Large businesses, companies, or entities have a number of advantages over their smaller counterparts. One of the main reasons for this is something I like to call the “numerator-denominator effect,” which is prevalent in many industries but plays a huge role in the IPTV industry. In fact, the “numerator-denominator effect” is responsible for the struggle of many smaller operations, as they look to enter into the world of IPTV.
While it may sound complicated, the “numerator-denominator effect” actually goes back to simple grade school math. The top number of a fraction is the numerator, and the bottom number is the denominator. The “numerator-denominator effect” comes in when adjusting these numbers. If the numerator is held constant and the denominator is made smaller, the fraction’s value goes up; if the denominator is made larger, the fraction’s value goes down. If the denominator is held constant and the numerator is made smaller, the fraction’s value goes down; if the numerator is made larger the fraction’s value goes up.
So if we look at it from a business perspective for IPTV (or for any other business for that matter) where the numerator represents cost and the denominator represents the number of customers, we can determine a cost per customer. If we plug in a total cost value of $100,000 and the number of customers is 500, we see the cost is $200 per customer, but if the customer number is one, the cost per customer becomes $100,000 and thus not a pretty business case. This perfectly illustrates the issue that arises in the world of IPTV, the minimal cost of entry. IPTV systems are typically designed to fulfill the needs of medium to large operators (1,000-100,000 customers) so the minimal cost of entry is so high that in order for it to make sense to deploy an IPTV system, you need to have a large number of customers.
IPTV infrastructures can provide significant benefits to multiple types of organizations, but a vast majority of these organizations are too small to warrant the investment needed for an IPTV system. The smaller operations (which can include telephone, cable, and Internet service providers, hotels, hospitals, schools, campuses, military bases, correctional facilities, and more) have a fixed number of customers and therefore a fixed denominator. Since they can’t increase their denominator, these operations need to decrease the numerator in order to deploy an IPTV system. In other words, they need to find a system that is more affordable, but still offers all the bells and whistles that larger IPTV deployments offer, as that is what their customers have come to expect.
LEIGHTRONIX has found a way to fix the smallest allowable numerator in a way that allows for an affordable cost of entry for smaller operations. The trick was not in limiting the functionality of the systems, but in consolidating them. The LuxeVision ipMerge™, which is targeted at situations with 50-500 TV endpoints, is an all-in-one unit, with multi-function server architecture. The LuxeVision ipMerge utilizes HTML browser-based middleware and allows users to utilize their existing fiber, coax, and/or Ethernet, infrastructures. That may seem a bit technical, but in a nutshell it means LuxeVision ipMerge has made IPTV more affordable with consolidated system hardware, the allowance for complete user customization, and the ability for customers to utilize their existing infrastructure rather than install a completely new one.
If we do the math with the new smallest allowable numerator comparing LuxeVision ipMerge to other IPTV systems, we can see just how important this value is. Earlier we did the math with a standard IPTV system with 500 customers at $100,000, which left us with $200 per customer. With the LuxeVision ipMerge system, a 500 customer operation may cost about $30,000, leaving us with $60 per customer, a much better business case. The system is suited for smaller businesses as well. The lowest cost of entry is just under $20,000 and is for systems with 50 endpoints, leaving us with about $400 per customer. With a standard IPTV system however, that number is much higher. A $100,000 solution with 50 endpoints would cost $2,000 per customer.
At $60 per customer you would expect some sacrifices to be made in functionality, but again, the cost was brought down through consolidation, not through elimination of features. With LuxeVision ipMerge, users still have a full feature set, including:
- Digital TV in HD and SD
- User friendly, customizable middleware
- Electronic program guide with program info
- Time shifting of live TV with DVR functionality
- Digital video recording (DVR)
- Progress bars
- Personal storage
- Emergency alert capabilities
Almost all technologies start out as luxuries that only the larger markets/operations can afford. However, as knowledge increases and the cost comes down, so too does the smallest allowable numerator, increasing access to the new technology. IPTV is no different, and at LEIGHTRONIX, we are proud to have come up with a technology that truly provides IPTV for ALL, all the way down to those with as few as 50 endpoints.
Bill Gallagher has over 30 years of experience in the broadband and telecommunications industry, working as a global supplier of IPTV systems with GoBackTV® and Aurora Networks prior to joining LEIGHTRONIX’s IPTV development team.
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