IPTV providers are flaunting the potential of IP features and applications, but what's really on the agenda in the near future?

Imagine a television viewing experience so intuitive and interactive that a set-top box recognizes which viewer is watching and adapts to meet his or her entertainment needs. It's certainly possible and often publicized, yet IPTV is not quite there. While carriers are busy working out kinks and seeking scale, technology vendors are ready to deliver on the promise of IP and all the innovative applications that come with it.

According to an In-Stat survey, topping consumer's wish lists for IPTV apps are digital video recording (DVR), multiroom DVR, TV access to PC content, on-screen caller ID and interactive information about the program being watched — essentially things with which consumers are already familiar, said Michelle Abraham, principal analyst for InStat.

“[Telcos] want to go fairly slowly and not throw everything at consumers all at once,” Abraham said. “They want to introduce a few at a time, both not confusing the consumer and to make sure it works in the system with their own infrastructure.”

But that hasn't stopped IPTV providers, vendors and middleware companies from showcasing the advanced applications they plan to roll out. At many of the past year's trade shows, exhibitors demonstrated features aimed at integration, interactivity and entertainment.

While IPTV is becoming more interactive, Matthew Rubins, general partner for M/C Ventures, stressed that TV is still largely a passive media. Apps that make the experience more intuitive have the most success. Other popular new features with “no rocket science” involved include original content, DVR and caller ID functions.

These features serve as a jumping-off point for telcos looking to introduce customers to unified communications — the ones that make the most sense now, even if they don't have the glamour of promised new apps, said Jeff Heynen, directing analyst for Infonetics Research.

“The applications that you are going to see first are convergence with traditional voice features and call management features, and then the next step would be location-based features, as well as integration between those customers who have both mobile television contracts as well as IPTV contracts,” Heynen said. “I look really to AT&T, at least domestically, to be a driver of that integration as well.”

Heynen is not the only one eying AT&T for the next move. In terms of new IPTV apps that deliver on the “wow” factor, Microsoft Mediaroom, deployed through AT&T, is often first to mind. The software powerhouse has a host of applications in the works, including partnerships with ES3, Showtime and Turner Broadcasting to bring interactive CNN election, NASCAR and boxing coverage, respectively. Hoping to capitalize on the social-networking phenomenon, Mediaroom also has a social application in the pipeline, dubbed MyPad, that connects TV viewers to online communities, letting them chat about a TV show, answer a poll or otherwise interact with Web sites.

Shari Barnett, group product marketing manager for Microsoft Mediaroom, said the platform that supports such functionality will be released to Microsoft customers toward the end of summer. She predicted that with test runs and integration issues, it most likely will be 2009 before the apps are commercially available to IPTV subscribers.

Outside of interactivity, Jonathan Hurd, director for Altman Vilandrie, said that significant opportunity exists to differentiate based not only on the number of high-definition (HD) channels an operator offers, but also on their quality.

“Some providers compress them to the point where they don't look as high-quality as they could,” he said. “Having high-quality HD streams going to consumers is very important to consumers as well. I'd say that getting those HD channels out there is definitely a higher priority than some of the more esoteric features that you sometimes see.”

One company hoping to do just that is Vudu, which has partnered with IPTV providers such as Greenfield Communications to bring video to consumers. Vudu currently features 100 HD TV shows and plans to quadruple that in 2008. The service's movie platform is the heart of the business, said Tony Miranz, Vudu's co-founder. The company is evolving its content offering to include 10,000 feature films and 10,000 TV shows by year's end, as well as expanding its STB into a community application for sharing personal videos and photos.

On the hardware side, Hillcrest Labs is designing a new air mouse that uses soft buttons on the TV set and a PC-inspired user interface. Parag Sheth, vice president of corporate marketing for Hillcrest, said to expect service providers to begin marketing the technology in the summer. The company hopes to announce customers in the first half of the year.

Such a remote “really bridges the divide between the mouse and the living room television viewing experience,” Heynen said. “As people continue to get more used to that, it will become table stakes for all STB manufacturers to integrate that.”

While most consumers may be unaware of the real potential of IPTV, analysts and vendors are raising the stakes for advanced applications that one day may become commonplace. These apps will rely on interactivity, multiple streams of content and the user's willingness to embrace an experience beyond passive TV viewing.

“It will seem strange someday that I can't chat with a friend on a show we're both watching, I'm hoping,” Microsoft's Barnett said. “It will seem strange someday I can't get to my sports team with a few clicks of a button to see how the game is going currently. Those things now you don't think of your TV as being able to do, but we want people to start to expect that because your TV is connected. It is just as connected as anything else.”

While Altman Vilandrie's Hurd sees the appeal of Microsoft's planned NASCAR app, he's ready to take it a step further. In the future, he sees consumers owning multiple HDTVs in the same room and using them to watch either one program from multiple views or multiple programs on a single screen.

“For example, put the NASCAR track view on one screen, the cockpit view on another screen and the statistics on the third screen,” he said.?“It may sound a bit farfetched today, but screen prices are falling rapidly, and users today are sitting with laptops following statistics or their fantasy team performance while they're watching live sports.”

Along the same lines, social-networking apps and more interactive TV shows — borrowed from the Internet model — also may find their place in IPTV. Heynen said operators today are interested in creating media-sharing applications that allow consumers to push pictures and home videos to what will essentially become their own TV channel, which then can be shared with family and friends.

These advanced features are still far down on IPTV's checklist — somewhere after attracting customers, achieving scale and ramping up HD. Yet interactive programs, games and community applications are on the horizon. While the focus still might be on deploying the basics, IPTV has the potential to be anything but basic.

INTEREST IN CALLER ID AND CONVERGED SERVICES

(Taken from an Aug. 2007 Comporium study of more than 3500 of its subscribers)

30% of TV caller ID subscribers are more likely to rate the service provider as “great” than subscribers not using the service.

25% said TV caller ID is a “main reason” they continue subscribing to digital phone, TV and phone caller ID services.

81% like content alerts: Display news, weather and sports banners on TVs and PCs via RSS and Web-based technology.

81% want personalization features: Add pictures and photos to TV and PC caller ID and to a network address book.

80% interested in click-to-call: Place calls from TV and PC network address books and call/voicemail logs via a remote control.

77% want voicemail alerts and playback: Show new landline or mobile phone voicemails via TV and PC banner alerts; view voicemail log and play voicemails on TVs and PCs.

Source: Integra5