Digital Media Strategies

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

June 30, 2010 22:06 Wu Jia
Two months ago, when the Hulu Plus rumor came out in the industry, we did a comparison between between Netflix and Hulu Plus here. Now that Hulu Plus is officially introduced, let’s take a further look at the new service. According to Hulu, Hulu Plus is not a replacement for Hulu.com. Hulu Plus is a new, revolutionary ad-supported subscription product that is incremental and complementary to the existing Hulu service. For almost all of the current broadcast shows on our service, Hulu Plus offers the full season. Every single episode of the current season will be available, not just a handful of trailing episodes. Moreover, Hulu Plus subscribers can now watch their favorites through more than just the browser on their Mac or PC. Hulu Plus subscribers will be able to watch all the Hulu shows on Internet connected TVs, iPhones, iPads and game consoles. In short, Hulu Plus offers a deep catalogue of TV shows and a wide range of content distribution channels. It is the TV Everywhere by broadcasters. So will consumers be willing to pay for the service? Without statistical evidence yet, a qualitative comparison among online premium video offerings could shed some light on the future of Hulu Plus. Netflix is a similar service which we’ve already compared with Hulu Plus in the previous post. As Hulu Plus has made it universally accessible, Netflix on iPhone is also coming soon. Both services are going the video everywhere approach. From the content distribution portfolio perspective, Hulu Plus is on par with Netflix streaming service. With $1 price advantage, Netflix could gain a slight edge over Hulu Plus, although a minor one. The key difference between the two services come down to content selection. While Netflix is a back-catalogue movie service, Hulu Plus is a back-catalogue TV show service, as all consumers can watch recent TV shows on regular Hulu service. So the competition could be somewhat simplified to TV shows VS movies. Netflix again has an edge over Hulu, with some of the TV shows such as Lost, 24 and Prison Break, also being included in its catalogue. Going forward, Hulu Plus could grow its catalogue significantly, but Netflix’s big user base makes it hard for broadcasters to ignore and not to sign deals with. Cable companies’ TV Everywhere is definitely a competing service to Hulu Plus. With similar content distribution portfolio in which users can access content on TVs, PCs and mobile phones, TV Everywhere could have better content selection than Hulu Plus. And for current cable subscribers, there is no incremental expense to enjoy TV Everywhere programs. But the speed of rolling out TV Everywhere service is questionable so far. Hulu Plus is clearly an experiment by the broadcasters in the hope of generating revenues by distributing content on their own. If Hulu Plus could prove its viability on profitability, there will be more content providers joining the game. And cable companies would inevitably lose their leverage in the negotiation. It is foreseeable that Hulu Plus could potentially become a formidable over-the-top TV service provider that rivals Comcast and Time Warner Cable, once all the major content providers join Hulu Plus. This could lead to the failure of cable companies’ TV Everywhere and eventually the distinction of cable companies. But right now it is still too early to tell. -Jia Wu

May 20, 2010 22:05 Wu Jia

April 16, 2010 16:04 Wu Jia
Google Logo Yesterday, Google reported its earning for the first quarter of 2010. Its revenue for the quarter was up 23% compared to the same period last year, with total advertising revenue increasing by 21%. Google's US revenue grew by 22%, slightly lower than its overall growth rate. This is clearly a robust performance delivered by Google. In the meantime, comScore released US Search Engine ranking for March 2010 four days ago, indicating a 65.1% search market share from Google in the US, which was only up 1.4% comparing to the same quarter 2009. It is reasonable to assume that the revenue share in the search market is somewhat proportionate to search traffic share, although different search engines could have different cost-per-click and other factors. Surprisingly, we see that now Google's 1.4% increase in the US traffic share has led to a 22% growth in revenue. It isn't that proportionate, is it? Well, it's still proportionate as the overall search market or online advertising market is bouncing back. We've already seen a strong fourth quarter rebound in 2009 in the online ad market mainly owing to the holiday season. Now Google's strong performance has shown that the search ad market is back to rapid growth track. In light of Google's performance, we anticipate that Yahoo!, Microsoft, Ask and AOL will all see their search revenues expanding in Q1 2010. Interesting, Google's stock was trading down massively for 5% after Google's strong earning release. Some analysis say the stock price decline attributes to Google's increasing cost on R&D and hiring, but I'd rather believe that investors's expectations on Google was just too high. They wanted even better results than this impressive one. With all the huge investment in innovation, Google is now under pressure to deliver the results of those innovation faster. Jia Wu Client Reading: Digital Media Index (DMI): Q4 2009

September 11, 2009 08:09 dmercer
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 Add to Technorati Favorites

January 7, 2009 01:01 dmercer

November 21, 2008 11:11 dmercer
...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 Add to Technorati Favorites

June 26, 2008 17:06 dmercer
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 Add to Technorati Favorites

June 4, 2008 12:06 dmercer
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 Add to Technorati Favorites

May 7, 2008 11:05 dmercer
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 Add to Technorati Favorites

May 6, 2008 15:05 dmercer
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? Add to Technorati Favorites