By Gordon Chu | March 16, 2010

Age of Digital Television

For those who follow the stock market, there was a flurry of action in Shanghai this past week in the media and telecom sectors. Why you ask? It was mainly driven by optimistic news on the Chinese government looking to invest and push the convergence of television, internet, and phone – otherwise more commonly known as triple play network.

From a purely technology perspective, triple play is really a no-brainer decision for the respective industries. While each of the three industries often operates separately and with different business models, all of them have the same technological backbone. More than just a technology benefit, triple play is really a natural evolutionary convergence of television (IPTV), internet, and telephony as it adapts to how consumers consume media. Especially now with multiple platform content that can exist online, television or mobile, triple play offers the perfect one-stop shop solution for all the viewing needs.

So far, the commercial success has been a great case study in the United States. It’s been having an enormous amount of success here in the States and on can theorize it will similarly have the same impact in China as well.

In the United States, elements of triple play’s full functionality has been available to consumers for several years, but since the launch of the bundled service in 2008, the market has seen tremendous growth in adoption (and this is just the beginning).

Since I live in a TV world, television is the be all end all of the three (just my opinion). As an active consumer of digital television, distributing television and adding Internet access across the same bandwidth resulted in three life-altering changes in how I consume media: Internet, High-Definition (HD), and Video-on-Demand (VOD). Call me what you will, but now that I’ve grown quite accustomed to all three services, I can’t say that I can ever (or won’t want to) go back to how things once were (distant memory already). Take away the bells and whistles of what the set-top box can do for television, the Internet and other value-add services such as VOD are really just another means of media consumption. At the end, each of these is nothing more than distribution platforms that offer cable (or telecom) companies that offer triple play another means of revenue.

Moving on to China, the idea of triple play is still in its early infancy stage. For starters, it wasn’t until mid-January until the Chinese government gave the official green light to allow bundled services. More importantly, we’re still talking about China here and the big question comes down to a matter of will the Chinese consumer follow the same path as their US counterparts.

Truth be told, China has already dabbled in multifaceted broadband services as a test bed or a trial-run for what’s to come. In fact, the Shanghai Media Group (SMG) has already over 4M subscribers to its IPTV services. Thoughts are that if IPTV (precursor to that of triple play) can work in a city such as Shanghai, the business can exist also in other markets within China.

Despite China’s media industry doing everything it humanly possibly can to mitigate the risks of launching such an endeavor like triple-play (make no mistake, it is very expensive to consolidate), there are still many factors that will dictate and influence this market.

Television to Online

We’ve talked plenty about the state of television and online in China. For my one-sentence recap of the situation, television and online both cater to two very different audience groups in China and can arguably be seen as two separate silos in the China market today. So, in other words, culturally, there is a deep chasm between audience groups between television and online. Obviously, this brings up a big dilemma when you argue that triple-play is here to bring those two platforms together in one when, in reality, will have a difficult time bridging the widening gap after so many years of this migration from television to online.

Rise of Mobile Phones

Television and Internet have been the main focus so far in our discussion about triple play, but there is a third leg to the stool and it’s that of telephone. I feel bad for telephone service just because it seems to be so buried and forgotten behind that of its big brother, television and online. And not to say that communicating with our voices is a thing of the past, but the idea of landline telephones seem such a thing of the past.

Now and for the foreseeable future, it’s difficult to argue against the fact mobile phones is the dominant force when it comes to telephone services. Nearly everyone has a mobile phone and more and more are relying on it as their primary means to a telephone. Even I’ve fallen victim to the same mentality and I recently banned having a landline in my own home in lieu of my iPhone.

Multi-Platform Content

I’m still a firm believer of the mantra, ‘content is king’ and will eventually be one of the more influential drivers of triple play in China. Comparing content from just ten years ago to where it is today, content has really made some significant leaps and bounds. Forget production value and the celebrity factor of television today, the dynamic nature of how the content lives and breathes on multiple platforms is where I feel content has made most headway.

Content is no longer static and does not just exist in one point in time like it did in television 10-15 years ago. Now, television drives viewers to online and vice versa. Now, the characters and the storyline breathe new life and exist between television broadcast on the Internet and mobile phones. Now, content is produced for more than just the eyeballs on the television screen, but for all the other ways consumers consume media today. The overlay of online and mobile to television introduces a brand-new viewing experience that simply cannot be replicated in each respective industry alone.

Looking beyond the short horizon if and when triple play makes headway in the China market, there will be new uncharted areas for advertisers, consumers, and content providers. So, what does this all mean?

For Advertisers

The concept of digital content should be a something all advertisers are salivating over now. Afterall, it’s a new ay to work in-between all three platforms of television, Internet, and phone. Think about interactive advertisements, television banner ads, pre-rolls, and how branded entertainment can exist in a much more robust environment with all three platforms.

For advertisers, triple-play is a new area for brands to play a more active role in reaching their target markets. The use of technology is a huge benefit in terms of flexibility and being able to more effectively market to audience groups in the future.

For Consumers

Consumers might be considered the biggest winners in the push for a triple-play network. For one, there’s the convenience factor of a one-stop solution for all three services. Now rather than having to deal with three companies for three services, consumers can work directly with just one that covers all of the above.

More importantly, for consumers the most significant benefit is all the value-add services triple play has to offer. From VOD to HD to niche channels, a triple-play network offers consumers all the media they can consume –

For Content Providers

And last, but not least, what does a triple play network mean for content providers. It comes down to one word: distribution. Distribution trumps all in China and a triple-play network offers a whole new dimension to distribution for content providers. Digital channels, VOD, and HD services are just the start of the potential triple-play has for the market.

We’ve already seen indication of how content providers are taking advantage of this brand-new digital world. In the United States, Comcast has joined forces with NBC Universal and makes a serious push to fill the symbiotic relationship between content provider and distributor. In China, we see the NBA, a behemoth in its own rights, experiment with IPTV by testing with SMG’s IPTV services in Shanghai. It’s a matter of time before the trend gains momentum and more content providers begin to flood the void of digital television.

Conclusion

I’m optimistic about where this is headed in China. And I’m not biased only because what I observe and see here in the United States. Unlike most trends I see in the media industry today, this one actually makes good solid sense – a win-win-win situation for all parties involved. I’m not saying it will be easy nor do I think it will be quick, but if done right and with a little patience, this will be a game-changer in China as it is here in the States.

Gordon Chu is the VP of Business Development at METAN Development Group. For comments/questions, email gchu@metanmedia.com.