Digital Media Strategies

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

January 11, 2007 00:01 dmercer
Some final thoughts on the Show as we head back to the UK.

I covered the LG dual-format BD/HD-DVD launch, and this got a lot of general press attention. The reality on the ground is that it will have little impact on the market situation. The major content providers remain firmly behind BD, PS3 is picking up speed, and BD disc sales are beginning to enter the DVD radar. Toshiba is left holding the HD-DVD baby, and is likely to be little more than a minor player in the next-gen market by this time next year.

Earlier I pointed out how tough it is to keep raising the video quality benchmark year after year. I spent some time with Silicon Image, the company behind the HDMI digital connectivity standard, and their demonstrations suggest there is still much room for progress. Next steps for displays are 10-bit colour, and in the long term 3D is likely to be realistic. OK, I know, we've been hearing that since the first CES 40 years ago, but it's one of those things whose time will inevitably come. I just hope I live to see it.

January 10, 2007 16:01 dmercer
A dominant theme at CES is what I call Internet TV (as opposed to IPTV, which tends to refer to managed, operator-delivered services). Microsoft have confirmed their intention to add internet TV to the Xbox 360 (something we've predicted since day one). More significantly, Sony announced that future Bravia TVs will be IP-enabled and are demonstrating their Internet Video Link device, which delivers managed internet video content to TV sets. Deals have been struck so far with AOL, Yahoo! and Grouper. FCC Chairman Kevin J. Martin and Commissioner Tate happened to be getting the demonstration when I dropped by (their schedule took priority, naturally enough...). I imagine there are some interesting debates at regulators right now over what exactly they should be calling this thing that gets TV and video content to the TV without involving the TV "providers" they like to regulate.

Cisco is the other firm to watch. Chairman and CEO John Chambers gave a typically powerful keynote suggesting that his firm would be enabling the transformation of consumer electronics over the next five years to a completely IP-based environment. Ambitious timing, perhaps, but a company with this sort of record and business performance cannot be ignored. Whether Cisco's strategy pans out or not, the transformation of digital devices in this timeframe is certainly assured.

January 9, 2007 23:01 dmercer
Vista is a big part of the show of course. One interesting aspect of the new OS is the Sideshow feature. This extends selected capabilities of the PC to a variety of connected devices by adding what Microsoft calls "gadgets" (add-in programs) to the PC. These programs update the relevant device with information and allow it to access the computer whether or not it is switched on. This concept raises the possibility that, as long as a PC user has access to the Internet, he can always access media or information stored on that PC. This is yet another example of the extension of the network to the individual - the connected consumer.

Hitachi gave some interesting perspectives on the ongoing plasma/LCD debate. The company claims to be independent of the debate, although in reality it has more invested in plasma than LCD. It sells both technologies, and positions plasma as preferable above 37" and LCD below. Even with the increase in LCD sizes Hitachi believes plasma will win the large screen battle because of the inherent benefits of the technology. One of the clearest of these, reduced blurring in high motion content, is being shown at Hitachi's booth in a side-by-side demonstration. LCD proponents of course will tell a different story...

Every major brand needs a world first at CES and Hitachi's was the 1TB (terabyte) hard drive. So expect to see these in PCs later this year.

Sling Media is the TiVo of the late 2000's. From a standing start in early 2005, the company's name has come to represent everything about the emerging connected entertainment world. It doesn't reveal sales numbers, but many international road warriers (shouldn't that be Sky Warriers?) confined to business hotel rooms are already familiar with the Slingbox's ability to banish the restriction to local television in unfamiliar languages to the history books. The size of the company's booth at the emerging technology exhibits at the Sands give testament to its growth and profitability.

Sling continues to shake up the media world with the launch of new devices. Highlight at CES is probably the SlingProjector, which mirrors whatever content is displayed on a PC screen on another display. This is Sling's answer to the problem of getting web content such as Youtube videos onto the TV; many other solutions are offered elsewhere at CES.

I'll be posting photos from the Show as soon as I can.

January 8, 2007 06:01 dmercer
Some bits and pieces from today's press conferences and tonight's excellent Digital Experience press event (I should point out that Strategy Analytics clients will get fuller details on this and other CES developments in due course).

LG got the day off to a roaring start by introducing the world's first single-drive Blu-Ray Disc/HD-DVD player. The demonstration even worked first time. But it's not a device that's likely to please the HD-DVD backers or encourage content owners to launch titles on HD-DVD as it doesn't support the HD-DVD interactive platform, iHD.

Pioneer and Panasonic gave us the usual "why plasma is best" indoctrination sessions. At least Panasonic has some products to show: Pioneer spent half an hour telling us how wonderful their completely redesigned plasma technology was but couldn't show us the product. Talk about anti-climax! We'll hopefully see the thing in action if we can struggle through the crowds on the show floor tomorrow.

Toshiba focused on HD-DVD and 1080p. A lacklustre presentation generally, demonstrating once again that if you call something absolutely amazing one year it raises the question why next year's product should be any better. HD-DVD first generation was good. Now there's a new generation. The percentage incremental improvement between the two is probably so small as to be incalculable.

We spent some time looking at Nokia's latest handheld devices. The N76 is a new slimline phone with all the Nseries features except the most important one in my view: WiFi. So I'm still waiting for the perfect phone, but it's tantalisingly close. They're introducing an upgrade to the 770 Internet tablet as well, the N800, which includes loudspeakers, a built-in stand and a webcam. I approve of the focus on sound: my 770 serves as a portable Internet radio but it barely does the job without headphones. The 800 looks like being a significant improvement.

At Digital Experience, a number of companies were showing Bluetooth stereo headphones, including iLuv (www.i-luv.com), which claimed the only noise-cancelling model on the market. I'm a big fan of noise cancelling and have been through several major brands (Sony, Philips, JVC) in the search for the best solution. Bose will be pleased to hear I ended up plumping for their latest model, the Series 3, at considerable expense but worthwhile to the regular plane using music lover. If only they could get rid of the wires.... latest versions of Bluetooth are holding more promise for high quality stereo audio.

Logitech is a company I have admired for some time. Best known for computer mice, they in fact offer a wide range of digital consumer electronics peripherals and control devices. They have recently acquired Slim Devices' internet radio device business, so I will look for evidence that Logitech's financial muscle can drive would should be a rapidly growing market for the millions of wireless home network users around the world.

Finally AOL demonstrated their latest AOL Video offering. We gave them a hard time over claims of DVD or even HD video quality, which they clearly are not offering. But the range of content available is impressive and users willing to spend up to $19.99 on a VHS-quality downloaded movie have plenty of choice. Very little content is paid for today, and that's the challenge for AOL and its content partners. There is some way to go before these models approach the mainstream.

January 7, 2007 05:01 dmercer
A few tasters from tonight's media preview:

3D headsets from TDVision: take any video content processed on a PC and transform them into a 3D image using a dual-image headset display. Worked quite well using demonstration video - a regular TV football game was transformed into a 3D event. But video headsets will remain a niche market however good they are.

Addlogix: demonstrated its wireless media adapter that claims to be the only one that can accommodate streamed Internet content. Demo'ed ABC's Desperate Housewives streamed from the web to a PC, then wirelessly to an LCD TV.

Norint's Falcon 3D game controller: an excellent new control device that lets the user navigate in a 3D environment with realistic force feedback.

Infusion internet radio player: a compact wireless internet radio player from Australian firm Torian. I'm a big fan of internet radio and this is another step in the direction of a breakthrough device, though I'm not sure it quite ticks all the boxes.

Pulse-Link was demonstrating 2 simultaneous HD streams over a UWB-over-coax network. Impressive video, but there appeared to be problems with the graphics when the credits rolled.

More to follow....

January 6, 2007 23:01 dmercer
I just returned from the CEA's overview of the state of the CE industry, and their forecasts for 2007 confirm our own views - that sales growth will decline significantly. We just published data indicating that worldwide revenues for digital home devices reached $167bn in 2006, a growth rate of 31%. The 2007 number is likely to hit $191bn, growth of just 11%. Of course the CEA's data covers just the US, and they include a number of categories that we exclude, but the general picture of a slowdown is agreed.

The main culprit in our view is the predicted maturing of the flat panel TV market. The manufacturers here at CES will be telling us that they have lots of tricks up their sleeves to persuade consumers to keep spending on the higher end TVs, so we'll take a look at what some of those tricks might be over the next few days. The bottom line is still the same, though: we're all looking out for the next hot product that will re-inject faster growth rates into the industry.

January 3, 2007 22:01 dmercer
I won't often post just to publicise our research, but I thought this was useful in view of the many announcements at CES likely to focus on media sharing. We just released results on usage of media sharing applications like copying music to MP3 players and sharing video from a PC to a TV.

The main takeaway is that most broadband users have tried at least one such activity, but only a minority have become regular users. Only around a quarter regularly copy music or photos from a PC to recordable CD, for example. Far fewer claim to connect their PC to a TV on a regular basis.

The research confirms again that those of us in the technology and media industries are not always typical users. Most of us tend to think of digital music and photo sharing as a standard activity, but for most internet users it's by no means commonplace.

We'll be looking for evidence at CES that vendors are making these applications easier and faster, particularly when it comes to the complex business of moving video around the home network.

January 3, 2007 22:01 dmercer
2 million seems to be everybody's favourite statistic this week. Sky announced 2 million Sky+ installations in the UK, and Microsoft was reported as having sold 2 million Xbox 360s in the US during the holiday season.

Same numbers, but with rather different stories behind them. Sky is way ahead of its own DVR rollout predictions. Microsoft, by contrast, is just about on track with the 360. We won't know for sure exactly where the 360 is until the company publishes its own data, but by my reckoning they should have hit their own 10 million global target for end 2006. Much will depend on their sales outside the US.

Happily, Strategy Analytics has pre-empted both stories. This blog a few days ago predicted Sky+ at nearly 2 million, and we have reported to our subscribers that Microsoft was aiming for 2 million 360s in the US.

December 30, 2006 15:12 dmercer
A brief tale to illustrate how a single event can demonstrate the power of the mobile Internet. My family and I were queuing for tickets at the London Eye. The queue was more than an hour long, so I logged on to the London Eye website using my Nokia N73's browser, selected tickets for later that afternoon, and paid using a credit card. Within 15 minutes we had picked up the tickets from the machine and were free to enjoy the rest of the day, saving at least an hour of standing around.

Mobile companies are always promoting the benefits of handheld applications such as this, and while they may appeal to technophiles, late adopters often see little relevance. In this case, my sister-in-law, who is an archetypal Practical Mainstreamer and doubts the benefits of pretty much any technology, admitted being amazed that a mobile phone could help us out in such a way, and almost, but not quite, rushed to buy her own device. Perhaps I'll let her have mine next time I upgrade...

December 29, 2006 20:12 dmercer
The BBC's primetime consumer rights programme, Watchdog, has been featuring BSkyB's digital TV PVR service, Sky+, in recent weeks. According to the presenters they have been inundated with viewer complaints about Sky's service. These seem to focus in general on unreliable set-top boxes (customers often have had several replacement devices), or programmes that have not been successfully recorded.

I have been a Sky+ user since the first weeks of its launch back in 2001. I have seen demonstrations of many other PVR services from around the world over the years, and have personally also tested TiVo's UK version (now withdrawn). In general BSkyB as usual has done an excellent job of hiding complex technology beneath a friendly and intuitive user experience.

But there have always been technical problems with Sky+, and one has to wonder why the BBC is jumping on this particular bandwagon five years down the road. (News Corp and the BBC do seem to enjoy any opportunity to stick the knife in.) The fact that there are nearly 2 million Sky+ subscribers (8% of all UK homes) probably has something to with the "noise" being generated by the average Watchdog viewer.

I had planned to comment on Sky+ a week or so ago, and so it was frustrating but fortuitous to experience another glitch in the system over the holiday period. In fact, the problem appears related to the EPG in general rather than Sky+ in particular, but that wouldn't be apparent at first sight. It relates to Sky's interactive football service, Football First, which presents time-delayed "as live" transmissions of football matches taking place in the previous 24 hours. On 26 December a full round of Premiership games took place and at 9.45pm that night Sky Sports viewers were able to select, as usual, extended highlights of any of the matches. Customer service representatives confirmed to me yesterday that a technical fault meant that viewers were unable to select a match by using the up-down cursor on the EPG menu. If they used this method, the feed would revert to the main broadcast. Selecting the match using number keys on the remote control resolved the problem.

Those of us who had set our PVRs to record a particular game found that, after a few seconds of the expected match (in my case - yes, you guessed it - Spurs-Aston Villa), the video reverted to (of all things ;-)) Man U - Wigan. Not a happy outcome over the festive period...

Sky's answer (after 40 minutes in a phone queue, including a diversion to the wrong department...)? "We can only apologise." Indeed. Boasts that viewers need never miss another programme have understandably become less prominent as BSkyB has grown to realise the true fallibilities of its technology.

There is no question that Sky's hard-drive set-top boxes are not 100% reliable. I don't know of any technology that is. Over the past five years I have regularly seen errors to do with failed recordings, incorrect programme descriptions, failed instant rewind, lost recording capacity, and many others, and have had boxes replaced. It's all part and parcel of the integration of a complex digital media technology with a sophisticated multi-channel broadcast service and most viewers probably accept these glitches as inevitable. Clearly Watchdog's complainants fall into a more exclusive category. In spite of the problems, I can assure each and every one of them that there is no better alternative digital TV PVR platform on the market. More importantly, I think the BBC also knows this, but I suspect we may never hear such an admission.

For BSkyB, Sky+ is an early illustration of the company's growing dependence on the reliability of consumer devices. However much it likes to sell the PVR as a "service" (for which it charges a monthly fee), the reality is that it is a sophisticated software/hardware device that is likely to go wrong. These challenges will only increase as it rolls out HDTV, broadband TV and other advanced services.