But some critics aren't convinced.
"Availability of hardware, consumer awareness and trust in new technology are some of the issues that have to be addressed and solved before IPTV can become a viable distribution platform in the U.S.," Mark Bruder, president of Santa Monica, Calif.-based Cable Entertainment Distribution Inc., told XBIZ.
Bruder says his company, CED, was the first supplier of adult content at the launch of cable pay-per-view in the U.S. and when video-on-demand was in its infancy.
A current leader in IPTV technology is Entice TV, which both CED (adult) and Bruder Releasing (general release mainstream movies, events, shows and children's series) have signed program supply agreements with.
Las Vegas-based Entice TV launched in January, and through a content partnership with Wicked Pictures, the company offers a video download service that delivers DVD-quality video and high-definition video via a broadband connection to a PC, which can then be connected to a television or HDTV without the need for a set-top box — unlike most services that do require added hardware.
IPTV offers the same broadcast quality as satellite or cable but promises many advantages that the other options lack, such as virtually limitless programming and on-demand content, because only channels selected by consumers are delivered over home broadband networks.
All content, including HDTV, can be delivered on a subscription or PPV basis with content promotion integrated into the user experience. IPTV offers true interactivity for the customer, allowing two-way communication with services comparable to the Internet, creating a better environment for users, programmers and advertisers, IPTV advocates say.
Another major player in the IPTV space is year-old Interactive Television Networks Inc., a vertically integrated provider of interactive content networks delivered to television over home broadband. Headquartered in Laguna Niguel, Calif., ITVN controls all aspects of its business from content licenses, management, billing and streaming software to a set-top box installed in the consumer's home. Consumers simply connect ITVN's small, sleek set-top box to their existing home broadband/DSL router, cable modem router or wireless LAN, plug in the connector to their television and subscribe to the services that best fit their needs.
ITVN is aggressive and determined to be a leader in this new growth sector, investing heavily in making this a global product for users around the world.
"At ITVN, we believe the future is in niche programming, targeting specific, often underrepresented audiences," an ITVN spokesperson told XBIZ. "For example, our Lacrosse TV channel appeals to the thousands of lacrosse fans who previously couldn't watch the games on TV."
ITVN recently launched PULSE, the first IPTV music video network, which offers unlimited VOD access to a commercial-free library of more than 30,000 music videos from all the major recording labels, with new videos added weekly. Additionally, ITVN recently announced the launch of the Karaoke Channel, featuring thousands of individual song titles spanning more than 100 years of music.
And then there is ITVN's XTV Network, which the company calls one of the largest all-adult television networks available for home television viewing, using DSL, cable modem and ITVN's broadband-enabled set-top box to deliver more than 100 adult TV channels broken down by niche, such as hardcore, Asian or bisexual. When customers order an ITVN system, they receive a free 15-day trial subscription to XTV. After the trial, the subscription automatically renews at $29.95 per month until canceled.
"XTV now carries adult content from Wicked and Danni's Hard Drive," ITVN told XBIZ. "And we are aggressively being pursued by many content providers, both small and upcoming companies that cannot make it onto TV under normal circumstances, as well as the major studios."
It is safe to assume, however, that ITVN is not dependent on adult content for its present or even future success. The company has attracted many high-profile media and entertainment executives to its board of directors, including Geoff Brown, a pioneer in interactive development who commissioned and developed "Tomb Raider" for Core Design; Joseph Scotti, a prominent cable and broadcast executive responsible for the launch of multiple television franchises including "Baywatch: Hawaii" and "Card Sharks"; and John Wirt, who is the assistant general counsel for Don King Productions.
ITVN: 10,000 Subscribers
ITVN currently has 10,000 subscribers, according to the spokesperson. That may not seem like a lot, but IPTV is still in its infancy, particularly in the U.S. However, there's a bright future for the company as the number of IPTV subscribers in Asia Pacific has nearly doubled between 2004 and 2005, where faster forms of DSL, such as VDSL2 and ADSL2/2+, are stimulating subscriber growth.
A May report by Infonetics Research says that the fanfare around IPTV is more than just hype. According to the report, equipment sales, service revenue and service provider capacity all increased dramatically between 2004 and 2005, and in Infonetic's own language, they are expected to explode by 2009 to an estimated 53 million.
Infonetics sees service providers investing increasing amounts on IPTV content and transport equipment. By 2009, says Infonetics, worldwide service providers will spend $26 billion on IPTV infrastructure alone.
Broadband service providers with DSL and FTTH services account for the bulk of IPTV service right now, but Infonetics believes that cable broadband providers also will migrate to all-IP triple-play services in the next few years and offer wireless services as well.
"Service providers expect huge returns from IPTV, and they are investing heavily in IPTV infrastructure to ensure those returns," Jeff Heynen, directing analyst for IPTV at Infonetics, reports. "Right now they are focused on transport infrastructure, upgrading their access networks with higher-bandwidth platforms and adding IP edge routers and Ethernet routers and switches to handle the expected traffic demands of the escalating numbers of IPTV subscribers. Over the next four years, though, their investments will shift a bit to content infrastructure, so they will spend more on things like VOD servers, encoders, content security platforms and head-end equipment."
Despite the slow adoption rates so far, the tracks are being laid for the train ahead, and whether that train is a swift-moving express or a Casey Jones-styled derailment is yet to be seen. Either way, adult product is along for the ride.
"Adult programming drives technology and produces revenue for the next step," Bruder said. "Adult content has driven every new technology that has been developed since cave drawings."