Digital Media Strategies

We cover all of the major media sectors, including advertising, TV and video, music, games and social media.

April 2, 2014 17:23 dmercer

As if there wasn’t enough choice in the expanding OTT TV market, Amazon has joined the fray with its $99 Fire TV digital media adaptor. Pitched as a faster, sleaker unit than its rivals, it puts Amazon squarely up against American internet heavyweight rivals Apple and Google, as well as specialists like Roku, in the race for viewers of tomorrow’s TV screen.

Amazon is certainly not new to the video market. It was a leader in the transition to internet-delivered DVDs and Blu-ray Discs and then in internet-delivered video downloads. Its Amazon Prime Instant Video and Lovefilm services have established the company as a leader in OTT video and, like Netflix, it is now commissioning its own original content. And while users could get Amazon’s services on other connected TV devices, Amazon didn’t have its own solution to the TV problem.

Fire TV solves that problem, as well as bringing games and, later, music to the TV screen. Amazon’s content portfolios and wide market presence will automatically make it a serious player for anyone looking for an alternative source of entertainment on their big screen. But like Apple TV and Chromecast, what Fire TV does not do is offer a serious threat to incumbent pay TV operators like Comcast and Sky, which still have most of the rights to premium live sports and first-run movies which OTT providers cannot offer. OTT TV customers are adding Chromecast, Apple TV and, now, Fire TV, to access additional content sources, including their own personal videos and web-sourced content, on their big screen, as much as to watch new content sources like Netflix.  There is little evidence so far that the so-called cord-cutting phenomenon is having a significant impact on pay TV providers, although they are clearly watching internet rivals closely and making their own plans for OTT. Sky’s Now TV is the best example of one such response and we expect pay TV/OTT partnerships to proliferate over the coming years.

One missing element appears to be social networking: still we have not seen a good example of integrating social networks like Twitter and Facebook into an OTT TV experience. Perhaps we will have to wait for Twitter and Facebook's TV adaptors to see that...

But Amazon appears to have done a good job of differentiating itself in what is already becoming a crowded market. It is right to have addressed the critical big screen user experience question, although we question whether voice control is necessarily the right approach – our research suggests modest customer support for this innovation. It is also right to focus on content discovery, a key challenge for all video providers. Innovations like multi-screen gaming will also help Fire TV to expand its appeal beyond video services.

All in all, a promising debut for a powerful new player in the OTT space and we look forward to the inevitable responses from its major rivals.

David Mercer


January 9, 2014 19:52 ebarton

Day three saw unchanged weather and dire traffic as the show headed past half time and the key messages started to be digested by attendees. Clearly the headline buzz bullet points are:

- 4K, some panels boast 4k resolution in order to use it as a marketing message. Silicon, upscaling quality, framerates and a host of other key factors impacting IQ range from bad to non-existant from these (generally) lower tier, less recognisable manufacturers. 4K content is another discussion entirely. In summary, wake me up when Sky Sports 4K launches.

- wearables, thaazands of'em (apologies to Michael Caine). If it has a chip, make sure you add a strap or some way of sticking it on a person. My colleagues in WMS have made some headway in divinating the key points on the app side of the wearables equation. The quantified self and wellness are another two big themes of this show which rely partly on the wearables story.

 

1. WWE are Family

WWE, the organisation behind the hugely popular wrestling entertainment franchise, announced an OTT subscription service to enable the audience to access live and on-demand wrestling. Monthly cost is $9.99. US launch is late February 2014 with UK, Australia, Germany, SIngapore and the Nordics to follow by the end of 2015. Device coverage includes desktop, iOS, Android, ps, Kindle, roku, Xbox, major IETV brands.

The content included comprises all twelve live PPV wrestling events annually including Wrestlemania. Other content includes a daily live studio show and a reality show based on retired wrestling legends sharing a house together and the hilarious japes which result. Live programming is augmented by an on-demand library making over 1000 hours of wrestling content available to subs.

 

Let's get ready to rumble

- WWE has a proven track record in pioneering distribution strategies which have subsequently become the industry standard for sports entertainment and conducts much research into the huge audience which will pay to get ringside. Of 116m TV homes in US over half have a self-confessed WWE (not wrestling, WWE, an important distinction) fan. This fan base loves online video and is twice as likely purchase online viewing than the average American. Device ownership and usage metrics also track well above average and their love of WWE is beyond question.

- WWE already performs well via the OTT channel: a subscription based product is a natural evolution of a maturing strategy. Other US sports rights owners have already leveraged the OTT channel effectively and WWE will hope to replicate if not surpass the success achieved by the NBA, NFL and particularly MLB.

- WWE Network at $9.99 a month substantially undercuts the cost of accessing WWE PPV broadcasts via TV which costs around $675. These aren't directly substitutable products: the main screen experience is still differentiated from the more intimate connectable device based viewing experience: try convincing ten of your college buddies to come round and watch the wrasslin on a tablet with beers and nachos. However the price difference is substantial and will cut into PPV revenues which won't be the best news service providers will get this week. WWE is disintermediating TV distributors by using the Public Internet to reach the audience directly: straight out of the Digital Media Analyst's playbook. Naturally OTT sub revenues don't have to be shared with anyone and presumably enjoy much higher margins than PPV revenues. Also WWE gets to cultivate a deeper relationship with the fan base. Deeper awareness and knowledge of what makes their audience tick will be gleaned from online viewing habits and will enable WWE to sell advertising at higher rates as well as inform future programming development.

 

Stone Cold Steve Austin

- The headline risk is in whether WWE shrinks the dollar volume dropping to the bottom line by enabling die hard wrestling fans to access PPV content at a 70 per cent discount to TV. Some of this is mitigated by imposing a 6 month minimum subscription period on the OTT product and some more is mitigated by the fact that the experiences are not directly substitutable. It is conceivable that a hardcore fan will subscribe to this AND purchase some of the PPV shows when they want the big screen experience. Additionally this is a long term play for WWE: while unlikely I suspect Vince McMahon would be willing to take a gentle bodyslam in the first year in return for the chokehold of higher margin revenues over the long term.

 

2. For what we are about to re-Vevo

In the round of Analyst briefings and meetings it is easy to become slightly jaded at the longer term attitudes of some senior execs for whom everything seems focussed on market share, exits, bottom lines, audience metrics and whatever else makes the compensation committee reach for a bigger chequebook. So a chat with Rio Caraeff who founded online music video service Vevo was a reminder that there are still some firms chasing the end of a visionary's rainbow.

 

Take me down to the Paradise City

- Online music video is a serious business: SA consumer research shows that it is the number one online method for teenagers to access music. It doesn't matter that there is a video playing: the major online video platforms allow the audience to treat them as they would an audio streaming service with playlists, discovery and recommendation tools which would be familiar to any Spotify jockey.

- Service is also free and ad-supported. Vevo has become a kitemark for quality music video online. Before Vevo searching for a popular music video on Youtube would yield thousands of low quality versions. Now Vevo is the key Youtube MCN with dozens of artist channels which usher the audience to the high quality official version. You can still stick a Daft Punk soundtrack on your boring holiday video featuring your insufferable offspring, just don't expect it to nix the Britney Spears cover version in the Youtube search rankings.

- territorial coverage is good and improving: we expect territorial rollout to continue through 2014 to increase markets from 13 to around 20 by year end. Device coverage is already tier one as demonstrated in our Digital Media Distribution Tracker. The commercial model will continue to evolve with some innovative release strategies promised for 2014 which will drive premium CPM rates higher still.

- the macro story is excellent: our OTT and digital advertising forecasts show that Vevo is riding the crest of two substantial growth waves with plenty of runway left for growth: OTT consumption and online video ad spend.

 

Like a wrecking ball

- working with music rights brings to mind the dentistry lesson from Marathon Man. The main constraint on Vevo's global rollout is negotiating publishing rights in each additional market.

- emerging markets retain the anarchic nature of low quality music videos attracting low to zero dollar CPMs and brands who continue to place a very low value on the online music audience, Vevo still has a substantial evangelical job to do in many parts of the World.

 

The tale of how Vevo reclaimed the music video experience online, cleaned it up, gave it a stiff polish and as a result substantially improved the value proposition to advertisers is likely to be taught in business schools a few years from now (don't hold that against them). We'll take a closer look at Vevo and online music video in general in the near future as this is a form of music distribution which doesn't get the attention it deserves.


January 8, 2014 13:40 ebarton

Day two of the Consumer Electronics Show, weather has remained fine and amenable to the conference grind. Traffic has worsened though the transportation backlog resulting from the NE storm has abated somewhat and, while some are delayed, most attendees are making it to Sin City for the start of the show proper. 

 

1. PlayStation Now: cloud gaming promise for buoyant PlayStation platform

PlayStation announced plans for launch of PlayStation Now: fully streamed remote server (or cloud) provisioned gaming to all PlayStation platforms, Bravia TVs, tablets and smartphones. US beta in January followed by full rollout by the end of summer with global rollout plans to be confirmed in the near future. Rental and subscription have been confirmed as the two charging models. PlayStation recommend a minimum 5MBPS downstream connection for an optimum experience.  

The promise of video streamed games on demand may finally start to be fulfilled. VSGoD services stream games to any connected device with a screen and controller inputs. Because the game is processed remotely it doesn't matter how powerful the hardware is: hence a graphically intense PS4 title is playable on a handset as long as the network connection is good enough. 

PlayStation also confirmed that the service will eventually be extended beyond Sony devices marking the emergence of a digital platform with increasing levels of device agnosticism. Android, iOS and whatever OS compatible PS NOW apps could deliver a PlayStation gaming experience to non-Sony devices. The potential addressable market, particularly when we include handsets, is at a completely different scale to what PlayStation has had to work with in the past. 

This was announced at the same time as confirmation that PlayStation 4 had sold through 4.2m units as at 28 December 2013, beating Xbox One by around 1m units confirming our view that the cheaper price and graphical superiority would resonate with consumers, despite a worse launch line up of games. PS4 has now outsold Nintendo's Wii U on an LTD basis, confirming an existential crisis for Nintendo in home consoles. Together Xbox One and PS4 have sold through over 7.2m units since November in a limited number of launch territories (neither has launched in JP yet), an excellent start to a new generation many believe may be the last for dedicated home console hardware. 

 

It's all a Stream

- At a stroke all Sony connectable screen based devices have access to a games catalogue spanning three home console generations, two handhelds and an Android based PS Mobile library. 

- Bravia smart TVs become games consoles. Handsets and tablets can suddenly play games with graphics significantly better than those they can process on the device. Once console only exclusives are playable on PC based laptops. 

- the technology works: graphically intense showcase God of War 3 looked and played well in a demo on a 60 inch Bravia. Only during particularly fast pans could one detect some minor judder and this would probably not be noticeable to a layman who wasn't looking for some indication of flaws in the stream. 

- PlayStation's huge back catalogue of games is one of the broadest, largest and finest games catalogues available. PlayStation now has a new way of monetising this catalogue. We expect there to be some negative impact on pre-owned games sales as gamers move to streaming catalogue titles instead of buying a second hand disc. 

- streaming games demos means there is no need to wait for large downloads for demos which take time and cost significantly more than streaming the same demo. 

- backwards compatibility can now be enabled by VSGoD rather than in silicon. 

 

Like the Cat that got the Stream

- we expect this will be additive to retail sales (both packaged and digital) for some time yet. Spending on streaming will cannibalise retail pre-owned sales to a mild to moderate level however retail pre-owned will continue to thrive as it is a distinct consumer experience. Whether it will increase overall spending on catalogue games is an interesting question: initially we suspect not but that spending will shift from retail pre-owned and catalogue sales to streaming leaving overall market size at around the same levels. Obviously as non-Sony devices are enabled the long term potential for spending growth is significant. 

- we wonder whether fixed and mobile networks can handle the demands of fully streamed gaming. Headline speed of 5MBPS isn't too demanding in many territories (it will be an issue in some) but bandwidth caps will be an issue. Certainly using a mobile network to access PS NOW could be problematic on many levels for a few years yet. PlayStation may want to explore connectivity bundled with PS NOW subs in order to drive subscriber growth. 

 

We will revisit our VSGoD forecasts in the light of this announcement: backing by a major platform owner is a significant fillip for the distribution method. 

 

2. Cloudy with a touch of TV

Sony also announced plans to launch a subscription based OTT TV service (aka virtual MSO) in the US market, combining linear TV and on-demand services such as Netflix. Details were scant though they did confirm they would begin testing the service this year in the US. 

 

Veni, Vidi, OTT

- Sony has a large installed base of addressable devices to target across PlayStation, Bravia TVs, Vaio laptops, handsets and tablets so might not face similar initial market volume challenges which spooked Intel's Oncue initiative (reportedly close to being sold to Verizon who might well compete with Sony in this nascent space). 

 

OTT-eetering

- good content is expensive and outside a deal with Viacom precious little is known about Sony's content relationships. What we do now is that content owners will not lower the price for a new entrant: Sony will have to sign some big cheques and guarantee some enormous minimum payments to secure the quality of TV content which is necessary to drive subscription growth. 

- the competition for premium TV and video subscriptions in the US is already intense. Getting a new service to scale and grow fast enough to not sustain huge losses resulting from payment guarantees to content owners will be challenging if not impossible. Sony has spent some years sustaining significant group wide losses which were relatively traumatic: does it really want to dive headlong into a business which could repeat this process?

 

We expect premium OTT TV subscription services to become a significant segment of OTT spending over the next five years and our latest OTT forecast, available at

http://www.strategyanalytics.com/default.aspx?mod=saservice&a0=20&m=5#1

reflects this view. Our forecasts will remain unchanged providing two to three providers launch in the US alongside Sony in 2014.

 

3. Viva Conviva

Conviva is cloud based technology which enables online video providers to optimise stream delivery and quality. Conviva code is embedded in apps provided by services such as ESPN and HBO. This enables realtime reporting of a dizzying array of video performance metrics such as bitrate, resolution, video protocol, device, view time, player version etc etc. This data is aggregated and used by Conviva to optimise video delivery at a huge scale meaning Conviva algorithms will reroute stream delivery across the public Internet depending on whether a given CDN's performance is dipping or will recommend delivery at a different bitrate in order to optimise quality across millions of streams, amongst a host of potential actions to improve the quality of what the audience sees on the screen. 

 

Convivial

- Conviva's scale, with much runway for growth remaining, is impressive. Conviva optimises 4b streams per month across 1.6b devices. This yields a huge amount of data to inform Conviva's algorithms to further optimise video delivery. 

- Conviva is agnostic: it doesn't care about devices, OSs or competitive considerations meaning it works with everyone and hence has a uniquely broad view of online video delivery. 

- Conviva has highlighted numerous additional applications for the huge and valuable volume of data it collects (which I won't share to spare their blushes): this is a firm with significant runway for growth territorially, potential new clients and for new product development. 

 

I still need Convi-vincing (sorry)

- I'm struggling to think of a negative point. Maybe someone will acquire them and screw things up. Maybe there will be a zombie apocalypse. Let's cross our fingers. 

 

Onto day three, we will keep you updated with what we think are the interesting media related developments from the show. 

 


January 7, 2014 14:35 ebarton

Strategy Analytics Digital Media Analysts were in attendance at CES in Nevada, our thoughts following day one at the show follow:

A cool but sunny day, good for rushing around at a conference.

- ATT's mobile data network held up well for the author

- Vegas traffic watch, severe

- the storm in the NE US meant a number of speakers and attendees were delayed in arriving in Vegas, all the conversation was about transportation nightmares

1. Extending TV advertising's reach into tablet and smartphone environments

Innovid is working with Cisco while Yume is working with Gracenote to enable targeted tablet and smartphone video advertising synchronised with broadcast TV ads via ACR.

Reasons to be excited:

- SA quantitative data shows the proliferation of devices (TTS and WSS) while SA qualitative research illustrates increasing levels of audience usage creating a huge opportunity for advertisers

- tablet and handset viewing tends to drive higher rates of engagement driving higher levels of brand recall: tablet and handset viewing is more personal and intimate than TV viewing and hence the impact of advertising via these devices tends to benefit 

- technology enables a number of strategies, obviously TV brand advertisers can deploy retargeting and resequencing campaigns however conquest campaign strategies are possible eg, Ford runs TV ad which Chevy uses as triggers to target other devices

- audience tracking on these devices is much more accurate than the TV audience panel approach enabling better ad targeting and more sophisticated strategies: TV advertising is still a relatively blunt instrument

But what is currently missing are any indications that brands care about the technology or want to use it:

- this is an extension to linear broadcast advertising which will maintain a leading role in mass audience brand advertising and hence brand spending

- suspect that it is most likely to cannibalise online display budgets than TV budgets which are having an increasingly challenging time justifying their existence

2. Technology manufacturers seem to have rushed way ahead of the content industry again: 4K party starts but content is arriving late

Displays and technology enablers are boasting of their 4K capabilities but there is precious little evidence of content to take advantage of the technology.

Reasons to be excited:

- 4K demos are almost universally stunning when witnessed in person

- Amazon is working with Samsung, Warner Bros, Lionsgate, 20th Century Fox and Discovery to drive 4K usage. Amazon Studios is filming all new content in 4K. However apart from promises of cooperation there was precious little detail about any concrete release dates or commitments.

4k not OK?

- TV manufacturers and broadcast technology manufacturers are constantly pushing new standards and innovations to shorten the traditionally glacial upgrade cycles for displays and equipment viz, 3D. Is this another case of crying wolf a good few years before the wolf is anywhere near the farm?

3. Valve's Steam Machine initiative has approved multiple manufacturing partners, staying on course for a H2 2014 launch

iBuyPower, Digital Storm, Alienware, Falcon Northwest, iBuyPower, CyberPowerPC, Origin PC, Gigabyte, Materiel.net, Webhallen, Alternate, Next, Zotac and Scan Computers are all making versions of the PC-based gaming-optimised platform which will run Valve's Linux based OS designed to take Steam PC gaming from the PC monitor to the main screen TV

Reasons to be excited

- perhaps a platform which will enable PC to more effectively challenge consoles by addressing many of the configurability and complexity issues which deter many from PC gaming, as well as explicitly targeting the living room TV through Steam's Big Picture Mode and the wireless console style controller

- potential for growth for the already huge Steam platform which reported 65m active accounts in October 2013

Load of hot steam?

- there will be multiple models, multiple configurations and many different levels of graphical capability, there is no fixed target for developers and a risk of any benefits being lost on confused consumers bewildered by the many models of Steam Machine available. Steam Machines risk becoming an unconvincing Kite mark unless these issues are addressed.

- to drive excitement in new users Steam needs an exclusive game. There may be announcements down the line but unless there is a major title exclusive to the platform it is difficult to be too optimistic.

- launching games platforms is expensive: will Valve back up the initiative with the kind of marketing spend which will penetrate the mass market's conciousness or is this more about converting existing PC gamers to Steam Machines? The latter will be tough, enthusiast PC gamers do not need a simplified technology platform.

- PC manufacturing is very very low margin: how much patience will these manufacturers have if sales are slow and competition intense given the number of manufacturers involved?

We will continue to update you with any further media and entertainment related developments at the show.


December 12, 2013 01:26 dmercer

I was pleased to take part in yesterday’s Forecast:Hollywood event in Beverly Hills, focusing on the outlook for multiscreen and OTT video and TV. The event is one of many offered by industry body MESA (Media and Entertainment Services Alliance) and draws an audience from the surrounding community of studios and related technology and media firms.

It was valuable to hear a variety of views on the changes which are engulfing the media industry. IBM and EY (Ernst and Young) took the management consulting perspective and suggested ways in which media firms could transform their businesses to deal with the emergence of the connected society and social enterprises. I was encouraged to hear the findings of IBM’s research of CxOs, who believe that technology is now the biggest disruptive threat to their businesses, and that understanding consumers is critical, whatever their position in the value chain. That can only be good for a consulting firm like Strategy Analytics which focuses on consumers and the impact of technology.

My own panel concluded the event with a discussion of the future of television. My presentation kicked off the debate by suggesting, contrary to persistent press articles, that TV is changing rather than dying. The global population of TV-addressable displays is going to reach more than 7 billion within the next five years, driven by personal and mobile devices. In fact, my analysis shows that we are in the second major growth wave of TV-addressable devices in recent years. Hollywood and the TV firms must start to embrace this world of new TV devices as their own.

Strategy Analytics clients are welcome to contact me at dmercer@strategyanalytics.com for a copy of the full presentation.

David Mercer


April 10, 2013 12:23 dmercer

I have had it confirmed from BSkyB's spokesman that the issue affecting the collapse of its Now TV service on Monday night was identified and “a fix has been put in place”. Sky is “now testing the service to make sure the fix ensures that we don’t see another service outage”.

Significantly, it seems that the Now TV trial of Sky Sports earlier this year failed to identify this particular technical issue (which remains publicly unidentified). As Sky says: “the issue was not thrown up in testing, hence why it was unfortunately only caught in a live environment”. This does raise the inevitable question, if the trial was not conducted effectively, will other issues not identified by the trial also only arise when real, paying customers are expecting to watch the big game?

It would appear that BSkyB is unconcerned about capacity issues, suggesting that the technical issue lies elsewhere. The core infrastructure of Now TV is shared with Sky Go, which recently supported more than 330,000 concurrent users for the Real Madrid-Manchester United game.

The business impact of the Now TV service failure on BSkyB is clearly not insignificant. Now TV is not only issuing refunds to any customers who paid for a day pass to watch the Manchester derby, but to any customer who has ever purchased a Sky Sports day pass since the service launched. That was only on March 19th, so in less than three weeks prior to Monday it seems unlikely there were too many paying customers. Now TV is also offering customers who were unable to watch on Monday five free day passes to use at a future date. Given that there were at least 5000 customers who had free passes on Monday, this equates to a minimum value of £300,000.

By issuing free passes to so many users, Now TV's Sky Sports service has effectively reverted back to trial mode, foregoing most of the commercial revenues which might have accrued over the first couple of months. Let's not forget that the outage also appeared to affect some of Now TV's movie subscriber customers. BSkyB will be hoping that any future technical issues can be resolved over the next few weeks without any further negative publicity.

David Mercer

Now TV Customer Letter

8/4/13

Hi Everyone,

We’re so sorry about last night. Due to an unforeseen technical issue we know some of our customers couldn’t access our service. As sports fans we totally understand the frustration you must have experienced if you came to watch the big game.

Having identified the cause of last night’s problem, we are now working hard to make sure that this doesn’t happen again.

For anyone who has ever purchased a Sky Sports Day Pass since launch, we have refunded all of your £9.99 passes. From this point the refund will be in your account within 3 to 5 working days (depending on your bank).

By way of an apology, we will also be sending everyone affected (including #Tweet4YourTicket winners) 5 free Sky Sports Day Passes so you can come and try the service again. We've been processing these today and they will be emailed to you tomorrow.

Apologies again from everyone here.

NOW TV


April 8, 2013 20:41 dmercer

Live televised football games don’t come much bigger than the top two teams in the English Premier League facing off at 8pm on a Monday night. Sky’s over-the-top TV service, Now TV, chose this game to offer 5000 free day passes (normal price £9.99) as a promotional tool.

I settled down at 7.45 having claimed my free voucher earlier in the day, with some very friendly assistance from Now TV’s online chat service (I had tried to use the voucher via the Xbox app but it wasn’t enabled so I was charged the full amount – I have been offered a refund).

Initially video quality was surprisingly good (I had heard that video quality on the recent Now TV Sky Sports trial was not entirely satisfactory). The main problem tonight was lip sync: audio was running ahead of video markedly for both studio and advertising material. But that’s not a problem you’ll notice for live sports so everything was looking good…

… until 7.55pm when my Xbox app shut down the video and presented an error message. After several attempts to restart the service the error message kept appearing. Checks at www.xbox.com/status suggested Xbox had resolved earlier problems at 7.35pm with Now TV but clearly that wasn’t the case. That message had disappeared by 8.30pm and Xbox claimed the Now TV app is “up and running”. I supposed that is true because the app opens. It just won’t run any video.

Checking Twitter it appears Now TV acknowledged problems specific to the Xbox app which they have tried to resolve. But there is a steady stream of complaints from Now TV users about the service failing, on multiple devices, including users who have paid £9.99 for the service and are demanding refunds. There are also reports that users of other Now TV channels (eg movies) are seeing a deterioration in service.

At 8.43pm Now TV’s Community Manager posted the following comment on the community notice board:

“We’re really sorry, but we have been experiencing some issues this evening which will obviously have impacted your viewing of NOW TV.

“As a result, we’ll be issuing a full refund tomorrow to all customers who had an active Sky Sports Day Pass during this time, and will email you to confirm this has happened.

“For those of you using a free pass, we will be contacting you with another free pass for you to use at any time.”

As I write at 9pm the stream of complaints on Twitter continues. This looks like being a major publicity disaster for Sky’s Now TV service. I will try to get official explanation of events in the morning. In the meantime this fiasco is confirmation that OTT TV is a long way from prime time when it comes to live sports, which was always going to be the most challenging genre, even when major powerhouses like BSkyB are behind it.

David Mercer


October 26, 2012 14:37 dmercer

The UK’s Freesat digital television service provider begins its television advertising campaign today for its new hybrid broadband/broadcast TV service, “Freetime”. We’re supposed to write this as <free time> so don’t blame me if it looks like my fingers have slipped on the keyboard.

I’ve been lucky enough to have been using the newly launched <free time> service for the past couple of weeks, courtesy of a new Humax <free time> HDR-1000S set-top box. The “hybrid” part means that the Freesat EPG integrates the OTT catch-up TV services from providers like the BBC, ITV and (coming shortly) Channel 4 and Five. In practice this means that the user can search backwards in time through the EPG, find a programme which was broadcast (in that traditional, legacy sense of the word) at some previous point, select the programme and watch it, more or less instantly.

From an end user perspective this should mean that the EPG becomes a gateway to online TV apps and services without the user even having to think about it. And in practice <free time> comes pretty close to delivering on that promise. At the moment only the BBC and ITV channels can make use of the hybrid capabilities; in those cases the user simply selects the left cursor on the remote control to surf backwards through the programme schedule. Selecting a programme which is available online (which the vast majority appear to be) takes the viewer automatically to the online player app, and to the specific show selected, and starts the show playing. There are inevitably a few pauses along the way, since however fast the broadband connection there is a fair amount of processing going on. But typically I have found that shows start within 30 seconds or so. That’s not bad when you appreciate what technology is involved in getting this to work, although perhaps typical users might wonder initially whether there is a problem with the service. Humax might want to think about showing some sort of “please wait” message while all this is going on.

Freesat is also planning to launch second screen apps to allow remote EPG control and content shifting. That's something I'm really looking forward to.

All in all, it’s an impressive effort and watching catch-up TV soon becomes second nature to watching regular live broadcast TV channels using the EPG. Unfortunately I have to report a couple of issues. Initially my ITV Player was simply failing to load, although this now appears to have been resolved. Secondly, I have found that the box does not appear to be caching enough content to allow for smooth playback. My set-top box is connected to a 4Mbps broadband connection and other devices using the same connection successfully stream both SD and HD content from the BBC’s iPlayer. Eventually I found a a solution: pausing the catch-up show for 30 seconds or so appears to load the buffer sufficiently that it then plays smoothly without further interruption. I have asked Humax for feedback and am awaiting comment.

The other aspect to <free time> is the ability to market television shows via the EPG. The “Don’t Miss” feature essentially advertises TV shows already broadcast and allows the viewer to watch them instantly. I have found this surprisingly compelling, given that I am not particularly open to searching for TV shows I am not familiar with. Perhaps the novelty factor will wear off, but this is potentially a rich seam of innovation and source of additional eyeballs which the BBC and other free-to-air broadcasters will want to mine.

According to Strategy Analytics research, opposition to pay TV has grown significantly in the UK in the past two years. We’ve seen a 13% net rise in the number of people who believe all TV should be free and supported by advertising or public funding. <free time> will go some way to ensuring that free digital satellite TV remains competitive against hybrid service offerings from Sky, Virgin Media and BT.

David Mercer

Finally, if you’re thinking this all sounds eerily familiar, you probably have in mind the Youview service from Freeview, the rival UK digital terrestrial TV platform, which does pretty much the same things, albeit using a very different technical platform. But Iwon’t bore you with those issues today, strategically significant as they are. Just sit back, select your show and enjoy. TV schedules just entered the digital age.

Client Reading: Attitudes to TV Business Models: Opposition To Pay TV Is Growing


October 3, 2012 09:33 dmercer

If the television industry is going to get swept up in the apps hype wave there is little sign of it at this week's Appsworld event in London. There were hardly any stands demonstrating apps aimed at smart TV viewers, Accedo being a notable exception. And the dedicated TV apps conference track has focused on the many barriers which stand in the way of this emerging market while bemoaning the absence of any major revenue generation opportunities.

Accedo`s Michael Lanz did his best to drum up some enthusiasm for the TV apps business, claiming that he can already make business cases for ad-supported apps, if only in the larger smart TV markets. At the same time he admitted that "TV apps payment platforms are a mess right now. I haven't been able to make one payment using my smart TV and this is my business." Partly because one-time payment mechanisms are so user-unfriendly he believes that the TV apps business will be driven almost entirely by ad- and subscription-driven business models. That sounds a lot like how the TV industry works today, and Lanz's argument makes sense: television's industry structure will encourage entrants to adapt to its way of doing things.

The other key theme has been openness and standards, and we have heard the usual complaints that most developers will never be able to support smart TV until today's fragmented market evolves into one where one or two platforms are dominant. Unless, that is, you are the BBC, which has hundreds of developers making sure that iPlayer is available on 400 different connected devices. The BBC is now promising that the red button will evolve into a connected TV service, so that viewers will connect directly to the channel's respective online service by selecting the familiar red button on their TV remote control. Eventually the BBC will offer multiscreen red button services, so that smartphones and tablets will detect if the viewer is watching TV and synchronise content.

The most valuable contribution so far has come from Facebook's Karla Geci, Strategic Partner Development Director. In response to my question about advertising opportunities, she noted that multiscreen was allowing advertisers to become better storytellers. This is precisely what needs to happen - the active involvement and drive from the creative community - if multiscreen and smart TV technologies are not to be consigned as distant memories like so many other advanced TV technologies over the past decade or so.

David Mercer


July 16, 2012 18:07 ebarton

Sky is launching NOW TV:

  • To extend Sky’s reach to consumers unwilling to commit to a pay TV subscription: currently 11m UK households do not have pay TV
  • As a defensive measure against the proliferation of OTT video and TV services in the UK market such as Netflix and Lovefilm which have proven particularly adept at making themselves available via a growing range of connectable devices
  • Because it is a low risk strategy: launch marketing spend will be significant however NOW TV is using the same content rights, distribution technology, sales and customer service infrastructure which underpins Sky TV and Sky Go. NOW TV offers a way to increase ROI on investments the group would be making anyway.

Sky’s growth is slowing while competition is intensifying

Sky’s core pay TV business is slowing and limited growth potential remains in untapped households and in increasing ARPU of existing subscribers through upselling additional content and services. Competition is intensifying from Virgin Media and a rush of enthusiastic OTT specialists targeting a rapidly growing addressable market of IP connectable devices. Sky’s strategy of increasing the value proposition of the pay TV subscription has served it well for many years however it is not the ideal tool in a fragmenting environment in which consumers want more flexibility across more devices.

NOW TV diversifies Sky’s competitive arsenal

NOW TV is Sky’s vehicle to break out of the constraints of pay TV subscriptions increasing growth potential following two of the slowest quarters in Sky’s history for net subscriber additions (only 15k in Q1 2012). NOW TV will augment Sky’s existing standalone OTT service Sky Go and enables a greater degree of market segmentation without eroding the premium positioning of the Sky brand. It is also a recognition of the viability of a fast growing addressable market of connectable devices in the UK and the increasing traction of alternative content charging models in particular short-term subscription and transactional VOD. Given the emergence of Netflix in the movie space, multiple online catch-up services from UK terrestrial broadcasters, growing spending on transactional platforms like iTunes and Blinkbox and ongoing high usage of illegal online streaming providers, Sky’s strategy acknowledges the reality that there are plenty of competitors ready to grab their share of audience consumption on IP-delivered services if they do nothing.

NOW TV will target devices which would otherwise erode Sky’s share of the audience: platforms which were once threats become opportunities. NOW TV will target connected TVs, games consoles as well as the rapidly growing tablet market. We believe that the number of connected TVs, consoles and tablets in the UK will double to over 26m in 2015 from 13m at the end of 2011. Sky will leverage the expertise it has developed in offering multiscreen and out-of-home distribution to existing pay TV customers, the connected TV expertise of the recently acquired Acetrax as well as a formidable content arsenal in evolving NOW TV.

NOW TV can even target homes which subscribe to competing pay TV services by distributing content through connected TVs, consoles or tablets. It will be interesting to see if Sky could convince customers to acquire their content directly via NOW TV rather than subscribing to Sky channels via a competing pay TV service provider: will consumers prefer to add a Sky channel accessible only via their STB rather than through NOW TV which will be accessible through connected TVs, consoles, smartphones and tablets?

Will NOW TV succeed?

The appeal of NOW TV is greatest in sports and movies where Sky’s content rights differentiate it from other OTT services: Sky enjoys a lock on FSPTW movie rights across all six Hollywood majors and the broadest collection of UK sports rights including Premiership and Champion’s League football, F1 and Test Cricket. Illegal sports streams are widely available online (especially for football) and Sky will look to monetise as much of this audience as possible through TVOD matches on NOW TV. Entertainment will be a tougher proposition given the strength of terrestrial broadcaster catch-up services in the UK lead by BBC’s iPlayer however Sky’s content rights to US programming again constitute a significant point of differentiation from the rest of the market.

However NOW TV is entering a relatively small market by pay TV standards:in 2011 the UK OTT TV and Video market was worth less than $395m and is likely to grow around 30 per cent in 2012 to top half a billion dollars by year-end. While we expect NOW TV to be a significant overall market driver for OTT distribution in 2012 and beyond it will be some time before NOW TV revenues significantly impact Sky’s overall revenues. If NOW TV can break 100k subscriptions by the end of 2012 and has started the arduous process of converting the illegal sports streaming audience to the paid option, it will be performing well.