IPTV provider Zattoo is expanding and grappling with teething problems that aren't of its own making.
Just under two years ago, in August 2006, Zattoo launched a groundbreaking application in Switzerland that made it easy to stream traditional TV programs to a computer—and it’s still free today. It operates using the peer-to-peer method, similar to what is used on music-sharing platforms, where the data stream is composed of content from various individual computers. Initially, only the four SRG channels were available. Just half a year later, Zattoo was offering 41 channels. Today, there are already 60 channels, including the BBC, Al Jazeera, Arte, as well as the most prominent French, German, Italian, and Swiss private and public broadcasters. But niche channels such as TV gusto, Automoto TV, and Game TV are also on the list. The technology places no limits on channel variety, but simply adding channels at random makes no sense, says Dominik A. Schmid, head of the German-speaking region at Zattoo. You can see this with satellite reception: «People usually limit themselves to the same eight to twelve channels,» he says.
Zattoo has seen tremendous growth in recent months. In Switzerland, approximately 675 ,000 people have downloaded the free player. The trend is strongly upward, especially with Euro 08 on the horizon. RingierTV, for example, will launch its own Euro 08 sports channel and broadcast it via Zattoo. Meanwhile, advertisers are showing interest but are hesitant to invest.
The European Championship is also likely to serve as a top-notch test of technology. That’s because the video feed isn’t always clear. During primetime, for example, on SRG channels, it’s not uncommon for the video to become pixelated or for viewers to be unable to access it at all. The problem usually stems from insufficient bandwidth or a lack of computing power. «This has to do with the capacity of our networks,» says Schmid. What isn’t such a big issue for other web applications can be devastating for Zattoo. For Schmid, the problem stems mainly from inadequate infrastructure with overbooked access points. This can also happen, for example, when multiple users access Zattoo simultaneously over a wireless network. While the service can handle a significantly larger number of concurrent users on the same channel—far more than any other provider today— «But if too many people log in, it’ll eventually crash.»
Zattoo is therefore adapting to the network providers’ and individual users’ ever-improving infrastructure. It’s just a matter of time, and it won’t be too much longer.
Zattoo is still free today. Even people who don’t own a TV can still watch TV online without paying any fees. Schmid expects that to change. But he doesn’t see it as a death knell for Zattoo. «That won’t limit our growth.» After all, 80 percent of Zattoo users have a TV at home and pay fees anyway.
In addition to Switzerland, Zattoo is currently expanding into seven other markets across Europe, including Spain, France, Belgium, Denmark, Norway, England, and Germany. Expansion into the U.S. and Asia is planned for this year, along with further growth in Europe, with the long-term goal of global distribution. Zattoo recently upgraded its technology with an electronic program guide. New features are being introduced on an ongoing basis, such as improvements in quality; users will also gain access to a channel manager for organizing channels, as well as teletext. Later this year, Zattoo also plans to launch a «Social Space» and offer channels that require a subscription fee.
It remains to be seen how long Zattoo will remain in beta. «We’re still in pioneering territory, because everything we’re introducing is new,» says Schmid.
René Worni