The problem with the real, on-demand IPTV is rights agreements.
Broadcasters only buy the rights to a certain number of showings of a programme/series for certain territories (exclusive first run, two repeats as an example). You have three models of delivery at the moment - terrestrial, satellite and cable (the digital versions of these are DTT, DSat and DCable) - and anyone putting whole programmes or channels on the Internet legally is hamstrung by the rights agreements agreed for these distribution channels. Of course this is where the opportunity is, as these agreements were conceived in an era of physical products and geographical distribution markets, whereas you are talking about a digital product and a global distribution system.
Hulu in the States and the iPlayer in the UK try and get around the territories issue by doing GeoIP restrictions. The BBC have a window, after broadcast, of 37 days for downloaded programmes to be consumed on-demand (the DRM software deletes it from your PC after that) and they have a 7 day windows for “streaming”. After that the rights sit with BBC Worldwide (for any content the BBC produced) or reverts back to the original independent producer for online delivery.
On demand TV delivery over the Internet breaks all the market segmentation and broadcast agreements that have been developed around an analogue signal and a physical product.
Once the content goes digital then your content is either free (as in beer) and just another set of 1s and 0s zipping around the Internet or you look to try and put some kind of DRM on it to restrict it’s distribution (which fundamentally misses the whole point of the Internet!).
NTL and SKY already do exactly this - what you are paying for from these satellite and cable distributors is the dedicated hardware locked to the decryption software for their signal. For what they do, they are very successful - so I wouldn’t diss them too much. If you do have a new way of being able to distribute TV via IP then I would change your mindset about them if I were you - because they would snap your arm off if you could show them a way of doing encrypted video over the Net - as they know their business models are screwed (which is why SKY snapped up EasyNet in the UK a few years back).
The BBC, under Greg Dyke, went from being encrypted on satellite via SKY to in the clear by paying for the extra broadcast rights for the footprint of satellite distribution.
This was based on a satellite dish of 60cm on the Astra2D satellite - which gave their signal a spillover into Ireland, France and The Netherlands. This is also why RTE do their satellite distribution via SKY - the cards issues to Irish addresses unlock RTE but it remains locked for non-Irish addresses, a form of GeoIP. RTE couldn’t afford to pay the rights for the satellite footprint to go in the clear.
Developing a hardware and software solution will drive you into the arms of the legal eagles - which when your are dealing with incumbent market players who are looking to defend their broken business models is not where you want to be.
Currently, you have some guys who are trying to aggregate Internet content and be the gateway - likeTape It Off The Internet or Surf The Channel. Then you have the P2P merchants like UKNova or The Pirate Bay.
The way of the future is BBC Redux (I’m involved in a related commercial project * - so I would say that!). This is a BBC R&D project which shows how to deliver content via the Internet - it’s religious on the production, agnostic on the delivery.
What you really should look at is leveraging their inherent failing business models against them. A classic example of this is looking at the weakness in their current online offerings - the GeoIP restriction.
These guys show how - WorldVPN, VPNGates, Vip-VPN, UK iVPN
- Personally I’m involved in a commercial venture which shows content producers how they can commercialize and build relationships via the “free” Internet - leveraging the power this global distribution model gives them and how it disintermediates the traditional broadcasters.