bandwidth of cable television network • Ethernet is a family of frame-based computer Ethernet LAN networking technologies for local area networks • An audio broadcasting service transmitted via Radio the Internet (streaming technology) • Optical fibers permit transmission over longer distances and at higher data rates than other Fibre forms of communications • Fibers are used instead of metal wires because signals travel along them with less loss Note: Subscriber base shares are for Sep 2007 Source: TRAI Knowledgefaber
Abbreviations • DSL (Digital Subscriber Line): DSL or xDSL, is a family of technologies that provides digital data transmission over the wires of a local telephone network • VoD = Video on Demand • MoD = Movie on Demand • SDTV = Standard Definition TV • CDN = A content delivery network or content distribution network (CDN) is a system of computers networked together across the Internet that cooperate transparently to deliver content to end users, most often for the purpose of improving performance, scalability, and cost efficiency. • DTH = Direct broadcast satellite (DBS) is a term used to refer to satellite television broadcasts intended for home reception, also referred to more broadly as direct-to-home signals. • RoW = A situation in which although a parcel of land has a specific private owner, some other party or the public at large has a legal right to traverse that land in some specified manner. Knowledgefaber
Knowledgefaber Introduction to Knowledgefaber Knowledgefaber
Knowledgefaber wants to be a preferred research, analysis, analytics and consulting firm for companies globally Particulars Description Knowledgefaber is a rapidly growing organization based out of Bangalore, India. It specializes in customized market research, analysis, data analytics, and research based problem solving/consulting Who we are? It is founded by individuals experienced in delivering research/consulting solutions for both global and Indian clients We create knowledge for our clients that helps them in decision making at various levels in their organization and across functions such as Corporate Planning, R&D, Marketing & Sales, others. What do we do? We bring to the table a combination of business domain knowledge and research skills Flexible consulting models (onsite/offsite) to deliver cost-effective and high-quality solutions, Knowledge advantage over competitors, speedy response, action oriented results and lower costs Practical expertise and not only academic/bookish knowledge in the industries Benefits We cover Knowledge re-utilization from one industry to another so that best practices identified once can be used elsewhere Knowledgefaber
Knowledgfaber at a glance Telecom (Equipment, Companies in the Wireline/Wireless field of Hi-tech, Services, Software, Telecom, Content, in short A to Verticals Clients Software/IT/ITeS, Z of telecom) others IT/ITeS/BPO/Software Big 5 consulting Media/Entertainment/ Functional experience firms Coverage of several Advertising working with consulting verticals firms and client experience working with companies Knowledgefaber A rich mix of engineers and Research, Analysis and MBAs provide diversified consulting Industry and Market skill-sets Analysis Indian Institute of Technology Demand estimation and forecasting Functional Capabilities People Indian Institute of Management Client Acquisition consulting Regional Engineering Outsourcing/Offshori- Colleges ng Studies Tier 1 MBA colleges Talent Pool Analysis Others Knowledgefaber
Project approach/methodology of Knowledgefaber Approach/Methodology Stage 1 Stage 2 Stage 3 Stage 4 Data from secondary research Data cleaning, Final structuring and Problem solving Data from Primary Research Recommendations – analysis Actionable results Data Modeler Powerpoint Report Data from secondary Storyline is developed for Grasp on business research including various structuring the analysis fundamentals websites, online journals, Data Modeler is prepared in Research Inputs magazines, and databases. MS excel for data Consultants have Interviews with presentations and views experience of working on vendors/suppliers, hundreds of projects on manufacturers, service customized requirements providers, others Experience of successfully Interviews with industry executing projects with thought leaders, consultants, complex data requirements academia and industry Knowledgefaber network in bodies across the industries covered Knowledgefaber

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IPTV India Progress Report 2009 by Knowledgefaber - Market Analysis

  • 1.
    IPTV India ProgressReport By Knowledgefaber Published: April, 2009 Knowledgefaber
  • 2.
    Access content onhome TV from relatives, friends…peer to Interactive peer downloads gaming Broadcast video IPTV Services Skip Advertising Knowledgefaber
  • 3.
    Research Methodology • Knowledgefaberresearchers have been tracking the IPTV space in India and globally on an ongoing basis • Numerous Interviews (primary research) with key industry participants from Telcos, equipment providers, technology providers in India • Interviews with experts from around the world who had experience of IPTV deployments and service provisioning • Secondary research including but not limited to annual reports, company websites, journals, magazines, literature shared by participants, web search Disclaimer: Information contained in the report has been obtained from sources deemed reliable and no representation is made as to the accuracy thereof. Neither Knowledgefaber or its affiliates, officers, directors, employees, owners, representatives nor any of its data or content providers shall be liable for any errors or for any actions taken in reliance thereon Knowledgefaber
  • 4.
    IPTV Globally andin India IPTV India Dynamics IPTV Readiness and Challenges IPTV Subscriber Base Growth and Opportunity Knowledgefaber
  • 5.
    Global IPTV markethas been growing rapidly since last 3 to 4 years The term IPTV was First Commercial In September 2003, It was projected that At the end of 2008 first used in 1995 by Deployment: Kingston PCCW, Hong Kong’s number of subscribers global IPTV subscriber a company called Communications, a incumbent fixed-line will grow from 3.7 million was 23 million and Precept Software. regional operator, became one of subscribers in 2005 to revenue was around Precept designed telecommunications the first wireline 36.9 million in 2009 that $5.9 billion as per and built an internet operator in UK, operators in the world to didn’t happen industry estimates video product launched Kingston launch an IPTV service named "IP/TV". Interactive Television, an IPTV over DSL in1999 Source: Knowledgefaber analysis, estimates by various research firms Knowledgefaber
  • 6.
    Hong Kong, France,Taiwan and Belgium are leading the pack in terms of penetration Global Top 10 IPTV Markets, by Penetration (2009) Highlights 55.21% • Hong Kong is leading in penetration level while France is leading in terms of 30.03% subscribers. 10.88% 9.88% 6.43% • There are currently around a hundred and twenty IPTV providers in over sixty countries, with Europe and the far eastern 3.98% markets taking the top spots. 3.90% 2.35% • In addition, main broadcasters in UK like the iPlayer from the BBC provide online 1.13% catch up* services and Channel Four provide VoD services. 0.74% Note: Penetration is defined as % of IPTV subscriber among Broadband users. *Online catch-up service allows viewers to catch up (watch) on BBC telly missed in the week Source: Informa Telecoms and media Knowledgefaber
  • 7.
    Hong Kong’s PCCWhas shown the way to succeed in IPTV through its NOW TV… Turning Free TV into Money Maker Strong Infrastructure to Support IPTV • PCCW, the incumbent carrier in Hong Kong launched its IPTV back in 2003, providing • PCCW reports that 93 percent of households broadband customers with a set-top box and in Hong Kong experience 6 Mbps of 23 TV channels as a starter pack all for free downstream speed on its ADSL network. under the name NOW TV. • PCCW now delivers more than 160 channels • Later It secured some unique content -- to its customers over VDSL and fiber-to-the- namely, English Premiership soccer -- and home (FTTH) broadband connections. developed some IPTV channels of its own, including multiple sports channels and a business news service. • PCCW’s exclusive offerings forced end-users interested in such content to subscribe to PCCW Attaining Dual Benefits NOW TV, thereby turning a free TV into money maker. • As intended, NOW TV has made PCCW’s broadband service more attractive. • Additionally, since the introduction of NOW TV, customer loss has halved to less than 1 Significant Growth over the Years percent, clearly indicating increased loyalty levels, thus ensuring continued revenues for broadband while gaining additional revenues • From 361,000 subscribers at end of 2004, through IPTV. PCCW’s IPTV subscriber base grew to 932,000 by the end of September 2008, of which 668,000 pay monthly fees to buy additional channels or IPTV packages. By pulling together an impressive and exclusive list of content along with supporting advanced infrastructure, PCCW has become the world’s largest IPTV provider Source: Industry Interview, Pyramid research, Industry reports Knowledgefaber
  • 8.
    What is happeningin India • Early movers in this field are BSNL and MTNL. MTNL rolled out it's IPTV service in Mumbai on Oct-2006 marking the first IPTV deployment in India • Bharti Airtel and Reliance Communications were given the go ahead to launch their IPTV services in the Indian market in Feb-2008 by TRAI • Airtel has launched its service in Jan-2009 while Reliance is still testing its services • Drivers – – Interactivity – Value added services – Customer-end benefit – Fuelling broadband demand • Inhibitors– – Broadband penetration and n/w capability – QOS (Quality of service) – Content Readiness and cost – Cost of service for user – Regulatory framework – Other infrastructural problems Source: Knowledgefaber research and analysis Knowledgefaber
  • 9.
    IPTV Service Providersin India Company Description Product/ Services Tie-Ups/Partnership (only illustrative list given here) BSNL • BSNL has been offering • Company is providing triple play • Aksh Optifibre, Cable and optical fibre manufacturer has IPTV services in several service featuring telephone, collaboration with state-run Bharat Sanchar Nigam Limited cities of India, some of broadband internet and TV (BSNL) for delivery of Interactive Personalized Television these includes Kolkata, • Additional services like pause, (IPTV) on its broadband network in the north Indian Market Bangalore, Ahmedabad, fast forward VOD(video on- • IOL Broadband (India on Line Broadband) has a tie up with Gurgaon, Jaipur, demand) (BSNL) for Internet Protocol television (IPTV) services to Chandigarh, etc BSNL subscribers • BSNL Kolkata started • Smart Digivision has a contract with BSNL to provide IPTV its services in Aug-07 services to its customers in 53 cities • Verimatrix, a provider of content security technology solutions for pay-TV networks, has announced that it is providing Verimatrix Video Content Authority System (VCAS) for IPTV ( News - Alert) to protect IPTV services to Bharat Sanchar Nigam Limited (BSNL) customers MTNL • MTNL is offering IPTV • Triple play services including • MTNL and IOL Broadband are in IPTV deal, in which IOL will services in Mumbai and telephone, Broadband internet, provide IPTV content to broadband subscriber of MTNL Delhi so far and TV is provided • Aksh has a agreement with MTNL to provide IPTV • IPTV services in Delhi • Video on Demand and other broadband content services to MTNL subscribers in Delhi started in Oct-06 vale added services are and Mumbai available Bharti- • In its first phase Bharti- • Company is offering triple play • IBM provides software and IT requirements for Bharti Airtel' Airtel Airtel has started advantage of telephony, non-mobile businesses which include Direct to Home (DTH), providing IPTV services broadband and TV. Company is Internet Protocol TV (IPTV), to customers of NCR also giving services like Video- enterprise services and broadband (Delhi, Gurgaon, and on-Demand, Time shift TV, and • UTStarcom has a contract with Bharti Airtel to supply its Noida) interactive 2.0 (includes options RollingStream end-to-end IPTV solution • Bharti Airtel started its like freedom of ordering pizzas services in Jan-2000 and movie tickets from TV set) Reliance • IPTV services of • Triple play services • Reliance Communications Ltd. and Microsoft Corp. has a Reliance are under test • Real-time Video-on-Demand, partnership to deliver Reliance’s Internet Protocol Television and expected to be High definition, subtitling and (IPTV) service, which is powered by the Microsoft launched soon audio language choice, Digital Mediaroom IPTV software platform commercially video recording, etc. Knowledgefaber
  • 10.
    Most of theIPTV market in India is still in Stage 1 Stage 1 Stage 2 Stage 3 Underlying DSL, ADSL Infrastructure and ADSL2+ Services offered SD TV channels, some VAS, QOS satisfactory Compression MPEG-2, Technology MPEG-4 Players (Country): MTNL, BSNL (India), Airtel (India) Underlying ADSL2+, VDSL Infrastructure Underlying Fibre, possibly Infrastructure WiMAX, LTE Services offered Triple play with good QOS, HD Services offered HD TV, Whole TV, serve homes Home DVR with multiple TV, DVR Compression MPEG-4 and Technology Possibly Compression MPEG-4 MPEG-7 Technology Players: PCCW (Hong Kong), AT&T (USA), Verizon (USA) Source: Industry interview and News reports Knowledgefaber
  • 11.
    IPTV Globally andin India IPTV India Dynamics IPTV Readiness and Challenges IPTV Subscriber Base Growth and Opportunity Knowledgefaber
  • 12.
    IPTV value-chain inIndia Equipment and Technology Network and Service Provisioning Customer Subscribes Sub- Equipment Software contracts Franchisee/Third Subscrib Players /Hardware Systems & Telcos Owner Revenue Party Provider es Systems Others Sharing Broadcaster, content creator • Video Headend • IPTV middleware • Copper wire and DSL • Content Aggregation, • Decoder + Streamer (homegrown systems technology network Content Distribution • VoD / nVoD Servers have seen in the case • Content sourcing Network, Content • Switches of many global • Procures hardware and Sourcing • DSLAM carriers) software • Technology deployment • IP-STB • Digital rights • Uses Telcos DSL Roles • xDSL Modem management (DRM) network for service technology provisioning • Content Related s/w • Branding, and packaging • Buys Set-top box • Branding, and • IP-STB • Billing • Installation • Buys IPTV Packages packaging • xDSL Modem • Service monitoring • Service Provisioning • Pulls content and • Installation and network probes • Billing advertisement • Customer support • CAS, IP-Scrambler • Customer support • Tech geek, subscribes to • Alcatel-Lucent, • Microsoft, UTStarcom • MTNL • Aksh Optifibre Ltd. Example every new technology Ericsson AB, Nokia • Digisoft, Envivio, • BSNL (Manufacturer of fiber, s • Hi-Speed Broadband Siemens Networks Harmonic, I-Make, • Bharti (Airtel) copper wire, etc.) Subscriber and video Nortel Networks, Verimatrix • Reliance • Time Broadband enthusiast • NSN, UTStarcom • Viaccess, Thomson • XYZ (Confidential) Services Pvt. Ltd. • Homes with more than 1 or • Mototech • Smart Digivision 2 TVs and interested in • Thomson, Sagem triple play and single service provider Note: To some extent IPTV related R&D work is also being done here in India by some players such as UTStarcom, NDS, etc. Sun and Tech Mahindra along with AMD have a IPTV lab at the Tech Mahindra facility in Pune Knowledgefaber
  • 13.
    Two business modelhave emerged in this market State owned companies are using franchise model while private players opting for there own channel. • Airtel IPTV is based on the existing • Franchise model includes two DSL network, and Airtel is going all entities a content provider and an by itself with the help of technology infrastructure owner. Content partners. provider will broadcast content and • UTStarcom has a contract with utilize the infrastructure of other Bharti Airtel to supply its entity. RollingStream end-to- end IPTV • Advantages – New ideas and solution capital into the business and high speed-up the deployment of IPTV. • Companies like BSNL and MTNL are using this through IOL to provide IPTV services in various parts of India Franchise model ( Call it Telcos going by MVNO concept of IPTV themselves market) Note: In the both the models revenue generation process, technology tie-ups and content tie-ups are almost similar Source: Company website, News articles, Industry interviews Knowledgefaber
  • 14.
    IPTV Globally andin India IPTV India Dynamics IPTV Readiness and Challenges IPTV Subscriber Base Growth and Opportunity Knowledgefaber
  • 15.
    IPTV is excitingfor stakeholders but making it work would be a huge challenge in India Is India ready for IPTV? Will the Threat of companies substitutes? IPTV make or lose money? Knowledgefaber
  • 16.
    Is India ready for IPTV? You can sense from the stakeholder’s response that IPTV is going to take some time to gather critical mass • Telecom players (read carriers) are not very aggressively pushing IPTV right now. • Infact the same players are heavily involved in their DTH service promotions. • We believe that IPTV will take some years to gain scale and will directly depend on telcos push and broadband penetration • Its success would depend on how seriously the top 4 telcos (with broadband infrastructure) take it up. Their involvement and creation of push would depend on the rate of return and the point of break even Knowledgefaber
  • 17.
    Threat of substitutes? Compare DTH versus IPTV “Just providing video Programs/video on demand through IPTV does not seem to be a viable business model in India since cable and DTH have already established a very large viewership base for themselves. Telcos and IPTV service providers have to come out with newer applications that can catch the attention of consumers. Unless IPTV establishes a unique selling proposition (USP), it will not be a popular choice for TV viewing” - Mahendra Nayak, Domain Head- Embedded Systems, Product Design Services, Tata Elxsi Limited PARAMETER DTH IPTV • High cost of the DSL line and right of • Cost per line is much lower as no way permissions Cost for Operator requirement of a physical line to home • Expensive hardware and software for handling the complex systems • Content creators (broadcasters) • Content creators are relatively less actively/aggressively pursue DTH interested to partner with IPTV Content Access operators to partner with them operators, and charge higher fees • DTH is considered most suitable for • For IPTV, the cable connectivity needs geographically large countries like the to be physical drawn until the customer Accessibility and US, Brazil, India because cost of a point, resulting in high installation DTH connection for customers charges for customers Cost for • IPTV’s Access to remote customers anywhere in country is the same Customers • Connectivity can be given even for might not be possible for many more people in remote villages years Source: Knowledgefaber Analysis, Industry Interviews Knowledgefaber
  • 18.
    Will the companies Inhibitors seems to outweigh the drivers in the current make or lose money? scenario Drivers Inhibitors Source: Knowledgefaber analysis, industry interviews Knowledgefaber
  • 19.
    Will the companies Drivers make or lose money? Driver Description • Option to choose from various available programs (including already broadcasted content), freedom to watch or skip advertisements and high level of interactivity • Parents can have a full knowledge/control of what kind of programs there kids watch and they Interactivity can control their timings, so as kids can study in exam time and watch there saved cartoon later in vacations • Customer have a option to watch two simultaneously broadcasted programs. For ex: IPL match Value-Added and soap opera • Availability of good and creative content, additional ‘killer applications’ like Video on Demand, services Music on Demand, karaoke, Internet on TV, voice/video conferencing, program guides, greetings, and home to home chat Customer- • Video quality of DTH is highly dependent on weather quality, but with IPTV this problem is end solved as this is provided through DSL cables mostly • TV sets with limited no. of channels can also watch as many channels as provided by service benefits provider as set top box removes the limit of number of channels available on TV set Fuelling • Triple play package can work as a booster for broadband penetration as this will increase broadband broadband subscription along with high ARPU customer base for companies, therefore telcos would push it further demand Source: Knowledgefaber research and analysis Knowledgefaber
  • 20.
    Will the companies make or lose Inhibitors money? Inhibitors Description • Broadband penetration is still a big challenge in India Broadband • There is a high cost of RoW permission charged , other high capital costs associated with last penetration mile distribution network and cost of services for users and n/w • IPTV requires at least 1.5 Mbps line (with MPEG-4) for basic services at a good QOS and 8 Mbps line (with MPEG-4) for HDTV services. Some part of the broadband networks are not capability ready yet • Services provided till last year have been no less than disappointing. There are video freezing, QOS frames freezing and other such problems. The old generation copper network and low bandwidth is just not going to work for IPTV. Add to that content handling capability issues. • There is a lack of high definition content available as Indian sops and other content is still Content produced in traditional formats readiness & Cost • Broadcasters are not offering the right prices to the IPTV players • IPTV is still costly as compared to its competitors like DTH and traditional cable (as low as $4 Cost of services per month in some cases), and it is difficult to convince price conscious Indian consumers to for user shell out that extra cost • Regulator framework in this area is not yet clear as government is still working on nitty-gritty's of policy regulating this fast evolving technology rich system, there aren't much examples Regulatory available of a emerging market adopting this technology • One of the power of IPTV to provide internet based channels is also not working in its favor as framework they are still not allowed in India due to censorship issues associated with them. Some of the smoke is getting cleared on this issue though • DTH has been immensely successful in remote areas where cable TV could not reach • Complex content delivery platform having integration challenges associated with IPTV are big Other and costly. Content distribution networks require high level of expertise to manage, which is not easy to find Infrastructure • It requires expensive servers/equipment/software solutions to provide IPTV services. With the problems subscriber numbers expected to be low, it looks like a risky proposition Source: Knowledgefaber research and analysis Knowledgefaber
  • 21.
    Broadband penetration Broadband penetration in India compared to global and n/w capability Scenario is very low Broadband penetration in India is one of the lowest in the world. IPTV’s success is directly dependant on that. Broadband penetration needs to grow at a much faster pace. Maybe VDSL, WiMAX or LTE can save the day for IPTV? Source: Knowledgefaber research and analysis, CIA world fact book, OECD, TRAI, Broadband world forum, Cisco, Point Topic Knowledgefaber
  • 22.
    Broadband IPTV requires atleast 1.5 Mbps line (with MPEG-4) for penetration basic services at a good QOS and 8 Mbps line (with and n/w capability MPEG-4) for HDTV services. Some part of the broadband networks in India are not ready yet T4 – 274 Mbps OC3 – 155 Mbps 100 Mbps IPTV needs 1.5 Mbps* speed for T3 – 45 Mbps basic services E3 – 34.368 Mbps like SDTV channels Ethernet – 10 Mbps broadcasting… T2 – 6.312 Mbps Cable Modem – 4 Mbps E1 - 2.048 Mbps DSL/T1 - 1500 kbps …and requires 8 1 Mbps Mbps* for HDTV services Satellite - 400 kbps ISDN - 128 kbps 100 kbps Kbps = 1000 bits/second V 92 modem - 56 kbps Mbps = 1000000 bits/second 28.8 modem - 28.8 kbps 14.4 modem - 14.4 kbps Note: *with MPEG-4 compression technology Source: Knowledgefaber research and analysis Knowledgefaber
  • 23.
    Regulatory Following are therequirements from the regulatory side framework that will help IPTV’s growth in India IPTV market would require the following from the regulatory standpoint Status (WIP/Cleared) Storage and replay of IPTV content without any editing or modification should be allowed and defined as a part of the IPTV transmission. Time shift WIP TV is a big advantage of IPTV All broadcast channels from all sources must participate on IPTV platform Cleared (similar to DTH) Amendments to down-linking rules to include IPTV as a form of distribution Cleared as it is the case with the DTH and cable television. Pricing and revenue sharing should be defined and mandated for IPTV at each step. It should be done for all the parties involved such as Broadcaster, Content aggregator/Content Delivery Network (CDN) and the Telecom WIP Operator/others. Similar Pricing and revenue sharing mandate exists for cable CAS Purchase of content for IPTV should come under the Copyright Act 1957. IPTV needs to be defined and provisioned for legitimate usage of copyright under this act. Premium content is expensive and is also one of the WIP opportunities for IPTV. In order to invest in procuring copyright of such content, stable well defined regulations are a precursor. Internet content will be a part of IPTV on both computer and TV. Regulation of Internet content should be within the scope of prevailing Internet WIP regulations. Knowledgefaber
  • 24.
    Content readiness & Cost Content poses challenge and opportunities as well • With respect to content there are various costs which are involved and it totally depends on what route does the player take: - Fixed fee deal with the broadcaster - works in case telcos are extremely sure of the subscriber ramp up. With IPTV, telcos are not sure of that - Ala carte price per channel • Content cost which is aside of linear channel-- and this is the differentiating part. Worldwide for mature IPTV operators in Europe and satellite TV operators in USA and Australia, the revenue from these services already account for 15-18%. Also, the gross margin is extremely high for these services, sometimes to the tune of 30-40% which is quite contrary to what you get in the linear channel which is around 5-10% • Opportunity – The case where Belgacom outbid cable and TV companies for the rights to broadcast Belgian football, paying about 36 Million Euros a year for three years. The case in point are the exclusive rights to a major sporting events or other events such as Film awards or celebrity tours. Exclusive TV content like IPL or other cricket tournaments can be game-changers for IPTV players. There are two main models of telco access to exclusive TV content: buy the full rights, or “sublet” from a right-owner. But the challenge is that as more telcos seek exclusive content to make their TV offering relevant, the value of content is set to appreciate even further. • IPTV players require something similar to what DTH players enjoy today through lobbying and petitions. Tariff regulation at the wholesale level - between the broadcasters and the DTH operators - has already happened with the rule that DTH operators had to pay only 50% of what CAS and cable operators were paying to broadcasters for content. So while CAS operators have to pay Rs 5 to broadcasters per channel, DTH companies pay Rs 2.5. Knowledgefaber
  • 25.
    Will the Cost perline for IPTV is high and the number of companies make or lose subscribers are still very low; break-even might take money? several years but telcos would go for it • The cost per line for providing IPTV services for a Telco is in the range of $1000 to $2000 per user. Main components of cost being Access and head-end technology, Transport network and technology, Software & video platform technology. • For players with a network in place (all top telcos in India), cost per line would be in the range of $1000 • The cost of setting up is high for a brand-new rollout and is in the range of $2000 for a green field operation • Since the number of subscribers are going to be low, telcos need to provide aggressive pricing, to increase penetration. But currently, the pricing w.r.t customer i.e. cost/ MB delivered is several times of that in Europe and that is precisely because of the high infrastructure cost, bandwidth ( national + international ) cost. The high prices will hinder penetration • The ROI is going to be pick up only slowly and the break-even would take several years (say 6 to 10 years). Still, it makes sense for the telecom players to diversify to triple play of voice, data and video so as to ensure new revenue streams and ensure return on investment on their fixed lines • Also as the voice ARPUs are suffering, IPTV would make a lot of sense going forward • IPTV ARPUs for PCCW had grown at a rate of about 30% (NOW TV's ARPU in June 2008 grew by 28% from a year ago to HK$213) while satellite TV ARPUs for US providers such as DirecTV had grown at a rate of just 2%-4%. This can be seen as a positive point by the telcos in India • At least a 6-7 years time is expected for a telco to do break-even. Those who are able to do it sooner would be real winners Knowledgefaber
  • 26.
    IPTV Globally andin India IPTV India Dynamics IPTV Readiness and Challenges IPTV Subscriber Base Growth and Opportunity Knowledgefaber
  • 27.
    Growth of IPTVdepends upon broadband subscriptions growth… Verified by various sources such as Assocham (30.1 million by 2013) Source: Knowledgefaber Research and Analysis Knowledgefaber
  • 28.
    What are the subscriber …and IPTV penetration within broadband subscribers. numbers and projections? Next 5 years will see tremendous boom in the market 3500 Scenario 2 – Broadband subscriber base sky- rockets and major push 7.00 for IPTV from Telcos IPTV penetration (in percentage) 5.16 3.71 2.67 0.45 1.92 Source: Knowledgefaber Research and Analysis Knowledgefaber
  • 29.
    India IPTV statusis “Not OK” as of now, and the progress is slow with positive outlook reflected by entry of new players Time Expected to reach Status 2009 atleast next level of Status Categories (Great, OK, Not OK) (Short, Medium, Long Period)) Content readiness and cost Not OK Medium Unified standards development Not OK Medium Pricing and Promotions Not OK Short Capability of expected leaders OK Medium/Long Favorable Regulations Not OK Long Customer understanding of product proposition Not OK Short/Medium Access and head-end technology OK Medium Set-top box technology Great -- Broadband/transport infrastructure and technology Not OK Long Software & Video platform technology Great -- Note: Short period is about <2 years while Long period is about >4 years Source: Knowledgefaber Research and Analysis Knowledgefaber
  • 30.
    Recommendations • On demand– Please contact us! Knowledgefaber
  • 31.
    Appendix Knowledgefaber
  • 32.
    Knowledgefaber research inthe IPTV goes beyond this report • Entire demand and supply side dynamics and market analysis • Studying all the tie-ups, technology partnerships, deals in India across the IPTV value-chain • Deeper value chain analysis with profit pool analysis • Detailed ROI and break-even analysis • Successful case studies from France, Hong Kong, Taiwan, Korea, US, Belgium, etc. • Trends in technology, regulatory, market, and customers • Customer preferences and opinions in terms of cost, prices, usage, QOS feedback, etc. If you have a research or consulting requirement in the IPTV area or other Telecom subject, please contact us for a discussion at: relationship@knowledgefaber.com or call us at 91-80-41231576 Knowledgefaber
  • 33.
    What is IPTV? • Internet Protocol Television (IPTV) is the delivery of broadcast-quality television and/or video signals to subscribers. This is done over a broadband connection using the Internet Protocol • While IP stands for Internet Protocol, this does not actually mean that television content is streaming over the Internet. IP is simply the same method, protocol or technology that enables you to access the Internet. IP- delivered television content is delivered using this technology. IPTV, unlike Internet TV, is primarily a TV experience rather than a PC experience and is meant as an alternative to cable and satellite • IPTV operates on a premise that's different from traditional satellite or cable television. In IPTV only selected programming and on-demand content are delivered to the consumer, while on satellite and cable, all channels are being pushed all the time to the consumer's home. • IPTV's ability to provide two-way communication (you request a programme from the TV guide and the programme is delivered to you) offers interactivity for the customer. Movies, past TV shows and other content can be distributed on demand, and service providers can tailor the requested content and advertising based on the customer's preferences Knowledgefaber
  • 34.
    IPTV system ata glance Content Sources Content Access Equipment Content Creation Decoder + Content Broadcasting Billing / SMS Streamer CAS, Content Transmission IP-Scrambler Middleware VoD / nVoD Servers IP Network with IGMP Support Subscribers TV Viewers IP-STB xDSL Modem DSLAM Ethernet Switch TV Viewers IP-STB PC Users PC Users Knowledgefaber
  • 35.
    Typical bandwidth requirementsfor IPTV Knowledgefaber
  • 36.
    Service provisioning quadplay; Consumer market segments User INR 1500 per month Knowledgefaber
  • 37.
    DSL constitutes majorityof the market share for the broadband market in India Market Share Break-up of Broadband Subscriber Base By Technology (2007) Service Description • DSL technology uses the infrastructure of Digital existing copper telephone infrastructure to facilitate high-speed data connections Subscriber • DSL uses high frequency, while regular Line (DSL) telephone uses low frequency on the same telephone line • A cable modem is a type of modem that provides access to a data signal sent over cable television. Cable • These are primarily used to deliver broadband Modem Internet access in the form of cable internet, taking advantage of the high bandwidth of cable television network • Ethernet is a family of frame-based computer Ethernet LAN networking technologies for local area networks • An audio broadcasting service transmitted via Radio the Internet (streaming technology) • Optical fibers permit transmission over longer distances and at higher data rates than other Fibre forms of communications • Fibers are used instead of metal wires because signals travel along them with less loss Note: Subscriber base shares are for Sep 2007 Source: TRAI Knowledgefaber
  • 38.
    Abbreviations • DSL (Digital Subscriber Line): DSL or xDSL, is a family of technologies that provides digital data transmission over the wires of a local telephone network • VoD = Video on Demand • MoD = Movie on Demand • SDTV = Standard Definition TV • CDN = A content delivery network or content distribution network (CDN) is a system of computers networked together across the Internet that cooperate transparently to deliver content to end users, most often for the purpose of improving performance, scalability, and cost efficiency. • DTH = Direct broadcast satellite (DBS) is a term used to refer to satellite television broadcasts intended for home reception, also referred to more broadly as direct-to-home signals. • RoW = A situation in which although a parcel of land has a specific private owner, some other party or the public at large has a legal right to traverse that land in some specified manner. Knowledgefaber
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  • 40.
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