Digital Media Strategies

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

November 15, 2007 13:11 dmercer
Just to follow up on the HD DVD Group's release of European "sales" figures, Sony uk's David Walstra, according to CE Daily, claims that BD discs are now outselling HD DVD by a 4-1 ratio, over "recent weeks". Year to date he claims the ratio is 2-1, and sources the data to GfK. Given these numbers (and similar in the US), it is something of a mystery why Howard Stringer describes the battle as a "stalemate". That may apply to standalone player sales, but the disc battle is clearly being won. Add to Technorati Favorites

November 14, 2007 11:11 dmercer
(This is an updated entry to correct a previous error and incorporate response from HD DVD Group) The hi-def disc battle gets nastier by the day. Europe's HD DVD Promotional Group has perfectly demonstrated why press releases should be read for what is not said, rather than what is, by releasing data suggesting that attach rates (ie discs bought per player) are vastly higher for HD-DVD player owners than those of BD players. I won't repeat the data: you can read some of it here. The press release does specify that the HD DVD group is including consoles in this analysis, which is ironic, or cynical, depending on which side of bed you fell out of this morning, because HD DVD supporters have made great play of the fact that standalone players are the most important drivers of disc demand and that consoles should be discounted. To quote Steve Nickerson, Senior Vice President, High Definition Media at Warner Bros: "... the standalone player market is by far the biggest driver of movie sales in the long-term". So why include PS3s now? Presumably because PS3 sales are surging ahead at such a rate as to make sales of HD-DVD players look tiny in comparison, and therefore inflate attach rates for the minority player. Even if attach rates are vastly different, BD disc sales could still be higher than HD-DVD. Sales of laserdisc used to be much higher than VHS, when measured on this basis, because the few people brave enough to have bought a player also purchased loads of discs, while most VCR owners were less interested in buying pre-recorded cassettes. But the HD-DVD Group does not release actual disc sales numbers. It says this is because it is "early days for both formats" and they want to publish findings based on independent "facts". But the important "facts" remain a secret, ie how many discs have actually been sold. Add to Technorati Favorites

November 12, 2007 18:11 dmercer
Most of the commentary on BT's announcement of its second quarter results focused on its BT Vision numbers - 60,000 customers - and whether this was below or on target (BT suggests it is going to meet its target, although there is dispute as to what that target really is). These debates are missing the key point, which is how much revenue BT Vision is generating. On this question the company maintains an ominous silence. The point being, of course, that you can be a "customer" of BT Vision without paying the company anything at all, beyond the basic broadband access fee. In fact, BT can be in deficit to a customer who chooses to take up the offer a free DVR (set-top box with recorder) and uses it simply to watch and record off-air Freeview. The BT Vision VOD service works perfectly well in my own experience, although the tortuous setting up of the service earlier this year might have driven many customers to cancel their order. Once BT confirmed that my line was able to support video, everything was fine, but at times it was giving very mixed messages - one day my line was adequate, the next it wasn't. Once it's up and running, choosing and watching VOD programmes is easy enough, although I haven't chosen to do so very often as they are nearly all pay-per-view. And that is the point: VOD was going to be a major revenue stream for BT, but it has not released this key information. It likewise remains silent on the question of how many of its "customers" are actually paying, and how much, for any level of subscription service. Until this vital data is released the BT Vision jury remains out. Add to Technorati Favorites

November 12, 2007 14:11 dmercer
One way of keeping people away from the video on their PC screens is to give them better television through their set-top boxes. Sky is one of the first broadcast platforms to offer "push-VOD" to digital TV customers through its Sky Anytime service. Around 1.5 million homes in the UK have Sky Digiboxes capable of accessing this service (including all their HDTV subscribers), which downloads selected (by Sky) programmes to the hard drive so that they are available for instant viewing. New Media Markets reports that Sky is claiming that Anytime is now the most popular "channel" after the five UK terrestrials. It doesn't back this up with the relevant data, but does indicate that viewers use Sky Anytime on average for 28.4 minutes each time they use it, which is more than ITV1, BBC1 or Channel 4. It also doesn't indicate the degree to which usage of Anytime is taking away from regular PVR usage, ie viewers watching their own recorded programmes. I have no doubt that Anytime is proving popular. Like all free VOD services it is an important reducer of churn and raises customer satisfaction. Sky's claim that it is a "channel", however, is stretching things a little. I can understand "platforms" wanting to see things this way, as they are selling the advertising for this product, but I'm not sure the TV channels themselves will concur. Right now, Sky gets all the advertising revenue around Sky Anytime programmes, so channels are effectively giving away their programmes for free. This cannot last. As Anytime increases its audience reach (it is only used by 3% of UK homes today), the channels will be demanding a fair cut of the cake or will withdraw their programmes from the service. Add to Technorati Favorites

November 12, 2007 14:11 dmercer
When I presented to a conference of TV advertising people in Berlin three years ago, my suggestion that broadband users would be turning away from television was met with an icy, if polite, silence. One senior attendee noted that he had yet to see any decline in TV viewing figures, and wished to know whether they would see such an impact in 10 or 20 years. If that individual is still in the industry, he may not have noticed, as his head is in the sand, two reports today demonstrating just how much impact broadband is having. The first, as described in today's Guardian, reports on the formation in the UK of a Broadband Measurement Working Group with the aim of accurately measuring how online video is being consumed so that advertisers and broadcasters can agree on rights payments. I wish them luck. As a starting point they may like to consult today's other news from the European Interactive Advertising Association, suggesting, amongst other things, that 16-24 year olds on average are now spending more time on the Internet than watching TV. Specifically, only 77% of this group watch TV at least 5 days a week (down from 82% in 2006), compared to 82% who use the Internet. It is not just frequency of usage - they are also spending 10% more time on the Internet overall. So the predicted decline in TV viewing is now happening in the younger age groups. Of course, those same people are now watching "TV", ie streamed or downloaded video from TV companies, online, hence the need for working groups to try to measure this accurately. It's not that TV companies need to panic about the loss of their business, but they do need to wake up to the fact that their content is going to be consumed in very different ways, at different times, and on different devices, than in the past. Given the challenges involved in audience measurement, the TV advertising business model was always imprecise at best. The move to online, with its interactive capabilities, should ultimately improve the opportunity for advertisers to reach their customers more effectively, but it may be some years before the necessary technologies and measurement systems are in place. In the meantime the TV industry will have to survive a period of some turmoil. Add to Technorati Favorites

November 7, 2007 19:11 dmercer
Sony Computer Entertainment Europe announced the latest version of its PS3 system software to allow access by PSPs to the PS3 hard drive from remote locations over a wifi internet connection. PS3 owners can now access any music, video or photo collections stored on their PS3 using their PSP. The remote access service will be provided on a trial basis and free of charge until April 2008. Sony says "The date and method to switch to a pay service and the price will be announced as soon as a decision is made". Placeshifting has been made famous by Sling Media, which recently agreed to be acquired by Echostar. Sling allows users of PCs (and now some mobile phones) to watch the TV service they have at home, wherever they have an internet connection. There are a number of similar PC-based applications, but Sling has made the running in easy-to-use, reliable and user-friendly systems. Today's announcement from Sony is further evidence of the PS3's potential as a powerful digital home media server. I would however be concerned if Sony felt it might generate significant pay revenues from this type of service as it suggests. Another reason for Sling's success is that it is based on a contract-free hardware-only revenue model. Sony will be watching carefully during the trial period for evidence that remote access increases owner satisfaction and stimulates sales improvement for both the PS3 and PSP from offering this type of capability, but it should not be wary of jeopardising any success by expecting its customers to cough up monthly fees. Add to Technorati Favorites

November 1, 2007 19:11 dmercer
I am bad at remembering names, so apologies to the nameless 80-year-old comedian whose joke I certainly do remember: after a long and illustrious career, he observed that the thing about getting old was that you always seem to be having breakfast. The analogy being that, as an ageing analyst, you always seem to be getting ready for CES, and if not that, then attending it or recovering from the experience. So here we are again, two months away from Las Vegas and the invitations have started to trickle in. And of course the Strategy Analytics team is always delighted to meet clients, non-clients, exhibitors and other hangers-on who have great stories to tell at the world's greatest consumer technology jamboree. To schedule appointments with our analysts, go here, and we'll do our best to fit everyone in. Add to Technorati Favorites

November 1, 2007 18:11 dmercer
I am sure we all have our own favourite hotspot horror stories. One of my more recent experiences, about which I penned but never published several angry paragraphs, concerned an attempt to use T-Mobile's hotspot service at Chicago's O-Hare airport back in the summer. As usual with T-Mobile, I was required to run round in circles several times before performing double backflips, creating user accounts and trying to retrieve unretrievable and forgotten usernames and passwords before finally giving up and depriving the company of its measly $6, which it no doubt did not miss. I do wonder if the designers of these systems, or indeed the senior managers responsible, ever actually put themselves through the experience they expect their customers to suffer. That time I was using, or failing to use, a laptop PC, which no doubt accounts for 95% of hotspot usage today. But hotspots will also support a growing number of other wireless devices, and I have at one time or another also successfully used Nokia's N95 and N800 tablet at different locations. Nintendo's DS is the obvious mass market example of a WiFi-enabled device that might benefit from wider WiFi availability, but there are many others waiting in the wings. Not least, of course, Apple's iPhone, which by all accounts has woken up the US industry to the fact that people really do want WiFi (ie wireless broadband) capability on handheld devices. One thing is for sure, though: the hotspot experience has to improve, and that's where Devicescape hopes to step in. We met with David Fraser, the CEO, yesterday, and the company seems to be rapidly building a lead in what should become an important market as 2 billion wireless home devices are sold over the next 6 years. Devicescape's database and application essentially stores details of the vast number of WiFi hotspots around the world, as well as the login details of registered users, saving the device owner the hassle of logging in every time he reaches another hotspot. It can also work with home wireless LANs, so that the user's friends and relatives can be registered as approved users. Devicescape claims that their software is already in 10% of hacked iPhones, demonstrating that Apple's enthusiast customers are determined to make WiFi a more pleasurable experience. The company also suggests that cellular operators are beginning to change their attitude towards WiFi, which they may previously have seen as unnecessary or even competitive to cellular, but now recognise (not least because of the iPhone's success) as a way to boost customer satisfaction and revenues. We will see. My first trial today did not go well - standing near Oxford Street in London, my N95 found the BT Openzone well enough, but Devicescape claimed I was not authorised to log in, even though I had registered my account. I will check the details and report back. But in principle there is no doubt Devicescape is trying to solve a genuine problem, and they appear to be getting the more forward-thinking operators on-side, which can only be a good sign. Add to Technorati Favorites

October 17, 2007 12:10 dmercer
One of the many nuggets offered by our latest survey digital home device markets is that more than 50 million TV homes around the world will be using a digital video recorder (DVR) by the end of this year. The US is leading the way, with nearly 30 million DVRs now in use (25% penetration), certainly a significant lead over Europe, where we estimate the installed base at around 14 million (8% of homes). (Note: these estimates include only DVRs provided by digital TV service providers. In particular, they exclude DVD recorders that incorporate a hard disk drive and therefore can serve as a DVR; this option is particularly popular in Japan.) The DVR has come a long way, but it has taken longer than many observers expected. Reporting on TiVo and ReplayTV in 1999, we noted: As each company gets drawn into wider industry alliances, it will inevitably lose control of its own destiny. DirecTV will want TiVo to serve its audiences, not those of rival services. Eventually the broadcaster will either swallow TiVo completely or develop its own solution independently." Well, DirecTV does have its own solution, although the TiVo partnership continues. But as we suggested, TiVo's share of the DVR market has dwindled to a few percentage points as operators push their own proprietary solutions. The DVR has now become a key competitive tool for digital TV providers and is set to move into the mainstream over the next few years. sub=addfavbtn&add=http://www.strategyanalytics.com/blogs/dmercer">Add to Technorati Favorites

October 17, 2007 11:10 dmercer
As one country finishes its analogue switch-off, another begins. On Monday morning at 8.45am Sweden’s Culture Minister, Lena Adelsohn Liljeroth, switched off the country’s last remaining analogue terrestrial transmitter at Hörby in Skåne. Two days later, in the UK, the same process is just beginning. This morning 20,000 households in Whitehaven, in Cumbria in northern England, woke up to find that BBC2 was no longer available on the analogue terrestrial service. Actually, if everything went according to plan, this should not have surprised any of the residents of this small coastal town. Over the next month the remaining analogue channels (BBC1, ITV and Channel Four) will also be removed, leaving room for the replacement DTT channels offered by Freeview. Is this a case of the UK falling behind? It would be easy to play the blame game as different European countries progress at their own pace towards an all-digital future. Sweden in fact is the fourth country (after the Netherlands, Luxembourg and Finland) to end analogue terrestrial TV, and a number of German Laender are also digital-only. The UK may just be beginning the process, but it is not the slowest. France and Spain have yet to begin switch-off, and Italy has just revised its schedule. The irony is that the countries that have succeeded in moving quickly towards switch-off are not necessarily the most successful in promoting digital TV. In fact, the UK still has the highest penetration of digital TV in Europe (more than 80% of homes have at least one TV able to watch digital channels). The secret in the Netherlands, Sweden and Germany is that many homes there have not used analogue terrestrial TV for many years – they use analogue cable TV, and continue to do so. It is in the less cabled countries – such as France, Spain, Italy and the UK - where switch-off is most challenging. Even though digital penetration in the UK is high, the switch-off process will be arduous. Converting all the second and third TV sets, as well as recorders (VCRs and DVD recorders) to digital will not be a trivial task. If Whitehaven proves successful, the UK's 2012 deadline will looking increasingly realistic. sub=addfavbtn&add=http://www.strategyanalytics.com/blogs/dmercer">Add to Technorati Favorites