November 25, 2009 17:11 dmercer
How much is a cable-free TV worth? That’s the key question for TV manufacturers and technology vendors as they seek to stir interest once again in the concept of wire-free TVs and peripheral devices. While few consumers will have noticed, it’s been possible for a few years to connect high definition devices like set-top boxes and Blu-ray Disc players to HDTVs without using a cable. The technology has been built in to a few very high-end TVs from Sony and others, but at enormous cost. In fact, with 40” LCD TVs retailing at $600 or less, it can cost considerably more than that just to retrofit a wireless HD set-up. Clearly only those most passionate about clutter-free homes are likely to see the value in spending $1000 or more to remove one cable from their AV system. Until the costs come down dramatically it seems that wireless HD is likely to remain entrenched in its niche market. Those obstacles won’t stop two key wireless HD technology proponents from getting their messages across as CES 2010 approaches. We’ve published several times about this particular tech standards battle over the past few years. The conclusions in our 2007 review look pretty accurate with the benefit of two and a half years’ hindsight. At that time we didn’t expect much standards clarity or indeed volume in the market much before 2010, and that’s more or less how things have panned out. There are two major technology developers: Amimon, which supports the WHDI standard, and SiBeam, which backs WirelessHD. Behind each vendor is a selection of familiar names from the consumer electronics industry, with several appearing on both sides. For this reason alone it’s been difficult to predict the eventual outcome of this battle, if indeed one solution eventually comes to dominate the market. Sony in particular has flirted with both camps, and although it has recently indicated increased support for WirelessHD, executives have suggested they are still uncertain about the longer term potential for wireless HD technologies in general. According to Sony, the price increment is the main barrier to wider adoption. Amimon has also announced progress in the past few days, with the introduction of WHDI PC modules aimed at netbooks and notebooks. WHDI-HDMI adapters will also be launched so that HDMI devices can be enabled for wireless HD. Consumer products are expected to reach the market next year. Apart from the main technical differences between the two standards – one being that WHDI uses 5GHz, WirelessHD 60GHz – a key debating point is whether whole-home signal distribution has significant value. The WHDI camp pushes this as one its main advantages. Personally this strikes me as a strange argument: most peripheral devices will support one display at any one time, wherever they are placed in the home. There may be some demand for devices which support multiple displays (whole-home DVRs, for example), but these are likely to be an expensive alternative to buying multiple devices. The main user advantage of wireless HD technologies seems to me to be removing the wires within a single AV system, and both technologies do this job. The other arguments inevitably have focused on quality and performance, and these are always tough to judge from an independent perspective. I’m sure we’ll hear more from both camps over the coming weeks and during CES itself. But until they can guarantee more realistic consumer price points wireless HD solutions are likely to remain a distant prospect for mass market success. Twitter: twitter.com/DavidMercer_SA Client Reading: HDTV: Standards Muddle Clouds Outlook For Wireless Displays Add to Technorati Favorites Technorati code: XRKDPAZFT879

November 18, 2009 21:11 bpiper
Fala sério!  (“Talk seriously!,” “You must be kidding!”) is likely one of the only remnants of my two semesters of university Brazilian Portuguese—well, that and the ability to sing “Happy Birthday."  Nonetheless, nobody in that classroom years ago would have believed that major companies, namely Vivendi and Telefónica, would one day be fighting for ownership of a Brazilian Telco.  In an escalating price war that has repercussions on three continents, French media giant Vivendi and Spanish Telco Telefónica have been bidding up Brazilian operator GVT--the country’s fourth-largest high-speed Internet provider.  In a somewhat surprising move, Vivendi bought out 37.9% of GVT with the option of buying another 19.6% so it can have total control of the broadband telco.  The price tag?  A cool $4.2 billion.  Telefónica sources said the Spanish telco will not pursue any further counteroffers. The move is noteworthy for a few reasons: It underlines the strategic  importance of Brazil as an emerging market In a report we published recently, we talk about the importance of Brazil as an emerging powerhouse.  Our base case model predicts broadband subscriptions growing to nearly 20 million by 2013, implying a 15% CAGR.  Broadband sub and revenue growth is largely predicated on increasing importance of IP-delivered video content, as well as the expected surge in IPTV providers in the Latin American region.  By hitching its wagon to an established player at this point in the game, Vivendi has the opportunity to establish a beachhead in a key emerging market--one whose tv market is expected to grow faster than Western Europe. It’s a direct challenge to Telefónica in its “home turf” Telefónica, through its Telesp subsidiary , has enjoyed a nice piece of the Brazilian fixed broadband market--market share is estimated to be around 28%. Vivendi’s takeover of GVT challenges Telefónica’s position in the Sao Paolo market, puts it on the defensive, and further limits its ability to expand outside of the Sao Paolo metro area. It further paves the way for an eventual Comcast NBCU merger Vivendi’s move is a clear and final signal that the company is ready to sell its 20% ownership of NBCU, valued at approximately $6 billion.  Indeed, it will need to in order to finance the GVT purchase.   This freeing up of ownership will pave the way for an eventual takeover of NBC Universal by Comcast. I expect we'll be seeing more of this type of emerging market "pre-positioning" going on the next few years.

November 12, 2009 18:11 dmercer
I was preparing a comment on plans for 3D at next year’s World Cup finals in South Africa. Then this article was published by respected broadcast journalist Adrian Pennington in TVB Europe. The article’s headline “World Cup 2010 to be broadcast in 3D” certainly gets the attention. The report indicates that up to half of the games could be broadcast in 3D. Given that today there are hardly any commercial 3D broadcast services anywhere in the world, barely six months before South Africa kick off in the first game, it would seem to require gargantuan efforts on the part of broadcasters, consumer device manufacturers, and broadcast equipment vendors if 3D broadcasts really were going to be available. Unfortunately for TVB Europe’s headline writers, the truth behind the story is perhaps not as exciting as it makes out. Sony is, correctly, cited as a key player in the 3D World Cup story, as a major sponsor and supplier of cameras and other equipment at the event. But my own discussions with senior Sony managers who are familiar with the FIFA discussions left me with the clear impression that, while negotiations are certainly taking place around 3D, there is nothing certain at this stage about production or distribution of games in that format. The obstacles are considerable and numerous. Apart from the fact that at the production and distribution levels 3D is still largely unexplored territory, even where sports events have been recorded in 3D this has largely been experimental. The creative community is very clear: they are at the beginning of the learning curve as far as 3D production in general, and sports in particular, is concerned. As Sky and other producers have demonstrated with their early productions, issues such as camera positioning and application are far from trivial if high quality 3D footage is to be achieved. But the biggest challenge of all regarding the FIFA World Cup is that 3D content rights have not yet been established. They were never included in the original broadcast deals because 3D broadcasting wasn’t even on the horizon at the time. So unless those agreements can be developed in the limited time available, and sold at a price that reflects the considerable additional costs of 3D production and transmission, it would be premature to assume that very much 3D broadcasting will emanate from South Africa’s football stadiums next summer. My own bet is that we will see a small number of the 64 games produced in 3D and a selection of those actually transmitted live. That is likely to include a few selected venues in the host country, where followers without tickets to the actual games will be gathering in their thousands, and possibly via broadcast networks to public venues in other countries such as cinemas. 3D TV has great potential, and I have already highlighted the wow factor which comes from seeing great 3D sports productions. But I’ll be surprised if more than a tiny minority of football fans get to see next year’s World Cup in this format. The London Olympics in 2012 look like a better bet, but that’s another story. Client Reading: Digital Media Devices Global Market Report Add to Technorati Favorites

November 12, 2009 18:11 bpiper

I’m on my way back to Boston,after spending 2 days at the Telco TV event in Orlando, a somewhat small--but nonetheless impressive--show focused on the IPTV space.  I’m posting this online at 35,000 feet, which is one of the few places I don’t particularly mind (or at least won’t audibly complain about) paying for connectivity.

My overall takeaway from the show is that IPTV still has a long way to go--and I feel like I say that every year at this time. A few notes and observations from the keynote sessions, workshops, and meetings:

What have you done for me lately?

For years, we’ve been hearing about the promise of IPTV, and the jaw-dropping array of services and applications it will ultimately deliver. The potential and promise of IPTV has been widely hyped. Jeff Weber, VP of Video Products at AT&T, suggested that IPTV’s upside is “beyond our understanding.” The question remains, though, what has the technology delivered?

Research we recently published confirms the strong growth opportunities for IPTV in the US—that growth, however, is dependent on a few basic conditions, including sustainable customer take up, and achievable and meaningful differentiation. The “me too” services won’t cut it anymore.

Um…the datestamp on that slide is “2005”

Sadly, the slideware on display at this year’s keynotes and sessions might as well have been from five years ago. The same tired slides and examples keep showing up again and again, presented as “innovative” and “new.” These include on-screen Caller ID (a curious notion in the first place, given the rapid decline of residential landlines, and the inherently personal nature of telephone communication), customizable EPG skins (really??), multiview, and remote DVR programming.

Not exactly earth shattering stuff.

Is there an app for that?

While IPTV may not fully realize its full potential for several years, the general consensus seems to be that the likely path to innovation in the space may come through the open “widgetization.” Drawing parallels to iPhone apps, proponents of this theory foresee a flood of new applications migrating to the television screen. Whether or not these can be (or should be) monetized remains another question. It does loop back to the fundamental question: how to compel a consumer to move to IPTV.

No first mover advantage

IPTV represents the first time in the Telcos’ history that they have been second to market…indeed, they enjoyed near or complete platform monopolies for decades. Television has a long and storied past, and consumers have developed a set of expectations and quality thresholds. Having to build to a set high-water mark is no easy task. And they have to do more than replicate what the cable companies are offering—to be successful, they have to surpass it.

What the Telcos have in their favor, however, is a long legacy of delivering “five nines” quality to consumers; an established brand and existing customer base.

The challenge is in meshing the two pieces together: harnessing the experience and success of the past, while simultaneously changing the fundamental Telco mindset from one of a monopolistic utility provider to that of a competitive provider of services.


November 11, 2009 12:11 dmercer
Global advertising revenues are forecast to decline by 8.5% this year, according to Strategy Analytics’ latest Global Advertising Forecast. In such a tough environment the need to find new communications platforms and ad-based business models is more urgent than ever. In theory the arrival of so many new IPTV services, in both managed and over-the-top environments, should give cause for optimism. If IP technologies have any advantage over traditional alternatives it is that they enable closer, more measurable relationships between those with the message (advertisers) and those receiving it (viewers). So far, however, with a few exceptions, we have seen little commercial evidence of these capabilities in the real world. These are some of the issues we will be exploring at the forthcoming “Future TV Advertising Forum” in London on December 11th. I will be chairing a session on Advertising in the Age of Convergence, with speakers from Coca-Cola, Thinkbox, RomTelecom and the Co-Operative Group. Other keynote speakers at the event include Turner Broadcasting, Sky, Channel 4, ITV, Discovery, Telenet and Ford. It promises to be a compelling and thought-provoking event. Early bird conference passes are available until the 25th November or register to watch the event live online FREE of charge at www.futuretvads.com. Twitter: twitter.com/DavidMercer_SA Client Reading: Online Video: YouTube vs. Hulu - Let the Battle Commence! Add to Technorati Favorites

November 5, 2009 16:11 bpiper

November 5, 2009 16:11 bpiper

We’ve just published a report on broadband opportunities in the BRIC (Brazil, Russia, India and China) countries, estimating that broadband revenues in the four-country region will reach $46 billion by 2013. The BRIC designation, attributed to Goldman Sachs analyst Jim O’Neill, captures the commonalities shared by the four countries, including  rapid economic growth, burgeoning middle classes, and increasingly sophisticated communications marketplaces.  Just as the BRIC countries are expected to be a dominant force in the global economy in the next decade, so too will they become important leaders in broadband consumption. The bloc’s still somewhat young and immature broadband consumer base, rapidly growing upwardly-mobile middle class, and increasingly important consumer purchasing power all point towards substantial opportunities in the upcoming years. We see the region as one of the next broadband frontiers, more than doubling its number of broadband connections between 2009 and 2013. While there are some positive commonalities shared among the four countries, there are likewise some negative aspects which may ultimately hamper their success. Widespread and institutionalized corruption, social and political instability and inefficient bureaucracies all make for a less-than-ideal environment in which to do business.  Nor do we see the BRIC countries necessarily marching in lockstep. In many ways, the four countries are more different than similar, and it would be unwise to expect them to follow exactly the same path.  Rather, we think broadband adoption will play out quite differently in each.


November 3, 2009 21:11 bpiper
As we've said before, and as evidenced by AT&T’s and Verizon’s recent reporting, the days of consistent double-digit broadband growth are probably behind us.  The US market is rapidly maturing--we are estimating 63% household broadband penetration by year-end-- and the new customer pool is dwindling.  Q3 was a fairly flat quarter for the Telcos in terms of subscriber growth, and we expect to see similar results from Comcast and TWC when they report next week.  We estimate sequential subscriber growth for each to be just around 1%, bringing Comcast's total broadband base to around 15.4 million, and Time Warner's to near 8.9 million. MSO_ESTIMATESQ309 The name of the game for service providers today is mitigating churn--that is, holding on to what they've got.  Research we recently fielded in the US market (to be published soon) showed that Americans report very high satisfaction with their current service provider (75% are "somewhat" or "very satisfied".  That said, when presented with a compelling competitive offer (20% price discount or doubling in speed), roughly two-thirds would jump ship.

November 2, 2009 21:11 dmercer
Things certainly didn't run according to the slick rollout plan Sky and Microsoft had promised us. In the grand scheme of things that is unlikely to have any major impact on tomorrow's world of connected TV. But the fact that two well financed global players can stumble so badly at the first hurdle demonstrates the severity of the challenges that lie ahead in the race to bring online TV to the big screen. The day after the official service launch Xbox posted the following message: “due to the unprecedented levels of simultaneous demand, we did not have the capacity to satisfy all service requests”. Xbox indicates that “many tens of thousands” of users tried to use the service. We, on the other hand, are surprised that this level of demand was not predicted in advance for such a high profile launch. The service will certainly have to cope with much higher volumes if Sky’s expectations are realised. The current status as far as we can tell (neither Sky nor Xbox have admitted to a more detailed analysis of the problems so far) is that some Xbox owners are successfully using Sky Player, some have downloaded it and been unable to use it, and others have yet to be offered the service. After the furore of the first day, when the application was withdrawn within hours of its launch, Xbox admitted that there were issues with some servers and that the service would instead be rolled out gradually to ensure that quality was not compromised. My own experience has veered from the excellent to the frustrating. I can say that we have managed to watch an on-demand streamed movie from beginning to end without a single glitch, and the video quality was quite acceptable. By contrast an on-demand sports game yesterday refused to play for more than a few minutes without buffering. I am currently still encoutering many buffering problems and Sky Player disconnections. I have also noted a few minor niggles with the user experience. The Xbox controller switches itself off after a few minutes of non-use, which is inevitable during the viewing of any TV show or movie. So live pause or any other functions cannot be selected until the controller has connected with the console, a process which usually takes 10 seconds or so. The aspect ratio on a number of shows, notably in Sky World News, are incorrectly set, so that tops of heads and captions are chopped off. News tickers are affected by jerky motion. The release dates of some programmes are not indicated in the programme description, which can be especially frustrating in the news genre. Most of these issues will surely be resolved over time. Both Sky and Xbox may be surprised (although they really have no excuses) at the initial demands put on their software and network systems and have to make further investments in order to maintain quality levels. One further point to note is that fast forward during advertisements during on demand shows has been disabled, which should certainly please advertisers. Assumign that these early problems can be solved quickly, it is clear, as we indicated before, that Sky on Xbox has the potential to shake up the UK's online TV market just as the BBC's iPlayer did two years ago. When it works, Sky on Xbox offers an entirely new way of selecting and watching TV on the big screen. The Sky Movies channel experience alone is transformed by the ability to choose instant start from a selection of hundreds of films. On-demand movies in our view will be one of the most used services, at least until Sky and its broadcast partners populate the libraries of television shows, which currently are somewhat restricted. We remain to be convinced that the streaming platform is yet sufficiently robust to support the expectations of subscribers who choose to get Sky for the first time using the Xbox platform. Given the monthly premium of up to £41 which Sky on Xbox customers will be paying there will be no room for the quality problems which are apparent at this early stage. We are also doubtful that many existing Sky customers will opt to pay an additional £9.75 a month to use the Xbox for live television on an additional TV set. The appeal of on-demand TV is immediately apparent, however, and we expect this to be a key selling point. It could be enough to tempt existing Sky customers to buy an Xbox 360. Xbox had better make the most of this window of opportunity: the rumours are already circulating that the PS3 will also offer Sky Player before too long. Twitter: twitter.com/DavidMercer_SA Client Reading: Online Video: YouTube vs. Hulu - Let the Battle Commence! Add to Technorati Favorites