Sony announced a major restructuring today. This is a vital step forward for the company, which has tried for years to bring coherence and unified direction across its various technology, device, media and service interest groups. Bringing all connected devices - Playstation, mobile and Vaio - under one group - Networked Products and Services - shows the company understands the importance of online capabilities across all its products and services. Existing TV and video products remain in a new Consumer Products Group. The challenge for Sony will be to develop a unified technology and product strategy across these various entities, and that will not be easy for groups that, in spite of progress in recent years, still do not work well together. Sony is not going as far as Cisco's familiar "the network is the platform" theme, but the development of PlayStation Network is clearly going to underpin a lot of Sony's developments across many of its product lines. Overall this has to be seen as a positive development at a time when the traditional consumer electronics market is in decline. If Sony executes successfuly and truly unifies behind a common objective, it will go a long way towards retaining the leadership position it has held for so many years. Twitter: twitter.com/dmercer15

Microsoft has announced that NBC Universal will provide movies to its growing catalogue of titles available for download through the Xbox Live service in France, Germany, Spain and the UK. The newcomer joins existing studios Warner, Paramount and MGM. The movie library will now total nearly 300 titles, and Microsoft claims that movie sales have doubled since the introduction of the new Xbox interface (NXE) late last year. Microsoft has brought over a team from the US to build up the Xbox Live activities in Europe, which are tracking somewhat behind what’s going on in the US. As I mentioned recently Netflix has had tremendous success with its movie rental service through the Xbox Live service in the US. Unfortunately Netflix doesn’t have a European activity yet, so until a deal with a European aggregator (Lovefilm?) can be signed, Microsoft is having to pull together its own movie deals. As with everything else in Europe, that’s no easy matter as rights have to be cleared in each country separately. Italy had to be excluded for the moment from the NBC Universal deal, for example, because of local exclusivity clauses. The Xbox Live library offers a mix of SD and HD movies, the latter in 720p. We are still waiting for the arrival of 1080p movies, both in the US and Europe. That will be a significant moment, because it will justify what Microsoft has claimed all along: that it doesn’t need to add Blu-ray capability in a world of online video. 1080p movies would obviously be a challenge in terms of file size, in terms of storage and network access, but it’s something Microsoft will have to address sooner or later, in spite of its claims that users can’t tell the difference between 720p and 1080p. Twitter: twitter.com/dmercer15 Client Reading: Digital Media Survey: An analysis of US Online Premium Video Users

Apple’s iTunes is by far the dominant player today in digital downloads, not just for music but increasingly for video and other media. It’s widely accepted that the tight integration of the iTunes service with Apple’s range of digital media devices has been critical to the company’s market leadership. But Strategy Analytics research suggests that even with its current dominance, Apple cannot afford to rest on its laurels. In our UK broadband user survey, people are still more likely to choose Amazon as the place to visit for digital media downloads. Even for digital music, 26% of broadband users say they would prefer Amazon to iTunes. The gap is wider in video (Amazon 16%, iTunes, 11%) and games (Amazon 16%, iTunes 5%). These findings demonstrate that leadership in the early stages of a market do not guarantee long term dominance. Amazon is clearly a much more powerful retailer than Apple and if it executes successfully in its online media strategy it should become a serious challenger for the number one position. Twitter: twitter.com/dmercer15 Client Reading: Digital Media Survey: United Kingdom - Country Profile

2009 is the year of 3D cinema, so I went along myself at the weekend to see one of the year’s first 3D blockbusters, Bolt.  I’m not trying to become a film reviewer, so I won’t pass judgment on whether anyone else would enjoy the film for its content. For what it’s worth the younger members of our party came away with grins on their faces, but then anything involving cute dogs or rotund hamsters is likely to please kids, however weak the storyline.  It’s only a sample of one, but the child who had already seen the film in 2D seemed fairly nonplussed by the depth-enhanced alternative. I couldn’t get a straight answer on which she preferred, which I took as less than wholehearted support for the decision to fork out an extra £2 a head (£1.50 for children) for 3D.   The ~20% uplift in per-head income is why studios and cinema chains are ramping up the 3D hype. They’ll justify some of the increase by pointing to the glasses given to each attendee. I’m not sure why we were allowed to walk away with these: possibly so that we can be charged over and over again for glasses at each new film; or possibly because of some obscure health and safety regulation. In any case, it seems a waste to use them only once, and I somehow doubt the entrance fee will be reduced for those bringing them back again.  Perhaps I’ve just seen too many 3D demos, but I’m not sure that’s the whole story. I really didn’t get the sense of any wow factor coming from the rest of the audience. 3D directors are having to strike a difficult balance between artificial “pop out of the screen” effects and merely adding a little depth to the 2D version. I suspect, once this initial wave of releases is over, that audiences will go back to looking for the best stories, whatever digital clever stuff is layered on top. Twitter: twitter.com/dmercer15

So I came looking for mobile/home convergence, and found it, but the overall impression is that it’s not something that is a high priority for the mobile industry right now. Given global handset volume declines of 10% or more, perhaps that’s understandable. Colleagues assured me Barcelona’s taxi lines were a lot shorter this year, a sure sign of falling attendance at any industry event. As expected we saw a number of signs of handsets moving towards true HD support. Nvidia’s demonstration of 1080p video output from an internally developed MID form factor device onto a full HD 50” TV was the most impressive sign of what is to come. The company’s Tegra processor was also used to demonstrate some impressive 3D graphics capabilities. End user devices are expected to reach the market during the second half of this year. The sticking point, as so often, is the practical issue of getting high definition media from the mobile device onto large screens. There is clearly going to be the inevitable standards battle as early HD handsets support HDMI output, Silicon Image tries to push a new handheld-centric variant called MHL, and others continue to promote wireless approaches such as WiFi. But while various solutions were being offered, and are apparently getting close to commercial viability, I did not get the impression that the mobile industry majors (operators, top 5 handset vendors) see this as a desperately important issue for the near term. Realistically it will be a couple of years at least before handsets begin to emerge widely as sources of HD content for the home, but that is clearly the path they are on. Twitter: twitter.com/dmercer15 Client Reading: High Definition TV, Video and Digital Media Devices: Global Market Forecast

I’m here in Barcelona for my first visit to the Mobile World Congress. I feel a bit like the black sheep on a farm built to rear white sheep, given that my interests are focused on the digital home and media industries, but I’m here to look for evidence that that over-worked cliché, convergence, is a commercial reality. In other words, how soon, if ever, is the mobile phone going to become a platform for home-based multimedia services? And how seriously is the mobile industry considering this opportunity? Nokia has been showing TV-out capability on its Nseries multimedia computers for several years. But the company always seems strangely reluctant to make very much of this function. They’ve also been promising “DVD quality” video from handsets, but it never quite seems to make it to commercial launch. One challenge, if the mobile phone is going to become a competitive media platform, is the issue of user control. I can connect my handset to the big screen with a 2-metre wire, but how do I then control what’s on the big screen? Handset manufacturers need to get to grips with the 10 foot user experience, and that means tackling the issue of remote control devices. Zeemote has been doing some of that work for them, and its Bluetooth remote control/software package is now being bundled as standard with Nokia Nseries phones in the German market. Zeemote is planning to launch standalone remote controls compatible with Nokia Nseries devices later this year, priced at €39. The controllers are intended to make Ngage and other mobile phone games more acceptable on the big TV screen. They are much smaller than the traditional console-style controls, but perfectly acceptable and certainly an improvement on Nokia’s standard handset button controls. Zeemote can’t do anything about the graphics and video quality of phone-based media, so that’s something else we need to see improved, and I’m sure there will be plenty of evidence of progress on that front here at MWC. See also: Digital Experience at CES: Hillcrest Demos Kodak Media Player User Control and Interface Hillcrest sues Nintendo and wants Wii imports stopped Twitter: twitter.com/dmercer15 Complimentary Report: Digital Home Observatory: Pilot Study

Pioneer’s plasma TV business is the latest casualty of the recession. The company announced today that it is ceasing TV development immediately, and will close its TV business altogether by March 2010. So it looks like Panasonic will be the only major Japanese vendor left holding the plasma baby in 2010, as I discussed 18 months ago. Koreans Samsung and LG will help to keep plasma going, but are increasingly focused on LCD and well behind Panasonic in the race for PDP market share. Pioneer tried in vain to hold the line on premium, high quality TVs. In fairness it was always going to be difficult even in good economic times. Pioneer’s TVs were generally regarded as some of the best on the market and served as an aspiration for those who could “only” afford a Sony or a Samsung. But the gap between the “mass market” and Pioneer was undoubtedly getting narrower, and Pioneer was going to get caught in the squeeze sooner or later. When Amazon is offering Toshiba 42” 1080p LCD TVs for £499, it becomes harder than ever to justify paying four times the price for a similar sized Pioneer, especially when most retail stores are simply not capable of, or interested in, demonstrating the differences in picture quality. The severe downturn in consumer electronics has accelerated the impact of plasma’s relative decline on Pioneer. What is left of the company’s display technology expertise now resides with Panasonic, and even in this downturn that huge company should be powerful enough to keep plasma alive for a few more years. It will be a long and lonely struggle. Client Reading: Digital Media Devices Global Market Report

Another of my confessions about underestimating the impact of new technologies: when I first saw demonstrations of Nintendo’s motion-sensitive controllers at E3 2006, as well as trying them myself, I was not convinced they would be anything more than a novelty or even a gimmick. It makes great television to watch people moving their arms around in front of the TV screen, and sure enough the Wii trounced its rivals in terms of press coverage and attendee feedback. But it wasn’t clear then, as it is now, that motion sensitive control would become so widely accepted and established in the video games industry. The Wii’s success has clearly demonstrated that some TV users at least are happy to adopt new interface technologies. It clearly works for games: but will people use similar devices to control TV programme guides or other big screen applications? Research from Strategy Analytics’ Digital Home Observatory suggests that there is indeed a positive attitude towards motion-sensitive, point-and-click approaches for media browser applications. In a survey of 500 US consumers, TV viewers identified point and click controllers such as Nintendo’s Wii Remote as the best type of control device for the next generation of TV-based media browsers. We found that PC-style keyboards ran a close second in popularity, followed by traditional TV remote controls using either on-screen keyboards or alphanumeric keypads. Voice control, which has often been talked about as the future of man-machine interface, was considered the least appropriate option by those surveyed. Perhaps it’s just that people have not yet seen a successful implementation of voice technology. After the surprising success of point-and-click, I would not rule out voice control making a breakthrough at some, probably distant, point in the future. See also: Digital Experience at CES: Hillcrest Demos Kodak Media Player User Control and Interface Hillcrest sues Nintendo and wants Wii imports stopped Twitter: twitter.com/dmercer15 Complimentary Report: Digital Home Observatory: Pilot Study

Forget mere "dominance". Sky has shattered the opposition and secured a fifth Premiership package, leaving only one for its rivals to scrap over. It can't win that because of EU agreements. The total deal has cost Sky more than £1.6bn. The only opposition left, as I indicated just now, is over-the-top, unauthorised services. Expect that to be Sky's next big battleground. Twitter: twitter.com/dmercer15

After commenting on Netflix’s online TV performance last week, Microsoft released further data confirming the popularity of online movies delivered to Xbox 360 users. More than 1 million US-based XBox Live Gold members (ie those who choose to pay the $50 a year fee) have downloaded and activated the Netflix service since it was launched in November 2008. Collectively these users (who subscribe to one of Neflix’s unlimited rental plans) have streamed the equivalent of 12.5 million 2 hour movies during the past three months; that’s one movie per user every week. Of course we’re not just talking about movies: the service also offers shorter TV episodes, so the actual number of programmes watched is even higher. Cold hard facts are always a useful guide to market trends ;-) Anecdotes can be dangerous indicators, but may also support or cast doubt on statistics. Two stories have come my way in the last few days on the subject of connected TV that suggest major shifts are beginning to happen in the real world rather than on tech vendor powerpoint slides. Firstly, a colleague in the US has recently bought an Xbox 360 primarily to watch Netflix online videos. He doesn’t play many games, and he wasn’t an existing Netflix customer, so both Microsoft and Netflix have benefited from this online video partnership to the tune of some $150/year combined. There was no obvious alternative as he doesn’t get cable service, but this seems to be a case where a potential traditional “pay TV” provider (cable, Fios) lost out by not having the right content package and service available. Secondly, a friend in the UK told me he has been using his broadband-enabled PS3 to watch live Premiership football on a large screen LCD TV from unauthorised websites. The quality is apparently quite acceptable if not impressive at times, with occasional breakup but nothing that detracts significantly from the enjoyment. Again, it may be the case that this was not a serious potential Sky Sports pay TV customer, since he might never spend that much on Sky’s service in any case, but Sky will be fully aware of the threat from these over the top (OTT) sources. So the internet has become a direct competitor to traditional pay television and VOD services on both sides of the Atlantic. The broadband service provider in each case receives no additional revenue; instead new OTT service providers are emerging to meet consumer demand. The sports streaming sites, admittedly, would appear to be in breach of content rights laws, but their revenues are presumably derived primarily from advertising. With current broadband networks there has to be a question as to how many concurrent users of these OTT TV services the networks can sustain. Judging from what’s going on out there, it may not be too long before we find out just how far today’s internet, and the patience of BSPs, will stretch. Twitter: twitter.com/dmercer15 Client Reading: Digital Media Survey: An analysis of US Online Premium Video Users