At 4.30 yesterday afternoon I wished Anthony Rose well for 2011. He agree it was going to be an exciting time, as YouView moves into the launch phase, and gave no indication that within a few hours he would be stepping down from his high profile CTO role. Rose had just given another presentation on the progress of YouView, the broadband TV joint venture "spearheaded" by the BBC. As YouView's figurehead Rose, in a short time, had become a star attraction on the conference circuit, and I dare say a fair proportion of the packed audience (by no means just from the UK) at Informa's OTT TV World Forum were there primarily to listen to his latest update on the project's progress. In a one-to-one discussion after the panel, I had been asking Rose about the potential compatibility between the YouView system and hbbtv, the broadband TV standard being deployed in Germany and elsewhere in Europe. I'll bring more on this subject at another time, together with the views of hbbtv itself. During the Q&A one or two people noted the challenges of getting YouView to publish its guidance documents in a timely fashion. One questioner noted that he had learnt more about YouView in ten minutes of listening to Anthony than from reading hundreds of pages of documentation. Rose admitted that keeping the project on schedule, as well as meeting the information demands of multiple external stakeholders, had proved challenging. Today's news stories are suggesting that Rose was not considered capable of managing YouView as it moves towards the commercial deployment phase. He will stay on in "an advisory role", but this hardly smacks of a vote of confidence. Advice is one thing: the responsibility for taking decisions will clearly rest on new shoulders. YouView is inevitably putting a gloss on the development, which will come as a shock to many in the IPTV industry. Management turmoil is rarely a good thing, so if YouView is to meet its ambitious mid-2011 launch target it needs to rally the troops and have its new managers get the word out that they understand and can meet the challenges ahead, without losing the vision which Anthony brought to the project. Many YouView doubters remain; the battle with Sky and Virgin rumbles on, and a lot more water will flow under the bridge before the next phase in television's evolution becomes a commercial reality. Client Reading: Profiling the Connected Media Consumer - UK

The excitement around 3D has been palpable over the past year, beginning with the numerous announcements, roll outs and demos at CES.  The momentum continued through the spring and summer, with more service providers putting stakes in the ground, and carried over to this year’s IBC show, where Strategy Analytics hosted an analyst breakfast on the topic with Sky 3D head, Brian Lenz.  The verdict? Excitement and hype levels were skyrocketing.  The question remains, though, whether or not anyone can spin this into a viable and profitable consumer offering. Over the summer, we fielded a 4,800 respondent survey  in five countries (France, Germany, Italy, UK and US), asking individuals about their understanding of, interest in, and willingness to pay for 3DTV.  The results are covered in detail in report we just published last week.  Here are some highlights:

Translating 3D Excitement into 3DTV Viability is Challenge

Over 70% of those who have seen 3D in the movie theater are impressed by its quality, but only 55% of those same individuals say they’re interested in watching 3DTV at home. How can Service Providers translate the cinematic excitement around 3D into a viable residential business? We found a few barriers standing in the way, including a dearth of content in 3D, luke-warm consumer interest in paying, hardware issues (the need to wear glasses), and widespread market uncertainty.

Market Uncertainty is a Barrier

Respondents were asked a battery of questions around their perceptions of 3DTV, including availability, hardware requirements and potential health and safety issues.  While overall awareness is quite high, with 94% saying they believe it’s possible to see 3D films in a movie theater, on other questions, the market uncertainty is substantial. The most surprising, and most critical finding to both vendors and service providers alike, is the uncertainty surrounding perceived health risks. Overall, 70% of respondents said they were either unsure or believed that watching 3DTV causes damage to the eyes. We believe that this perception issue, which proved to be common across the five countries surveyed, is a key hurdle standing in the way of widespread adoption of 3DTV. Regardless of the validity of the belief, customer perception is what matters, and such widespread uncertainty could prove disastrous if not addressed appropriately.

Perceived Health Risk by Country (“3DTV Causes Eye Damage”) N=4,803

Source: Strategy Analytics

Target: Cube Tubers

3DTV, at least in the short term,  will be largely a niche application, attractive to only a subset of the general population. Through our survey work, we have isolated and identified this demographic as the “Cube Tubers,” and suggest that they should be viewed as a key target market for service providers and equipment vendors. These individuals represent between 8%-10% of the overall population, and are unique in their intentions to purchase a 3DTV in the upcoming year, and to be active premium/HD customers.  Cube Tubers,  who are predominantly young, educated married males, are nearly twice as likely as the average Joe to expect to pay for 3DTV.  Willingness or expectation of paying hits on an issue that many in the industry seem to be overlooking.  Few question the “wow” factor of 3D.  Rather, the question is, how do you make money at it? Client Reading: 3DTV: Will Consumers Buy It?

Embarrassing Apology of the Week Award goes to Sky for the following email just received by its UK customers: “In our recent newsletter - 'This week on Sky Player' - we did not make it clear that in order to watch live Sky Sports for free on Sky Player until 31/12/2010, you need to subscribe to Sky Sports 1 & 2 on Sky TV. We apologise and hope that this did not cause too much confusion.” The company presumably has received complaints from confused customers who do not currently pay for Sky Sports on TV and assumed, naturally enough, that when Sky told them they could watch Sky Sports for free on Sky Player, they could watch Sky Sports for free on Sky Player. In fact, the email should clearly only have been sent to customers who already pay for Sky Sports on TV, or worded very differently for all customers. No doubt the company’s apology is also intended to ward off any possibility of a regulatory wrist-slap. It’s a little unfair, if rather easy on this occasion, to pick on Sky for its misleading communications over bundled service offers. But this episode does highlight the age-old question of when “free” really means “free”. My own father, who was fond of repeating the well-worn cliché “there’s no such thing as a free lunch”, would probably say “never”. And perhaps consumers in the 21st Century have been bombarded by so many unlikely offers that they are simply inured to misleading advice. The details, after all, are usually in the fine print, if anyone can be bothered to check. What’s the difference, after all, between Sky offering “free” Sky Sports to its paying customers, and mobile phone customers offering “free” texts to its paying customers? Or “free” mobile phones to customers who have to pay money to use them every month? To quote Orange’s current Monkey offer: “Get free music, texts and a free daily internet pass, just for topping up £5 on Monkey”. So, spend money to get something free. These “offers” are such an established feature of bundled service marketing (and commercial life in general) if anything it's surprising that Sky felt the need to respond. A liberal deployment of asterisked fine print should help Sky avoid similar problems in future. Client Reading: Apple TV: Still Just a Hobby? Or Another Nail in Pay Television's Coffin?

Many thanks to Jeff Baumgartner at Light Reading for reminding me of my post last September concerning ActiveVideo Networks and the company's suitability as a potential Cisco acquisition. I had also just noted that ActiveVideo is planning to exhibit on Cisco's stand at this year's IBC starting tomorrow. I'm sure the relationship is quite harmless at the moment, but who knows where things may lead? If you're at IBC, hurry to register for our free-to-attend 3DTV Analyst Forum. We’ll be presenting great insights from our 3DTV research, and Sky’s Brian Lenz, who has headed up the company’s 3D initiative, will be giving the audience his thoughts on our findings as well as an update on Sky’s 3D launch plans. Attendees are invited to register in advance by visiting www.strategyanalytics.com/ibc2010.html. Meet Our Analysts: 3DTV Analyst Forum at IBC 2010

It’s been implied on more than one occasion by various commentators that the arrival of 3DTV is “too soon” because many people have only recently bought their first HDTV and will be reluctant to invest once again in a new technology. The argument makes sense on the surface, but, as usual, a little digging into real data tends to prove otherwise. Our survey of 700 UK consumers found that current HDTV owners were in fact more than twice as likely to be interested in buying a 3DTV than non-HDTV owners. Specifically, 13% of HDTV owners say they are “somewhat” or “very likely” to buy a 3DTV during the next 12 months, compared to 6% of non-HDTV owners. Given that HDTVs are still in only half of UK households, this hardly suggests that 3DTV’s prospects are being held back because people have already bought an HDTV set. The truth is that it’s likely to be the same early adopters who bought HDTV who will also go out and buy the next latest and greatest TV technology. We’ll be presenting these and many more insights from our research at a free-to-attend analyst forum during this year’s IBC, and Sky’s Brian Lenz, who has headed up the company’s 3D initiative, will be giving the audience his thoughts on our findings as well as an update on Sky’s 3D launch plans. Attendees are invited to register in advance by visiting www.strategyanalytics.com/ibc2010.html. Meet Our Analysts: 3DTV Analyst Forum at IBC 2010

3DTV will again be one of the hot topics at this year’s IBC in Amsterdam. Unlike previous years, however, discussions and demonstrations will take place against the background of broadcasters delivering commercial 3D services to residential TV viewers. Since earlier this year 3D television programmes have been broadcast, if only on a selective basis, to viewers of some cable, satellite and IPTV services in the US and Europe. But as sales of 3D-capable TVs begin to take off, Sky’s UK launch of the first full-time 3DTV channel on October 1st will confirm the arrival of 3DTV as a fully fledged consumer proposition. But compared to the excessive hype which has built up over the last couple of years as the industry geared up for launch, the mood this year may appear to be markedly more realistic, and tinged with more notes of caution than were previously evident. It’s still too early to discuss consumer reaction to fully fledged home 3DTV services (as opposed to any of the out-of-home options) – the number of people who have actually seen a 3DTV broadcast in the comfort of their own homes is still tiny. But pre-launch surveys are suggesting 3D in general may not become the sure-fire success many were hoping for. Strategy Analytics’ own consumer surveys suggest a very mixed response across the board. Our survey of European consumers is still in the field, but the first results from the US suggest that the industry must at least overcome doubts about the health impact of watching 3DTV. More than half of respondents are unsure whether watching 3DTV can cause damage to the eyes, and 17% actually believe that 3DTV may cause damage. With the level of uncertainty the industry clearly has a lot of work to do to bring 3DTV to the mass market. Overall we found that 11% of people are somewhat or very likely to buy a 3DTV during the coming year. This may not sound a lot but it’s not bad for a newly launched technology. What’s interesting is the impact of previous 3D experiences on buying intentions. In total 60% of Americans say they have seen a 3D movie at the cinema, and a quarter say they have been very impressed with the quality of the 3D experience. Those people are four times more likely to buy a 3DTV than people who say they were not impressed with 3D at the cinema. This may not be surprising, but it demonstrates the importance to the industry of continuing to improve the 3D experience in the cinema in order to meet its overall goal of bringing 3D to the home viewer. We’ll be presenting many more findings from our research at our free-to-attend analyst forum during this year’s IBC, and Sky’s Brian Lenz, who has headed up the company’s 3D initiative, will be giving the audience his thoughts on our findings as well as an update on Sky’s 3D launch plans. Attendees are invited to register in advance by visiting www.strategyanalytics.com/ibc2010.html. Meet Our Analysts: 3DTV Analyst Forum at IBC 2010

Strategy Analytics' latest consumer survey indicates great uncertainty over the potential health effects of watching 3DTV. 17% of our 2000 US survey respondents say they believe that watching 3DTV will cause damage to their eyes. Perhaps even more significant is that more than half of respondents are uncertain whether 3DTV has a health impact one way or the other. Faced with that level of doubt, 3DTV marketers - both TV set manufacturers and broadcasters - have some work to do to convince people that 3D is something worth risking their health on. The truth of the matter remains a subject of some debate. In response to the fact that some viewers report feeling unwell after watching 3D, or can only watch comfortably for limited periods, some claim that these impacts will be reduced as the technology matures. Whatever the case, the industry clearly must get to grips with the communications issue before unsubstantiated rumours get out of hand. We'll be presenting more details on our new 3DTV research at this year's IBC in Amsterdam. You can also hear BSkyB's Brian Lenz discuss his own company's plans for 3DTV. Attendance is complimentary but we encourage pre-registration as space is limited: Meet Our Analysts: 3DTV Analyst Forum at IBC 2010

We're delighted to announce our plans for this year's IBC in Amsterdam. For many years now Strategy Analytics has offered an analyst forum focusing on key topics relevant to the television and broadcast industries. This year we are focusing on 3DTV, still very much the hot topic in the industry, especially as we head towards the commercial launch of 3D residential services in Europe when Sky launches 3D on October 1st. With that in mind we are pleased that BSkyB's Brian Lenz, who has spearheaded the company's development of a 3D service, will join us to discuss our latest research findings and update everyone on the latest news from BSkyB. We'll present hot-off-the-press consumer findings from our latest surveys, and our colleagues from D. I. S. Consulting will also unveil the latest research from the production community. It should be a great session to kick off the first full day of the show. The event is free of charge but as we have limited space we're expecting a full house so please register your interest as soon as possible. 3DTV Analyst Forum at IBC 2010: Strategy Analytics and D. I. S Consulting Saturday 11th September 2010 Holiday Inn, "Manhattan" Room, De Boelelaan 2, 1083 HJ Amsterdam, The Netherlands Schedule 8.00-8.30 Networking Breakfast 8.30-9.10 New 3D Research: Analyst Presentations 9.10-9.30 Guest Speaker: Brian Lenz, Director of Product Development, BSkyB 9.30-10.00 Panel and Audience Q&A Client Reading: Video Capture Devices: Global Market Forecast

Is it a sign of Trouble at’ Mill? Or just another corporate shake-up while business goes on as usual? Microsoft yesterday announced the departure of leading Entertainment and Devices executives Robbie Bach and J. Allard. Microsoft CEO Steve Ballmer will take charge of the division, with Don Mattrick running the Xbox side and Andy Lees the mobile business. There are clearly problems for Microsoft in its mobile business. All the various iterations of its mobile phone software over the years have failed to make significant market impact as Apple and, now, Google, make the running. Microsoft’s biggest problem is that consumer is still a relatively small and fragmented part of its overall business. It’s losing out to Apple, and others, in the consumer market because its primary corporate focus continues to be business users of Windows. Apple, which, not through lack of effort, never achieved prominence in business markets, has been able to focus its strategy on the consumer space without the hindrance of adhering to a corporate software strategy. From Microsoft’s perspective it might seem logical to group Xbox, music players and mobile phones under one roof, but this makes less obvious sense to the outside world. Xbox has been successful largely because it has been left alone to formulate its own strategy focused on games, entertainment and the digital home. Dan Mattrick, whom I met last summer to discuss Xbox strategy, should now try to persuade Ballmer that the Xbox team needs to remain a discrete unit with liberty to forge its own direction, and if necessary outside of the demands of the corporate Windows strategy if necessary. With the launch of Natal imminent, the continued ramping up of online services based around the Xbox 360, and the plateauing of Xbox 360 sales, Microsoft can ill afford a dilution in focus because of this disruption to the senior management team. David Mercer Other Blog Posts Of Interest: PS3 Global Market Share Reached 31% in Q1 2010 Sony’s PS3 to Win Current Games Console Battle; SA Forecasts 47.5 Million Global Console Market in 2010 Sky Player Finally Arrives Where It Belongs, But Work Still to be Done TV or Videogame? 1 vs 100 on Xbox Live Offers Lifeline To Appointment Viewing Client Reading: Taming the Waves: Games Console Life Cycles and Platform Competition

As our recent report pointed out, the potential of internet and IPTV has failed to materialise. One area of untapped potential is interactive or targeted advertising. In spite of more than a decade of red button adverts in the UK these services have never proved commercially viable and in fact were recently withdrawn completely by Sky. Trials of new technologies continue, however, and Sky has just completed a trial called Adsmart. Its partner was Mediacom, using technology from Packetvision and ads from Nat West, the UK bank. Mediacom's Managing Partner of Implementation & Futures Rhys McLachlan, presenting at this morning's Broadcast and Beyond conference, called the trial a technical success, but went on to describe the key findings, most of which seemed to present targeted TV ads not so much as an uphill battle as an attempt at Mount Everest. The first conclusion is that current television audience segmentations are 'rudimentary' at best. In spite of using Sky's own extensive customer database, McClachlan concluded that the segmentations currently used 'cannot be validated'. As far as advertisers are concerned there is simply no consensus on how such audience data should be employed. Mediacom also found that it was very difficult to find the right metric for audience measurement, and that, critically, it was very difficult to prove the ROI from targeted ads. Finally, in spite of the advanced technology used, there was simply no proof that advertisements had been delivered and viewed. Effectiveness measurement depended simply on ‘good faith and intuition'. In spite of these challenges investment in advanced advertising trials continues, and broadband is the key to the future success, according to McClachy. The biggest challenge of all is developing technology which can help advertisers differentiate between single and multi viewer consumption. As we have also noted previously, asking TV viewers to log in, as some emerging services do, does not solve this problem. Even with the latest advanced technologies in the IPTV world, it seems there is still a long way to go before advertisers will be convinced to spend money on using them. David Mercer Client Reading: Chasing the Elusive IPTV Business Model: NDS, Cisco and Comcast to the Rescue?