CHICAGO--The key to successful provisioning of IPTV services will lie in the service provider’s ability to deliver to its customers personalized interaction that replicates what they are currently experiencing on their computers, according to a panel that spoke at the 2006 IP Summit, co-sponsored by Telephony magazine and GlobalComm 2006.

Currently, it’s difficult for consumers to interact with their televisions, which presents an opportunity for telcos considering a foray into IPTV, said Dan Simpkins, founder and CEO of Hillcrest Labs, a Rockville, Md.-based provider of content navigation solutions.

“This is about merchandising content to the consumer and there are a lot of ways to go about that [with IPTV],” Simpkins said. “The reason we don’t see a lot more interactive TV [today] is that you can’t interact with your TV.”

Consequently, service providers have an opportunity to create stickiness or new revenue streams by offering customer-specific value-added services, such as personalized advertising or customized channel offerings based on a customer’s choices or analysis of his viewing patterns, said Rick DeGabrielle, president and CEO of Arroyo Video Solutions, a provider of video networking software headquartered in Pleasanton, Calif.

“Consumption patterns are [changing]—we all want convenience, we all want relevance, and service providers are going to have to provide that,” DeGabrielle said.

Simpkins told of a study conducted by his firm where participants were transitioned from a traditional grid navigation system to a three-dimensional guide that included interactive links. The result was a 300% jump in usage, according to Simpkins.

“What is it going to take to get people to consume more? It comes down to navigation,” he said.

More important, personalized offerings will provide telcos with a path to profitability in IPTV, said Philip Yim, executive vice president of global marketing and product development for Allied Telesyn.

“Telcos are always asking about how they can money from IPTV, and the answer is targeted advertising,” Yim said. “Let’s face it--targeted advertising is what IPTV is all about. It’s not about content, necessarily.”

Simpkins added that IPTV technology would give service providers the chance to extend personalization well beyond targeted advertising. Simpkins envisions a “buddy list” concept where IPTV subscribers can watch programming in virtual recreation rooms across the country. For example, IPTV technology could be used to alert a subscriber when other buddy-list members are watching the same program the subscriber is watching, or let a subscriber alert members in real time about programming they might find interesting, via an on-screen message.

“Suddenly, a different kind of community is created,” he said.

Simpkins recognizes the privacy issues inherent with such an offering but said measures already exist to mitigate the risk.

“Any navigation system today has to deal with parental controls in the same way that a classic television system does,” Simpkins said. “The chances are that you wouldn’t opt in a buddy who might choose content that you would find inappropriate.”

Danny Briere, CEO of industry consultancy TeleChoice, agreed, adding that individuals likely wouldn’t join groups where they might encounter content they would find objectionable.