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May 25, 2005
Mike Quigley explains IPTV
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Behind the acronym 'IPTV' lies an expanding universe of communications possibilities. Alcatel's president explains it all.
This week in a Business Week article titled "The Real Meaning Of IPTV", Mike Quigley, CEO of Alcatel USA explains some of the basics about IPTV. It's a good place to start for anyone trying to picture what the telco's are up to.
Note: I am going to side-step the point that he compares IPTV only to traditional television. The problematic part is that the cable companies can deliver this same functionality, too.
"Let's start with what IPTV is not. Specifically, it is not TV that is broadcast over the Internet. While the 'IP' in its name stands for Internet protocol, that doesn't mean people will log onto their favorite Web page to access television programming. The IP refers to a method of sending information over a secure, tightly managed network that results in a superior entertainment experience."
And why does Mr. Quigley think that the IPTV experience will be superior? He goes on to explain.
"Because it means ... a much more personalized entertainment experience to customers... In particular, IPTV allows the service provider to deliver only those channels that the consumer wants at any given time -- unlike traditional television broadcasting, where every channel is delivered to every home on the network. For the first time, it will be economical to deliver a college basketball game to everyone who wants to see it, for example, rather than just a particular local community."
He is correct. However, in my opinion his explanation is too wrapped up in vendor-speak. The average viewer does not care about the telco's economics. I would simply say this: a telco can keep all the television content ever produced and give it to you when you want it. That level service can be done affordably. That is something that traditional television cannot deliver.
But this is his most significant statement for how the business of advertising will change next decade.
" ... because the network ... has the ability to synthesize all sorts of information regarding the consumer's preferences, it's an excellent platform on which to add e-commerce, advertising, and other capabilities. In fact, as advertisers get better at divining the behavior of consumers with digital video recorders, they'll have a significant opportunity to decrease the use of low-impact broadcast ads and increase the use of personalized ads that drive meaningful business results and impulse purchasing."
I added the emphasis. That one sentence speaks a big truth. That is this: traditional television advertising is mass marketing and it is diminishing in effectiveness. The Internet is often a joke when it comes to the quality of its advertising but it does have this going for it -- targetability and ROI. We can only just begin to picture what will happen when those characteristics become a part of the visually high-quality medium called television. In future blog entries, I will have much more to say about that.
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Read the original entry that explains how large an effective VOD Ad Market might grow to. |
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