By Giles Cottle

As always Informa’s analyst team was out in force at this year’s IP&TV World Forum – the last IP&TV World Forum, it turns out, as the show re-brands to TV Connect for 2013 and beyond. This year’s show was certainly bigger and brasher than previous years (exhibit a: the Red Bull F1 car on the upper floor) and most of the conversations we had showed companies in bullish mood about future opportunities.

OTT-where’s the money?

But the one question we kept getting asked, which belies this feeling of optimism, is where the money is in OTT. There is money to be made for sure – Informa forecasts a global $17.5bn video ad market by 2016 (subscription required) , but how this money is divvied out is a concern to many.

The answer to this question is that perennial analyst favourite: that it depends on a case by case basis. For operators like Viasat or Sky, offering OTT in conjunction with an extremely profitable core TV business – and focusing its OTT on its premium channels, as both are doing – there is a clear positive business opportunity. For others, there remains value in using OTT to reduce churn and increase service stickiness. The latter are justifications that, to be fair, do sound very like those made for IPTV at the dawn of that particular technology. And the danger for operators is to get sucked into OTT by the considerable hype around the service. The strategic rationale for OTT varies, but there must be a strategic rationale.

OTT without borders

The concept of using OTT to target diasporas or ex-pat community is something that came up in around 80% of the conversations I had at the event. It’s becoming increasingly seen as something of an OTT silver bullet for two simple reasons – this content often can’t be served in any other way, and for that reason, users will pay for it. It’s unlikely this will ever be a mainstream business case, and, as with any good story, there are always a few “buts” to dampen things. In this case, it’s getting global content rights, and getting around the fact that in many markets, immigrant populations are typically low ARPU customers unwilling to pay much for content. But it looks like becoming a white hot opportunity for OTT during 2012. (Informa subscribers can read further in our recently published OTT without borders report).

Truth in advertising

Media and ad agencies and technology guys seldom see to eye-to-eye, advertising-wise, which makes IP&TV an interesting opportunity to meet both groups of people. The former typically accuse the latter of pie-in-the-sky thinking that has little relevance to their clients or their day-to-day needs. The latter, in turn, believe the former are not opening their eyes to the new opportunities that IP and connectivity bring. The two just about managed to avoid fisticuffs on the advertising stream at the show, but it’s clear that the thinking of the two is still far from aligned. Case in point – while targeted advertising is described as a TV advertising game changer by many, speakers from OMD and Mindshare both claimed it will take only single digit percentages of TV budgets in 2016, and that the premium it attracts to conventional advertising will be minimal.

The Android STB invasion begins

For all the hype over Google TV, it is Google’s mobile OS that is becoming more widely adopted by set-top box vendors, who were eager to share how well received their Android STBs had been at the show.

While some lower-end TV manufacturers have simply ported the Android mobile UI to the TV, with unsurprisingly underwhelming results, Android boxes we saw from the likes of Peer TV and Comigo were more compelling. Comigo has substantially reskinned Android to give it the appearance of a reasonable mature TV UI. Likewise, the firm already offers access to many of the best apps on the Android marketplace. The oft spoke about advantages of bringing Android to the TV is the large number of existing apps and developers that can be leveraged. But Informa is mightily skeptical at claims from a few vendors that apps can simply be ported from one box to another-particularly as Google itself told us this was not the case.

The other elephant in the room regarding Android for the TV is that, in an age where tablets become even more commonplace, how compelling is having Android apps on the TV? Certainly, however you view TV apps, it’s clear that the game is not creating a mass of apps for the TV, but providing the ones most suitable for the big screen. For this reason, our view is that STB manufacturers will use Android for the much the same reason as mobile OEMs did – the fact it is almost free to do so.

The Apple TV debate rumbles on

They may have been under the radar, but Apple were at the IP&TVWF in at least a semi-official capacity (hat-tip – @cybronics) which set the stage nicely for our somewhat heated Apple TV debate on Thursday. We still believe that an Apple TV box could have a real impact on the market if Apple allows third parties to offer content on there, as they have on the iPad, and if they fully integrate Airplay, pretty much the best thing about owning an Apple TV today, into the experience.

A TV made by Apple is more difficult to fathom. At $2-3000, users will expect a full TV experience. The OTT services on the iPad are nice to have but, in the most part, additions to the main experience. This leaves Apple with the choice of working with the vast array of Digital TV standards today to offer some form of “traditional” linear service (very difficult technically) or striking their own TV-like content deals (very difficult commercially). It’s dangerous to rule Apple out of this particular game – they’ve upset the odds before – but it’s equally dangerous to assume superiority before they’ve even put out a mainstream TV product. The message, as ever, is to watch this space.

Note: For more information on any of these topics, feel free to either contact us or download our IP&TV White Paper.