<![CDATA[<body>
Slide 1
The IPTV Explosion: Who's Positioned for Success?
Ron Westfall, Research Director, Access and Applications
Yoav Schreiber, Senior Analyst, Digital Media Infrastructure
Larry Hettick, Principal Analyst, Digital Home Services U. S.
Bernt Ostergaard, Research Director, Telecom Services Europe
Ben Tudor, Senior Analyst, Consumer Broadband Services Europe
June 4th & 5th, 2008
Slide 2
Agenda: The IPTV Video Explosion: Who.s Positioned for Success?
Section I: The Global IPTV and IP Video Infrastructure Market and Competitive Terrain
Section II: The US IPTV Market and Competitive Terrain
Section III: The European IPTV Market and Competitive Terrain
Slide 3
Section I: The Global IPTV and IP Video Infrastructure Market and Competitive Terrain
Slide 4
The Major Drivers for the Overall IPTV and IP Video Market
Standards and Acceptance
- MPEG-2/4
- Open IPTV Forum
- DOCSIS 3.0, tru2way
- DLNA, Semantic Web
- HD, PVR Mainstream
- DVB-H
Back-Office and Organization Evolution
- SDP for Any Device, Any Content
- Metadata Management/Semantic Web
- Future IMS based services
- Content and Workflow Mgmt
Regulation and Competition
- EU Model Spur Content Innovation
- Net Neutrality
- Interactivity and Custom Ads
- Regulators Need to Adapt
Applications and Services
- IP Video and IPTV
- IP Video/IPTV
- Any Play, Interactivity
- PC TV, Mobile TV and OTT Video
- Personal Ads
- User-Generated Content
Slide 5
IPTV and IP Video Market Evolution
Significant Factors
IPTV Impact on Ad Models
- Unicast content such as VoD, DVR/nPVR
- Long tail content, non-linear content
- User-generated and personal content
Networking and Home Wiring
- May prove most challenging technical issue in U.S.
- Regions beyond U.S. = single TV households
- IPTV Standardization Efforts
- Some progress, but still open-ended
- Open IPTV forum and others
Slide 6
IPTV and IP Video Market Evolution (Continued)
Significant Factors
IP Video and IPTV Business Case Evolution
- SD to HD = MPEG2 to MPEG4
- Pay models shifting
- MSOs already offering free VoD
- IPTV: a separate or bundled/hidden charge
IPTV Middleware Market Segment Fragmentation
- Microsoft Mediaroom traction
- Wide variety of established players, independent players and carrier-originated IPTV middleware
- Increased consolidation of players expected
Slide 7
Current IPTV and IP Video Solutions Competitive Positioning Matrix
Vendor
Middleware
VHE/Encoding
CDS/VoD
Content
Security
Digital
Home/STB
Overall
IPTV/IP
Video
Cisco
IPTV MW
MIA
Very
Competitive
#1
Cable
Security, but
IPTV =
Partners
Linksys/STB
Top Ranking
Alcatel-Lucent
MSFT
Friction
Partners
Portfolio
Hedge
Partners
Partners
MSFT
Dependent
Ericsson
Kasenna
Solid
TANDBERG
TV
Respectable
Portfolio
Diversity
Execution
Key
Huawei
Cascade
N/A
Limited
N/A
STB Assets
Rebuilding
Credibility
NSN
Myrio
Partners
Partners
Partners
Some HE
Assets
Lead
Integrator
Message
Has Holes
Thomson
Thales
IPTV
IPTV and
Mobile
TV
In-House
Respectable
Execution
Key
ZTE
China
Competitive
Competitive
In-House
Decent
Asia-Pac
Threat
Motorola
Cable
Competitive;
More Cohesion
Though
Portfolio
Streamlining
can Help
Cable
Security, but
IPTV =
Partners
Strong
New Re-Org
= Many
Unanswered
Positive
Neutral
Negative
Ratings Key
Slide 8
IPTV and IP Video Content Security
Four components:
- Conditional Access Systems (CAS)
- Digital Rights Management (DRM)
- Encryption
- Watermarking
Content security solutions require agility (i.e., renewability via hardware or software) to enable business model flexibility for operators
ARPU growth enabled by securing interactivity (via middleware integration)
Key goal = seamless content portability across devices and networks, and securing “whole home” convergence
Pirates focus on systems with large numbers
- To date, IPTV numbers are smaller than either cable or satellite
- Largest software-downloadable content security: PCCW and France Telecom
- NDS has the largest 17 million customer license for smart cards
Slide 9
IPTV and IP Video Content Security Competitive
Positioning Matrix
Vendor Footprint
Technology Flexibility
End-to-end Strategy
Messaging & Vision
Overall Ranking
Irdeto
1 billion+ devices & apps secured; mostly cable/sat.
Smartcard + robust software capabilities (Cloakware)
Subsidiaries: IDwaymiddleware & IBS InterpritB/OSS
Business Model Protection
Positioned to influence converged market
Latens
Few tier 1 accounts; mostly telco
Software-based
Integrates own ECOsystemmiddleware
Integrated CAS/DRM speeds time-to-market
Lacks market momentum
Nagravision
78 million+ active cards/devices; mostly cable/sat
Primarily smartcards; chipset-based software solution
Leverages content management & middleware from sister companies
Securing content aggregation, delivery, consumption
Can influence hybrid market
NDS
87 million+ active devices; mostly cable/sat
Primarily smartcards, server-based software
Owns middleware, DVR & apps
Securing & enabling content
Market leader in scope and influence
Secure Media
Limited; primarily telco
Software-based
Relies on partners
Open platform content protection
Lacks influence
Verimatrix
4 million+ screens protected; 100+ customers; mostly telco
Software-based
Layered security to prevent cloning (GeoAuthentication& Quantum ID)
3-D content security (multiple networks, screens, layers)
IPTV Leadership in terms of system scale and licenses
Viaccess
13 million+ smart cards shipped; mostly cable/satellite
Primarily hardware; has software offer (Purple Box)
Turnkey offering and acquired Orca middleware
Securing digital content
Still establishing middleware credentials
Widevine
130 operator accounts, few tier 1s; mostly telco
Software –based; has cable card offering
Partner driven strategy; multiple SI relationships
Multi-format & multi-platform protection
Broad multi-platform credibility
Positive
Neutral
Negative
Ratings Key
Slide 10
Competitive Actions to Improve Market Positioning
Irdeto
Needs to focus on interactivity enablement as key differentiator, leveraging middleware, DVR and apps; IPTV execution is key
Latens
Needs to build mobile DRM differentiator, and leverage installed base to win the hybrid cable + IP market
Nagravision
Needs to expand customer base to demonstrate market viability of EncryptoniteOne system
NDS
Needs to consolidate offerings and vision to solidify IPTV lead and extend to new markets, (i.e., Internet, cable, mobile)
Secure Media
Needs to demonstrate Orca middleware acquisition synergy as key for IPTV success
Verimatrix
Needs to gain Tier 1 customers to demonstrate system scale, and leverage multi-platform/format leadership positioning
Viaccess
Needs more system integrator partners to drive penetration, and needs to demonstrate integrated middleware ECOsystemsuccess
Widevine
Needs to leverage integrated B/OSS capabilities for “whole-home” convergence and Cloakwaresoftware as differentiators
Slide 11
Section II: The US IPTV Market and Competitive Terrain
Slide 12
Service Provider Drivers and Trends
Universal Service Provider Drivers
- Increase ARPU
- Decrease churn
U. S. Service Provider Trends
- A zero sum game
- Telcos: add video
- MSOs: add voice
- Both: increased speed, video options (HD+++, DVR, etc.)
- Both: double play / triple play
Up to 85% of U. S. Homes Pay to Watch TV
Slide 13
Telcos Losing Wireline Voice to MSOs, Wireless Substitution
Telcos Losing the ARPU Battle but Targeting 30% Video Market Share by 2010
MSOs Gaining on Targeted 30% Voice Share by 2010
MSOs Losing Little Video Share to Date
Verizon FiOS Driving Broadband Speed as U. S. Competitive Advantage
Satellite TV Driving HD Channels as Competitive Advantage
Business Case Drivers: Competitive Pressures (U. S.)
Slide 14
U. S. Consumer Drivers and Trends
Consumer Demand Drivers
- More for less
- A little more for a lot less
Current Monthly A La Carte Prices
- Voice: Unlimited Domestic Calling (including loop) ~ $20 to $45
- Broadband: Downstream @ 1.5 / 3 Mbps to 50 Mbps; $19.95 to $149.95
- Video: ~ 200 Digital Channels = ~ $45 -$65
Consumer Demand Trends
- $99 triple play (up to 60% for new subscribers)
- Unlimited voice
- 200+ digital channels, 40+ HD
- 1.5 –6Mbps broadband
$140-$160 Premium Triple Play
- Unlimited voice
- + HD, + DVR, + premium Video
- 10 –20 Mbps broadband
Slide 15
IPTV Case Example: AT&T U-verse Service Delivery
Technical:
- Largely FTTN (FTTH for new homes)
- VDSL
- IPTV/MPEG-4
Financial:
- Capex: $330 / home passed
- CPE Cost / Sub ~ $550
- APRU / sub: not disclosed, however estimated at > $115 / month
Subscribers:
- Q1 07: 13,000
- Q1 08: 379,000
Source: AT&T
Slide 16
Section III: The European IPTV Market and Competitive Terrain
Slide 17
Split European Broadband Infrastructure Strategies
Infrastructure Build-Out Strategies:
FTTH with active ethernet or passive optical network
- AE: Free (FR), Citynet & Reggefiber (NL), B2 & Telenor Sweden (S)
- GPON: Fastweb (I), Neuf & Orange (F), Energi Midt (DK)
FTTB or FTTC AE/PON +VDSL/VDSL2 to the subscriber
- AE: DT (D), Belgacom (B)
- GPON: Orange (F), Fastweb (I)
- GPON+VDSL2: TI (I)
HFC hybrid fiber/coax to subscriber
- DOCSIS 2.0: The standard delivery
- DOCSIS 3.0: No commercial services. Trials at UPC (NL), Telenet (B), Virgin Media (UK) and Cablecom (CH)
Slide 18
European Business Case Drivers: Competitive Pressures
Need to drive up ARPU and justify heavy infrastructure investments
Telcos Losing wireline voice to MSOs with wireless substitution
Broadband becoming commodity
Cable, MSOs, broadcasters and others offering triple play services
FTTx rollouts gathering speed (France, Nordics)
Advertisers looking for more detailed audience data
Need to make services "sticky" –see BT
Video Traffic is the Key Growth Factor –BUT:Infrastructure investments cannot be justified by IPTV alone. SPs need to evolve Video Related Services:VoD, P2P video, video conferencing, Games and Apps sharing, Video security services.
Slide 19
Service Provider Drivers and Trends
Telco Priorities
- Add a revenue stream to flat-rate DSL
- Staunch revenue losses to cable
- Differentiate from discount ISPs
- Stop revenue loss to content providers
- Move up the value chain
- Preparing for multi-screen delivery
Cable Operator Priorities
- Triple play services
- Stay ahead in HD quality delivery
- Enhance in home service delivery
Current Broadband Speeds / Prices vary wildly: Cheapest prices $5.80 in Sweden, $33.38 in
Czech Republic (Source: OECD)
EU and Non-EU Europe Region
Slide 20
European Consumer Drivers and Trends
DTT and license financed „Free TV. shakes up EU markets
Fibre rollouts / xDSL evolution makes it easier to deliver IPTV
Consumers conditioned by what.s available in their market
Huge appetite for catch-up TV, time shifting
VOD offerings from broadcasters enable new consumer behaviors
Games console penetration used to distribute content
Regulatory Issues:
-Infrastructure access and investment sharing
-Role of publicly-funded broadcasters
Slide 21
IPTV Case Example: Illiad FreeBox Service Delivery
Power line Connections for HDTV connections in-house
A fiber-connected Freebox home
Source: Free www.free.fr
Technical:
- Unbundled ADSL2+
- FTTH in 80 cities
- IPTV/MPEG-4
Financial:
- Capex: €70/€400 apartment/house
- CPE Cost: €300
- APRU / sub: not disclosed
Subscribers:
- Q1 07: 2,1 mill
- Q1 08: 3,1 mill (400K FTTH households passed)
- Base subscription €29.99 per month for both ADSL and FTTH
Slide 22
Catch-up TV VOD case study – BBC iPlayer
Free to view in the UK
Viewers can stream to browser, iPhone, Virgin Media STB or Wii
75 million streams / downloads since Christmas 2007
UK #3 ISP, Tiscali, complains about bandwidth cost
PlusNet: iPlayer traffic accounts for 6.3% of total downloads
Slide 23
IPTV Best Practice Revenue Models
Consumers pay for content, picture quality and ease of use
- Size (# of subscribers) critical for best content deals
- Large flat screens ready for HD
- Triple-& Quad SP are attractive, but bad customer experience can hurt across all bundled services
There is zero customer loyalty – just varying degrees of vendor lock-in to delay churn to better, cheaper SP's
- DTTs will set the bar
We are a long way from IPTV profitability
- If carriers want to avoid being bit carriers they have to stop thinking like bit carriers
Slide 24
Global IPTV and IP Video Technology Drivers and Trends
Standards and Acceptance: GPON/VDSL2 and DOCSIS 3.0 standards and silicon advances = fixed wireline BW per sub boosts to further drive video and other BW-intensive apps
Regulation and Competition: Intermodal competition realized among operators; Content regulation still lagging
Back-office and Organizational Evolution: All-digital/IP upgrades, FMC architectures, SDP/IMS and metadata management enhancements = operator org. shifts
Applications and Services: Mobile TV, PC TV, and OTT video fuel overall video demand including Adobe Flash proliferation
Slide 25
Questions and Answers
Slide 26
Recent Current Analysis Reports on IPTV
Our customers have been reading:
Netflix's Streaming Video Service Crosses Over to the TV via the New Roku Set-top BoxProduct Intelligence Report | Digital Home -U.S. [May 2008] Netflix’s new broadband device can stream movies on a television for only $99 for the equipment with no extra service fees. But there is no HD content and overall Netflix’s online selection is skimpy compared to its vast DVD library.
The State of the UK IPTV Market Advisory Report | Consumer Broadband Services Europe [May 2008] The market for IPTV in the UK is driven by varying technical and market conditions. Existing broadcasters are keen to bring their own products to market, and existing broadband provisioning is currently not suited to mass IPTV adoption.
IPTV World Forum 2008 Round-up: A Wealth of Emerging Trends Worthy of Metadata Management Advisory Report | Digital Media Infrastructure [March 2008] The IPTV World Forum 2008 show indicated IPTV is now beyond the bleeding edge of technical implementation and first generation service deployment, but some cutting edge challenges and innovations are around the corner in 2008.
Slide 27
Competitive Intelligence levels the playing field…
Competitive Response enables you to Win.
Current Analysisis the onlycompetitive research firm that provides solutions to improve your company’sCompetitive Response
21335 Signal Hill Plaza, Suite 200
Sterling, VA 20164, United States
Phone +1 703 404 9200
Toll free 877 787 8947
Fax +1 703 404 9300
www.currentanalysis.com
</body>
]]>