What is IPTV and Internet Video?
The rapid increase in number of households and businesses with access to fast internet connections, capable of streaming of downloading compressed video content, has allowed a market to emerge for the provisioning of video content – whether of TV, short-form or feature-length. The popularity of short-form, user-generated video site YouTube from its creation in 2005 has spearheaded the emergence of a multitude of services which now provide access to all sorts of video content.
At this point it's useful to make clear some technological distinctions between different modes of delivery of video content over the internet. What is referred to as IPTV (Internet Protocol Television) is a platform used by television service providers to “deliver multiple streams of continuous content over private networks to viewers who watch the content on normal television sets”. Though the IP protocol used is common with internet traffic, the network is not part of the open internet. In this way, service providers have built and exploited proprietary fiber-based networks and CDNs (Content Delivery Networks) to avoid issues with bandwidth which have prevented broadcast quality streaming of multi-channel video over the “open” internet. In this sense, IPTV is closer in concept and execution to cable television. Indeed, there has been convergence between the two in recent years as cable television companies such as Virgin Media in the UK have added internet video functionality to their set-top boxes.
In contrast, what is generally referred to as “Internet Video” covers all other forms of delivery of video content over the internet. Such content is delivered over the open internet, with service providers hosting content on a number of servers which respond on-demand to multiple concurrent users. The Internet Protocol facilitates this concurrency and scale through its ability to break up digital audio-visual streams into multiple packets and deliver it over a network across potentially different paths, depending on current bottlenecks or outages in the infrastructure. Though this can present challenges in terms of latency (the time it takes to deliver data) and the potential loss of individual data packets, the flexibility and open nature of the network has allowed a multiplicity of content providers to emerge. And, as broadband speeds have increased, the possibility of broadcast quality streaming and fast downloads have increased the viability of paid downloads and subscription businesses for online video.
It's important to place any market for online video into the wider context of the home entertainment market. As mentioned above, the development of IPTV closely mirrors that of cable television, where small communities – perhaps due to factors such as geography – are served through a purpose-built network, enabling the provision of multi-channel video. Cable and satellite television emerged throughout the 1970s as a method of bringing television to otherwise inaccessible parts of the US and other countries and developed into a means of providing extra choice in mature markets served by traditional broadcast television. Crucial to the salability of such offerings has been so-called “big ticket” items including major sporting events and major Hollywood feature films. Cable television built on the success of home video in providing home access to feature films and negotiated contracts which introduced an extra exhibition window closely behind a film's home video release. The growing importance of the Video-on-Demand market and the relative decline of the DVD market have ensured that this delay has gradually decreased:
The window used to be several months after video, but as video has matured from a rental to sell through business, and as the preponderance of DVD sales has become frontloaded, the residential PPV/VOD windows has become accelerated ... it would not surprise me by the printing of this book if the window has crept even further forward.
It has been in the field of sports coverage that cable and satellite has been most successful in terms of differentiating offerings from broadcast television and other home entertainment formats such as video. The ability to offer multiple channels of live coverage of major sporting events has been a major sales driver. In the UK, BskyB's development of Premier League football has been an incredible success and has – in tandem with packages of Hollywood films and premium television series – driven widespread adoption of Sky's satellite TV platform, with around 10 million subscribers.
Central to the appeal of cable and satellite has been premium content and a breadth of channels which aims to ensure that there is always something on television which will engage the subscriber. Cable television has advanced the notion of fulfilling viewer desires by introducing true on-demand programming. Leveraging the capability of fiber-optic networks, cable platforms through the 90s developed to allow subscribers to select a range of programming for instant viewing. It is this on demand access to a range of media content which is heavily exploited by services which are being developed on the internet.
The breadth of sources across the internet brings the reality of truly on demand content closer, as the provision of all types of video and other content is only limited by availability of physical masters and the licenses required ensuring that such access properly compensates rights holders. The breadth of feature film (and other types of media content) that has already been digitally mastered for distribution on physical media formats ensures that the transition to online distribution is smooth. As with previous home video formats, however, it is legal issues which may present a greater barrier to the availability of content, as rights holders seek to maximise value while preserving existing revenue streams.
Major Companies in the Market Today
Despite the challenges to the establishment of paid models for online feature film distribution, several businesses have emerged who are simultaneously exploring new technological modes of distribution and fulfilling content value demands made by rights holders. The film industry has followed the music industry, who were first to respond to large-scale decimation of their business by piracy, to embrace online distribution as a way of preserving revenue streams. Online music vendors such as Apple's iTunes and Amazon's MP3 Store have been popular with music listeners and have provided music labels with at least some of the revenue lost through illegal downloads. Also contributing to label's revenue has been subscription services such as Spotify, with a library of music available for on-demand streaming for a monthly fee. In addition, the music labels have themselves set up portals on their own websites providing downloads of albums and individual tracks. Partnerships with mobile phone companies have also exploited the popularity of music played back on new portable devices.
Extending this business model, iTunes and Amazon have expanded their existing music offerings to offer downloads of feature film content. Until recently, broadband provision would have reduced the viability of such services, where file sizes for an average feature are likely to approach 1 GB. Also experiencing significant growth has been subscription film services – with Netflix leading the way. The service, which is currently moving beyond its initial market in the US, has a large installed base, built on the back its original physical DVD rental service. It has offered a film streaming service in parallel to DVD rental since 2007 and has recently introduced streaming-online subscription plans. It has also moved into the content creation sphere, picking up the initial screening rights for the Kevin Spacey television series House of Cards, outbidding traditional cable and broadcast rivals in the process.
Despite the global nature of companies such as Apple and Amazon, offerings such as iTunes have been prevented from selling certain titles in all of the countries in which they operate. Complex licensing issues have ensured that download rights have to be negotiated for each geographical territory. In addition, services providing access to feature films for streaming or download have had to implement geo-blocking technology which prevents users from outside of the licensed territories from accessing content. Online video companies who operate across a number of countries operate applications and web portals which can look markedly different, dependent on from which country the user accesses them. Services such as Mubi – a company which aims to provide access to international art-house film – implement this by colour coding films on the website menu, allowing users to filter out those which are not available in their own market. Others, such as Sony’s Crackle movie portal, filter out content in advance – which, in the UK at least, results in a very sparsely populated website. It could be argued that this approach is preferable to the sadly ubiquitous error message, “This content is not currently available in your territory”, which is seen on countless online video websites at present, when accessed from the UK.
Geographical licensing has ensured that, while the internet is truly a global platform, each country may have its own online distribution players. In the UK, the dominant company for legal access to streaming video content is Lovefilm, which has operated in a similar fashion to Netflix in the US, providing access to a number of titles for online streaming alongside a traditional physical DVD rental offering. Blinkbox is a pure streaming video service, which provides access to a large number of film and television titles on a pay-per-view basis. It also provides free, advert-supported access to a limited range of less popular titles. While both Lovefilm and Blinkbox, in common with international services which operate in the UK such as iTunes, carry a number of niche and documentary titles, their main focus is mainstream Hollywood films. A number of specialised websites have been established in the UK market which provide access to low-budget, independently-produced feature films, shorts and documentaries. Services such as ChannelFilms and jointhedocs.tv have partnered with art house DVD labels and film festivals to provide a legal online source for niche content. Many of these services are supported by government – such as the now-defunct UK Film Commission and the EU’s Europa Film Programme.
 70% of UK households were connected to broadband internet in Jun 2010. "OECD place UK 5th in Broadband Penetration", Techwatch.co.uk, Dec 6 2010. http://www.techwatch.co.uk/2010/12/06/oecd-places-uk-5th-in-broadband-penetration/
 IPTV and Internet Video, Wes Simpson and Howard Greenfield, Focal Press, Oxford, 2009, p.33
 See the example of Canby Telecom, in Simpson & Greenfield, p. 43. The company serves an agricultural community in Oregon, providing voice, data and "up to 200 standard definition channels"via an IP network.
 The Business of Media Distribution, Jeffrey C. Ulin, Focal Press, Oxford, 2010, p.369
 Ulin, p.371
 Nebusiness.co.uk, "BskyB customer base is close to 10 million", Oct 23, 2010. http://www.nebusiness.co.uk/business-news/latest-business-news/2010/10/23/bskyb-customer-base-is-close-to-10-million-51140-27527677/
 Almost 25 million subscribers in the US alone. Gigaom.com, "Netflix by the Numbers", Aug 9 2011. http://gigaom.com/video/netflix-by-the-numbers/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+newteevee+%28GigaOM%3A+Video%29
 Mashable.com, "Want netflix DVDs & streaming?", July 12 2011. http://mashable.com/2011/07/12/want-netflix-dvds-streaming-thatll-be-16-a-month/
 Probably a common problem for anyone accessing from outside the US. Most online video websites are owned and run from the US. Popular exceptions include dailymotion.com – from France – and youku.com – a Chinese alternative to Youtube.
 The Telegraph, "UK Film Council Abolished", 26th July 2010. http://www.telegraph.co.uk/culture/film/film-blog/7911109/UK-Film-Council-abolished.html