Another analyst firm running the rule over TV delivered over the Internet is Pyramid Research. In its recent study ‘Can Video on Demand Save IPTV? VoD Economics, Global Forecasts, and the Case for IPTV VoD’ Pyramid states that IPTV is an important part of the grand telco plan to monetise the broadband network and become more competitive in a market characterised by triple- and quadruple-play providers. However, suggests Pyramid, a mere ‘me too’ strategy of providing linear channels will neither work against entrenched TV players nor convince consumers to start paying for TV. IPTV technology leverages the flexibility and scalability of IP to allow operators to offer content that is more personalised and interactive than traditional broadcast TV. Within this context, says Pyramid, video on demand (VoD) has rapidly become a significant stepping stone on the way to interactive TV, which promises to disrupt the traditional TV business by radically transforming the TV viewing experience and creating substantial service differentiation for IPTV operators.

However, judges Pyramid, IPTV and VoD services are as uncertain as they are tantalising, and the TV business is complex and largely new territory for telcos: the jury is still out on the commercial viability of IPTV and VoD services. Interestingly Pyramid reasons that, because new movies represent the most popular and costly VoD assets, and that IPTV players will pay almost all revenue back to the studios, in the medium term VoD will be about customer retention. Over time though, given a fair wind and an increase in the size of the VoD consumer base, Pyramid can see more of the power shifting from the content owners to the IPTV service providers.
John Williamson