In the very first entry in this blog back in late 2006 I moaned about the tendency ofbroadband service providers to market their services with the term "up to" when offering different "tiers" of service. Well full credit to AT&T for taking the initiative to move away from this misleading practice. While full details have not been announced yet, the telco has confirmed that it plans to begin offering "non-overlapping tiers" rather than the traditional "up to" packages. In essence AT&T is guaranteeing a minimum level of service, something which is not at all usual in the BSP world. So if a BSP offers a service of "up to" 8Mbps today, in theory there is nothing to stop its service averaging at 1Mbps or less. After all, "up to 8" can be anywhere from 0 to 8. A tiered approach, however, might offer, say, 5-8Mbps, in which case users would at least know the minimum they could expect. AT&T's challenge will be to match the tiers to the technical capabilities of its network. No matter what the technology, all broadband services are inherently unpredictable to a degree, so there will likely still be fine print conditions. Nevertheless, we approve of the company's initiative and hope all others will follow, driven by commercial forces rather than regulator pressure, which is looking increasingly likely in the UK and elsewhere. Client Reading: AT&T's Tiered Service: Taking A Bite Out of Fraudband?

Strategy Analytics' latest forecasts show just how fast people are adopting connected TV devices. Our research indicates that, by the end of this year, consumers worldwide will own 186 million devices that allow TVs to access web content. While games consoles and set-top boxes dominate the market today, demand for connected flat panel TVs is also set to take off. Sony recently announced a big push on IP-enabled TVs and other devices, and other major CE vendors, while not yet as aggressive, are also moving in this direction. By "connected TV devices", we include a number of device segments, including flat panel TVs, DVD and Blu-ray players and recorders, set-top boxes, digital video recorders, digital media adapters and games consoles. We have excluded connected portable and mobile devices, such as handheld games consoles and IP cellphones, as well as PCs and related devices. Some people might aruge that we could also include such products as they can play a role in delivering IP content to TV displays, in which case the adoption rates would be substantially higher. Games consoles have been the largest connected TV device segment to date, with a forecast of 79 million installed by the end of 2008. Set-top boxes and DVRs are the next major category at the moment, while IP-enabled flat panel TVs are only just beginning to appear. But that is all set to change over the next five or six years. By 2014 we are projecting an installed base of more than 450 million connected flat panel TVs. Set-top boxes and games consoles will still play an important role, but Blu-ray players and recorders will also be significant IP content gateways by this time, with an installed base of 225 million. These are impressive numbers, and they focus on the devices people have bought and are using at home. They don't necessarily reflect what content is actually available or being watched on those devices, and that is clearly a missing link in the web TV phenomenon. All PS3 and Xbox 360 owners will in theory be able to get video content onto those devices over their broadband connection and display it on a TV. How many actually end up doing that is still open to question. But the message for media companies is clear: millions of TV viewers will soon be ready and waiting for web content. Many business model and relationship issues need to be resolved before web TV content itself becomes widespread. But we are now seeing the emergence of technology platforms that will support a surge in adoption of web-based TV content over the coming few years. Traditional service providers such as cablecos and telcos need to put plans in place to accommodate the impact of these “over-the-top” media device relationships that will increasingly disrupt established models and revenue streams. Client Reading: Digital Media Devices Global Market Report

We’ve now had a chance to dip into Strategy Analytics’ survey of European digital media users. We’ll be releasing full and detailed results to clients, of course, but here’s a taster to be going on with. We find a similar pattern across age groups in Europe as in the US, in that younger Internet users are more likely to be watching TV on their PCs, and more likely to be frequent users. But the overall level of PC TV usage in Europe appears to be trending a little higher at present compared to the US, and indeed television viewing on TV sets is also a little lower. Our survey found that 30% of 15-29 year-olds in Europe claim to watch TV shows or movies on their PCs at least on a weekly basis, with a peak of 35% for 20-24 year-olds. This compares to around 25% of the same age group in the US. As in the US, the frequent usage of web TV tails off significantly in older demographics, with less than 10% of the 40+ group claiming to do this weekly. Anecdotally we are probably familiar with the idea that students are in the vanguard of adopting emerging internet services, such as the social networking phenomenon I covered recently. This seems to be confirmed in Europe, where, in terms of “occupation”, full-time students are by far the most active viewers of TV shows and movies on PCs. 35% of full-time students claim to do this at least once a week. No other single occupation category comes close; in fact every other group comes in at or below the population average of 17%. Most of us have been students in a former life, and in the pre-Internet age dubbing vinyl and CDs onto audiocassettes was a common method of alleviating boredom. So there’s no point in pointing the finger at today’s generation. Let’s face it, student life gives most young people more time than they know what to do with, unless you’re desperate to get an Oxbridge First. Add to that the fact that students are more likely to have access to high speed broadband and their own laptops, and it’s no surprise that keeping your social network up-to-speed on what programmes you watched on the Internet last night seems to keep today’s students pretty occupied when they’re not attending lectures and engaging in other, more traditional student pastimes, which incidentally were not the subject of our latest survey… Client Reading: Online Video: Global Market Forecast

David Gosen, whose rather long-winded title at Microsoft is “VP, Strategic Marketing, Interactive Entertainment Business EMEA” (which means he looks after Xbox 360 in Europe) briefed Strategy Analytics today on announcements Xbox is planning for the upcoming E3. Specific plans for new games titles remain under wraps, but the company is planning significant marketing investment behind the Xbox 360 in European countries, such as Spain and Italy, where the platform is performing less well than in other markets. We can also expect a significant broadening of title genres as Microsoft seeks to target the 360 towards a wider customer base. In addition there will be improvements to the Xbox Live service, also to broaden its appeal and make it more user-friendly. The specifics behind these announcements are quite exciting, so watch out for news at E3 in a couple of weeks’ time. One key development seems to be behind track, however. At CES in January BT and Microsoft made a big splash by announcing that BT’s BT Vision video-on-demand service (which uses Microsoft’s Mediaroom middleware platform) would be made available on the Xbox 360 platform. At that time the companies indicated that the service would be rolled out in the “middle of 2008”, so given that it’s now July we thought it reasonable to have expected news by now. David Gosen confirmed to us, however, that there are no announcements currently planned for the innovative service. “Some things take a little longer than planned,” he noted, and told us to stay tuned. Well I suppose to be fair the “middle of 2008” could be extended another month or so, but it doesn’t seem likely anything will be announced any time soon. We’ve already indicated our doubts concerning strategic positioning around such a service, but it would be surprising if they were significant enough to have stalled the project altogether. More likely are the usual unforeseen technical barriers that inevitably arise when a “world first” of this sort is planned. Even so, it’s probably better that we don’t put a note in our Jan 09 diaries to ask for the next BT Vision/Xbox update; that way we’ll be pleasantly surprised when it eventually arrives. Client Reading: Global IPTV Forecast: Homes, Users and Subscribers

Strategy Analytics has been studying results from its latest round of user research. We released highlights at the recent Digital Hollywood event in the US. The presentation focused on the impact of web video and television on traditional TV, and related to the findings of our US survey. Research from Europe will be released separately in due course. Global revenues from online video and TV are estimated to have reached $2bn in 2007. Our survey finds that younger age groups are already watching significantly less television than older demographics, in the sense of "watching TV shows and movies on a TV set". 64% of 15-19 year olds watch TV in this traditional fashion on a weekly basis, which means that more than a third do not. This compares to the average of 78%, and 85% of 40-44 year-olds, who watch TV at least once a week. We also investigated viewing of the same type of content – “TV shows and movies” – on PCs. Not surprisingly younger age groups are more likely to engage in this activity on a regular basis, with around a quarter of those aged between 15 and 29 claiming to do this at least on a weekly basis. The average across all age groups is 16%, and most older demographics are much less frequent “PC TV” users. More than half of US Internet users have now watched TV shows or movies from a broadcast network website, ie the equivalent to the BBC’s iPlayer in the UK. But most of these web TV users are still not active on a regular basis: only 7% claim to use a broadcaster’s website for video streaming at least weekly. Perhaps the demographic findings are not too surprising. We expect younger Internet users to be in the vanguard of many emerging trends, and the fact that they also watch television less frequently than their elders has also been documented previously. The inevitable consequence of these two indicators is that a growing proportion of younger people are likely to find television programming on the Internet rather than through their “TV” or the associated “service provider”, ie cable or satellite, DirecTV or BskyB, a trend I have highlighted. Or to put it another way, TV companies are increasingly likely to find younger viewers through Internet distribution than through traditional channels. The tipping point when younger people watch more TV online than "on TV" may not be far off. John Malone may not be happy but TV networks have little choice but to go with the flow. Client Reading: Online Video: Global Market Forecast