Just arrived in Amsterdam for this year’s IBC. Doors open in a couple of hours and then it’s straight into press conferences and company briefings. Key themes this year will obviously be 3D. After the hype generated at IFA in Berlin last week for consumer 3D devices it will be interesting to see whether the broadcasters and service providers are gearing up to support the desperate need for 3D content. One thing seems clear – Disney movies alone will not be enough to sustain a home 3D market. We expect to see many examples of 3D user interfaces and guides – this is one of the major challenges if the TV industry is to transition even partially to 3D delivery over the coming years. Other technology trends in the professional space will be the continued penetration of HD in the production and distribution chain; the related trend towards 3Gig capability in the workflow, which is required to support future moves towards 1080p broadcasting; and trends in camcorder formats, or the decline of the format as it could be described. In general it will be good to test the mood of the industry after a period of severe downturn. During the last IBC http://www.strategyanalytics.com/blogs/326/ a year ago the financial world was entering crisis mode as Lehman Brothers collapsed, and shortly after the show many purchase orders were put on hold or abandoned. While the worst may now be over, the industry is still reeling from this blow and will take some time to recover. It will be surprising if the show floors are not easier to negotiate this year. Join Strategy Analytics and D. I. S. Consulting at IBC: Complimentary Analyst Presentations Client Reading: US IPTV Market Sizing: 15.5 Million Subscribers by 2013

...On Strategy Analytics' target, that is. We predicted global 2008 sales of 4.0 million units back in March, and that still seems a reasonable estimate. Some major industry players, however, seem to have been too optimistic and are now scaling back their plans. Sigma Designs is one of the leading suppliers of video processors for Blu-ray players. Sigma’s Edward McGregor has been quoted as saying: “Blu-ray has been slower than expected to catch on”, partly in defence of his company’s loss of market share to rivals Broadcom, NEC and others. It seems Sigma had been working on predictions of up to 6 million units and has now reduced these to 3-4 million. Companies often use this excuse, and take market projections that suit their needs at any given time. It’s an inevitable part of the forecasting game. That’s not to say we always get it right. As I’ve said previously forecasts are very rarely precisely accurate. But it is important to set a broadly correct expectation, and I would dispute that Blu-ray is not performing to expectations, as Sigma and many others now seem to be suggesting. As I’ve highlighted many times, just because Blu-ray defeated HD-DVD didn’t mean it was going to replace DVD overnight. It was always going to be a long haul for Blu-ray, and the dive in consumer confidence (the scale of which very few predicted a few months ago) is clearly not going to help in the near term. But while this holiday period is important for Blu-ray it’s by no means critical in the long term. This is a five-year transition and we are only in the very early stages. Client Reading: Blu-ray Disc Devices: Global Market Forecast

Social network services have boomed in the last couple of years, led by now well-known brands such as Facebook, Myspace and Bebo. I profess to finding the whole thing a little bemusing, but that’s doubtless down to my unsuitable demographic. Perhaps if I’d been born 20 years later I’d now be spending hours every day updating my social pages and checking out the latest activities of “friends” I never thought I had or needed. Strategy Analytics’ own survey data confirms that I’m in the wrong age group to appreciate the value of these services. Of online users across the US and Europe, 63% of 15-24 year-olds and 52% of 25-34s use a social network. Once we reach middle age the proportion drops below a third: 30% of 35-44s and 25% of 45-54s. Only 15% of those lucky enough to have reached or be approaching retirement (55 and over) have discovered the delights of MySpace and Facebook. In actual fact, as an occasional user of Linked-in I do classify as a “user”. I did also register with Facebook and receive invitations to “connect” from “friends” I have never heard of. I suppose grumpy old men just aren’t cut out for all this friendship. It’s good to know today’s youngsters have so many options ahead of them… Other findings from our study: UK internauts are most likely to maintain a social network, with just over half claiming to be users. The proportion in the US is 44%, and 37% in Italy, but in France and Germany only just over 20% of internet users are networking socially. Our findings suggest that social networks are attracting huge daily audiences. In the US more than 30 million people are using a service every day, while in the UK the number is more than 8 million. That’s a lot of young people being pulled away from more traditional pursuits like watching TV. In spite of that, 69% of 15-24 year olds still claim to watch TV (ie TV shows or movies on the TV set) on a weekly basis, compared to 74% of the population on average. But the term “watch” should probably be applied loosely: anecdotally it is clear more and more people are tapping away on PC keyboards or cellphones while the TV show runs on the big screen ten feet away. Client Reading: Social Media: Brits Lead in Social Network Usage

We have always cited the cable industry as the archetypal vertical or closed content-to-device business model. Ever since the US cable network providers (MSOs) began to offer paid-for services and secure content using set-top boxes, they have steadily increased their hold on the television content and device market. Initially with analogue premium TV boxes, and more recently with digital cable boxes, a growing proportion of US TV viewers use a device provided by their cable operator as the gateway to all their television programming. And as the cable industry has added more advanced features to those boxes, such as DVRs and VOD, these have also been controlled by the set-top box, leaving the “TV set” as essentially a dumb terminal. The satellite TV industry followed a similar model in both the US and Europe. Cable in Europe, however, has a somewhat different history, since its early development was encouraged by government subsidy in several countries. But the US model has also found its way into several European countries, notably the UK, and as digitisation of cable has accelerated, European cable operators have also moved increasingly towards a set-top box approach. Manufacturers of TVs have been concerned at these trends for many years, realising that the “intelligence” of their devices was being bypassed and ignored as many viewers used set-top boxes. In spite of many attempts over the years to encourage the integration of various cable or satellite technologies into TVs, such as digital tuners or smart card slots, these have largely failed. The challenges for TV manufacturers have been numerous, not least the additional cost of these features and overcoming the obsolescence argument, that viewers may want to change cable or satellite providers or services without having to change their TV set. There has also been an argument that it has not been in the strategic interests of cable or satellite providers to allow integration of what are essentially their network technologies into devices that are available in an open, horizontal market. Having fought hard to win new customers, service providers should not be inclined to make it easy for those customers to move to a different supplier, and forcing them to use a proprietary device is one way of discouraging churn. Recent developments suggest that the cable industry at least is now ready to adopt a much more open stance towards the CE industry. In the US, Sony has signed an important agreement with the five largest cable operators (Comcast, Time Warner Cable, Cox Communications, Charter Communications, Cablevision and Bright House Networks) to use Tru2way technology in its TV sets and other CE devices. This will allow cable customers to use cable services, such as VOD and interactive guides, on these devices without the need for a set-top box. Given the support for Tru2way by other major CE companies, there seems a genuine possibility that it will become widely deployed over the coming years, although the cable operators still have to demonstrate that they are wholeheartedly behind the initiative by actively promoting the technology. In Europe, meanwhile, some of the cable industry’s largest operators are also moving towards endorsement of a more open system. CE companies Sony, Panasonic, Samsung and Philips have led the initiative to develop a platform known as CI+ (Common Interface Plus). German cable operators, including the largest, Kabel Deutschland, have given their support, and others are expected to follow suit. CI+ will allow users to access premium and advanced cable services without the need for a set-top box. CI+ devices will incorporate a smart card slot which will accept conditional access modules provided by cable operators. So is this a sign that cable operators are accepting that the world is moving on? Or will both Tru2way and CI+ be sucked into the black hole of promising but failed open cable technology initiatives? My bet is that this time round things may really be changing. And the difference now is that cable recognises that its long-term future lies more in broadband than in the traditional pay television market. The TV set-top box has been the gateway to content for many years, but as people consumer more content on the web some of that role is increasingly shifting towards other devices such as broadband gateways, home PCs and TV sets. For sure, the set-top box is not going to disappear overnight. It will be some years before both Tru2way and CI+ are widely enough deployed to have a significant impact. And cable companies and content providers may still decide to promote set-top boxes if the new technologies fail to support future services or fail due to content security issues. But one way or another, the cable industry is getting ready for a major transition that will have widespread implications for device manufacturers and content owners alike. Client Reading: Global Broadband Forecast 2008 - 2012

BT launched its Total Broadband Anywhere service today. It is available to Option 3 broadband customers starting at an additional £5/month and includes a free smartphone. The contract is for a minimum of 18 months. The “50” option (£5/month) includes 50 minutes and 50 texts over Vodafone’s network. Higher price packages are available, up to £35/month, which includes 600 minutes and 700 texts. All packages include unlimited WiFi downloads and 10MB of data over GPRS connections. Two BT ToGo smartphones are available initially, both from HTC (whose brand is also on the devices) – the HTC S620 and S710. BT’s Gavin Patterson told us that he was working with other phone vendors and expected more devices to be available in future. 3G is also a possibility for the future, although BT does not believe it is necessary today, and clearly there are other network access technologies, such as Wimax, which may come along as well. The basis of BT’s Anywhere package is WiFi, so the devices will connect to the home wifi network, BT FON hotspots (currently 82,000 in the UK and an additional 190,000 worldwide), and 2500 BT Openzone hotspots in the UK and Ireland. The devices are based on Windows Mobile and preconfigured with customers’ BT Broadband settings, so that BT Yahoo email works “out of the box”. Other email accounts are also set up easily, simply by inputting an email address. Mobile security is also integrated. BT Broadband Talk is available at WiFi hotspots. I asked BT if this announcement represented the company’s mobile strategy, and the answer is a qualified “no”. It is first and foremost an extension of the company’s broadband offer, and gives customers the option to use a portable broadband device in mobile situations. If BT Broadband customers choose to drop their mobile service provider, the BT ToGo phones clearly allow them to do this, at a cost. Although BT wouldn’t put a number on it they clearly expect that a reasonable number of broadband customers will use BT ToGo as their main mobile service over time. At the same time they claimed they were not going “head to head” with other mobile service providers like Vodafone and Orange. If ToGo does start displacing mobile phone contracts, this could clearly change. The biggest concern with BT's approach is that it relies on a network partner's 2.5G service outside of WiFi hotspots. 10MB does not go very far for web browsing or any serious media applications, and while BT suggests most people will be happy just to download a few emails, it remains to be seen whether this will be a limitation for most users. Client Reading: Google-backed FON Movimiento: Peace, Love and Free WiFi

Today's launch of the first dedicated free-to-air satellite service, Freesat, will help inject some much-needed competition into the UK's HDTV market. Even though its HD performance has been disappointing, Sky Digital remains the only major source of HD broadcast content in the country, notwithstanding Virgin Media’s offer of on-demand HD video. Freesat has been four years in the making and is a joint venture initiative of the BBC and ITV. 17.9% of the latter, of course, is still owned by BSkyB. Although Sky has been directed by Ofcom to reduce this stake, the matter is currently under appeal. Whatever the result of that lengthy dispute, Sky’s holding does not seem to have prevented ITV taking the significant decision to restrict its own soon-to-be-launched HD service to the Freesat platform, thus providing Freesat with a competitive advantage over Sky’s HD service, whose paying subscribers will not be able to see ITV HD. How much of a disadvantage that is for Sky, only time will tell. But given the paucity of choice in HD broadcasting today, and the continued popularity of ITV programmes, it should at least provide some pressure on Sky. The other HD channel on Freesat, BBC HD, is also available to Sky viewers. ITV and the BBC, more than most, will be regretting the exit of England and the other home nations from the finals of the European Championships, for which they will be providing live coverage. Live games in HD could have provided a significant boost to Freesat uptake. The major difference from Sky of course is that Freesat viewers will not have to pay a monthly subscription for their HD programmes. BBC and ITV alone would not appear to be a huge attraction for viewers to buy and install new HD set-top boxes at £200 or more, so much will depend on persuading other channels to launch HD over the coming months. As we have discussed, free-to-air HDTV (excluding well-funded public broadcasters like the BBC) is a challenging business model until wider platform reach has been established, so we can expect Sky to continue to lead in HDTV service adoption. But competition is usually a good thing, and Freesat will put modest additional pressure on Sky to improve its own range of channels and bring costs down. Freesat channels at launch are listed below (EPG channel numbers in brackets). There are in fact around 40 discreet mainstream TV channels. The remaining 80 comprise shopping, radio and regional feeds of the main BBC and ITV channels. Entertainment (101-199) BBC One (101) BBC Two (102) ITV1 (103) C4 / S4C in Wales (104) BBC Three (106) BBC Four (107) BBC HD (108) ITV2 (113) ITV3 (115) ITV3+1 (116) ITV4 (117) S4C Digidol / C4 in Wales (120) E4 (122) More4 (124) Zone Romantica (135) Zone Thriller (137) News and Sport (200-299) BBC News (200) BBC Parliament (201) S4C2 (202) Al-Jazeera English (203) Euronews (204) Movies (300-399) Film4 (300) True Movies (302) True Movies2 (303) Movies4Men (304) Movies4Men2 (306) Lifestyle (400-499) Wedding TV (402) Overseas Property Channel (411) Men and Motors (450) Music (500-599) Chartshow TV (500) The Vault (501) Scuzz (502) Bubble Hits (503) B4U Music (504) Children (600-649) CBBC (600) CBeebies (601) CiTV (602) POP (603) POPGirl (604) Tiny POP(605) Special Interest (650-699) Teachers TV (650) Radio (700-799) BBC Radio 1 (700) 1Xtra BBC (701) BBC Radio 2 (702) BBC Radio 3 (703) BBC Radio 4 FM (704) BBC Radio 4 LW (705) BBC Radio Five Live (706) BBC Radio Five Live Sports Extra (707) BBC 6 Music (708) BBC 7 (709) BBC Asian Network (710) BBC World Service (711) BBC Radio Scotland (712) BBC Radio nan Gaidheal (713) BBC Radio Wales (714) BBC Radio Cymru (715) BBC Radio Ulster (716) BBC London 94.9 (718) Shopping (800-849) QVC (800) Price Drop TV (801) Bid TV (802) Pitch TV (803) JML Lifestyle (810) Interactive (900-949) BBCi Regional (950-999) also accessible via BBC One/BBC Two BBC One London (950) BBC One Channel Islands (951) BBC One East (W) (954) BBC One Northern Ireland (957) BBC One Scotland (960) BBC One Wales (964) BBC Two England (968) BBC Two Northern Ireland (969) BBC Two Scotland (970) BBC Two Wales (971) ITV regionals accessed via ITV1 London (not listed separately) Ulster STV Scottish East STV Scottish West ITV1 Wales ITV1 Border England ITV1 Central West ITV1 Granada ITV1 Anglia East Channel TV STV Grampian North Client Reading: HDTV Channels Shut Down: A Sign Of Things To Come?

Much hype in the last 24 hours about yet another new IP video venture. Sezmi, formerly known as Building-B, has received $17.5 million in funding from venture capital firms and includes prominent engineers Buno Pati and Phil Wiser (formerly of Sony) as its founders. It hasn’t disclosed where its initial trials are taking place, nor who its broadband service provider partners are, but is now at least public about its intended offer. However the company tries to spin it, Sezmi’s new service is pretty much a reiteration of many previous attempts to use digital terrestrial television to compete with cable network providers like Comcast. Predecessors have included USDTV, Geocast and iBlast, and the most recent, Moviebeam, gave up in December last year after attracting a paltry 1800 subscribers. All these services have tried, one way or another, to use capacity in the digital TV broadcast spectrum to increase the range of programming and choice and offer an alternative to cable TV. As with Moviebeam, Sezmi will use a DVR set-top box to store programmes and give viewers a quasi-VOD experience through an integrated program guide. And it’s certainly an impressive DVR – the 1TB hard drive could store 1000 hours (42 days) of video depending on quality settings. Unlike Moviebeam, Sezmi will also use a broadband connection to download programmes, alongside the over-the-air broadcast signal. And it’s the broadband part that Sezmi claims makes it TV 2.0. It suggests that it will partner with broadband service providers, while at the same time claiming that infrastructure costs are low. Given that BSPs are moaning about the cost of transporting rapidly growing mountains of IP video, I suspect that Sezmi’s position on infrastructure costs may fall on deaf ears in the telco community. What Sezmi is doing, of course, is trying to replicate what is already happening in Europe, where telcos (eg BT Vision) are combining DTTV with IP video to create a quasi-IPTV service. There are several key differences, however. First, Sezmi is not the telco, and does not provide broadband service, so until it sorts out that part of the equation it’s not clear whether company will be competing as an over-the-top provider or simply enhancing existing managed BSP packages. Second, the US DTV service is simply not as consistent as what’s available in many parts of Europe. Sezmi claims it has developed advanced indoor antennas for the ATSC system, but until we see this perform in the real world we will have to reserve judgment. Sezmi is targeting non-digital TV customers in the US, so it had better get a move-on. The 10% or so who still really solely on analogue terrestrial will have decided what to do after switchover within the next 12 months, and those using analogue cable will be tempted with new cable offers to switch to digital. One way or another, Sezmi in its current form looks like it will go the way of its not-so-illustrious predecessors. Client Reading: US IPTV Forecast and Outlook: $13.7 Billion by 2012

We have just published a major piece of research into what amounts to a new digital consumer device segment: Mobile Internet Devices (MIDs). With screen diagonals of between 4” and 6” these touch-screen handheld gadgets fill the gap between web-browsing cellphones (smartphones) and miniature portable computers (for example UMPCs and netbooks). They’re the latest attempt by computing, mobile and consumer electronics companies to create a market for handheld gadgets that give consumers access to the full range of Internet applications they are familiar with on their PCs. Our estimates indicate that annual revenues will exceed $17 billion by 2014. Global sales in 2008 are expected to reach 1 million units, and will continue to grow at an average annual rate of 102% to reach 69 million units by 2014. The report also examines the main rivalry in technology platforms between Intel and ARM. ARM dominates the mobile phone industry today, in spite of several attempts by Intel to penetrate this lucrative industry. Intel is hoping that MIDs will finally give it the opportunity to build a significant business outside of its PC market stronghold. A key part of Intel’s strategy will be its Moorestown system-on-a-chip, but until this arrives in 2009 or 2010 ARM-based vendors will be able to use this window of opportunity to establish market leadership positions. The report concludes that the proven advantages of the ARM ecosystem in mobile devices will eventually outweigh those of the Intel platform and that ARM devices will comprise the majority of MID sales thru 2014. Client Reading: Mobile Internet Devices: Heavyweights Do Battle For $17Bn Prize

Sky’s quarterly results announcement today focused on steady growth in the total customer base. Given the tough economic background and talk of falling consumer spending it is no mean achievement for the company to add 289,000 new customers in the three months to March, although churn left a position of 56,000 net new adds. The company remains on track to meet its 10m target by the end of 2009. Given the constant promotion Sky is giving to HDTV, however, its performance here is very disappointing. 43,000 customers added HD service in the quarter, bringing the total to 465,000, or 5% of the total base. Of those 43,000, 24% (10,000) were customers new to Sky. This means that less than half of one per cent of Sky’s customer base at the beginning of the quarter were persuaded to upgrade to the HDTV service, in spite of the constant bombardment of Sky HD advertising and cross-promotion. Sky touts the addition of more channels during the coming months, but even with 18 to choose from the selection looks poor compared to the hundreds available on standard Sky multi-channel and premium packages. To be fair, it is the best performing HD service in Europe (which doesn’t say much for the rest), and it has also taken HD providers in the US nearly 10 years to make HDTV a success. Sky’s numbers illustrate how tough it is for service providers to persuade their existing customers to add new services. Even Sky+, which is the fastest growing service in terms of new customers, was added by only 1.7% of existing customers, and only 1.5% added broadband. Multiroom fared even worse than HD in Q3, although it had already built a much larger base of users. Sky’s position on HD is that it took several years before Sky+ adoption began to grow rapidly, and it expects a similar pattern to emerge with HDTV. But this will be little encouragement to HD broadcasters and indeed set-top box vendors. Until Sky changes its marketing approach (making at least some of its own and partners’ HD channels available at no extra charge, and reducing set-top box costs) it seems that HDTV is set for a long slow journey towards mass adoption. Client Reading: HDTV Channels Shut Down: A Sign Of Things To Come?

Strategy Analytics' latest quarterly mobile phone handset data is released today. In spite of fears of a global recession unit sales were up 14% in Q108 v. the same period last year. Even in a market as large as this (282 million units shipped in 3 months) the rate at which market shares can change is a warning to current leaders not to lose their focus. Motorola's problems are well documented, but to lose nearly 9 percentage points within 12 months is an indication of the malaise within the company. Its share is now 9.7%, having been nearly 22% as recently as 2006, and both LG and Sony Ericsson are within striking distance of Motorola's third position. Samsung has also been a major beneficiary of Motorola's decline, and is now a clear no. 2 behind Nokia. The Finnish giant maintained its 40% share attained in Q407, although its US performance remains an area of concern. Client Reading: Motorola, Sony Ericsson and Apple Lose Global Handset Marketshare in Q1 2008