IPTV – The New Dimension of Television Consumption and Business Models

Mike Friedrichsen

Stuttgart Media University, Germany

Abstract

For over half a century, the television (TV) has been influencing our society and social live with growing importance. Upon closer analysis of the opportunities and changes associated with this bland abbreviation, it will turn out that IPTV will have a much greater impact than the introduction of coloured motion pictures has ever generated.

New and manifold fields of activity are developing for established as well as new market participants, which will dramatically change our way of TV consumption. Because the Internet protocol (IP) and the Internet has an open and commonly used network, it will be difficult to maintain artificial barriers to the merit good called television in the long-term. However, innovative models by content providers and producers are promising approaches. The existing back-channel capability of the Internet and related interactivity is the crucial advantage of IPTV. A lot of findings show that the establishment of IPTV will dramatically change TV consuming habits and therefore have an immense impact on daily lives. In order to adequately prepare for this future, this presentation will elaborate recommendations and potential activities to be pursued by market participants. Due to the vertical integration of content producers, the market will remain highly competitive in the future. The telecommunication industry is therefore suggested to focus on their core competencies and provide a powerful communications medium. A lasting gatekeeper function within IPTV is not likely to last.

For the television stations, a bright future can be forecasted in the drawn scenario. They have new opportunities to offer their customers an attractive programme. This statement is applicable both for the advertising as well as the recipient market. Their advertising customers will deal with lower divergence losses, a more accurate coverage measurement and new advertising space as well as new ways of advertising with interaction made possible for the recipient. In addition to interacting with advertisers, the recipient has the possibility of creating his own programme or influencing the existing one. It can be assumed that due to the increasing diversity of TV viewers the large and established television stations will lose market shares to the new entrants, while the market shares however will settle down within a few years at a new level. A similar trend was seen in the 1980s, when the private broadcasters entered the market. Within nine years, the four major television stations levelled off in a range of 1015% market share, and ever since this redistribution no significant changes have occurred. Now the market is apparently back in such a phase of redeployment. Therefore it is now of crucial importance to set the right accents.

For the public broadcasters, it is time for a new programme which is more appealing to young people. Following the successful establishment and experience of some youthful radio stations, similar actions should be taken for the TV channels. The quality level of our television programme must be raised, and therefore also keep the potential to influence the orientation of our society in a positive way. In addition, an attractive programme for the young people could significantly improve youngsters’ attitude towards the public TV stations and consequently GEZ (German Television Licence Collection Agency). The establishment of an attractive educational television is likewise necessary. The educational mandate is an essential part of public broadcasting and deeply-seated in the legal framework of the public broadcasting. This must be of higher priority again in today’s entertainment-dominated television domain.

Thus the mass medium television has a great influence on the direction of our society and therefore on the country’s future. Whether that influence is positive or negative is within the hands of the active market participants. It is important in an ever faster rotating world to keep and not neglect the long-term and substantial perception. The danger is present that because of the rising amount of content providers, the quality of the broadcasted material is reduced even further. The desired target group is young, dynamic and successful. The future non-linearity of the media has potentially a positive influence, but only if the possibilities of the medium are exploited by a critically acting human. Therefore, the advertising industry and broadcasters should be keen on taking an active role in the areas of education and culture, influencing society in a positive direction.

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