The Role of Standards in The Diffusion of IPTV in Western Europe

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The role of standards in the diffusion of IPTV in Western Europe
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Index

Index ....................................................................................................................................................... 2
Abstract................................................................................................................................................... 3
Acknowledgements................................................................................................................................. 5
Research project ..................................................................................................................................... 6
Part 1: The world of IPTV ...................................................................................................................... 10
1. 1 Interactive TV: IPTV versus WebTV (walled garden vs. open garden) .................................. 11
1.2 The evolution of (IP)TV.......................................................................................................... 13
1.3 The IPTV value chain and landscape ..................................................................................... 15
Part 2: The diffusion of IPTV ................................................................................................................. 19
2.1 The current position of IPTV on the diffusion curve ............................................................. 20
2.2 The diffusion of (interactive) innovations ............................................................................. 23
2.3 Factors (theory) about the diffusion of IPTV......................................................................... 24
Part 3: Our research.............................................................................................................................. 28
3.1 Data collection ...................................................................................................................... 29
3.2 Results of our quantitative research ..................................................................................... 31
3.3 Results of our qualitative research (interviews) ................................................................... 35
3.4 Conclusions ........................................................................................................................... 37
3.5 Reflection .............................................................................................................................. 39
3.6 Suggestions ........................................................................................................................... 41
Appendices............................................................................................................................................ 43
Appendix 1: Reference .................................................................................................................. 44
Appendix 2: Interview questionnaires .......................................................................................... 46
Appendix 3: Survey results ............................................................................................................ 48
Appendix 4: Interviews.................................................................................................................. 60
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Abstract

The diffusion process of IPTV (as opposed to Web TV) progresses slower than most who are involved
in IPTV expect and/or predicted.
For our master thesis at the MBA Crossmedia (Lemniscaat School of Management) we decided to
investigate why the IPTV diffusion is progressing slower than we expect and what factors are
influencing this. Because we expected a resemblance to the diffusion patterns of technological
innovations like VHS/BetaMax/V2000, DVD-‐A/SACD and HD-‐DVD/Blu-‐ray, which were settled after a
standards war, we decided to focus on the role of standards in the diffusion of IPTV.
We started by investigating if this subject had already been studied earlier, but could not find
anything on the role of standards with regard to IPTV. We therefore formulated these two
hypotheses to scope down our research:
Hypothesis 1: The primary reason for the slow adoption of interactive TV (and therefore IPTV) by
consumers is the lack of useful content/applications/services
Hypothesis 2: The primary reason for the lack of useful content/applications/services for IPTV is the
reluctance of publishers to provide/develop such content/applications/services because they are
unaware of the possibilities and held back by the technological complexity, the plethora of
(middleware) platforms and the absence of a dominant standard.
Or, in a more visual representation:
After studying relevant theoretical material, we found a lot of studies regarding technological
innovations and diffusion patterns, mainly based on the works of Everett Rogers. From these works
we concluded that the diffusion curve for interactive innovations has a steeper slope than those of
other innovations, which means that it is harder to reach critical mass, but the adoption rate goes
quick once critical mass is reached.
By studying the number and growth of IPTV subscribers in Western Europe since 2001, we verified
that IPTV is still in the early stages on the adoption curve. To find out why, we conducted an online
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survey to investigate the views of IPTV related companies and conducted interviews with relevant
players from the industry and publishing companies.
In our survey we found support for our first hypothesis: consumers regard the absence of relevant
content, applications and services as the main factor for the slow adoption. Of course, the behavioral
change that is needed to convert the TV from a passive medium to an active channel also plays an
important role and takes time.
Our findings with regard to the second hypothesis, the role of standardization, were less supportive
of our hypothesis. We found that the lack of a valid business model is the primary reason for
publishers not to invest in content, applications and services for IPTV. Even though standardization is
seen as an important factor (bottleneck), the industry shows a reluctance to standardize the
(middleware) platform if this means abandoning past investments (sunk cost) or strategic alliances.
As we found in studies regarding adoption curves of innovations, a disruptive innovation can cause a
radical speedup in the diffusion. This circumvents the (lack of) platform standardization by shifting
towards application-‐ or service standardization due to customer demand/expectations. Our hope is
on (low interactive) services like YouTube integration, Video on Demand (including “Uitzending
Gemist”) and remote PVR to become widely accepted. This will at least provide the (broad)
infrastructure for interactive services, so new applications and services can emerge. Amongst them
may be new breakthrough innovations that accelerate the diffusion of (real) IPTV.
Based on our research findings we feel that a quick breakthrough of IPTV in the near future is not
very likely. We expect WebTV, which is less affected by the factors we found, to have a better chance
of conquering our living rooms. The openness and less restrictiveness of WebTV may result in
different (unanticipated?) use of the technology, which could lead to more disruptive applications
and services for interactive TV.
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Acknowledgements

A lot of people have contributed to this master thesis. Our special thanks goes out to our supervisor
Erik Huizer, professor at the University of Utrecht and professor Steef Peters of the Lemniscaat
School of Management. Of course we would also like to thank our partners Annelou Aalders and
Dorien Turk for their great support and patience.
Prof. Dr. Ir. Erik Huizer
Prof. Steef Peters
Dr. Lidwien van de Wijngaert
Alexander Schultz-‐Heyn (chairman Deutscher IPTV Verband)
Hans Broekhuis, Tele2
Marcel Kuil, Rabobank
Bart van Oortmerssen, AD
Robert Timmer, Philips
Bram Tullemans, NPO
Gartner
LinkedIn groups
Annelou Aalders
Dorien Turk
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Research project

Research objectives
The diffusion process of IPTV (as opposed to WebTV) progresses slower than most who are involved
in IPTV expect and/or predicted (IDC press release “European Telcos Become Entertainment
Providers Through Launch of IPTV Services”, 2005; iSuppli predicted in August 2006 that global IPTV
subscribers would grow to slightly more than 63 million in 2010 (compound annual growth rate of
92.1%), while the Multimedia Research Group forecast in October 2006 that global IPTV subscribers
would grow from 4.3 million in 2005 to 36.8 million in 2009 and to 50.5 million in 2010. In Western
Europe, Gartner (April 2006) forecast that the IPTV subscriber market would reach 3.3 million
subscribers in 2006 and 16.7 million in 2010.) In reality, we found all these forecasts to be optimistic
(chapter xx).
For our master thesis at the MBA Crossmedia (Lemniscaat School of Management) we decided to
investigate why the IPTV diffusion is progressing slower than we expect and what factors are
influencing this. Because we expected a resemblance to the diffusion patterns of technological
innovations like VHS/BetaMax/V2000, DVD-‐A/SACD and HD-‐DVD/Blu-‐ray, which were settled after a
standards war, we decided to focus on the role of standards in the diffusion of IPTV.
We started our research from the consumers (end-‐users) point of view. Our guess was that the lack
of adoption (besides the lack of knowledge of the technology and its applications in general) was due
to the lack of useful applications and services that are generally provided by publishers. These
publishers however are reluctant to invest in IPTV, either because they do not know (enough) about
the existence and possibilities of IPTV in general, or are held back because of the scattered
(fragmented) landscape of platforms for which they have to develop their applications and services.
We started this research because we strongly felt that there is a distinct correlation between the
adoption rate of IPTV (by consumers), the content, applications and services that are being exposed
(by publishers) and the absence of a dominant platform standard (used by telco’s and cable
companies).
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In other words:
We were strengthened in this hypothesis by looking at similar struggles in neighboring fields like
video standards (VHS, Betamax, V2000), HD audio (Super Audio CD, HDCD, DVD-‐Audio), mobile
communications (NMT, GSM) and HD video (HD-‐DVD, Blu-‐ray DVD).
Typically in these cases, technological companies start by introducing rival technologies, hoping to
set the standard, thereby sending out a mixed message (doubt) to other companies and end users,
resulting in reluctance to adopt by other companies in the chain and consumers in particular. In
these examples critical mass was not reached until the “standards war” was decided on. General
acceptance however accelerated quickly after a standard became dominant.
Prior to our research, having peeked at some of the possibilities IPTV can offer as part of the media-‐
channels that we have at our grasp, we had a hunch that the technical possibilities might be limiting
the progress. After diving in some more, we found that the technology, in general, is ready, but the
landscape is scattered with proprietary solutions, platforms, semi-‐standards etc.
In our study we investigated how players in the IPTV-‐ or IPTV-‐related industries are looking at this
situation and if they are willing to comply to facilitate faster growth.
For our research, we broke the general hypothesis down into two parts:
Our main goal is to explore, investigate and draw conclusions on the role of standards in the diffusion
process of IPTV in Western Europe.
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Relevance
The results of our research are of importance to stakeholders involved in the IPTV area, ranging from
telecommunications companies, broadcasters, content production companies and publishers. Much
money is lost if a technology fails to see success. Even more money is lost in the battle for setting a
standard. Several respondents to our survey and the participants in our interviews have expressed
their interest in our findings.
In addition to investigating the relationship between (the lack of) standards and the speed of
diffusion, we also provide suggestions that could help speed up the adoption process.
Approach
For our research we decided on the following approach:
-‐ Desk-‐research on the world of IPTV
-‐ Literature study on the diffusion process of (interactive) innovations
-‐ Estimate the current position of the IPTV diffusion on the diffusion curve by researching the
curve and comparing to similar technology diffusion curves
-‐ Use the Technology Acceptance Model (TAM) and the research of Baaren et al (Baaren et al,
2009) regarding the underlying factors which lead to Perceived Usefulness (PU) and
Perceived Ease of Use (PEOU) to find out which factors influence the diffusion process of
IPTV
-‐ Do a survey amongst IPTV providers to investigate:
o the view of market players on these factors
o the view of market players on the role of standards
o the level of standardization
o the intentions (strategy) of market players in the coming years with regard to
standardization (willingness to comply)
-‐ Do interviews with key (publishing) players to:
o Gain insight in their views on the status of IPTV
o Gain insight in their opinion with regard to the role of standards
o Test our hypothesis with regard to publishers
-‐ Analyze the results to test whether they support our hypotheses
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-‐ Draw conclusions from the results
-‐ Reflect on our research process
-‐ Add our suggestions for players in the IPTV-‐area
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Part 1: The world of IPTV
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1. 1 Interactive TV: IPTV versus WebTV (walled garden vs. open garden)

IPTV is a form of interactive television. Interactive television is a technology where television (one-‐
way, broadcast) is extended with interactive features (e.g. video on demand, respond to events on
television etc), creating a two-‐way link for communication and thereby opening a whole new range
of possibilities for new content, applications and services. Although we cannot oversee the full
spectrum of possibilities that interactive TV has to offer, some of the most obvious applications are
already available for use.
Interactive TV can either be delivered via Digital Video Broadcasting (DVB) or via the Internet
Protocol (IP). There are generally two types of IP-‐based interactive television, IPTV and WebTV (or
Internet TV). This paper focuses on IPTV as opposed to WebTV. While both technologies are similar in
many aspects (both generally use the IP protocol, are digital, offer interaction possibilities between
user and broadcaster), they differ in accessibility [Cooper & Lovelace, 2006].
IPTV requires a set-‐top box, a subscription to an IPTV provider, and is generally distributed over a
private network in a distributer-‐managed (walled garden) environment, offering a high quality of
service.
WebTV on the other hand is distributed over the public Internet (open garden), trying to reach a
global audience on a best effort basis.
Both are part of the evolution of TV viewing in general and the technological advancements in that
area. The similarities between the two approaches show signs of a convergence in media channels
and consumption patterns.
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Content, applications and services
Contrary to DVB-‐based standards for interactive TV, IPTV is not standardized. This results in the
absence of well-‐defined objective norms for compression, transfer rates and other facets that
determine the quality of service. On the other side, use of the IP protocol, next to offering a return
path, opens opportunities for integration with other IP-‐based services.
The technical possibilities of IPTV make a wide range of applications possible, ranging from (low
interactive) applications and services like Content on Demand (the daily news on your TV, an
interactive Electronic Program Guide, web browsing on your TV etc), Video on Demand (You Tube,
Rent-‐A-‐Video), Personal Video Recorder (PVR) facilities, to a (fully interactive) TV quiz where viewers
can participate using their remote control and much more.
The current IPTV offering of applications and services is still limited. Most television companies start
their offering with plain Content on Demand and low interactive applications and services like Video
on Demand and PVR-‐functionality. We believe this is mainly because of the standardized solutions
for this functionality provided out of the box by the platform providers, but this is ground for further
studies.
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1.2 The evolution of (IP)TV

The evolution of television is a complex process that involves many players with different
backgrounds. They have made contributions to make television what it is today: the most popular
mass medium in the world. For the purpose of this thesis we have simplified this process. We
distinguish 5 phases in the history of television.

1. The first television broadcasts
2. The switch from black & white to color television
3. From 4:3 to widescreen
4. From Standard Definition (SD) to High Definition (HD)
5. From non-‐interactive to interactive
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In the past 90 years television has come a long way: from the poor picture quality in black & white in
the beginning of the 20th century, to the high definition television with the possibility of interactivity
now. One of the most important turning points in this history was of course the first television
broadcasts in the 1920’s. The introduction of color television – technically first possible in the 1940’s
with mass introduction in the 1960’s – was another pivotal moment. The transition from 4:3 aspect
ratio to widescreen television was the next big step. This transition started in the 1980’s, but is a
process still going on today. In The Netherlands for instance, widescreen was introduced in 2007.
Many other viewers in the world still watch in 4:3. The introduction of High Definition television in
the 1990’s is one of the most recent developments. HD was analogue at first, digital HD surfaced
after 2000. The introduction of HD has had a big impact on both broadcast television as well as
storage devices as DVD. But while the transition to High Definition has just started and is still going
on, another significant step has been made. Up till now television has been mostly non-‐interactive.
The use of the remote control was up till recent the most interactive part of watching television. But
with the introduction of IPTV and the possibility of real interaction with viewers, this has changed
dramatically. As IPTV spreads television makers and viewers are gradually discovering the
possibilities of interactive television, such as video on demand.
We won’t elaborate further on the breakthroughs that have been made through the years in the
distribution of television and the picture quality. But it is clear that television has evolved enormously
through the years.

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1.3 The IPTV value chain and landscape

There are different approaches in defining the value chain in a particular market. Ricardo Murer says
in ‘The IPTV Value Chain (April 2008): “The value chain can be defined as a number of organizations,
resources and specific knowledge, all connected and involved in creating and delivering value to final
customers. The value chain, also involves production and sales cycles, as well as suppliers of the most
diverse and different sectors such as logistics companies involved in the distribution of products for a
network of stores”.
So, at first glance the value chain of IPTV seems very complicated. But after closer inspection, all
involved actors in the value chain can be categorized in three domains. One the one hand there are
the content providers. The companies that provide distribution for IPTV are the other main category
in the value chain. Finally, there are the customers who have the possibility to interact with both
distributors as content providers.
We have found that a much-‐used model developed by Michael Porter suits our research objectives.
First of all the model is relatively simple. Furthermore, the general value system of Porter can be
easily applied to the IPTV value chain. The producer is a supplier of content towards the broadcaster
and the distributor who, via their channels is able to buy and receive the content (P. Deumer,
Internet TV & the Dutch broadcast value chain, November 2008).

Single Industry Value Chain
Generally speaking, one company is not able to bring a product to the market all by itself. In
"Competitive Advantage" (1985) Michael Porter describes a general value system made up by a
supplier, a channel and a buyer.

This ‘Single Industry Value System’ can also be applied to IPTV. At first glance the IPTV value chain
looks rather complicated. Many different actors have a role. There are of course the telecom
operators and cable TV operators. But also Internet portals play a role, and so do content providers,
telecom equipment suppliers, middleware software providers, advertising agencies and last but not
least consumers.
The value chain and business model of IPTV is quite different from the value chain of traditional
broadcast television and it would be a mistake to regard IPTV as just TV. IPTV uses the consumption
experience of TV, but is actually something quite different. The value chain and business model of
IPTV is actually a combination of 4 mature models already in place in the market: TV, IP, Telecom and
Digital Media.
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Roles
In essence there are four roles to be distinguished in the IPTV value chain. That of content provider
(the supplier in Porter’s model), the service provider and network provider (the channel), and the
consumer (the buyer).
Schematically this would look like this:
(
Source: ‘Global Standards of IPTV and its infrastructural framework’, presentation by Chae Sub Lee, Telecommunications
Technology Association of Korea)
We describe these 4 roles in the value chain as follows:

• Content provider
This is the phase in the value chain in which content is created and purchased and turned into
a service or channel. The amount of advertising that is placed on the channel and editorial
control over the type of content on the channel is determined in this phase. The content provider
provides a variety of content for IPTV service.
• Service provider
This is the part in the value chain in which channel services are aggregated and made available
for distribution in the form of a commercial offering. To provide IPTV service, the service
provider is responsible for management of customer information, product scheduling, billings
and user authentication.
• Network Provider
The network provider must transmit the service across a network to the customer.
• Customer
Here consumers can directly access the services and content using a setup box.
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European Market
There’s no doubt that Western Europe leads the world in IPTV deployment. But as in the rest of the
world, there are big regional differences in Europe. The prediction for 2009 (US Research firm
Strategy Analytics) is that the number of households with IPTV in Western Europe will grow with a
staggering 70% from 10 million at the end of 2008 to 16,9 million at the end of this year. France is
leading the pack in Europe by a big margin: 6,2 million French households had IPTV by the end of
2008.
France
Researchers in the industry say that the reason for the strong diffusion of IPTV in France lies in the
strong policy of the regulatory body. That has been policing the unbundling of local loops in an early
stage, so alternative operators could offer technologies like ADSL2+ without having to rely on the
established telco’s. This also stimulated strong competition in fixed phone lines. The result was
attractively priced triple-‐play packages.
By the end of 2008 France had 6,2 million households with access to IPTV-‐services. Iliad, which trades
under the name Free in France, is easily the largest IPTV provider in the world with 3,1 million IPTV-‐
enabled customers. France Telecom reported 2,1 million IPTV subscribers by the end of 2008 and
Neuf Cegetel 1 million subscribers.
Spain
Telefonica and Jazztel Spanish cable operator ONO has a predominantly digital subscriber base but
this has not stopped Telefonica from emerging as one of the most successful incumbents in the
European market. With more than 600.000 subscribers, it is the second-‐biggest incumbent player in
Europe. Unlike DT that delayed its IPTV investment, Telefonica launched its Imagenio IPTV service
back in 2004 and got early success in a country where there was not significant pay-‐TV penetration.
Belgium
The use of smart programming offers has also been behind the success of Belgacom’s IPTV service,
which had more than 550,000 subscribers in Q1 2009. Belgacom has been able to secure a deal with
Warner Bros. to provide selected feature film titles on demand at the same time as they are released
to DVD. This has proved to be a key driver in its take-‐up rates in Belgium.
Belgacom has had more success in the southern French-‐speaking Walloon region because of the lack
of a strong cable operator in this region. In the north in Flanders, there is one dominant cable
operator that is digitalizing its service.
United Kingdom
Total 538.000 IPTV households. Tiscali (100.000 households Q4 2008), Freewire (reaches 40.000
students in the UK), BT (398.000 households Q4 2008).
IPTV has similarly struggled in the U.K. where the presence of a strong pay-‐TV operator, News
Corporation’s Sky Television, has made it difficult for BT or any other player to gain a significant
market position. But unlike parts of mainland Europe, SkyTV is not considered a utility service and
has had to win market share off its own back.
In the late 1980s it was launched into a market with a limited number of free to air channels and no
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pay-‐TV and gained its market strength through the 1990’s by securing key football rights. Other ISPs
are also offering free or heavily discounted broadband access, which lessens the appeal of BT’s triple
play package. In the U.S., Verizon executives have confirmed it is the attraction of high-‐speed
internet rather than multi-‐channel television that is selling subscribers to its FiOS service.
Another key handicap for IPTV in the U.K. is the low access speeds on its core networks. BT currently
uses R-‐ADSL, which delivers maximum download speeds of up to 8 Mbs. Although there are now
plans to upgrade to ADSL2+ in France, ADSL2+ infrastructure has already been widely deployed and
major operators are starting to roll-‐out fiber in the major cities.
Germany
By the end of 2008 there were 536.000 households with IPTV in Germany. But the forecasts are that
this number will grow sharply in the coming years to 1,2 million households by the end of 2009 and
1,8 million by the end of 2010.
The dynamic take up of IPTV in France contrasts with Germany where Deutsche Telecom has had to
drop its prices twice in an attempt to kick start demand. The German market seems to be very price
sensitive with low average TV ARPU rates. But with the local cable system still very much analog he
says DT has a “window of opportunity” to grow its market. DT cut the subscription price by 25
percent last year and re-‐branded the service to Entertain IPTV.
Italy
Total 525.000 households. Telecom Italia (Alice with 325.000), Fastweb (200.000). In Italy, despite
the lack of a cable industry, IPTV has struggled. Telecom Italia added 111,000 IPTV subscribers in Q4
2008, giving a total of 325.000 by the end of 2008. This number has risen to 365.000 at the end of Q1
2009. Competitor carrier Fastweb was one of the first players to offer IPTV, but until recently it was
held back by its limited reach and Italy’s low propensity for pay-‐TV services. It has only 200,000
subscribers to show for the six-‐year-‐old service. Tiscali started with IPTV in Italy but that was a
disaster. Tiscali discontinued the service at the end of 2008.
Netherlands
In the Netherlands there are about 250.000 households with IPTV. The main players are Tele2
(195.000 subscribers) and KPN with 45.000 subscribers). Also, cable company Ziggo has recently
started with IPTV. No numbers about subscribers are available yet.
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Part 2: The diffusion of IPTV
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2.1 The current position of IPTV on the diffusion curve

Current situation
Although the number of subscribers of IPTV has been growing rapidly the last years, the total number
is still comparatively small to the total number of TV-‐viewers in the world (22 million vs 1.2 billion).
Almost 22 million people have access to IPTV in the last quarter of 2008, according to the most
recent figures that were published during the World IPTV Forum in London (research Point Topic).
The numbers show that the North American IPTV market has more than doubled in size in 2008 –
with growth of 113 percent, despite the global economic downturn. IPTV global subscriber totals
have now reached 21.8 million, which is an increase of 63 percent on the end of 2007 figures.

Region 2007 Q4 Total 2008 Q4 Total
Western Europe 7.045.860 10.388.000
North America 1.774.671 3.835.544
South & East Asia 1.840.000 3.615.000
Asia-Pacific 2.199.828 3.082.182
Eastern Europe 465.223 884.466
Latin America 8.991 21.495
Middle East & 10.000 10.000
Africa
Global Total 13.344.573 21.836.687
Source: Data provided for the Broadband Forum by Point Topic (www.point-topic.com)
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Growth
A recent report by the Multimedia Research Group (may 2009) is forecasting that the number of
global IPTV subscribers will grow from 26.7 million in 2009 to 81 million in 2013, which is an annual
growth rate of 32%. (see figure below).

Revenues
In terms of service revenue, the Global IPTV market is worth $6.7 billion in 2009 (report Multimedia
Research Group) and growing to $19.9 billion in 2013, a compound annual growth rate of 31% (see
figure below). By 2013, Europe and North America will generate a larger share of global revenue, due
to very low Average Revenues Per User (ARPU) in China and India, the fastest growing markets in
Asia.

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Diffusion
Since the introduction in various countries in the world in 2002 IPTV has grown fast. In 2002 there
were about 65.000 households with IPTV. This number has grown to almost 22 million by the end of
2008 (Point Topic). Still, this a relative small number compared to the total number of households
with television access worldwide, about 1,2 billion. 22 million households with IPTV is not more than
1,75% of the total number of households with television. It seems that IPTV has still a long way to go
to become a mainstream product.
There are many problems that influence the diffusion of IPTV. Despite 7 years of experience with
IPTV it’s requirements are still fragmented. The suppliers of technology, such as Microsoft, are even
today struggling to find sizeable customers to which they can sell their products. The market for IPTV
is geographically fragmented by deployment type (cable, satellite or terrestrial) and by regional
differences in digital-‐TV requirements. Available bandwidth and data rates also vary among
broadband infrastructures. And last but not least: the scalability and management of content, billing
and customer systems are also of concern and form an obstacle for the diffusion. These factors also
apply to other distribution systems as cable, satellite and terrestrial broadcast, with a big exception.
They are all systems for ‘one-‐to-‐many’, one way broadcast distribution, while IPTV is ‘one-‐to-‐one’
and provides a return path. This makes the diffusion of IPTV much more complex. In this regard,
The diffusion of IPTV is in the early stages. With almost 22 million subscribers worldwide, IPTV is still
at the beginning of the S-‐curve. Reaching critical mass seems far away.
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2.2 The diffusion of (interactive) innovations

To find out what influences the diffusion of IPTV we researched the works of Everett Rogers on the
diffusion process, and specifically the diffusion curve for interactive innovations.
“Interactive innovations are distinctive in that their adoption depends on the perceived number of
others who have already adopted the innovation. Thus their rate of adoption does not take off in the
familiar “S” shape until a critical mass of adopters has been reached.” [The diffusion of interactive
communication innovations and the critical mass: the adoption of telecommunications services by
German banks, Mahler & Rogers, 1999]
As Mahler & Rogers conclude, the curve for interactive communication innovations displays a
stronger curved line, putting (even) more emphasis on reaching critical mass, but resulting in a
sharper uprise once critical mass is reached.
Not (ever) reaching critical mass often leads to end-‐of-‐life for the innovation (e.g. CD-‐i).
To investigate how the curve evolves for IPTV and what factors influence the adoption, we will make
use of the TAM-‐model and the research of Van Baaren et al into underlying factors that lead to PU or
PEOU.
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2.3 Factors (theory) about the diffusion of IPTV

To investigate the process towards reaching critical mass we found that the Technology Acceptance
Model (TAM) (Davis, 1989) gives insight into how likely the attitude towards adoption of IPTV is.
The TAM model states that the likelihood for adopting a certain technology is determined by two
factors: perceived usefulness (PU) and perceived ease of use (PEOU).
We translated those factors to our research as follows:
Perceived usefulness
1 -‐ Content/applications/services  publishers
Awareness
Technological complexity / plethora of platforms / absence of standard
2 -‐ Marketing
Perceived ease of use
1 -‐ Technology (user interface, interaction design, graphical design)
2 – Marketing
We used these factors in our questionnaire, on which we based our survey to find out how experts in
the field weigh these factors in their decisions and asked the key players in the interviews about their
viewpoints with regards to these factors. Although the TAM gives a general insight into the likelihood
of attitude towards adoption, it does not take into account the underlying factors that lead to PU and
PEOU (Baaren et al, 2009). As Baaren et al discovered, to further explain what factors help or hinder
the adoption process, one has to take into account the underlying factors for attitude towards
adoption:
• individual factors
o end-‐user and technology match, e.g. knowledge, visual experience, match of needs,
uses, gratifications,
o characteristics of the technology)
• contextual (system) factors (Lin, 2003)
o partners, friends, relatives, peers (Venkatesh et. al. 2003, Quiring 2006),
o organizations (marketing), news media (Weber & Evans, 2002)
In our research on IPTV we assume that IPTV scores low on most individual factors. Consumers
hardly know of its existence, the visual experience is still very rudimentary and the match of needs,
25

uses and gratifications is still low. We believe this is due to the lack of useful applications and services
for IPTV.
We assume that the absence of useful services and applications is caused by the reluctance of
publishers to invest in this technology. In our research we will investigate this reluctance and the
underlying causes: lack of knowledge, absence of viable (proven) business models, complexity
regarding the intellectual property rights (specifically good mechanisms for Digital Rights
Management) and (as we believe and will investigate in this research), the lack of standardization
and the resulting scattered landscape of technological platforms.
Although behavior and the visual experience also play a role in the diffusion process, we will not go
deeply into these factors.
On the contextual factors we also assume IPTV to score low because not many people have access to
IPTV or knowledge of having it at all. There has not been much marketing or attention from news
media for IPTV, as we expect, because of the small target group and the absence of relevant content,
applications and services. In our research we will mainly investigate if the IPTV providers agree on
our assumptions on IPTV adoption, the relation with the standardization process (or the absence
thereof) and their willingness to move towards a more standardized technology platform.
Behavioral fit
Next to technological advancements, a change in user interface (experience) and behavior (cultural
change) is required for the adoption of IPTV. Where current TV viewing is generally considered to be
a “lean back” experience, interactivity is typical “lean forward” behavior.
In this context “lean back” refers to the lean back “couch position”, in which the tv viewer (passively)
consumes content (programs) that is being broadcast. It is specifically meant to stipulate that tv
viewing is generally considered a passive, leisure-‐like activity. Lean forward hints at the position
people assume while working on a computer or on a video game, in other words: being active. The
shift towards the use of IPTV requires at least a shift in behavioral patterns, which is generally a slow
process.
Critics of television often point out that the nature of television programs encourages passivity
[Casey et al, 2002].
It is often thought that television viewing is an isolating, anti-‐social experience, but ethnographic
studies (Lull, 1990) have shown that TV and other mass media, rarely mentioned as vital forces in the
construction or maintenance of interpersonal relations, can now be seen to play central roles in the
methods which families and other social units employ to interact normatively -‐ Oehlberg et al, 2006.
According to Oehlberg et al, this passivity could be explained, at least in part, by the fact that the
television set tends to dominate most channels of communication (both audio and visual) and, as
such, it might not be conducive to interactive exchanges between audience members. However, their
experiments [Oehlberg et al, 2006] revealed that television viewers are quite adept at
communicating with each other during a show. To do so, they rely on a set of interaction rules that
26

allow them to simultaneously socialize with each other around the TV and maintain the flow of the
program they are watching.
Where the distinction between “lean forward” and “lean back” behavior is mainly used in the field of
marketing, scientific research usually makes a distinction based on the distance between the user
and the viewing device.
1ft mobile device Personal highly interactive, …

3ft computer Personal (inter)active, …
10ft tv Shared Mainly passive
100ft Billboard Public passive

As shown in table x, different media are used for different purposes with regard to social interaction
and interactivity.
Breakthrough innovations
As Carayannis et al [Carayannis et al, 2003] discovered, cultural change does take a long time unless a
breakthrough innovation, which drastically changes behavior, pops up.
It is not the technology that causes the behavioral change directly, but its application. There are
several applications that already changed our (tv related) behavior during the past few years.
An example is the use of YouTube videos in parties. Several people at parties nowadays share the
latest YouTube videos they liked and share their emotions on those, or use YouTube as a mechanism
for music-‐ and video requests. Broadcasters gratefully incorporate these functions into their set top
boxes, thereby giving more use to IPTV.
Another good example of an application that accelerated a pattern change in our television viewing
behavior is the Digital Video Recorder (DVR), which introduced delayed viewing instead of or next to
real time viewing. In the USA this was mainly set off by the introduction of TiVo, which never took off
in Europe. Digital video recorders have however found their way into the living room in Europe also.
In The Netherlands “Uitzending gemist” is a good example of the delayed viewing, resulting in
shifting media usage.
These applications are indeed disruptive, since they change our media consumption patterns (e.g.
pause, skip ads), have a huge impact on existing business models (e.g. tv advertising) and result in
completely new business models (e.g.?). This kind of innovation, even though often instigated from
Internet TV applications, is helping consumers to change their behavior and get used to
interactiveness on TV. This strengthens us in the thoughts that the change in behavior is already
underway. The availability of “perceived useful” applications heavily influences these changes.
In this paper we do not explore the behavioral changes any further, but it is certainly ground for
further research.
27

Since our TV viewing behavior is still mainly “lean back”, or passive, the necessary change in behavior
complicates (=slows) the diffusion process. The diffusion process is therefore still mainly dependent
on the applications and services that are available to end-‐users.
Useful applications and services
Companies introducing IPTV typically start their offering with services that require a low entry point
with regard to the behavioral change (learning curve). Typically, the IPTV offering starts with
applications for delayed viewing (DVR functionality without a DRV device) and Video on Demand
(VOD), which is a small step from (physically) renting a video.
These changes slowly introduce interactive behavior to a once non-‐interactive medium and facilitate
our getting used to these possibilities, thereby altering our behavioral patterns.
The convergence from media usage and change from passive to (inter)active does however require
an evolution in user interface design and user interaction design, as Obrist et al [Obrist et al, 2008]
have concluded in their study “Usability & User Experience: Preliminary Results from Evaluating an
IPTV Community Platform".
Much research in this field has been done by Jacob Nielsen. He compares the main user interface
characteristics between traditional television and computers:
In this paper we will however not go deeper into the subject of user interface and user interaction
design. We merely want to state this as an important factor that hinders the adoption rate.

28

Part 3: Our research
29

3.1 Data collection
For our research we did a quantitative study amongst industry players to investigate their opinion on
the diffusion of IPTV and the role of standards, and a qualitative study (interviews) with key players
from broadcasters and publishers to investigate the content and services side.
Online survey
For our quantitative study on the role of standards in the diffusion process of IPTV we set up an
online survey. In this survey we asked industry players in IPTV-‐related companies:
• about their customer base/market share

• about their current IPTV offering
• what services they are planning to offer in the coming years
• their strategy on platform selection and what factors influence(d) their platform selection
• their plans to change the platform selection within the next few years
• their view on the role of standards
• their view on the main factors that prevent IPTV to reach critical mass
• their view on what prevents publishers to create content and services
Our objective in this survey was to investigate what view industry players within the IPTV domain
have on the diffusion process of IPTV and in particular on these questions regarding our hypotheses:
• Why are customers not mass-‐adopting IPTV?

• Why are publishers not creating more content/services for IPTV?
• What is the view of the industry on the mixed platform situation in relation to the adoption
rate and the absence of content/services
• Are industry players willing to / planning to standardize their platforms
We aimed to reach 30+ respondents for the online survey and 5 interviews.
In our first attempt of getting respondents for the online survey we approached several (over 70)
IPTV-‐related websites, trade-‐organizations, umbrella-‐organizations, major consulting firms and
individual contacts we have in the IPTV domain. This resulted in some response, but did not come
close to the 30+ respondents we were aiming for.
After a brainstorm session on how to raise more responses, we decided to try to make use of our
social media channels to get a better response. We particularly posted our survey-‐request in the
LinkedIn groups “IPTV”, “IPTV Forum”, “IPTV Middleware”, “Set-‐top Box & IDTV, Mediacenter DVB
and IP / CI+” and “HDTV Group”. This had an overwhelming result on the response on our survey:
within 3 weeks we attracted 144 respondents from all major countries in Western Europe and a lot
of email from group members. 56 respondents completed the full survey, including full personal
details, while on average 70 respondents answered the questions that related to our hypotheses.
Interviews with key players
For our interviews we contacted 12 IPTV-‐related companies. This resulted in 5 interviews with key
players in media-‐ or media-‐related companies:
30

• Tele2
• Netherlands Public Broadcasting (NPO)
• Rabobank
• Philips
• AD Nieuwsmedia
In the interviews we mainly focused on:
• their views on IPTV and its adoption process

• their current IPTV offering
• the position of publishers towards IPTV
• their views on the role of standards
• their vision, strategy and plans regarding IPTV

The interviews were very open and gave us, besides answers to our questions, a lot of side-‐
information regarding the players, their views on IPTV and their future plans.
31

3.2 Results of our quantitative research

Survey population
Our online survey was conducted using Survey Monkey (http://www.surveymonkey.com). We used
our personal network in the IPTV world, augmented by the use of postings in relevant LinkedIn
groups to draw respondents to our survey. It resulted in a total of 145 respondents from over 14
countries:
Our survey population consisted almost fully of experts in IPTV or IPTV-‐related companies. 44% of
our respondents work for telecommunications companies in Western Europe, 16% came from
broadcasting companies.
Most respondents work in large companies, although also smaller companies took part:
32

Our respondents are mainly working in technical functions (CTO, Tech manager).
The companies our respondents work for (still) have a small market share in the TV area (52% show a
market share of <5%). We believe this has a high correlation with the response from
telecommunications companies that are relative newcomers in the TV distribution chain as a result
of the digitization and their existing (physical) network infrastructure. They show a small number of
subscribers for TV (51% have <50.000 TV subscribers), digital TV (57% have <50.000 digital TV
subscribers), and IPTV subscribers (69% have <50.000 IPTV subscribers).
View on standardization
Our survey focuses on the role of standards. We started by investigating the views of our
respondents on standardization and the role of standardization in the diffusion of IPTV. Our
respondents indicate that they regard standardization as important (56% of our respondents say
standardization is very important, 44% say a dominant platform for IPTV is important).
Current services and fees
We asked our respondents what TV add-‐on services they currently offer their subscribers. 84% offer
Video on Demand (VoD) services, 69% offer HDTV, 63% offer DVR services. In general there are 3
options for asking fees on IPTV services with a different granularity: a general access fee, a fee per
service and a pay per view fee. Most of our respondents (71%) ask a subscriptions fee for (in general)
access to their IPTV services, 46% ask a per service subscription fee, 54% ask a pay per view fee.
Expected changes in the coming years
When asked for their expectations for the coming years we see that our respondents expect a
noticeable change (growth) in the number of subscribers (27% of respondents expect to have
<50.000 subscribers, 20% expect to have 50.000-‐100.000 subscribers).
With regard to the applications and services, several new applications and services are expected to
be added:
33

The diffusion of IPTV
Our respondents show a very coherent opinion on the relevance of applications and services in the
diffusion: 81% think applications and services are important for the adoption by consumers and 90%
think content (information) is important for the adoption by consumers.
The views on what is the main bottleneck (for consumers) in the current diffusion process differ:
• 36% think knowledge of existence

• 39% of our respondents think (the absence of) content and services
• 25% think the ease of use
As can be expected, our respondents agree on the importance of ease of use (94% marked it as
important) and price (76% marked it as important).
On the questions regarding why publishers are reluctant to create content, products and services for
IPTV, the opinions differ somewhat:
• 20% (only!) feel that publishers are not familiar with the possibilities of IPTV
• 35% think the lack of a good business model is the bottleneck for publishers
• 21% think the lack of platform standardization is the bottleneck for publishers
Half of our respondents (50%) feel that the absence of a dominant platform standard slows the
diffusion of IPTV.
IPTV middleware platforms
In our investigation on the platforms that are currently being used by our respondents we found a
scattered landscape:
[Bert: diagram platform use]
• 23% use a custom (proprietary) platform

• 18% use Microsoft Mediaroom
34

• 42% use not-‐top 5 platform
When asked what factors influenced or dictated the platform selection we found that:
• 38% selected the platform for backend-‐integrations possibilities and/or architectural fit
• 26% selected the platform for the available applications
• 29% selected the platform for strategic (alliance) reasons
Although the respondents tend to agree on the importance of standardization 69% expect NOT to
change platforms within the next 2 years. This is probably related to strategic contracts and
investments. [ed: we did not ask for their motivation]
35

3.3 Results of our qualitative research (interviews)

We have interviewed managers from five companies in the Netherlands about their views on IPTV.
They operate in very different markets, but all have one thing in common: they play a role in IPTV or
interactive television in the Netherlands.
Bram Tullemans of the Netherlands Public Broadcasting (NPO) says that the main obstacle for
implementing interactive television is the cable companies. According to Tullemans it is difficult to
realize a return channel within the infrastructure of the cable companies. That is why the Dutch
public broadcasters look at mobile technology to provide a return channel. Content is not an issue,
says Tullemans. “The content will be produced once the technology is available”.
Marcel Kuil of The Rabobank believes that content can play a role in promoting the diffusion of IPTV.
That is why the Rabobank is so active in this field. Kuil thinks that IPTV is completely unknown to the
public. Therefore most people don’t see the possibilities, says Kuil. It doesn’t help that there are no
technical standards, but Kuil sees progress in this area.
Hans Broekhuis of Tele2 is very outspoken about the technology of IPTV. He thinks that technology
isn’t the issue anymore. Neither is content, says Broekhuis. “The premium content is there”. The
diffusion of IPTV is mostly a marketing issue, believes Broekhuis. “People will have to be convinced of
the benefits. Otherwise it will never work”.
Bart van Oortmerssen of the newspaper AD Nieuwsmedia doesn’t think that the absence of
standards in IPTV is a real problem. He says this based on his experience with Net TV of Philips. “If
you have the content in order and if the code is right, it should be no problem”.
Robert Timmer of Philips believes that there has to be a sustainable business model for IPTV.
Otherwise the lifespan for this technology could be very short. Content and services for interactive
television provide the real added value for the consumer, says Timmer. At the same time, standards
are very important, according to Timmer. “It’s no use without standards”.
Most of the managers we interviewed think that IPTV is still in it’s infant years. According to them,
the breakthrough for this technology is not to be expected in the near future. As Robert Timmer of
Philips puts it: “Broadcast will be around for a long time to come”.
We specifically asked the interviewees about the role of standards and the availability of content and
services in the diffusion of IPTV. Striking was that none of the interviewed managers see the lack of
standards as an obstacle. The technology has evolved so much that this is no longer the biggest
problem, they said. Although Philips and NPO are convinced that standards could help the diffusion,
they don’t see it as a major issue. The other three, Tele2, Rabobank and AD Nieuwsmedia, say that
technology is no longer a bottleneck.
The interviewed managers see two important factors why IPTV is still an emerging technology:
1. The network. In the Netherlands the cable companies are still the dominant distribution
channel for television. These cable companies hardly offer any IPTV services to their
customers, while being very reluctant to open their network to other content providers. This
means that the current content offering for the cable TV customers has hardly changed. In
this situation it is hard to persuade consumers to make the switch to IPTV, especially when
there not convinced of the added value.
36

2. The content. The conclusion from the interviews is that there is just not enough content
being produced for IPTV. Most of the services are based on existing content. As Bram
Tullemans of the public broadcasting company NPO puts it: “The amount of content that is
really interesting for the consumer just isn’t there. There is no added value in IPTV yet”.
37

3.4 Conclusions

We started our research by stating our 2 hypotheses:
From our desk research we could, by comparing the IPTV number of subscribers to other (related)
innovation adoption curves (color TV, digital TV, etc), establish the position of IPTV on the adoption
curve (Rogers) as still in the early stages.
In our quantitative research we investigated the views of our respondents on the TAM factors (PU
(mainly) and PEOU) of IPTV. We found that knowledge of existence (36%) and (the absence of)
content and services (39%) are considered the most important factors with regard to PU. Our
respondents show a very coherent opinion on the relevance of applications and services in the
diffusion: 81% think applications and services are important for the adoption by consumers and 90%
think content (information) is important for the adoption by consumers.
Our respondents agree on the importance of ease of use (PEOU, 94% marked it as important), but we
did not ask enough specific questions with regard to PEOU to draw any conclusions on that.

While we (the researchers) feel that consumers are not adopting IPTV (primarily) because of the lack
of knowledge of its existence (which in fact may be due to the absence of relevant content,
applications and services), our respondents regard the absence of content, applications and services
as the primary reason (75%) for the slow adoption. 94% think that (perceived) ease of use is of key
importance to the adoption by consumers, but only 25% feel that this is the main bottleneck

We can therefore conclude that our respondents agree with hypothesis 1.
Furthermore, we investigated if the IPTV providers agree on our assumptions on IPTV adoption, the
relation with the standardization process (or the absence thereof) and their willingness to move
towards a more standardized technology platform.
The content, applications and services comes from publishers. Of our research group only 20% regard
the lack of knowledge of the existence of IPTV among publishers as the reason for publishers not to
jump at IPTV. 36% feel that the lack of a good business model is the primary reason for this. We have
tried to verify this in the in-‐depth discussions in our qualitative research (interviews).
Publishers and other important players in the IPTV world in the Netherlands do see the lack of good
content as an important obstacle for the diffusion of IPTV. The companies we interviewed in our
qualitative research agree that there is hardly any specific content being produced for IPTV. There is
just no demand for it at the moment, therefore there is no business model for the publishers. The
38

dominant players in the distribution of tv in the Netherlands, the cable companies, hardly offer any
interactive content. Video on demand and “Uitzending Gemist” are the only exceptions, but they are
entirely based on existing content. The interviewed managers see this network issue as the most
important reason that IPTV is still an emerging technology.
With regard to the role of standards in the diffusion process: the (middleware) platform landscape is
scattered. And, although 50% think the absence of a dominant platform standard slows the diffusion
of IPTV, 69% of respondents do not expect to change platforms over the next two years. This is not
very promising for speeding up the diffusion process.
With regard to hypothesis 2, we can therefore conclude that our research has revealed little support
for this hypothesis. Our respondents consider the lack of a valid business model far more important
than the lack of (platform) standardization.
Although we still believe in a strong role for standardization and our respondent tend to agree on
that, we found that there is very little willingness, let alone eagerness, to standardize in the industry.
Even with the support of sound theoretical bases like the adoption curve for interactive innovations
(Rogers) and the examples from neighboring fields like Video2000/Betamax/VHS, Blu-‐ray/HD-‐DVD,
SACD/DVD-‐A, the industry seems reluctant to standardize at the price of abandoning past
investments (sunk cost) and strategic alliances.
As we described, a disruptive innovation can cause a radical speedup in the diffusion. This
circumvents the (lack of) platform standardization by shifting towards application-‐ or service
standardization due to customer demand/expectations. Our hope is on (low interactive) services like
YouTube-‐integration, Video on Demand (including “Uitzending Gemist”) and remote PVR to become
widely accepted. This will at least provide the (broad) infrastructure for interactive services, so new
applications and services can emerge. Amongst them may be new breakthrough innovations which
accelerate the diffusion of (real) IPTV.
Based on our research findings we feel that a quick breakthrough of IPTV in the near future is not
very likely. We expect WebTV, which is less affected by the factors we found, to have a better chance
of conquering our living rooms. The openness and lack of restrictions of WebTV may result in
different (unanticipated?) use of the technology, which could lead to more disruptive applications
and services for interactive TV.
39

3.5 Reflection

Looking back at the thesis process we lived through the previous year, we can conclude we had quite
a struggle.
We started off very eager and enthusiastic about our hypotheses. At that moment in time we were
submerged in the world of IPTV because of the Deutsche Telekom Interactive TV award and reaching
the finals with 3-‐frogs (which one of the authors is a partner in).
Finding the relevant theoretical models for our research by reading up on recent theoretical material
was our first major bottleneck. We found that we were not used to reading extensive research
material and interpreting the findings. Investing more time and effort during this phase in starting to
write our thesis document would have saved us a lot of time in the analysis phase and the final phase
of writing our thesis document, but we did not.
Even though it was not easy to combine our day jobs with finishing our thesis, in the early phases of
our thesis (mainly the research phase), we were able to get up to speed rather quickly. This resulted
in a swift setting up the quantitative part of our research (survey questions). Finding relevant
respondents turned out to be a lot harder than expected.
After contacting over 30 companies in the IPTV area we found that we could hardly raise any
respondents for our research. Even close personal contacts did not result in much response. After re-‐
evaluating our approach we decided to test if we could leverage our experience in the use of new
media to our advantage by using LinkedIn and Twitter for reaching our respondents. Especially the
use of LinkedIn groups on the topic of IPTV resulted in a large set of respondents in a short period of
time.
Setting up the interviews was even harder. We contacted over 20 companies in 7 European countries
for an interview that resulted in only 3 interviews. Through our personal contacts we finally raised
this number to 5 interviews. The interviews were very interesting and insightful though.
Because our research took place during the Credit Crisis, this may have played an important role in
our struggle for respondents and may even have influenced some of the factors we have
investigated.
During the analysis phase we discovered that it would have been a good idea to also do a survey
amongst consumers to investigate their views on interactive TV. We have not done that survey, but
this is strongly suggested as follow up research.
The hardest part of our thesis, after preparing our research, setting up the survey, conducting the
interviews and analyzing the results, was creating our thesis report. This phase took us over 6
months, while our motivation was low, the problems of the Credit Crisis were fully influencing our
daily business and we already had our findings analyzed.
40

At the start we decided to divide the different parts of our research between the two of us with
clean-‐cut pieces of work. During the process we found we mostly needed each other to stay
motivated and make progress. It took a lot of effort to stay on track and (mainly) to finish our work,
but we came out as better friends and partners in a new venture (Journalist.nl), partly as a result of
this process.
Looking back, the memories of our struggle will faint and will be replaced with pride about finishing
our thesis and earning our MBA degree.
41

3.6 Suggestions

Suggestions for follow-‐up research:
• Consumers and the adoption of IPTV
In our research we have focused on the role of IPTV-‐providers and publishers. Of course
consumers also play a big role in the diffusion of this relatively new technology. There are a
number of (commercial) market research companies that have data about consumer
behavior with regard to IPTV. We have found that there is hardly any independent scientific
research in this field. Therefore we think a study about consumers and the adoption of IPTV
would be a good idea.
• The relationship between the existing platform in use with IPTV providers and the adoption
of new standards
A maturing industry like IPTV attracts new standards. At the same time these standards seem
to face resistance from IPTV providers. They seem to be reluctant to give up their existing
technology and argue there is no need for change. A study on the relationship between
existing platforms in use with IPTV providers and the adaption of new standards would be
very useful.
• The cost of not standardizing
The lack of standards in the IPTV industry could prove to be very costly in the long run. It
would be interesting to do a study on the financial benefits if a standard would be adopted
by the industry.
• The role of social media in research
For this master thesis we have used the social network LinkedIn to promote our web survey
among professionals in the IPTV world. This worked remarkably well. We recommend a study
on the use of social media (LinkedIn, Facebook, Twitter) in scientific research.
• The influence of design and interface on the adoption curve
We think that the design of most interfaces used in IPTV can be improved. In out view
functionality, perceived usefulness and perceived ease of use play an important role in the
diffusion. A user interface that is intuitive and allow users to really personalize and customize
their TV viewing could help the spread of the technology enormously. We think a study on
the influence of interfaces and design on the adoption curve is very desirable.
• The role of standards in the diffusion of Web TV
The main subject of our master thesis is the role of standards in the diffusion of IPTV. It
would be interesting to see if and to what extent standards play a role in the diffusion of
Web TV.
42

Suggestions for IPTV players:
• Be an enabler instead of a publisher, help publishers to make money
• Be more flexible when it comes to the adaptation of new standards
• Learn from neighboring fields such as Blu-‐Ray
• Invest to boost quality of services offered in terms of both content and service availability
• Introduce subscription music services and gaming on demand. This would add would great
value for customers.
43

Appendices
44

Appendix 1: Reference
[IPTV & WebTV -‐ Hype oder Revolution der TV-‐Landschaft? -‐ Jakob J. Assmann -‐ Institut für Information, Organisation und
Management, 2007]
Technological forecasting and scenarios matter: Research into the use of information and communication technology in the
home environment in 2010 – H. Bouwman, P. van der Duin, 2003
Wikipedia, History of Television: http://en.wikipedia.org/wiki/History_of_television

Federal Communications Commission, Historical periods in television technology: http://www.fcc.gov/omd/history/tv/

Edwin Howard Reitan, Jr. History of the early colour television: http://novia.net/~ereitan/

Wikipedia, Aspect Ratio: http://en.wikipedia.org/wiki/Aspect_ratio

Wikipedia, Digital Television: http://en.wikipedia.org/wiki/Digital_television

The evolution of broadcast TV technology: http://www.mlesat.com/evolutio.html

Porter, M. E. (1979): How Competitive Forces Shape Strategy. Harvard Business Review, 91-‐101.
‘Global Standards of IPTV and its infrastructural framework’, presentation by Chae Sub Lee, Telecommunications
Technology Association of Korea.
Deumer, P. (2008), Internet TV & the Dutch broadcast value chain.
IPTV-‐News (http://www.iptv-‐news.com/iptv_news/march_09/iptv_households_in_western_europe_reach_10mn_at_end-‐
2008),
IPTV-‐News (http://www.iptv-‐news.com/iptv_news/june_09_2/dutch_cable_households_exceed_2mn)
IPTV-‐Watch (http://www.iptv-‐watch.co.uk/18062009-‐iptv-‐booming-‐in-‐germany.html)
Personal TV: A Qualitative Study of Mobile TV Users – Cui, Chipchase, Jung, 2005
The television will be revolutionized: effects of PVRs and file sharing on television watching – Brown, Barkhuus, 2006
“I Just Want to See the News” – Interactivity in Mobile Environments – Hubel, Theilmann, Theilmann, 2007
Is TV Dead? Consumer Behavior in the Digital TV Environment and Beyond -‐ Gali Einav and John Carey, 2009
IPTV & WebTV -‐ Hype oder Revolution der TV-‐Landschaft? -‐ Jakob J. Assmann -‐ Institut für Information, Organisation und
Management, 2007
Making TV Meaningful: Consumers and IPTV Applications – D. Iyer, K. Scherf, 2006 -‐ Parks Associates
Open IPTV Forum – Toward an open IPTV standard -‐ Mats Cedervall, Uwe Horn, Yunchao Hu, Ignacio Más Ivars and Thomas
Näsström, 2007 – Ericsson review
Baas over de buis. De kansen en bedreigingen voor reclame bij een transformatie van analoge naar digitale televisie -‐ J.J.L.
Nagtegaal, 2005 -‐ Erasmus Universiteit Rotterdam
Betekent IPTV het einde van de huidige commerciële zenders – S. Pool , J. Sinnige, M. Zantinge, 2006 -‐ Hogeschool Utrecht
Studie naar de technologie en mogelijkheden van iDTV – S. Mahieu, 2006 – PIH
IPTV business models: profit and loss in the telco TV space – ScreenDigest, 2008
45

Potential user factors driving adoption of IPTV – Dong Hee Shin, 2006
Technical innovations, standardization and regional comparison, a case study in mobile communications – Sadahiko Kano,
2000
IPTV & WebTV -‐ Hype oder Revolution der TV-‐Landschaft? -‐ Jakob J. Assmann -‐ Institut für Information, Organisation und
Management, 2007
The role of standards in innovation and diffusion of broadband mobile services: The case of South Korea – Yoo, Lyytinen,
Yang, 2005
The diffusion of interactive communication innovations and the critical mass: the adoption of telecommunications services
by German banks, Mahler & Rogers, 1999
Social TV: Designing for Distributed, Sociable Television Viewing – Oehlberg et al – Stanford University, 2006
46

Appendix 2: Interview questionnaire

Interview guide “The role of standards in the diffusion of IPTV”
1. Company / person
• Can you give a brief history of your career?
• Why did your company select IPTV as the distribution standard
o Out of necessity (no alternative)?
o Because it was the best alternative?
• How did your company get involved in IPTV?
• What is your company’s view on the IPTV market
• What is your company's strategy in the IPTV-market (R&D, product,
standards)?
o What is your company’s view of the current IPTV-market (for instance
competition, technology, standards, applications, hardware)?
2. Landscape / value chain

• What company’s and organizations do you interact with?
o What role(s)
o How would you describe the relationship of your company with these
actors?
3. (Technical) standards
• What standard(s) does your company use/support and why?
• Is your company involved in the development of these standards
o Are you involved in IPTV standardization?
• Which actors are involved in the development of the IPTV standard?
• Do you see standards as a key aspect that affects the diffusion of IPTV in your
country?
• What other technological aspects play a role in this regard?
4. Content and services

• Do you think that content and services play a role in the diffusion of IPTV?
o And do you think that is any different for other distribution standards
like DVB?
• Does your company play an active role in stimulating the creation of content
and services specific for IPTV?
5. Diffusion
• What is your view on the current diffusion of IPTV in your country and in the
rest of the world?
o which (f)actors influence the diffusion in your opinion?
• What – in your view – are the reasons for the big regional differences in the
diffusion op IPTV in the world?
• Can you compare the present IPTV to the diffusion of other technology, for
instance Blu-ray?
47

Interview guide “Publishers and Interactive Television”
1. Company / person
• Can you give a brief history of your career?
• What range of products/brands does you company publish?
• On what media-channels / devices does your company publish
products/content?
• Does your company currently publish content/applications/services for
Interactive Television?
• What is your company’s strategy on Interactive Television?
o What is your company’s view of the current IPTV-market (for instance
competition, technology, standards, applications, hardware, business
model)?
2. Landscape / value chain
• What companies and organizations do you interact with specifically for
interactive television?
o what role(s)
o How would you describe the relationship of your company with these
actors?
3. Content and services

• Do you think that content and services play a role in the diffusion of IPTV?
• Does your company play an active role in stimulating the creation of content
and services specific for IPTV?
4. Diffusion
• What is your view on the current diffusion of IPTV in your country and in the
rest of the world?
o which (f)actors influence the diffusion in your opinion?
• What – in your view – are the reasons for the big regional differences in the
diffusion op IPTV in the world?
48

Appendix 3: Survey results
49

50

51

52

53

54

55

56

57

58

59

60

Appendix 4: Interviews
Interview Bram Tullemans, Nederlandse Publieke Omroep (NPO)
Date: April 22nd 2009
Bram Tullemans is senior policy adviser of the department DTU (Distribution, Technology and
Broadcasting) of the NPO, the Netherlands Public Broadcasting. NPO is the organization in the
Netherlands which by law stimulates cooperation and coordination between the Dutch national
public broadcasters.
Can you give a brief history of your career?
“I work for the NPO now for 1 year. Before I was employed as director/producer at the cross media
department of publisher IDG. Before this I worked as a freelancer and at the technical department of
Artis/Planetarium”.
Does the NPO currently publish content or services for interactive television?
“The NPO is involved in a number of trials with interactive TV, especially with the so called ‘red
button’ technology. We are focussing on offering related content with this technology and the ability
to switch to on-‐demand functions. But these are all in the trial phase. There are no existing programs
at this moment which use interactivity. The last program we had was a TV-‐show around choirs in
which the audience could vote through sms and influence the programming”.
What are the difficulties you experience with implementing interactive television?
“We find that interactivity is hard to realize with the cable companies, who are still the main
distribution channel in the Netherlands. The service has to meet the specific technical requirements
of the different platforms the cable company’s use. So for each company you have to adapt the
service each time. It is also difficult to realize a return channel within the infrastructure of the cable
companies. This of course makes development complicated. It doesn’t help that providers such as
cable companies are reluctant to release information that is gathered through interactive television.
This is why we also look at mobile technology to provide a return channel. We consider the ‘red
button’ technology as the easiest to implement. You can use this for instance for accessing related
content which can be easily put in place beforehand”.
What is the reason that there is still no specific content available for interactive television at this
moment within the Dutch public broadcasters?
“That kind of content will be produced once the technology is available. For the broadcasters it’s
always the dilemma of weighing possibilities against cost. The makers of TV-‐shows regularly express
the desire to interact with the public and they do for instance through SMS, mail and Twitter. But
producing an interactive program is still a bridge too far”.
What is the strategy of NPO with regard to interactive television?
“Interactive television is coming and we want to be ready for it. That is why we are conducting
experiments with red button with the cable companies on the one hand and the exploration of
61

interactivity through other platforms such as mobile on the other hand. We have created budget to
facilitate this. If the technology proves itself and TV makers want to use it than we will find money to
produce specific content for IPTV. For instance we are working on our own ‘red button’ technology.
But xml-‐communication is also an important issue. We are using the subtitles of programmes to
index this content. We are also working on a project with visual radio in which users can also upload
content”.
What is the view of NPO on the current IPTV market?
“We talk to a lot of different parties who are involved in IPTV. A lot. But no one seems to reach the
threshold in which you can make this technology work. Almost no one reached an install base of
50.000, which is considered to be the minimum for a viable business case”.
Which factors influence the diffusion of IPTV?
“Well, there are many reasons that IPTV is still an emerging technology. First there is the network. It
is just not ready yet. You have to deal with so many companies who are involved in the whole
process between broadcaster and provider, but also between consumer and provider. There are so
may factors you can’t control. Also bandwidth is still an issue. If you are going to use the web for very
large data files, the providers want to get paid. This makes the internet providers most suited for
IPTV, by the way. On the other hand there is the content. The public broadcasters have interesting
content for IPTV and we we’re the first to be on the platforms of KPN and Tele2. But the amount of
content that is really interesting for the consumer just isn’t there yet. There is no real added value in
IPTV yet”.
What role do standards play in the diffusion of IPTV?
“The lack of a standard is a bottleneck. It makes the market unclear. And it makes it difficult to
develop. Standards are indispensible. With IPTV things have remained to open in my view. Here at
NPO we believe in a ‘hybrid’ model. Broadcasting through DVB-‐T and using the cable or Internet as
return channel. I am a member of a working group of the European Broadcasting Union which is
working on this. Of course we are also talking with Philips and Samsung about new developments as
Net TV.”
We seem to be in a sort of Catch 22 when it comes to IPTV. No standards, no content, no business
model. What is your view?
“Yes, we seem to be in a Catch 22. But we can break free. This will require an extensive lobby with all
involved parties. We are developing content for interactive TV, but it’s trial and error. For instance
the ‘red button’ is incredibly hard to realize. There is no standard. Interactivity is not something you
can put out there ready to be picked up. Also here within the Dutch public broadcasting system
budgets are still divided between TV, radio and internet. This is hard to break through. A TV-‐show is
still produced for TV, and not for interactivity”.
What are the reasons for the big regional differences in the diffusion of IPTV?
“The differences in infrastructure play a big role, mainly the difference in bandwidth. But it is also a
question of availability of the content”.
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Interview Marcel Kuil, Rabobank
Date: May 7th 2009.
Marcel Kuil is program manager for the one of the largest banks in the Netherlands, Rabobank. He is
currently responsible for the New Media program of the Rabobank. Marcel has worked most of his
career at Rabobank. After a year at the national post company PTT, Marcel started at Rabobank in
1983. He has a background in information technology and business economics.
The Rabobank is very active in the field of new media and started Rabobank TV more than 4 years
ago. The bank also acts as a telecom provider with Rabo Mobiel.
What is your company’s strategy on interactive television?
“We focussed on the principal that all our video content should be accessible through one technical
platform, and that platform had to be IP-‐based. We started with Windows Media Centre as our
primary platform. Initially our technological infrastructure for video was developed and maintained
by Logica CMG.”
“Our starting point was the combination of fun and the possibility to do financial transactions and
other banking affairs on your tv. That means that you can log on to your banking accounts on your tv.
Security is a big issue in this regard. That’s why we chose for IP. Via Open TV – like UPC is using – you
can’t set up a secure connection. That is of course crucial for a bank like ours”.
What technical platform are you using?
“itv.rabobank.nl” is available on the following stb’s: Windows Media Center, Daily Media, KPN Mine,
Mediamall, gaming platforms such as the Wii, Xbox 360 and Playstation, Net TV by Philips (CE
HTML).”
What is the strategy of Rabobank on IPTV?
“The Rabobank is present on many IP-‐based platforms. It’s important to generate some sort of mass
and to reach as many people as we can. We are also available on non IP-‐based platforms like UPC &
Tele2 where no secure connection is possible. There we only offer our (video) content, but
subscribers can’t do banking affairs. Mass is critical, so that’s why we are on all of these platforms.
“We do see that internet and tv are growing much closer. The basis was IP, the top layer could be
different for different platforms”.
Does Rabobank produce content especially for IPTV?
“No, Rabobank doesn’t produce content especially for IPTV. We do make content for mobile
platforms, internet and TV environments. We do experiment with red button technology in the TV-‐
environment, for instance with UPC. But the question is: how do you get people on this interactive
platform? They need an incentive. I think the cable company’s could be more active in this field”.
What kind of content do you produce for TV?
63

“Besides sports – the Rabobank is a big sport sponsor i.e.g. cycling and hockey – we focus on local
content. Our local banks are very active in sponsoring events. We try to encourage the production of
video of these events. That content we can use on our video platform. And it also increases the
involvement of our clients. Community building might be a big word, but we do encourage this.
Besides this our extensive video archive is also very important. And last but not least there is the
‘fulfilment’ aspect. Clients can use the TV-‐platform for instance to make an appointment with one of
our advisers”.
“TV is no longer just a broadcast platform. TV is an added channel. Internet is the most important
way of communicating with our clients. After that it’s our offices and branches. Mobile is in third
place, followed by iTV as an extra channel”.
“We operate our own technical platform. That may change in the near future but not when it comes
to banking transactions. We do this via secure internet connections, and we are not planning on
doing this any other way. This is also something we emphasize with cable providers”.
What role do content and services play in the diffusion of IPTV?
“Somewhere something has got to give. Content can play this role. That’s why we are so active in this
field. With our sponsoring content we have an edge over other companies. We try to persuade other
companies to be present on these kinds of platforms. It is not in our interest if we are on our own. So
we discuss these technologies with our (banking) competitors”.
What is your view of the current diffusion of IPTV?
“IPTV is completely unknown to the public. A digital box that provides better picture quality and
better sound quality, that is something users understand. But the other possibilities? Sure, they know
about Video On Demand and stuff like that, the rest is completely unknown. Of course it doesn’t help
that every provider has his own hardware. But there is a lot going on to tune the technical problems.
The content is no problem as far as I can see. That’s available if we need it”.
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Interview Hans Broekhuis, Tele2.
Date: May 25th 2009
Hans Broekhuis is Director TV Marketing and Content for Tele2 in the Netherlands. He is responsible
for the triple play offering of Tele 2 in the Netherlands. He manages a team of 7 persons, who cover
the areas of sales, marketing and communication and technology. Hans works for Tele 2 since 2000.
Before this he was consultant with DDV Telecommunication Consultancy. He studied Business
Management at the Vrije Universiteit in Amsterdam.
How did Tele2 get involved in IPTV?
“It started when Tele2 (then Versatel) acquired the TV rights of the Dutch soccer competition in
2005. We chose for the technology of Samsung for distribution and setup a completely new IP
network in eight months”.
What is your company’s view on the IPTV market?
“I think there is no market for IPTV. But there is a market for interactive television. What technology
is used is of no importance. There are many developments in interactive television. The past ten
years there was a lot of discussion about which technology to use. We’ve grown past that now. I
think that the technology is ready to enable growth of interactive television. But this is mainly a
marketing issue. As I said technology isn’t the problem anymore. But neither is the content. The
premium content is there, in our case soccer and movies. We see a growing demand for Video On
Demand and for postponed viewing. Our customers want to see TV shows when it suits them. Of
course IPTV enables us to use the preference of customers to adjust the offering we make to them.
We can add intelligence to our systems. I don’t believe in the red button technology at the moment.
It has no added value yet, producers are not ready for it and the business case is also unclear”.
What role do standards play in your opinion?
“Technology isn’t the issue anymore. VOD, the possibility to playback missed broadcasts (‘Uitzending
Gemist’, ed), it’s all there. It would be more convenient if there were standards, but the lack of them
isn’t a make or break. The movement that we see now is that IPTV is evolving more to services that
are delivered in a format that is based on a standard.”
What is the strategy of Tele2 in the IPTV market?
“We are constantly working to improve our platform. This is a real challenge. We want to offer
services on our platform that will be used by our customers. Services that they are willing to pay for.
The consumer now is much more interested in an easy and cheap offer. From a marketing
perspective this works much better than offering interactive services. It is still a challenge to to make
clear to our customers what interactive services are and to convince them to use them”.
Is Tele2 involved in the development of standards?
“No, not active at this moment. When it comes to technology we prefer to work with smaller
companies. They operate faster and are more flexible. And, that’s also very important, they are more
innovative”.
65

What standard does Tele2 use at this moment?
“We use middleware from Samsung and have built our own platform”.
What are the important developments regarding IPTV you see at the moment?
“Three things as far as I’m concerned. First of all the market for IPTV is very difficult. It’s hard to
attack the companies that have a monopoly: the cable companies and the companies that use
satellite. In this situation it’s hard to persuade the consumer to make the switch to IPTV. Second
thing is that if people have a setup box at home, it’s hard to get them to actually use the system. A
lot of people still have cable also. The third issue is the interactive services. People have to start using
them en start paying for them. People will have to be convinced of the benefits. Otherwise it will
never work.”
“Another important thing is internet integration. This is definitely coming. And it’s a stimulus for the
complete IPTV-‐industry. Net TV for instance from Philips is also very important. Once the internet
integration breaks through, well then IPTV could really fly”.
66

Interview Bart van Oortmerssen, AD Nieuwsmedia.
Date: May 28th, 2009
Bart van Oortmerssen is editorial manager of the multimedia department of the Dutch newspaper
Algemeen Dagblad, which changed it’s official name to AD recently. Algemeen Dagblad has a
circulation of 460.000. On internet AD.nl has 3,9 million unique visitors per month and is the fourth
largest news site in the Netherlands. Bart has almost 25 years of experience in journalism. He started
at the regional newspaper Utrechts Nieuwsblad, which later became a part of AD Nieuwsmedia. Bart
studied Dutch language at the Universiteit van Utrecht. He started at the sports desk of Utrechts
Nieuwsblad and after that worked at various desks at the paper. Later he became chief editor of the
sports desk and later of the central news desk. The internet department of the paper was part of the
central news desk. After the merger of Utrechts Nieuwsblad with AD, Bart became deputy editor-‐in-‐
chief in charge of the multimedia department.
How did AD Nieuwsmedia become involved in IPTV?
“The Algemeen Dagblad was asked by Philips to participate in Net TV. One of our goals is to be
present on more platforms than just print and Internet. Our content offering on Philips Net TV is
virtually the same as on Internet. We just do a conversion to CE HTML”.
Does AD Nieuwsmedia have a strategy for television and IPTV?
“Our strategy is to be on as many channels that we can to make our brand stronger. Our UPS’s are
regional news, sports and consumer related journalism and we try to be present on all platforms. But
this is mainly focussed on print, internet and mobile. We have studied the possibilities for us on
television. We had the ambition to offer complete programs besides the short video items we offer
on internet at the moment. But we concluded that there is no business model for us when it comes
to television. We are making the transition from traditional newspaper company to Multimedia
Company and that is hard enough. We haven’t put time into interactive concepts because we want
to see what happens with Net TV. If this proves to be a success, we are able to roll out interactive
services fast. But we have to develop these services on the basis of our current activities and
content”.
Did you look at other media companies in the world to see what their strategy is with regard to IPTV?
“No, we didn’t, as far as I know”.
Do you see a role for a media company such as AD Nieuwsmedia in IPTV?
“We don’t have a strategy for interactive television and the role we could play in that field. There is a
vision for internet, not for TV”.
What role do standards play do you think?
“I don’t think that the absence of standards in IPTV are a real problem. If you have your content in
order and if the code is right, it should be no problem. That is my experience with Net TV. It’s just a
question of a different front end. The back end stays the same as far as we’re concerned”.
Do you produce specific content for IPTV?
67

“No, we don’t. Our motto is: produce once and use many. If there is a demand for channel bound
content we could consider it. But it’s always a question of cost and revenue”.
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Interview Robert Timmer, Philips
Date: June 22th 2009.
Robert Timmer is Senior Director Net TV of the Business Unit Television of Philips Consumer Lifestyle.
He studied business economics at the University of Groningen in the Netherlands. He started as a
temporary employee at Philips in 1987. Robert worked for the business unit Domestic Appliances and
Personal car. In 1999 he switched to Consumer Electronics and especially audio. He was stationed in
Asia for 10 years and worked in Hong Kong, Taipei and Singapore. In 2004 he moved back to the
Netherlands and started for the Connected Planet Group of Philips. It’s task was to develop
consumer electronics with a internet connection and to standardize the technology involved.
“My task was to give direction to standardization from a commercial standpoint. Technology is great,
but it has to be implementable in practice. That’s all about the interface and a lot of commercial
issues are involved. At Connected Planet we focussed on home networking. Consumer electronics
that can talk to each other”.
Robert is currently responsible for a new product of Philips: Net TV. This a television with built-‐in
internet connection. Net TV uses CE-‐HTML a new standard for internet browsing with consumer
electronics like TV’s.
What is the role of content and services for instance with Net TV, but also in IPTV?
“The value of the consumer is in the content and services that can be obtained from outside. Here
we have learned one important lesson. There has to be a sustainable business model. If there is no
business model, the life span of a new product will be very short. But this can be a very indirect
model. It can be generating traffic to a website, for instance. But somewhere money has to be made.
What we realized is that consumers are not waiting for Philips services. Services are very specific.
People expect news from established brands. It’s all about facilitating these services and getting
people enthusiastic for them. It has to make business sense to the consumer. If you put a lot of these
services together – like we did with Net TV – that is also interesting for us business wise. For instance
we could generate revenue with the services we offer on Net TV through a revenue share”.
What was the difficulty with developing NET TV?
“If you want to integrate these services into a system like Net TV you have to design an ecosystem.
Basically that means a browser. Almost all consumers, especially in the Netherlands – have internet
access. The challenge for us was how to build in a browser into a television. That was a bog
conceptual challenge. With TV you don’t have some essential interactive elements – like a mouse
and keyboard – that you have on a PC. That’s why Philips – together with Samsung and Intel –
developed CE-‐HTML. In 2007 that resulted in the standard CEA 2014. This a browser for televisions
with what we call ‘spatial navigation’. This also included a MPEG4 decoder for playing media objects.
This was really the break through for the standard, because High Definition TV also uses MPEG4”.
Is Net TV IPTV?
69

“No. To me IPTV is broadcast television that’s been done by a vertical operator using IP. What we are
doing with Net TV is internet television. NET TV is about everything but broadcast. NET TV is two
things in one. It’s broadcast on the one hand, and internet using a browser on the other. Consumers
use two cables to connect TV. One for the TV-‐signal and one for the internet connection. The system
is not hybrid yet. But of course this is where it is going: the link between internet and broadcast”.
How do you see the future of television?
“Broadcast will be around for a long time to come. There are still a lot of programs that millions of
people want to see. It’s part of their life. We think that there are three kinds of screens: the phone (1
ft), the personal computer (2ft, with complete interaction) and the TV (10 ft). Mobile and TV have a
lot of similarities, except that mobile has become much more personal. On each of these 3 screens
communication, information and entertainment are important. But on mobile communication is the
dominant factor, on the PC it’s information and on the TV it’s entertainment”.
What about the role of Philips in this development?
“I think that Philips can’t be just a supplier of hardware. That’s a strategy that can’t be maintained in
the long run. The margin on TV’s has gone down considerably the last years. To capitalize the added
value in TV’s is becoming much harder. There is overcapacity in the market and the competition is
killing. So the future for us is in the combination of TV and services. Actually that is not so much
different that the manufacturing of cd-‐players. There we made more in licensing than on the players
themselves. Consumer Electronics are worth nothing without content or services. It’s all about the
way to get these content and services to the appliance”.
How do you see the role of Philips in developing standards for IPTV?
“We can do two things. Wait to see how the technology develops to maturity. Or actively pursuing
corporation with other to setup something together. We have a two-‐track policy. We talk to a lot of
stakeholders within the Open IPTV Forum. We talk to broadcasters, operators, content providers and
colleague CE-‐manufacturers from Japan, Korea and China. But while we’re doing this we are also
rolling out our own technology, Net TV”. The thin sis with these standardizing body’s that discussions
tend to become religious in character. But you can talk endlessly about these issues, if you want to
go forward someone has to do it. We have built the portal of Net TV on IBM web share. We use open
standards to get more acceptability. We are prepared to share our platform for reuse”.
So standards are important to you?
“It’s no use without standards. The biggest compliment to us would be if Panasonic and Sony take
over our standard. I am convinced that they want to, but we’re not there yet”.
Your view on the rol of content and services?
“We have built a portal into Net TV where we offer services of others to the consumer. For this you
need a good user interface. The TV is not as smart as a computer, but in our platform the real
intelligence is in the backend. We have taken a step back in the value chain. We aggregate services
and content with the possibility to make money with advertising and through revenue sharing. Of
70

course the Electronic Program Guide is very important is this. We see the EPG as an extension of the
user interface. And in the case of Net TV we do claim ownership of the EPG”.
“For us there are two kinds of content providers. The ones who are already in TV and the ones that
are not. We want to talk to both. For newspapers it is very interesting to be on the ‘third’ screen,
besides mobile and PC. Don’t forget that 2,5 person watch a TV and they are usually in a well defined
environment. Net TV offers newspapers a low cost opportunity to get on TV. On the other hand you
have the companies that are already on TV, the broadcasters. A lot of them feel like ‘sitting ducks’,
because the fight for the attention of the consumer is so fierce. That’s why they offer postponed
viewing via internet, as long as these viewers are in the ratings and the revenue from advertising
goes to them. But there is a problem with that. The cost of viewing through internet are 4 times as
high as through broadcast. That is why I can’t see broadcast disappearing in the short future. There is
no cheaper system available”.
What’s your view on the regional differences in the diffusion of IPTV?
“France stands out with a reported 6,5 million IPTV subscribers. But I don’t regard the French IPTV as
real IPTV. It’s just broadcast over IP. The geographical differences see to have a historic background.
For instance, in the Netherlands it’s a political issue. Here there is no open market. De broadcasters
have become addicted to the operators. The operators pay broadcasters like RTL and SBS for their
content. In China TV is mostly terrestrial. There is an opportunity for interactive TV in China because
the normal TV is so incredibly boring. The United States is the country of exclusivity. But the
differences between countries will be diminished. Internet will become the big equalizer in this
regard”.
How about the comparison between the diffusion of Blu-‐Ray and IPTV? Blu-‐Ray has finally taken off
after there was a standard accepted by the manufacturers.
“Yes, I do see a lot of similarities. NET TV can become that standard as far as I’m concerned. And I’m
not just saying this because I work for Philips. Net TV has been put together exceptionally well. And it
uses existing technology and open standards”.

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1

Research project ..................................................................................................................................... 6

Part 1: The world of IPTV ...................................................................................................................... 10

1.2 The evolution of (IP)TV.......................................................................................................... 13

1.3 The IPTV value chain and landscape ..................................................................................... 15

Part 2: The diffusion of IPTV ................................................................................................................. 19

2.2 The diffusion of (interactive) innovations ............................................................................. 23

2.3 Factors (theory) about the diffusion of IPTV......................................................................... 24

Part 3: Our research.............................................................................................................................. 28

3.1 Data collection ...................................................................................................................... 29

3.2 Results of our quantitative research ..................................................................................... 31

3.3 Results of our qualitative research (interviews) ................................................................... 35

3.4 Conclusions ........................................................................................................................... 37

3.5 Reflection .............................................................................................................................. 39

3.6 Suggestions ........................................................................................................................... 41

Appendix 1: Reference .................................................................................................................. 44

Appendix 2: Interview questionnaires .......................................................................................... 46

Appendix 3: Survey results ............................................................................................................ 48

Appendix 4: Interviews.................................................................................................................. 60

Or, in a more visual representation:

Prof. Dr. Ir. Erik Huizer

Prof. Steef Peters

Dr. Lidwien van de Wijngaert

Alexander Schultz-­‐Heyn (chairman Deutscher IPTV Verband)

Hans Broekhuis, Tele2

Marcel Kuil, Rabobank

Bart van Oortmerssen, AD

Robert Timmer, Philips

Bram Tullemans, NPO

For our research we decided on the following approach:

-­‐ Desk-­‐research on the world of IPTV

-­‐ Do a survey amongst IPTV providers to investigate:

o the view of market players on these factors

o the level of standardization

-­‐ Do interviews with key (publishing) players to:

o Test our hypothesis with regard to publishers

-­‐ Draw conclusions from the results

-­‐ Reflect on our research process

-­‐ Add our suggestions for players in the IPTV-­‐area

Part 1: The world of IPTV

Content, applications and services

1.2 The evolution of (IP)TV

1.3 The IPTV value chain and landscape

Schematically this would look like this:

We describe these 4 roles in the value chain as follows:

Part 2: The diffusion of IPTV

Western Europe 7.045.860 10.388.000

North America 1.774.671 3.835.544

South & East Asia 1.840.000 3.615.000

Asia-Pacific 2.199.828 3.082.182

Eastern Europe 465.223 884.466

Latin America 8.991 21.495

Middle East & 10.000 10.000

Global Total 13.344.573 21.836.687

2.2 The diffusion of (interactive) innovations

2.3 Factors (theory) about the diffusion of IPTV

We translated those factors to our research as follows:

1 -­‐ Content/applications/services  publishers

Technological complexity / plethora of platforms / absence of standard

Perceived ease of use

1 -­‐ Technology (user interface, interaction design, graphical design)

o characteristics of the technology)

• contextual (system) factors (Lin, 2003)

Alexander Schultz-‐Heyn (chairman Deutscher IPTV Verband)

-‐ Desk-‐research on the world of IPTV

-‐ Do a survey amongst IPTV providers to investigate:

-‐ Do interviews with key (publishing) players to:

-‐ Draw conclusions from the results

-‐ Reflect on our research process

-‐ Add our suggestions for players in the IPTV-‐area

1 -‐ Content/applications/services  publishers

1 -‐ Technology (user interface, interaction design, graphical design)

• Why are customers not mass-‐adopting IPTV?

• 42% use not-‐top 5 platform

Suggestions for follow-‐up research:

• Learn from neighboring fields such as Blu-‐Ray