From a TV watcher's point of view, IPTV is very simple: instead of receiving TV programs as broadcast signals that enter your home from a rooftop antenna, satellite dish, or fiber-optic cable, you get them streamed (downloaded and played almost simultaneously) through your Internet connection. Not the kind of connection you have today, which can probably handle only 1–10 Mbps (million bits per second—roughly the amount of information in an average novel entering your computer every second!), but a broadband line with about 10 times higher bandwidth (information carrying capacity) of maybe 10–100Mbps. You watch the program either on your computer or with a set-top box (a kind of adapter that fits between your Internet connection and your existing television receiver, decoding incoming signals so your TV can display Internet programs).
From the viewpoint of a broadcaster or telephone company, IPTV is somewhat more complex. You need a sophisticated storage system for all the videos you want to make available and a web-style interface that allows people to select the programs they want. Once a viewer has selected a program, you need to be able to encode the video file in a suitable format for streaming, encrypt it (encoding it so only people who've paid can decode and receive it), embed advertisements (especially if the program is free), and stream it across the Internet to anything from one person to (potentially) thousands or millions of people at a time. Furthermore, you have to figure out how to do this to provide a consistently high-quality picture (especially if you're delivering advertising with your programming—because that's what your paying advertisers will certainly expect).