The digitization of everything has not bypassed the entertainment industry. The recent NAB show, which drew 105,000 attendees to Las Vegas, has relabeled itself “The World’s Largest Electronic Media Show” and claims that “From entertainment to news to business communications, NAB2006 is the only global event that covers the entire spectrum of media.” In the sessions and on the show floor, digital technology was pervasive. Computers are built into everything from HDTV cameras to audio mixers, and transmission of audio and video has moved from analog, to proprietary digital and (just emerging now) to IP-based networks. The latter was the topic of the IPTV World conference within a conference, produced by Michael and Zahava Stroud of the iHollywood Forum.
This full day of sessions was targeted at telcos who want to get into the cable TV business, cable MSOs who are worried about the telcos, content owners who are considering distributing content through this new regime, and everyone else who wants to get on the gold rush.
What started this bandwagon was that when the telephone companies saw the cable companies entering what had been a highly lucrative voice business, they needed to find a new source of revenue, and figured they could amortize the upgrade of their network by using it to deliver voice, Internet, and TV programming. This calculation has led to significant upgrades in the bandwidth to the home through the rollout of DSL and Fiber-to-the-home projects such as Verizon’s FIOS. However, while the underlying technology is the same as used in the PC and the Internet, the intended result, IPTV, is a parallel, closed universe with only the most carefully controlled connections to the world of general-purpose computing.
The keynote speaker, Phil Corman, of Microsoft, and many of the subsequent speakers took great pains to point out that IPTV “is not the Internet.” In Corman’s words, the IPTV is not:
- Best effort
- Video streaming over the Internet
- TV on the PC
- Based on unproven business model
And it is
- Competitive TV services over managed IP networks
- Broadcast TV
- All forms of all-demand connected entertainment services
In other words, IPTV is intended to provide the same experience as cable TV, including the ability to channel surf and do time-shifting with PVRs. Great care will be taken to make sure “the rights of the content owners are protected,” i.e. multi-layered digital rights management (DRM) and conditional access systems will allow each piece of content to be tagged so that as it passes through the system it can only be used in a manner consistent with the rights that have been purchased and none of it can leak out into the wild and wooly world of the Internet. In this way the telcos hope to persuade the studios to part with their precious content while helping them avoid the fate of the record industry, whose woes they blame on Napster and its successors. They also hope to finesse the Innovator’s Dilemma and ensure that the only business model that is disrupted is that of the cable companies whom they hope to displace in an otherwise unaltered value chain.
The main problem with this tidy scenario is that ossifying the existing business practices of the entertainment industry, and ensuring that only officially blessed uses can be made of licensed content may choke off the very innovation that would otherwise create the revenue streams of tomorrow. At one point, the entertainment industry feared TV, Cable, FM radio, CDs, DVDs, and the VCR, yet these went on to become the major sources of revenue. The same thing could happen with the Internet, although this time the major technology players are conspiring with the content owners to enforce a rigid scheme to allow only officially blessed applications, and they have successfully lobbied the Congress to give some of these schemes the force of law.
To see how these restrictions are affecting the market, take a look at the efforts to achieve interoperability among the various DRM schemes. Just as in the portable music player business Apple and Microsoft have been pushing incompatible schemes for devices and music stores, there are multiple schemes for IPTV, except that this time there are more parties and more layers of technology. At this point some of the overlapping regimes are:
- Digital Living Network Alliance (DLNA)
- Coral Consortium
- Digital Transmission Content Protection (DTCP)
- High-bandwidth Digital Content Protection (HDCP)
- Content Protection for Recordable Media (CPRM)
- Microsoft MSTV DRM
- Apple Fairplay
- RealNetworks Nelix DRM
The central notion of all of these schemes is that the content provider can restrict what the consumer does with the content that was purchased, even if that content passes through multiple devices. For example, a movie could be restricted such that the set-top-box would send the output to a display for viewing but would not be sent it to a device for recording, or it could be recorded on a PVR but not output to removable media such as DVD. To enforce this scheme, every device must be a trusted part of the scheme, and all the links among the devices must be encrypted. Needless to say, while we are awaiting the fulfillment of this dream of cooperation, consumers are going to experience a lot of frustration when they find out that content they purchased does not work on all the devices in their home. There are some signs that the industry is concerned about this possibility, must mostly they are coming from the device manufacturers who will deal with disappointed purchasers and not from the content owners who still seem more concerned that nothing happens to disrupt their existing business models.
The ability to offer a coherent solution across a wide variety of devices has created an opportunity for Microsoft to sign up telcos such as AT&T. It remains to be seen whether the various committees will come up with a scheme that allows all the parties to play nicely together and whether Microsoft and Apple will cooperate with them. In the meantime the consumer may face a bewildering collection of incompatible devices and services, and it will be all that much more difficult for a new company to join the club. One wonders if a Google ever could have gotten started in an environment like this, which may be the point.
One bright spot is that there seems to be a recognition in some quarters that the consumers themselves could be a fertile source of content. While most of the attendees had not heard of the long tail, some of the telcos have started to appreciate the idea of content that they don’t need to pay for. Given that, according to a recent Pew study, the majority of today’s teenagers are content creators, those who want to make money at IPTV may need to allow them the freedom to create or they will find that no one is watching.
Comments
You can follow this conversation by subscribing to the comment feed for this post.