Thursday, January 07, 2010

Internet Pirates - coming to a TV near you..

This year we're welcoming guest contributors to IPTV Times. Here are some thoughts on how to manage piracy by fellow industry veteran, Peter Lewinton of Servercorp:

“Nature abhors a vacuum” (Aristotle) has been proved to have validity over time. We have all watched the music industry being put to the sword by the illegal downloader’s and some have been surprised by the lack of a coherent response from the content owners and distributors.

History is repeating itself as illegal sports streamers are now out in force and individual streams of illegal PPV content on sites such as Ustream and Justin.tv achieve up to 30,000 viewers - figures which would not embarrass a small channel on the Sky Platform.

This level of popularity suggests a major gap between what the consumer is being provided with and what they really want – the vacuum created by the sports PPV broadcasters is being filled by the sports streamers.

If we look at the UK sports TV market in a historical context we are offered a few clues as to why this might be. Before the emergence of Sky in 1989 (21 years ago) premium sports material was distributed on a free to air basis via BBC and ITV. Sky cleverly spotted the fact that live football was such an important part of many people’s daily lives that if it was locked behind a payment window viewers would be forced to subscribe on the basis that they would have no other choice.

About the same time (1990) Sir Tim Berners Lee published the first web client and server and the internet came into being. The narrow band world was very limited in its capability and appeared little more than a tool for communication between developers. However, some pioneers of broadband such as Simon Hochhauser at Video Networks realised that a broadband enabled telephone line could, and would, be the basis for a new open access entertainment platform.

A contrary, if wrong, view of broadband was offered by the Chief Executive of BT at the time, Sir Peter Bonfield who famously commented that BT did not intend to commit to broadband rollout as there was little consumer demand for it. Since then broadband has whizzed past the 350 million subscriber mark worldwide and has been the fastest rollout of technology in history. BT’s share price has not moved forward in quite the same way.

The technology crash in 2001 further slowed development but in the background PC’s were being enabled with graphics and sound cards, Google and YouTube were about to burst onto the scene and broadband speeds were improving to 2mbps and beyond. Payment solutions were being refined and production and editing equipment at the consumer level was becoming ever more powerful. Crucially bandwidth costs were also falling sharply.

Bringing us to the present day suddenly YouTube probably has a bigger audience than Sky and Google has a very significant slice of UK advertising spend. For under £300 per month a user can set up an internet TV channel, integrate it with cost per click advertising and go wild. A few cables connected to a set top box plus an encoder card, account with a free streaming provider and a Google account and millions of pounds of content is at your fingertips with an eager user worldwide user base. Money talks and suddenly profit can be made from illegal streaming online.
TV quality pictures are now delivered, for free, directly to your PC for the majority of live sporting events on an illegal basis.

Strange as it might seem this is still a fairly niche activity however from a viewer perspective. Watching entertainment on the PC remains an activity for the hardcore fan. Losses to the existing PPV operators remain at “manageable” levels and thus it seems that little investment has been made in addressing this issue to date.

The massive popularity of the BBC I Player on the Virgin Platform when delivered to the TV give some clue however as the next stage of development.

At new chips emerge, such as vidiactive, Ethernet ports become standard on TV sets, and devices become more interoperable internet delivery to the TV will become ubiquitous – of both legal and illegal streams. At that point it is highly likely that the current incumbent commercial TV stations will lose control of the EPG – perhaps to Google / YouTube, and the fact that all Premier League games, for example, can be watched for free in high quality online will start to matter financially.

It seems unlikely that the “walled garden” approach to IPTV will work – the consumers and providers will simply jump over the wall to access whatever material services they want.

Common sense suggests a simple legal solution to illegal streaming – surely this can be shut down by the corporate legal departments ? In reality Intellectual Property Law varies significantly country by country, the legislation on Copyright was written for a different technological era and the wheels of change turn very slowly the legal arena. The Premier League recently lost a case against YouTube in the USA as they had failed to register copyright for their material in the USA.

US studio executive likened Pirate Bay, a well known file sharing site, to the Goddess Shiva “Destroyer of Worlds” – digital dollars were being substituted for digital cents and Porsches were likely to lose their slot in the studio car park. That may be true but commerce, like nature, will roll forward regardless and unless the current models are adjusted to better meet consumer needs the vacuum referred to at the start of this article will be filled even more effectively by the digital pirates when the internet hits the TV over the coming years.