February 2008

Personalised TV is the top driver for switching to IPTV services, according to recent European consumer research carried out for Juniper Networks. The ability to create ‘My TV' channels was rated more attractive than access to wider content, interactivity and ‘any screen, anywhere' services.

The value placed on personalisation makes IPTV more attractive not just to consumers. The ability to deliver tailored advertising on a per viewer basis will create high-value revenues streams for IPTV providers – marrying the granular targeting of online advertising with the power of TV to deliver messages and influence brand perceptions.

But unlocking this opportunity is not quite as simple as it might seem.

Sure, there will be the gadget geeks who will be happy to spend hours scrolling through content menus to create their own schedules. But the vast majority of consumers won't have the time or patience.

So the challenge for IPTV providers is how to bring the benefit of personalisation to the masses.

The answer lies in using viewer profiling to create new channels. This is likely to follow a similar approach used by Amazon and other online retailers who recommend products based on profiling the choices of other customers. Imagine being offered a personalised channel at the end of a week's viewing: ‘Other people who enjoy sports, history and news have subscribed to channel 57'.

This will create a hybrid version of personalisation that will start with generic channels and become ever more granular based on the long-term mining of viewer profiles. This, in turn, will enable ever more targeted reach and drive up the value of advertising.

Underpinning all of this will be advanced CRM systems that combine subscriber management, payment and data mining capabilities. Advertising won't be the only revenue stream, as personalisation will be charged as a premium service. CRM systems, therefore, will need to be able to apply sophisticated payment structures and policies, and manage platform access on a per subscriber basis.

But that's not the end of the story. MGt's own research found that offering ‘try before you buy' services would quadruple subscriptions rates. Using viewer profiling data cross-referenced with socio-demographic information would enable IPTV providers to design highly attractive trial packages for targeted audience segments, increasing subscription rates even further.

The sting in the tail, however, is that off-the-shelf CRM and data mining packages simply can't deliver the viewer profiling and subscriber management capabilities required. The alternative, building an in-house system, is too complex and costly to be viable. Therefore, we're likely to see IPTV providers outsourcing to third-party specialists to manage the whole subscriber lifecycle – including personalisation.