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Executives Fear Initial IPTV Sales Anticlimax

Informitv reports that a survey of telecom, broadcasting and media executives reveals that only 4 percent are 'very confident' that IPTV will generate significant revenue for their respective industries over the coming year.

Accenture and the Economist Intelligence Unit conducted an international survey of over 300 technology and media company executives involved in or close to the evolving IPTV service delivery business.

On average they were only 'a little confident' in short-term revenues, but 'fairly confident' in the longer term, with 34 percent reporting they strongly believe that IPTV-based pay-TV services will be generating significant revenue in three years.

Confidence was lowest among telco network operators, but equipment vendors and broadcasters or movie studios were among the more optimistic, reported Accenture. Surely, they say, not all the world�s largest telecom operators can be wrong about IPTV.

Few companies expect a substantial IPTV impact on their bottom line, they observe. Rather they expect a larger impact on top-line growth. The business logic for IPTV has been defensive on the part of incumbents and aggressive on the part of alternative operators. In fact the current IPTV deployment leader, PCCW in Hong Kong, has admitted that their television service offering was a 'loss-leader' that was primarily intended to limit customer churn impact on their core communication service revenue.

Half of those surveyed hoped to establish new revenue streams, and nearly a third expected to acquire new customers, but only a fifth saw driving profit growth through IPTV as their top priority. Video-on-demand is expected to be the main money-earner, with advertising seen as less of an opportunity, despite the untapped possibility of delivering highly-targeted consumer messages.

The findings come in the first issue of the quarterly IPTV Monitor available from Accenture. The survey was conducted in April to May 2006 with executives from firms across the whole IPTV value-chain in Europe, the Americas and Asia-Pacific.

IMHO, the Accenture study findings are very telling, because they confirm that the telcos appear to be preparing and launching IPTV services purely from a defensive (self-interest) perspective. What's the significance? They are less focused on researching and developing a meaningful and compelling consumer experience, and are more inclined to embrace IPTV primarily as a 'damage control' strategy -- and it shows, in their initial service launch.

Granted, the telco core business is under attack on several fronts, and they will need to be vigilant regarding competitor activity. However, an uninspired venture into the entertainment and advertising delivery business clearly isn't the way to broaden and fortify their current business model.

Ironically, most informed financial analysts agree, there is still significant opportunity to reinvent the traditional television viewing experience that essentially hasn't changed much in several decades. The global financial markets are concerned, however, that telcos are willing to make a huge up-front investment in IPTV infrastructure without the expectation of making a reasonable and customary profit.

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