Revenue streams for the screens?

Let’s define the different screens – First screen is the TV that one uses at home. The second screen is typically a laptop or a desktop screen and the third screen is the mobile screen (mobile phone, iPOD etc).

Cable, Satellite and Broadcast operators typically have access to the first screen. For IPTV to be relevant and truly differentiated, they may have to be the integrated services to all the three screens. The IPTV operators would typically be an integrated service provider – quadruple play operator (Wire-line voice, Wireless voice, Data, Video).

Typically when one thinks of bundled services, one thinks of getting a better price when one subscribes to all the services as opposed to subscribing them individually from different operators. I believe if service providers think this way, then they would be missing out on the real benefits of IPTV. Let’s examine how.

Let’s look at the revenue stream of the different operators.

As can be seen, there are two revenue streams that a service provider can expect for their IPTV service offers,

Subscription that the end user would pay to get the service as with other entertainment service
Advertising revenue from companies who need to reach a particular demographic. Since IPTV uses IP Technology, data mining of usage of content by each IP address will be easily accomplished and hopefully the service provider can charge a premium for their service.

And to make this revenue from advertising significant, service providers may have to promote them through all the three screens. This will also become a major differentiator too.

Other thoughts?

Quick comparison Verizon and Comcast business in Q3 2007

Per the Journal article dated Oct 24, 2007 http://online.wsj.com/article/SB119318239126769111.html?mod=loomia&loomia_si=1

It appears that Verizon has acquired 171,600 subscribers for their FiOS TV services calculated based on the numbers reported in the article - Verizon has been acquiring 2,600 subscribers per business day. Per my simple math, 30 days in a month less the Saturday and Sunday would have 22 working days. The number of subscribers acquired would be around 171,600 (22*2,600*3). The number of FiOS Internet (broadband) users acquired is approx. 500,000.

When compared to Comast – Comcast acquired 450,000 broadband users and 662,000 phone users. The number of TV users acquired is approx. 333,000. This was calculated per some guidance provided in the article on the Journal (http://online.wsj.com/article/SB119330126130871182.html?mod=telecommunications_primary_hs).

I learnt a new terminology from the Journal - Revenue-Generating Units or RGUs, are a key measure of health for cable companies. Each RGU represents a single new service, so a person who buys TV, Internet and telephone services from Comcast counts as three RGUs. 1,400,000 RGU = 450,000 + 662,000 – 65,000 + X (phone customers)

Calculate X = 333,000

The numbers are interesting – Comcast adding more phone customers that the TV service customers (think about core business). Hope that is not the case with Verizon. One would surely hope that the phone customers acquired by Verizon would be more than 662,000 number given the scale of Verizon and the depth of its offering (wireline and wireless). To compete Verizon has to move the number of TV service customer higher or may have to look to acquire Satellite TV operators to improve scale.

Anyone have any ideas on the real numbers?

Broadband services to include IPTV

Saw an article on the Wall Street Journal dated Oct 24, 2007 - About Verizon FiOS.
http://online.wsj.com/article/SB119318239126769111.html?mod=telecommunications_primary_hs

Verizon has the right focus - Focusing on broadband services as opposed to just providing video services over IP or bundling (triple play/quad play).

It is interesting that the CAPEX spent by Verizon is apprx. $872 per home passed and they make approx. $100 per home per month. This would mean a breakeven in less than 9 months. Seem to be a good business plan. Of course the numbers do not include the SG&A costs, other expenses and the cost of service delivery.

These numbers should look better once Verizon thinks of other services they can offer to fill the pipes and they attempt to monetize the access capacity to the homes.


The comparative CAPEX per homes passed for AT&T is approx. $361 and for Comcast is approx. $250. These costs differences are due to the underlying technology the service providers chose as they bring such services to their market. It would be best if one knew the cost of operation (OPEX) of this underlying network. Any thoughts?

Entertainment Value Chain

If the end goal is to provide video programming on the end user's TV set, will not be a differentiator for the IPTV service provider. If this is the case, then price will become a differentiator and we all know this is not sustainable.

IPTV service providers will benefit if they can take the same content and offer it to the end users using different devices (PC, iPOD, mobile phones). This is something the other video service provider like the cable operators, direct to home (DTH) operators cannot match.

In addition, the IPTV provider can also offer other revenue generating services like gaming, e-learning, video on demand (VOD), interactive TV, and also pipe in other user generated content that has made billions for Internet companies like Google, Yahoo etc.

IPTV truly marries the Internet and the Telco world and provides this benefit to both the service provider and the end user.

Advantages of IPTV

IPTV provides service differentiation that may not be matched by satellite, broadcast and cable delivery models With IPTV, service providers can offer customers value-added applications such as Video on Demand (VoD), personalized content and television schedules, interactive television, unlimited data applications and even applications beyond TV broadcasting such as video surveillance, video gaming and distance learning. It allows advertisers to target individual IP address with very focused messages or through precise data-mining and targeting.

What is IPTV?

Internet Protocol Television (IPTV) is the delivery of video and multimedia content to a television or computer or any other device via IP technology. Rather than being delivered through traditional formats such as over the air, satellite or cabling, IPTV is received through networks that were traditionally established for computer networks. This digital television service provides content via an IP over broadband connection to a set-top box over a closed network infrastructure.