Smartphones, tablets and ultrabooks will grab many of the headlines over the next few days of CES mayhem, and in some cases may even deserve their accolades. The world of consumer technology has been transformed by smart personal devices and there is plenty more innovation coming down those pipelines in the years ahead.

In the meantime, the world of TV, which used to define CES, has taken a back seat. In spite of various developments in recent years, including high definition, connected and smart TV and 3D, some of which have had strategic significance for ecosystem players, television as a whole has tended to decline in relative importance. Apart from the notable exception of Samsung, the business performance of major TV vendors has certainly suffered in recent years and has added to the general perception that television is a legacy industry in decline.

Smart TV was supposed to change all that, and, as we have reported, there are now more than a hundred million smart TVs in use worldwide. But there is little evidence yet of these newest smart devices transforming the business outlook for their manufacturers. As I noted a few months ago smart TV usage rates are higher in the US, where high value services like Netflix are prominent, than in Europe, where equivalents are harder to find. Smart TV’s success will hinge on driving new services, content and usage: selling the devices is only the first step.

The next opportunity for TV’s fightback will be highly visible at next week’s International CES: Ultra High Definition TV presents a major opportunity to raise the value bar for TV manufacturers and ultimately for content and service providers as well. Naturally enough people will look at these crazily-prized jumbo TVs and wonder who on earth will buy them, and for a couple of years their scepticism will appear to be justified. UHD is the start of a another stage in television’s evolution and there are many barriers ahead, not least bandwidth restrictions and new codec requirements. But display prices will fall rapidly and we fully expect UHD TV ultimately to do to HDTV what HDTV has done to standard definition over the past twenty years.

Our UHD forecast has been released and we are projecting ten million homes worldwide owning a UHD TV by 2016. We’re looking forward to seeing the first wave of these products and some great 4k content next week in Vegas.

David Mercer

Strategy Analytics has been designing and analysing large scale consumer surveys for many years. Some of this work has been used by our industry analysts to support their regular market and competition tracking. We have also conducted frequent consumer surveys to support proprietary project and consulting activities.

Recognising that every client has its own particular set of interests, questions and perspectives, we have now opened up some of the results of these surveys to our client base via a powerful new web-based interface and analysis tool. The ConsumerMetrix service collates the results of three years’ worth of survey results, comprising more than 15000 online consumer interviews and offering millions of unique datapoints. Survey results are easily selected and instantly available according to the needs of the individual user, and can be downloaded in Excel and Powerpoint format for incorporation into customers’ own reports.

ConsumerMetrix surveys cover the US, France, Germany, Italy and the UK. Additional international market coverage, including Canada, Spain, China, India, Japan, South Korea, Russia, the Nordic region, Poland, Hungary, Brazil, Mexico and Indonesia, is available at the request of subscribers.

Subscribers can use ConsumerMetrix to assess survey data about the world’s leading technology and service provider brands and who their current and potential customers are.

ConsumerMetrix: Major Technology Brands

Acer, Apple, Asus, Compaq, Dell, Emachines, Facebook, Gateway, Grundig, HP, HTC, JVC, LG, LinkedIn, Motorola, MySpace, Nokia, Packard Bell, Panasonic, Philips, RIM/Blackberry, Samsung, Sanyo, Sharp, Sony, SonyEricsson, Toshiba, Twitter, Vizio, Youtube

ConsumerMetrix: Major Service Provider Brands

3, AT&T/Bell South/Cingular, Bouyges Telecom, BT, Comcast, DirecTV, Dish, E-Plus, Free, Kabel Deutschland, Mediaset PremiumNeuf Cegetel, O2, Orange, SFR, Sky, Sprint/Nextel, TalkTalk, Telecom Italia, T-Home, TIM, Time Warner Cable, T-Mobile, United Internet, Verizon/Alltel, Virgin Media, Virgin Mobile, Vodafone/Arcor, WIND

 

ConsumerMetrix is designed to answer key tactical, consumer-facing questions like:

·         How many people plan to buy an Xbox 360 or PS3 during the next 12 months?

·         How do nations vary in usage of digital video recorders?

·         How do the profiles of Samsung and Sony customers compare?

·         Which television service providers have the highest satisfaction ratings?

·         Which brands are people most likely to choose when they next purchase a TV, PC or mobile phone?

·         How do the demographics of Apple v. PC owners compare?

·         How many people are using the major OTT video services and which devices are they watching them on?

·         How much do consumers expect to pay for iPads or other tablets?

·         How useful do consumers find TV mobile phone apps?

·         Which consumers are using multiscreen TV?

·         How many Sky Digital customers plan to drop the service during the coming 12 months?

 

ConsumerMetrix covers a wide range of themes and technologies related to the digital consumer, television, video and media sectors. The outline is presented below:

 

ConsumerMetrix Survey Themes

ConsumerMetrix Product Segmentation

•          Attitudes to payment and finance •          Household device ownership •          Personal device usage •          Device purchase intentions •          Device price expectations •          Brand ownership •          Brand purchase intentions and preferences •          Service provider customers •          TV, Fixed Broadband, Mobile Broadband, Mobile phone, Home phone •          Broadband and television access technologies •          Television service fees and satisfaction •          Managed home services •          3D television and video •          Advanced television services and features: availability, usage, perceived value and interest •          Television service: propensity to churn •          Future television concepts •          Online television and video services and applications •          Connected video device usage •          Social networking users and brands

•          Consumer Devices: Connected TV, HDTV, 3DTV, LCD/plasma TV, Blu-ray, Xbox 360, PS3, Wii, PS2, PS Vita, Home cinema, Home computer (desktop, portable, PC, Mac), Handheld games (PSP, Nintendo), Digital TV set-top box, Apple TV, Connected TV boxes, mobile phone, iPhone, smartphone, iPad, tablet, broadband WiFi router, Internet radio, camcorder, e-reader, home monitoring camera, iPod, personal audio player •          Broadband/TV Access Technologies: Cable, xDSL, Fiber, WiMax, Mobile data card/dongle, satellite, terrestrial broadcast, IPTV •          Advanced TV Features (selected examples): VOD, Pause/rewind live TV, Series recording, Mobile phone app, caller ID, whole home DVR, internet access •          Online TV device usage: TV/PC, TV/console, TV/media server, TV/Blu-ray, TV/digital media player, Connected TV, PC, Tablet, Smartphone

 

We are excited by the strong interest already shown in this service, which we believe is unique in many respects. Please email digitalconsumer@strategyanalytics.com for further details and a personal demonstration.

David Mercer

“The TV” has been about more than “TV” for many years. Ever since the first video recorders arrived back in the late 1970s, bringing home video to millions of millions of TV sets around the world, TV viewers have been faced with ever-increasing choice in what they watch and when they watch it.

The latest stage in this evolution has been the arrival of internet connectivity to the TV itself and to many of its attached devices. While such products have been around for a few years, it’s only relatively recently that improved bandwidth and usability have allowed people to explore the world of internet video on their big screens.

Our recent survey of nearly 5000 respondents across the US and Europe suggests people are taking to this “connected TV thing” in a big way. Based on the survey’s findings we estimate that 42 million homes across the two regions are now connecting a TV screen to the internet, in some way or other, in order to watch TV shows or movies. This is not a daily activity for most people just yet – this is the number of homes doing this monthly, weekly or daily. But it’s a clear sign that the concept of connected TV is becoming more widely accepted.

Significantly we found much higher usage in the US than in Europe – 20% of US homes are using connected TV compared to 10% of European homes. The Germans are falling some way behind the rest of Europe: only 6% of German homes are using connected TV currently, compared to 12% in both France and Italy – the UK proportion stands at 9%.

New digital service providers such as Netflix and Hulu have seen tremendous progress in the States in the last couple of years as they become available on multiple connected TV devices. Europe has yet to find its own equivalent, although each market can name examples of localised services.

People are still working out the best way to get connected TV content onto their TV set. In the US the games console is leading the way: in Europe the most popular method is to connect a PC to the TV using an HDMI cable. But the majority of connected TV viewers are actually making use of more than one solution. There may be a number of reasons for this: certain content is only available from different devices; or they are using different TV screens at different times.

We are in the early days of the connected TV revolution, but the momentum shows no sign of decline. As Ultraviolet launches and Apple considers its own streaming movie service, this market is set to get a lot more interesting over the next few months.

David Mercer

Client Reading: Multiscreen Connected TV: Assessing Device Usage and Ownership

 

 

I listened in recently to an analyst webinar given by Dave Durnil, director of advanced content at Qualcomm CDMA Technologies. Dave's role is to convince games publishers that Qualcomm's Snapdragon system-on-chip platform is suitable for "console-quality" games. So far things seem to be going well, with more than a 100 games optimized to the Snapdragon platform.

Qualcomm’s strategy, according to Durnil, is based on the premise that smartphones will replace TV games consoles. Durnil provided various statistics which demonstrate the “decline” of the console market, which do not match Strategy Analytics’ own analysis, so that’s an unfortunate place to start the discussion.

There’s no question that the quality of games on handset devices is improving rapidly, and will continue to do so through more advanced mobile platforms like Snapdragon. But why is Qualcomm asking the question, will phones replace consoles? If it truly expects Snapdragon to match or exceed the capabilities of TV consoles in the future, surely it could enter the dedicated TV console market and sell even more devices?

The flawed assumption seems to be that consumers are willing to use their handsets as TV peripherals, using either an HDMI lead or short-range wireless connection. Our research so far has suggested this type of behaviour is something which only a small number of people are interested in: for example, in our July 2011 consumer survey, only 6% of 4800 respondents said they were very interested in using a mobile phone to send high definition TV and video to a TV set.

Many people also doubt whether a mobile-dedicated platform really will be able to compete head-to-head with a TV-based one, but let’s also put those doubts to one side for the sake of argument. If Qualcomm is right, and Snapdragon really will be able to compete with PS4 and Xbox720, what is to stop the company offering its technology platform to console manufacturers, as well as handset makers? Games publishers would presumably be delighted at the prospect of authoring to a common mobile/TV platform.

The concern, as we have seen with Nokia in the past, is that a strategy focused on traditional strengths can blind a firm to growth potential outside of its comfort zone. Qualcomm should be careful not to fall into that trap: its gaming strategy suggests that it could have a future beyond just the handheld device. 200 million TV games consoles will be sold worldwide over the next five years – is Qualcomm missing out?

David Mercer

Client Reading: Global Connected Consumer Electronics (CE) Devices Market Forecast

 

Barely two years after first announcing its intention to buy Pure Digital Technologies, makers of the Flip camcorder, Cisco is closing the division, making 550 people redundant. The move is part of a series of steps intended to drive Cisco’s business towards “greater operational excellence”.

As well as closing Flip, Cisco will “re-align” other elements of its consumer business in line with its core strategic objectives. Specifically, that will mean that Umi, the consumer telepresence business, will be folded into Cisco’s Business TelePresence unit; and the Linksys home networking group will be refocused towards the core networking infrastructure activity at Cisco.

Video remains a core strategic objective for Cisco, and its vision remains that the network will expand into a video platform in the home. But the company has accepted that retail consumer electronics is, for the most part, outside of its competency, and will now focus its efforts on helping its service provider customers to maximise the potential of the dramatic changes in consumer media and technology markets expected over the next 5 to 10 years.

We have tracked Cisco closely over the years, and have noted on many occasions the challenges associated with a dual service provider-retail strategy. Not just because of the potential customer conflicts this entails, but also because of the highly contrasting economic and business challenges of retail and service provider models. If Cisco had been serious about consumer electronics, its overall results would inevitably have been impacted by lower margins: the only major player which has managed to avoid this golden rule is Apple. The real disappointment with Flip was that its famed ease of use and software strengths could not be transferred to other Cisco units in the consumer space.

Cisco's announcement includes a review of the Eos Media Solutions products in terms of its integration with core video technologies. Eos is a key element in the Videoscape strategy announced at the end of last year, so its future is particularly important. If Eos capabilities can be repositioned towards the needs of video service providers in over-the-top video and television services, this can only be a good thing.

Cisco may be pulling out of consumer markets, but they remain vital to the company’s interests. How and how fast consumers switch to IP-based video services and devices over the coming years will have a major impact on the company’s core technology and network businesses.

David Mercer

Client Reading: CES 2011: Connected TV Growing Up and Tablets Join the Ecosystem

With a couple of hours to go before this year’s technofest in Las Vegas gets under way, I thought I’d issue a friendly warning to the growing number of firms (Intel, Samsung, LG are culprits so far) who seem to be planning to major on “Smart TV” as a key theme of this year’s show. Even before the doors open we already have a quotation from LG Electronics' Baeguen Kang: "Smart TV is an inevitable trend: As people experienced smartphones and tablet PCs, the larger screen on a TV is very attractive for apps and Web content.” So whatever people do on phones and PCs, they will inevitably do on their TVs? If this is an indication of the strategic thinking behind many of the innovations we are about to see unveiled this week, I can scarcely imagine the horrors which await us. When will manufacturers learn? As Google’s disastrous first attempt at connected TV has neatly demonstrated, people do not want the web on TV. How many times do we have to go through this learning process? What people want on TV is video content, and if that’s going to be “smart” it had better deliver some level of intelligence about what video content viewers are likely to enjoy. As I said in our (free to download) 2011 Predictions report, television viewers don’t want a million things to choose from: they want their TV to tell them what they are likely to enjoy. Surprise me, enlighten me! That has value, and if it unexpectedly appears at this year’s show I’ll be the first to label it “smart”. David Mercer

We don’t do this very often folks, but as a seasonal gift we have made our 2011 Digital Home Predictions report available to everyone, whether a Strategy Analytics client or not. You can download the full report here. A lot of the talk at the moment is about Google’s troubles with its TV offer: there will be little to see at CES after all, much to the annoyance of Google’s many partners no doubt. But this setback should not be seen as a a sign of general malaise in the connected TV industry: Apple has just reported that its TV solution is finally gaining some traction, and we expect continued progress from other key players in the rollout of internet TV to the big screen during 2011. We may even see Facebook moving into this space. Headline number of the year will be tablet revenues, which we predict will exceed netbooks. We also think Apple needs to revamp iTunes to take account of the connected device era, and Nintendo may have to take the plunge and launch the successor to the Wii. We’ll see further innovations in the TV control arena, with touchscreens, phone apps and motion control all featuring more widely. But 3DTV is likely to see only slow progress: sure, people will be buying 3D-enabled sets, but less than 20% will be watching 3D content on them. And one more stat to whet your appetite: more than one billion people worldwide will be using social networks for the first time during 2011. And since you are one of them, please go ahead and read the full report, and any comments and feedback are always appreciated. Best wishes for a peaceful holiday season. David Mercer Client Reading: Profiling the Connected Media Consumer - UK

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

As I prepare to chair a panel discussion on television advertising at this week’s Future TV Advertising conference, I thought I would dip into our consumer surveys to see what people are telling us about their attitudes towards advertising. For reference, our survey was based on a weighted sample of 2803 online respondents across France, Germany, Italy and the UK, and was fielded between July and September 2010. One of the issues often discussed at such conferences is the degree to which viewers enjoy advertising on television. Our survey found that only 7% of Europeans strongly agree that they “enjoy watching and listening to well produced and informative commercials on television”, and another 26% somewhat agree. But 23% strongly disagree that they enjoy watching commercials, and another 16% somewhat disagree. This gives a negative “balance” of -6% overall on the question of how much people say they enjoy watching TV ads; you are three times more likely to find someone who dislikes TV ads as someone who really enjoys them. The irony is that Europeans do appreciate that advertising plays an important role, even if they don’t like watching the ads. 51% somewhat or strongly agree with the statement that “advertising plays a useful role since it pays for the cost of providing entertainment”; only 31% disagree. There is even stronger agreement for the idea that all television should be “free” at the point of consumption: 65% of people somewhat or strongly agree with the statement “No one should have to pay for television; all programmes, including all sports and movies, should be available to everyone and supported by advertisements or public funding”. Only 24% disagreed with the idea that all television should be free. Not surprisingly (given that pay TV is most successful in the UK) the strongest support for this idea came from viewers in continental Europe, with 72% of French respondents in agreement. UK respondents are markedly different in their atttitudes towards free TV: 49% agree it should be free, but 32% disagree, giving a net balance of only 17%, compared to 58% in France. We found similar love-hate attitudes towards advertising in online television. People are very resistant to the idea that they could pay in order to avoid advertisements, but they also don’t like the fact that they have to watch adverts before an online TV show starts, and they think there are too many short adverts in online video content. So the challenge for advertisers appears to be the same as it ever was: getting a message across and engaging with viewers who are generally resistant to commercially motivated communications. Whether technology and innovation can help ease that process over the years ahead remains to be seen. Client Reading: Global Advertising Market Forecast

Hidden away in the depths of the European Commission’s latest household communications survey is a finding that should scare the 4X out of the cable industry: the percentage of EU27 households using cable TV fell by 4% between 2008 and 2009, from 34% to 30%. To put this in context, that means the cable industry lost around 8 million TV household customers in the space of just 12 months. The biggest winner has been digital terrestrial television. The share of households using digital terrestrial rose from 12% to 23%, while the proportion of those using analogue terrestrial fell from 41% to 34%. Satellite also made gains, increasing by 2% to reach 24% of households, and IPTV rose from 2% to 4%. Observant readers will have noted that we have reached a total of 115% of households. The survey allowed for multiple answers because some hosueholds use a combination of different TV access services, usually because they have terrestrial TV (analogue or digital) for one TV set, with cable or satellite piped to another. Cable’s decline has been little short of dramatic in Benelux. For years, visitors to those countries were told that the “only” way to receive television was through a cable network. Even though cable TV penetration strictly speaking never reached the 100% mark, it was certainly in the 90%+ range for many years. Now, according to the viewers themselves at least, cable is used by only 69% of Belgian households, a decline of 18% in one year. This was mirrored precisely by the increase in digital terrestrial usage over the same period. In the Netherlands, cable usage fell to 75% of homes, with digital terrestrial at 21% by the end of 2009. This is not the “cord cutting” which American cable operators are currently fretting over. Stateside, the hot issue is whether cable (and satellite) customers will switch to internet-delivered, OTT TV. In Europe, the threat from digital terrestrial television is currently much greater and already having a marked impact. Where cable used to provide the de facto option for “free”, commercially funded TV channels, it is losing ground rapidly to over-the-air services. The latter, of course, are genuinely free of charge (except for public service TV licence fees in some cases), in contrast to the “basic” fees cable operators have always charged. Here is yet another indication of the huge structural differences between the US and European markets, which strike me every time I travel between the two regions. A couple of days ago, during a meeting with a well-known US software provider looking to enter the European connected TV market, I saw another sign of how US companies can struggle to appreciate these variations when they visit Europe. It may have been more or less abandoned in the US, but free-to-air television in Europe is alive and well. Client Reading: Global Digital Television Forecast: 1H'10