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IPTV faces challenge obtaining content

Major content providers are playing hard to get with IPTV start-ups, reports BusinessWeek Online. Though the new technology could lead to entirely new ways of watching TV, the motion picture studios are not yet convinced.

Part of the problem has to do with the technology. Because IPTV uses large centralized servers to deliver video into consumers’ homes, it can support nearly unlimited numbers of channels and allow customers to pick from an à la carte channel selection. It can offer events available on demand.

IPTV differs from earlier forms of Internet-based TV in that, while the video signal is encoded just like data over the Web, it travels solely over the telco’s own servers and network. Viewers will find the experience akin to watching digital cable, rather than streaming video on the Web.

But the technology matters only if the movie studios and other content providers play along. So far, they’re not. The Walt Disney Co. didn’t return calls seeking comment on IPTV, and it hasn’t signed with any outside distributor to provide its movies for video-on-demand. Most studios have agreed to only limited VOD distribution, fearing it could cut into revenues from rentals and DVD sales — now generating larger income streams than the box office itself.

So far, the telcos, led by SBC, Verizon and BellSouth, are moving ahead with their plans for three of the biggest IPTV deployments in the world. When completed in less than two years, SBC’s service will extend to 18 million homes in 13 states and cost an estimated $4 billion. It also puts the telecom in direct competition with cable companies who are venturing onto Baby Bell turf by offering phone service.

BusinessWeek Online said with the big studios and other content providers uneasy about jumping on board the IPTV bandwagon, it may be impossible for the new distribution technology to come into its own. The telcos have hired teams of program executives to try to turn around a very challenging situation, the report said.

For more information, read Telcos gear up for TV business in 2005.

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