Writing from TelcoTV - Considering the Opportunity of NetVideo for Network Operators

I’m on the road again, this time in Atlanta to attend the TelcoTV conference, where telephone companies talk about how to add TV to their stable of services.

Yesterday I attended their pre-conference NetVideo Summit, which covered the challenges and opportunities of Internet video from the perspective of network operators. The series of sessions offered an interesting juxtaposition of themes.

One oft-mentioned challenge was the struggles associated with obtaining rights to content from the studios, whether in order to deliver TV or Internet video experiences. A speaker from Avail Media mentioned a number of concessions they’ve had to make as they developed their Internet TV platform in order to satisfy the demands of content owners.

But Joe Trainor from Narrowstep struck a more contrarian note, suggesting that what’s driving the stubbornness of studios is not necessarily arrogance but instead the fact that they’re facing an uncertain future that they’re preparing for by circling their wagons and doing whatever they can to establish the highest possible value of and control over their content.

At the same time, he observed that studios are coming around on the fact that their approach towards digital storefronts should mirror that of brick-and-mortar stores: they need to cast their nets across as many outlets as possible in order to maximize reach, sales, and revenue.

Alongside these discussions was the general consensus that network operators are perfectly positioned to step into this space and leverage the fact that they have the customer, a trusted brand, and established billing relationships in order to help facilitate the marketing, discovery, and delivery of NetVideo.

In fact, this was really the overarching theme of this NetVideo Summit: that network operators should focus not just on IPTV but also on NetVideo as an opportunity to open up new revenue streams.

But I also sensed an undercurrent in the room that the telephone companies believe their most urgent need wasn’t to pursue a NetVideo strategy but instead to stay focused on the speedy deployment of TV service so that they can compete directly with cable companies, who are poaching phone subscribers left and right.

And these constraints on time and resources stand even more starkly when set against the backdrop of the marginal success of high profile NetVideo plays like Comcast’s The Fan, as well as the general confusion as to how best to approach the NetVideo opportunity.

Yet the thing that network operators can’t forget is that the opportunity of NetVideo may be fleeting. Content owners are increasingly creating their own presences and establishing their own audiences online, without need for distribution partners.

If you’re like me, you believe that the NetVideo revolution is inevitable and will increasingly eat into the mindshare of TV. So it’s important for network operators to jump in as soon as possible as otherwise they may not only miss out on new revenue, but also have to deal with the double whammy of rising network costs as consumer demand for NetVideo, and therefore bandwidth, continues to increase.

So in summation, network operators shouldn’t lose sight of NetVideo as they pursue IPTV lest they end up having to face a future where content owners have established sufficient online audiences to bypass the need for traditional TV systems entirely.