IPTV R and D and operation shifting to India for gaining competitive advantage

The Revolution in IPTV marks a milestone defining a new age of entertainment. It brings back the essence of the entertainment industry - creativity and freedom of expression.True that video and music-on-demand held promise for a long time. But over the past few years, IPTV has dwarfed the quality of DVD and Cable TV. One reason for its phenomenal growth is its in-built protection against piracy while another is its superb quality. The IPTV Set Top Box industry is on the go. Though the US authorities have cracked 83 pirate sites including the notorious Pirate Bay, the entertainment industry is still reeling under the shock of revenue loss resulting from massive piracy. Piracy attacks physical media like DVDs and CDs. But this will soon be a thing of the past because the DVD player will soon be replaced by IPTV Set Top boxes in every home.IPTV began its successful journey in 2006 introduced by AT&T (U Verse IPTV) emerging as the most viable alternative to DVD. It has escalated High Definition media (Blue Ray) cost only with Roku Box which is an IPTV box introduced by America's biggest movie retailer Netflix in 2008. Roku forced Netflix's rental competitor Hollywood and Block Buster to bankruptcy. This motivated Google, Verizon and Amazon to launch their IPTV service by 2010-2011. At this point of time, Neflix drives one-fourth of US audited traffic between seven and ten p.m. in any city. Movie watchers through IPTV are growing every day. The merits are clear. It ensures secured media delivery across the Internet. It offers Blue Ray quality that is a dream-come-true for both the viewers and the producers. There is a frenzied race among distributors to push their libraries faster than others trying to cash in on the emerging IPTV boom.Behind this fascinating fairy tale hides some bytes of grim reality. So far as IPTV box and technology developers go, IPTV is much more complex in its operational functions than Cable TV and other similar formats. The IPTV set top box needs front-end development. It also needs to develop video hosting platforms in Content Development Network (CDN). It provides choose to go with ready-made platforms like Brightcover, etc. without developing their own operational bandwidth, the costs involved can neither be justified nor sustained.The total integrated development cost may vary between $240K and $500K to launch an IPTV platform successfully. Besides, mobile IPTV, Satellite IPTV and hybrid IPTV are cashing in on existing contents adding to R&D development costs. Video encoding costs are rising too. That apart, full automated encoding does not guarantee excellence in quality. Cost remains a major issue despite the existence of IEEE standard for IPTV like Home PNA 3.0 G9954.If a single movie can gross something between $100 and $200M, why should sub-million development costs impede the growth of IPTV? The reason is - video-on-demand market is the only model that works on subscriptions. No IPTV provider has been able to charge more than $10 /month on the basis of past failures. Even Roku, the largest IPTV provider has only 1.5 million subscribers. Above all, producers' cuts range anywhere between 50% and 70%. After paying producers and developers, distributors find it hard to extract any margin whatsoever.IPTV is now heading towards India. . Software giants like Infosys, TCS and Wipro did not develop much expertise in IPTV since development costs must be strictly contained tightly between $50-250K. The prospect does not match their size. But medium-size companies like R-System Inc. (Head Quarter in Folsom, CA and development center in Delhi- A BSE listed public company) are much better posited for IPTV development and subsequent operational support from India. They are already supporting IPTV customers across the globe both technologically and operationally. This has cut down on the IPTV Capex by 60% and Opex by nearly 70%. R System is highly focused on IPTV. They are offering development services for all phases and verticals including Mobile IPTV, Satellite IPTV, Hybrid IPTV etc. offering both vertical expertise and cost saving. How technology evolves in IPTV market remains to be seen. India has emerged as the most favored back office for IPTV development and support.