IPTV — Turning Gorillas Into Guerrillas

Tom Burton at FierceMarkets brought an interesting new study to my attention via his FierceIPTV e-newsletter Tuesday. Tom’s an experienced tech journalist who recently relocated to the States from Australia, and I’ve gotten to know him over the past few months. He writes good commentary that goes easy on the jargon and gets into the business issues driving the market.

In this one he’s crediting the Yankee Group report for challenging the conventional wisdom that the incumbent position of cable MSOs makes IPTV primarily defensive and/or niche play for carriers. Telcos will use IPTV to go after the best customers in the most lucrative urban markets, turning a formerly mass market into a battle of hypercompetitive micro-markets. Many counties, towns and neighborhoods will be unaffected, while others will see intense competition. In the process, both telcos and MSOs will need to change from very centralized, 800 pound gorillas to nimble, insurgent guerrillas to win the battle. (Credit for clever title goes to Yankee Group)

All that said, Tom takes Yankee to task for missing how this still could end up being a mass market after all a bit down the road:

A curious absence from the Yankee report is the lack of discussion of the impact of over-the-top or online video. IPTV may cause material change in the distribution rules, but Internet TV–streamed and downloads direct to the TV–is expected to take off. One prediction is that 160 million homes world wide will connect their TVs to the web in the five years from 2007. Think of the Internet as a giant TiVo machine and you start to get the picture. In that scenario all things pre-recordable live on the Internet and all live programming–sport, competitions (eg. American Idol)–come down whatever pipe (or air-wave) works best. The latter still looks very mass market to me.

Personally I think time to market is critical. Cox Communications just got me to bite on a low-priced digital upgrade (yes, I know not upgrading from analog until now is very late adopter of me) combined with a DVR. And if I eventually succumb to the VOIP phone offers from that seem to come weekly, I’ll then be the much sought after triple play customer. At that point, getting me to switch to a competitive bundle will require a very low price, horrible customer service from Cox, or a combination thereof.

Click here for Tom’s full editorial. And here for a link to an abstract of the Yankee Group report.