[opendtv] News: Microsoft-Backed IPTV Could Be Threat To Satellite
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Tue, 4 Oct 2005 08:32:55 -0400
As I was saying about new forms of TV competition...
I'm not betting on Microsoft here, but I am betting that IPTV will
become a competitive force, based on the potential to provide new
services and ala carte programming.
Regards
Craig
Microsoft-Backed IPTV Could Be Threat To Satellite
October 4, 2005 12:00am
Source: Satellite News
Satellite pay-TV operators are facing more pressure than ever before
in digital television markets across the world. While cable operators
may still be seen as the natural enemy, other platforms are emerging,
with computer software giant Microsoft Corp. set to become a major
force in the market.
In 2006, many telcos plan to begin their launch of Internet protocol
(IP) TV services. Microsoft aims to be the software vendor to help
telcos gain an edge on satellite and cable competitors, and the
personal computer (PC) giant is throwing huge amounts of money at the
television sector.
"We are building a Microsoft-scale business and we see a huge
opportunity," Moshe Lichtman, corporate vice president, Microsoft TV
Division, told Satellite News' sister publication, Inside Digital TV.
"I think Merrill Lynch a few weeks ago came out with an estimate that
this business will deliver $5 billion over the next few years. If you
look at Microsoft today, 96 percent of Microsoft's $40 billion
revenues are coming from a single phenomenon, and that is the PC.
There are about three quarters of a billion PCs out there today and
that market has taken 30 years to develop. At the same time, there
are more than 1.6 billion TVs. So, we see the opportunity around
Microsoft TV and IPTV as a very substantial opportunity for the
company."
Bob Larribeau, a media analyst at MRG, believes satellite operators
should not underestimate the influence that Microsoft can have in
this sector. "The telcos are looking to Microsoft to provide a
subscriber experience that is clearly superior to the cable and
satellite companies," he said. "The resources that Microsoft is
putting into this project can make this happen. Microsoft's
competitive advantage is its preeminent position in the software
industry. It clearly has the skills and resources to develop a
superior product."
Microsoft also wants to play a key role in helping U.S. cable
operators put pressure on their satellite pay-TV rivals, Echostar
Communications Corp., which offers the Dish Network direct-to-home
(DTH) satellite television service, and DirecTV. Microsoft also has
plans to help cable operators in Latin America.
All of these plans could lead to Microsoft establishing dominance in
another technology field, said Michelle Abraham, senior analyst at
In-Stat/MDR. "Microsoft has demonstrated an impressive user interface
that may be available to cable operators, too," she said.
Commercial Rollout
Microsoft has signed deals with several major telcos, including SBC,
Verizon, BT, Bell Canada and Telecom Italia, to provide software for
their IPTV efforts. These telcos represent about 26 percent of the
world's residential fixed access phone lines and 28 percent of the
world's DSL subscribers, Lichtman said, and the telcos will be hoping
that the IPTV platform will give them an edge in the TV market, as
well as take away consumer dollars from satellite operators.
"We are getting close to the end of the second phase [of IPTV
development], which is the delivery of the platform and the initial
commercial deployment," Lichtman added. "We are totally on track with
delivering the product this autumn and absolutely on schedule to
support our customers' plans for initial commercial deployments
beginning at the end of this year."
There have been rumors in the industry about problems with the
scalability of the Microsoft software, which Lichtman said are
"flawed and baseless. ... There's no way on Earth that these telcos
would buy a solution that had scalability issues," he said. "You can
imagine that scalability and reliability are top priorities for our
platform. If you compare the number of servers used by IPTV Edition
to the number needed by competitive solutions to enable video, DRM,
middleware and TV applications, the number is similar."
Microsoft's Role In The Television Space
Lichtman believes IPTV "represents a change that happens once every
50 years in TV," he said. "The first change was when TV changed from
black and white to color. The second change was the shift from analog
to digital TV. IPTV represents the change from broadcast to broadband
TV."
Once the IPTV market blooms, Microsoft sees the offering as a way to
connect different user experiences such as television, computers and
video gaming, Lichtman said. "We look for ways to connect those
experiences so the whole is greater than sum of the parts," he said.
"Basically, when we talk about connected entertainment, we see IPTV
as a glue between those different experiences. It creates a platform
for operators to deliver entertainment services to a variety of
devices, enabling a variety of services."
Larribeau believes the IPTV middleware market will be worth around
$200 million in revenue by the end of 2008. While that is a small
market when compared to Microsoft's current business, it is still an
important one. "Microsoft middleware will put Microsoft in an
advantageous position in bringing its Xbox [video game console],
media center and other entertainment products in the home," he said.
"I expect that its middleware will include features that provide
specific support for its own consumer products."
DTH Providers Not Concerned
Even with the marketing and financial muscle that Microsoft brings
to the table, satellite providers are not fazed at going head-to-head
against the software giant. The DTH providers will be relying on what
got them to where they are today -- stronger channel offerings and
lower prices.
"EchoStar has always faced competition in the pay-TV markets,
primarily from cable providers," Francie Bauer, Echostar spokeswoman,
told Satellite News. "Cable companies have more than 65 million
households compared to satellite TV's approximately 25 million
households. Despite cable's conversion to digital service, Dish
Network has earned more than 1.2 million new customers each year in
the past six years."
Bauer attributed the continued growth in Dish Network subscribers to
what she calls "the best combination of digital programming, DVR
(digital video recorder) and international channels for the lowest
price in America." She also noted that Echostar has been responsive
to the growing demand for being an all- in-one service provider of
voice, video and data services though its partnerships with SBC,
Sprint, Citizens and Centurytel.
"The multichannel television industry in the United States has
become increasingly more competitive every year for the past five
years and it will become even more competitive in the years ahead,"
Bob Marsocci, DirecTV spokesman, told Satellite News. "DirecTV
competes with large and small cable companies throughout the country
every day, so we're no stranger to competition, and we are prepared
for increased competition."
Marsocci added that DirecTV is not sitting idol while telcos get
ready to enter the multichannel television market.
"In the coming months we will be introducing a wide array of new
products, including a new DVR and new [high definition] receiver, as
well as new programming services and original content that we believe
will help us further extend our leadership position in the
multichannel television business," Marsocci said.
--Mark Holmes
(Bob Marsocci, DirecTV, 310/726-4656; Francie Bauer, Echostar,
720/514- 5839; Michelle Abraham, In-Stat, mabraham@xxxxxxxxxxxxxxxx;
David Lawrence, Hill and Knowlton (for Microsoft),
dlawrence@xxxxxxxxxxxxxxxxxx; Bob Larribeau, MRG, bob@xxxxxxxxxxxxx)
[Copyright 2005 Access Intelligence, LLC. All rights reserved.]
<<Satellite News -- 10/04/05>>
<< Copyright ©2005 Access Intelligence, LLC. All rights reserved. >>
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