BT’s IPTV strategy could improve ARPU

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Andrew Burke, CEO, BT Entertainment Division spoke convincingly about BT’s approach to IPTV.

He noted that there is 5% growth on voice calls, but it’s swamped by what’s going on online. 60bn emails a day, 10bn SMS, 6bn instant mesages sent a day. Ultimately, this may move to the TV.

Business case for IPTV is : with broadband penetration IPTV is more possible. 35% of households in the UK now have broadband. So IPTV is a good candidate for replacing ARPUs.

But it’s about getting broadband to multiple devices. If you concentrated on PCs you’d stick at 67% , so it’s about hitting other devices.

Analysts says it’ll be a $36bn entertainment market by 2007.

But is IPTV really going to happen? Consumers are giving us “hints”.

The first is convenience. They don;t like being bound by the schedule. Sky+ is showing that, where people watch less live TV and more PVR recorded content.

People buy digital music, sure.

Single occupant households mean the TV could become a place for community interaction. (This is important).

PRS activity – so the final of X-Factor/Amercian Idol etc, lots of activity, with voting and gaming channels.

Freeview: growth shows people want more choice in channels.

“It’s TV not IPTV. People don’t know what the hell IPTV is.

They don’t want subscriber based TV. They want flexible payment and cheap!

The interface has to be simple. The Experience has to WORK. Installed, wired, content, customer support, billing end to end process is complex, and critical to success. “Keep it simple stupid”

Challenges around content include the rights. Multiple rights holders. “Windows” sellers want to preserve broadcast windows, but consumers want it on demand. Cost and existing agreements.

Niche content (see your local dog show) is not the answer.

Technology issues: DRM, compression, quality assured, cost effective. Can it travel across devices? Needs to be DVD quality.

** BT’s solution is a Freeview hybrid (takes ariel signal and mixes it with the EPG to get the best of both worlds). Uses MPEG , Microsoft DRM, open APIs.

“With all those together we might find we have a business model. We’ve learnt NOT to do content. We partner on content.”

“Apple designed the iPod for consumers. If you wouldn’t use the product yourself, then don’t market it.” says Burke.

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