As IPTV operators seek greater cooperation with broadcasters, content should be their first and foremost consideration, according to a panel of broadcasting and telco executives. The NAB discussion “True Hollywood Story,” moderated by Whit Jackson, VP of business development and studio relations at SecureMedia, concluded that the rules have changed for IPTV providers, and they now must meet the conditions of licensing content, rather than just transporting it.

“IPTV, whether we want to believe it or not, is still an infant industry when it comes to the cable broadcast market,” said Kevin Kenworthy, COO and executive VP and founder of the National Telco Television Consortium (NTTC), a consortium licensing group focused on IPTV providers in the United States. “You can set your expectation so high that you treat content like any other commodity, but content is the most important piece, and you have to make your content decisions first before you do anything. It influences your entire systems build and return on investment…The days of picking and choosing channels are largely going away. The rules for picking and protecting channels are much more intense. You have to make the content decision first; everything else is downstream of that.”

Kenworthy called it the “SpongeBob syndrome.” Like the cartoon’s propensity to get overexcited and plunge head first into situations, telcos enter the IPTV market, build their infrastructure and expect the rest to fall into place. They have no patience for the programming industry’s requirements. But this is no longer acceptable, he said. The picking and choosing of channels has largely become a practice of the past and the network now controls the channel requirements. Operators now have to have two agreements: an affiliate distribution to their subscriber base and basic transport company agreement.

“You really have to answer the hard questions before you are even considered to license equipment,” he said.

Bethany Gorfine, president and CEO at Federal Hill Communications, an advisory and strategy firm that facilitates deals for IPTV clients, stressed the importance of not answering these hard questions or making content deals with a studio without third-party negotiation help — a point that Gregory DePriest, VP of technology policy at NBCU, was quick to jokingly contest.

“The IPTV solution has to be secure,” Gorfine said. “[Telcos] must go to the studio first and get vetted. In the world, especially in Asia, there is so much exclusivity that goes on, where if you don’t have a rugby match, for example, how are you going to differentiate in a way that makes them go with you versus the satellite guy that you’ve known for years? That is our challenge — to see if we can serve them better. So you always have to have something to say, ‘We have this and they don’t’.’”

At NBCU, DePriest is responsible for the broadcaster’s video and copyright policy. He is devoted to fighting piracy, a multimillion-dollar a year problem. He acknowledged that the idea of piracy often elicits a lot of eye rolls because of the by-no-means insignificant amount of revenues that broadcasters like NBC bring in. Yet, in February, the amount of pirated content reached 400,000 in the United States and got into figures in the millions internationally. He also said that college campuses are a hotbed for piracy, with early numbers around 44 percent of content piracy occurring in the campus network. Gorfine validated DePriest’s concern of the piracy on a global basis.

“All over the world, these movies are being delivered on the Internet the day they release it in the U.S.,” Gorfine said. “They are getting it in any language, subtitled on the day and date of the release. We need to make it more effective for consumers to pay for that content legally.”

DePriest identified three buckets of content: video on demand (VOD), local content and that from cable networks. In terms of content protection along all lines of the distribution path, he said, operators have to have measures including digital rights management (DRM), encryption, watermarking and fingerprinting — to name a few.

“From a content creator standpoint, we like to create [content] and shape it for a distribution path as few times as possible,” he said, adding that while content is shaped differently for mobile consumption, it really doesn’t matter whether or not it’s a telco doing the offering.

Gorfine had three points of advice to leave the telco industry with: one, don’t expect to make money immediately; two, use a third party to negotiate terms for the content; and three, don’t just put an IPTV service out there without marketing it, a key element that Vince Vittore, senior analyst at the Yankee Group stressed in an earlier panel. Most importantly, Gorfine said, telcos have to keep in mind that they are functioning not as a telephone company anymore, but as a player in the entertainment business.