March 10, 2010 15:03 dmercer
Cisco built up yesterday’s big news announcement as something “that will forever change the Internet and its impact on consumers, businesses and governments”. The chances are slim that more than a tiny fraction of consumers, businesses and governments will ever actually encounter the catalyst for this revolution, namely the new CRS-3 router, which will help service providers deliver the vast quantities of video that people will expect to consume over the internet in the coming years. So in that sense, the announcement was a slight disappointment, if none the less significant. Shortly beforehand, the news arrived that Cisco had also became a strategic investor in SiBeam, Inc. Also currently unknown to most consumers, perhaps, but SiBeam’s wireless video technology could become ubiquitous over the coming decade. We’ve covered it many times, most recently here. For some years SiBeam has been in a race with various other technology developers, and primarily Amimon, to bring wireless distribution of high-definition video to the digital home. While early consumer products have reached the market in limited numbers using both SiBeam and Amimon solutions, sales performance has been restricted by high prices. We are also hearing that Amimon’s technology has not proved as reliable as it needs to be, and as we predicted before, we believe the momentum is in the direction of WirelessHD, if there is indeed going to be a single de facto standard. Cisco joins other major consumer technology investors Samsung, Panasonic and others in backing the WirelessHD 60 GHz technology. So as well as investing in the future of internet video distribution, Cisco is counting on tomorrow’s in-home video networking technologies to build its vision of a world of networked video. David Mercer Client Reading: Wireless High Definition Appearing Soon at a Home Cinema Near You Add to Technorati Favorites

January 28, 2010 02:01 dmercer
Apple cynics seem to have taken the initiative following the announcement of Apple’s iPad internet tablet. I tend to shy away from anything as hyped as this product has been. Surely the most hyped Apple device ever... And for that reason alone I am feeling underwhelmed. Is the iPad really what this was all building up to? Let's think about the applications: Books - ok, I get this. if you want e-books this seems like a reasonable way to carry and read them. A nice way to read newspapers as well – I’m not sure the publishers will make money from it though. Web browsing and applications - I suppose the brower must work well. This is definitely the primary set of apps in my view. Consumers need an easy and fast way to get to websites quickly when they’re at home and don’t want to boot up the laptop. Music - ok, but who would rather listen to their music through a 1.5 pound portable device with (presumably) tinny speakers rather than either a) a small iPhone/Pod plus headphones, or b) plus docking device? Photos - yes of course – iPad could be a very nice digital photo frame. Games - could eventually become a killer app but control and input functions will need to be adapted to a larger screen device and iPhone app developers need to get to work to match the screen's HD resolution. Productivity applications - I'm struggling here. is this really how the iPad is going to get used? The virtual keyboard may be good, although early reports are not promising. But think about how are people going to hold or rest this device: sitting down in a chair - it would have to rest on the flat table, so you are leaning over it to use it properly. Sitting in an armchair - so it's on your lap, but again you have trouble positioning the screen at the right angle; or standing, so you hold it resting in one arm and only have one arm free to touch the screen. Or you use a stand and add-on keyboard, and it becomes... a laptop! OK, maybe the iPad could be used occasionally for productivity applications, but I just don't see this device as a breakthrough for work-based devices. and finally... Video. Video playback is reported as stunning - I can believe this. But where are the extra video content applications or TV deals? The specialised video apps like TV-transfer? No HDMI for TV connection? Apple seems to be struggling more than ever to break into the home video market in a big way. And no multi-tasking… this is crazy. I can't play music while I surf?! Form factor: maybe I was expecting too much from Apple, but really the iPad is hardly a revelation. Have they done what we expected? ie take all previous tablet-type implementations, improved on them and added innovative style and usability and content integration to create a unique package? I don't see this from what I've read and seen. And it's too heavy to be held in one hand, much heavier than some e-readers. Wireless: So the key question - how often would this device be used in truly mobile situations, and of those situations, how often would a user need to have cellular data service? The cellular service can be bought ad hoc - and I think it will be primarily. Not much new recurring revenue for carriers there then... The iPad is surely primarily a “free data” wifi device. It doesn’t need always-on connectivity for messages and voice - I'm always going to carry a phone for those. I can get online for websites and apps via hotspots when needed, and primarily use my home broadband to load it up with content. Having said all this, of course the lower than expected price points mean they will sell millions to Apple fans who won't blink at spending another $500 on the latest Jobs gizmo. (And did anyone at Apple really not investigate the unfortunate connotations of the device name for the female market? - one wonders if Jobs has really lost his touch.) Client Reading: Consumer Imperatives for Digital TV Media Browsers Add to Technorati Favorites

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

October 19, 2009 21:10 dmercer
The UK’s 1.3m Sky TV subscribers who own Xbox 360s are about to get a real treat. Instead of putting up with Sky’s archaic EPG they will soon be surfing Sky’s content using the slick Xbox Live interface. We were given a live demonstration of the service today and everything (well, almost everything) is looking good for the commercial rollout on October 27th. Let’s get the slight caveat out of the way first of all: today’s demonstration from a central London location used a broadband connection to the production servers which will support the commercial service rollout. However, during live IP “broadcasts” one of Sky’s sports channels the picture was not 100% reliable, and occasional freezing and jerkiness was noticeable on several occasions. This would not perhaps be significant on a normal streamed video service to a PC, but it seems doubtful if TV viewers will be quite so forgiving. I’m sure Xbox and Sky will ensure that the commercial service is not plagued by these slight problems. Sky’s Griff Parry, who heads the Sky Player group, and Microsoft’s Jerry Johnson, head of Xbox Live in Europe, offered a united front to the partnership, claiming that, after initial and understandable caution, both teams had worked together extremely well and with considerable mutual respect. Of course we have seen previous apparently rosy partnerships involving Xbox fail to deliver, but this is clearly different. Sky would not be putting its substantial reputation for quality and reliability on the line if it was not convinced that the Xbox Live platform was robust, and the evidence so far (subject to the earlier qualification) is looking extremely promising. As expected the Sky programming sits behind one of the Xbox Live menu items in the Video Marketplace tab. As soon as the Sky option is selected the background and colour scheme become blue, reflecting Sky’s corporate image. The Sky menu items closely reflect the standard Sky TV EPG, down to channel and genre options. For relevant options there is the choice to watch on demand or live. In my view the biggest benefit of Sky on Xbox will be for Sky Movies subscribers to have access to a considerable library of true VOD movies on their TV set. Sky believes there are two major opportunities from this initiative: first, to secure loyalty from existing customers; and second, to tap into a lucrative 20-30 demographic for which its traditional satellite-based distribution may not be appropriate. Sky is thinking here particularly of young males who have yet to “put down roots”, who may move home frequently, and who inhabit apartments where satellite dishes are prohibited. This segment is seen as prime Xbox owning territory and therefore ripe for upgrade to premium TV services. Besides increasing the overall customer base, the Xbox Live platform offers Sky a new avenue towards advanced services. The early example of avatars sitting in front of a big home cinema screen watching live football together may or may not prove to be a gimmick. But a real opportunity for Sky certainly lies around integrating communications and content into exciting new services. Parry admitted that he sees headset-based voice chat during programmes as one of the most compelling opportunities in the early days of the Xbox Live venture. We can only imagine the possibilities as Xbox continues to add peripherals such as the set-top camera/microphone – the crowd noise during live sports could soon become the sound of a million home-based viewers shouting at the TV screen . Given what has been possible before, it would seem that Sky and Xbox together really can take the TV experience to a completely new level. If anything disrupts progress it will be corporate disagreements, rather than technology failings. Twitter: twitter.com/DavidMercer_SA Client Reading: Online Video: YouTube vs. Hulu - Let the Battle Commence! Add to Technorati Favorites

July 1, 2009 16:07 dmercer
Another excellent session this morningat the IEA/Marketforce's Future of Broadcasting conference, representing all the key players except the BBC. The main topic of debate was the Digital Britain report (DBR), and again Sky, in the form of David Wheeldon, Director of Public Affairs, stood alone in objecting to some of the key premises of the report. Describing the study as having “some deep flaws”, he suggested that the report failed to offer an accurate understanding of consumers’ future behaviour, and that key assumptions about the public interest were based on past behaviour. It also assumed by default that the instruments of change would be “incumbents” such as the telco (BT) and the BBC, rather than alternative providers (such as Sky). Fundamentally, Sky again questionned the premise that only free content has public value, whether state or advertising funded. Instead, the DBR failed to recognise the contribution of pay television, and Wheeldon again listed the various programming investments Sky is making in the arts and drama. We also heard from Dan Marks, until last night the head of BT Vision at BT, but since this morning officially unemployed. Dan told me he was really looking forward to kick-starting the retail economy (“going shopping” were his words), and intended, once the session was over, to do no more talking about the broadcasting or broadband industries. And who can blame him? So with his BT hat partly off, Dan broadly speaking gave the perspective of the public service player, which covers both the BBC and BT, since the latter is presented as the natural partner for ensuring delivering of universal broadband service. “Broadcasters will have to cooperate increasingly with telcos to manage the broadband spectrum” as it evolves into a fully fledged new medium for delivering interactive and television services. Sky “does not challenge the concept of the licence fee, but its scale and distribution”, according to Wheeldon, but it clearly has a fight on its hands as government policy responds to the recommendations of the DBR, and in its battle with Ofcom over control of wholesale pricing. I suppose it’s inevitable that these high level discussions are characterised primarily by two divergent sets of opinions. The history of UK, and indeed European, broadcasting, has been built upon the premise of free access for the whole population to a minimum level of television content, and based on government controlled access to wireless infrastructure. As we move into the era of broadband television, supported by new communications technologies and a plethora of potential new business models, these assumptions are inevitably going to be challenged. Twitter: twitter.com/DavidMercer_SA Client Reading: Digital Media Devices Global Market Report Add to Technorati Favorites

June 22, 2009 17:06 dmercer
I’ll be heading to London’s Le Meridien hotel in Piccadilly next week to hear some of the UK’s top media decision makers debate the future of broadcasting; hence the event’s name: the Future of Broadcasting conference, courtesy of the IEA (Institute of Economic Affairs) and MarketForce . The first morning’s panel alone should be worth the admission fee. There can’t be many occasions when top execs at the BBC (Caroline Thomson), ITV (Michael Grade), Five (Dawn Airey) and BSkyB (Mike Darcey) have gathered together around the same table. Indeed, there might be a few hints at anti-trust activity if they did it too often, given that they represent more or less the entire UK television industry, with the primary and unfortunate exception of Channel Four – they will be appearing separately in the following session, but I don’t suppose we should read too much into that. I just hope the panel’s chairman manages to get these senior figures to avoid the usual platitudes about the strength of the UK broadcast industry, British TV being the best in the world and the impact of the Digital Britain report, and address the awkward issues, such as: - Why does the BBC need so much money from licence fee payers? - Is Sky’s domination of the UK pay TV market a good thing for British broadcasting? - Can ITV survive without being acquired by a major overseas media firm? Given that there are only 20 minutes for discussion this seems unlikely, but we live in hope. In any case, it looks like a fascinating couple of days and I’ll be reporting back whether or not the key questions are answered. Twitter: twitter.com/DavidMercer_SA Client Reading: Global Digital Media Growth Slows to 2.7% in Q4 2008 Add to Technorati Favorites

June 18, 2009 18:06 dmercer
Countries, and especially their politicans, get surprisingly animated when global rankings of nations are released. We’ve tried to stir things up a little more by releasing our own version, based on penetration of broadband households. Perhaps it’s a sign that broadband grew out of the communications industry, which generally sees individual people as its primary customers (putting business users to one side for a moment), that households can be ignored as a key metric. Certainly in the world of mobile communications it makes sense to talk about a mobile phone account being attached to an individual user. But broadband is different. Even though many individuals clearly make use of broadband to connect to the internet, the business of broadband is based on selling service to the household as the unit of demand, whether cable, telco or other emerging fixed line provider such as fibre. Once a household is a customer of a broadband service, that household is, generally speaking, free to allow any of its members to use that service at no additional fee. Indeed, the service provider may be unaware of how many users are accessing broadband over any given period of time. Most may put a limit on the number of devices able to access the service (via a wireless LAN or other technologies), but there is no good way to tie that limitation to the number of users sharing those devices. For these reasons we have always used the household, rather than the user, as a key metric when determining the potential for broadband service adoption. That’s not to say that the number of users is not important in other respects, and we track that as well. But the way the broadband business is currently set up (and it doesn’t seem likely to change any time soon) the household is the more important measure. The household is also the target (in the sense of offering universal, high speed access) for the many broadband public policies being developed around the world (see our recent discussion of Australia). So when we look at the percentage of total households in any given country in which broadband is available (ie paid for and used), we find, not surprisingly, that Asia-Pacific countries lead the way, with Korea out in front, as it has been for many years. At the end of last year 95% of Korean households took broadband service, compared to 88% in Singapore and 81% in Hong Kong. But one or two European countries are edging towards the top of the list, led by the Netherlands (85%) and Denmark (82%). It’s not until you reach number 20 (out of a total of 57 countries covered in our research), that the US appears, with household penetration of 60%. Even then, the US is ahead of other “advanced” economies such as Germany (58%), Spain (57%) and Italy (51%). And China, for all the talk of its emerging leadership in all things tech, ranks at number 43 with 21% household penetration. The rural population in China is clearly still way behind leading economies in adoption of PCs and internet access. Here’s the complete ranking: Strategy Analytics: Global Broadband Household Penetration Rankings (2008) 1 South Korea 95% 2 Singapore 88% 3 Netherlands 85% 4 Denmark 82% 5 Taiwan 81% 6 Hong Kong 81% 7 Israel 77% 8 Switzerland 76% 9 Canada 76% 10 Norway 75% 11 Australia 72% 12 Finland 69% 13 France 68% 14 United Kingdom 67% 15 United Arab Em. 65% 16 Japan 64% 17 Sweden 63% 18 Estonia 62% 19 Belgium 62% 20 USA 60% 21 Slovenia 58% 22 Germany 58% 23 Ireland 58% 24 Spain 57% 25 New Zealand 57% 26 Lithuania 51% 27 Italy 51% 28 Austria 50% 29 Portugal 40% 30 Greece 39% 31 Turkey 37% 32 Hungary 34% 33 Slovakia 33% 34Poland 32% 35 Argentina 31% 36 Romania 31% 37 Latvia 30% 38 Czech Republic 28% 39 Mexico 28% 40 Chile 27% 41 Croatia 23% 42 China 21% 43 Malaysia 21% 44Venezuela 17% 45 Brazil 17% 46 Russia 14% 47 Bulgaria 13% 48 Peru 11% 49 Saudi Arabia 7% 50 Thailand 7% 51 Vietnam 7% 52 Philippines 5% 53 Albania 5% 54 Ukraine 4% 55 Egypt 3% 56 India 2% 57 Indonesia 1% Source: Strategy Analytics’ Multiplay Market Dynamics service, June 2009 Twitter: twitter.com/DavidMercer_SA Client Reading: Sputnik Moment: The Call for a National Broadband Policy Asia Pacific Broadband Forecast: 1H09 Add to Technorati Favorites

February 6, 2009 18:02 dmercer
After commenting on Netflix’s online TV performance last week, Microsoft released further data confirming the popularity of online movies delivered to Xbox 360 users. More than 1 million US-based XBox Live Gold members (ie those who choose to pay the $50 a year fee) have downloaded and activated the Netflix service since it was launched in November 2008. Collectively these users (who subscribe to one of Neflix’s unlimited rental plans) have streamed the equivalent of 12.5 million 2 hour movies during the past three months; that’s one movie per user every week. Of course we’re not just talking about movies: the service also offers shorter TV episodes, so the actual number of programmes watched is even higher. Cold hard facts are always a useful guide to market trends ;-) Anecdotes can be dangerous indicators, but may also support or cast doubt on statistics. Two stories have come my way in the last few days on the subject of connected TV that suggest major shifts are beginning to happen in the real world rather than on tech vendor powerpoint slides. Firstly, a colleague in the US has recently bought an Xbox 360 primarily to watch Netflix online videos. He doesn’t play many games, and he wasn’t an existing Netflix customer, so both Microsoft and Netflix have benefited from this online video partnership to the tune of some $150/year combined. There was no obvious alternative as he doesn’t get cable service, but this seems to be a case where a potential traditional “pay TV” provider (cable, Fios) lost out by not having the right content package and service available. Secondly, a friend in the UK told me he has been using his broadband-enabled PS3 to watch live Premiership football on a large screen LCD TV from unauthorised websites. The quality is apparently quite acceptable if not impressive at times, with occasional breakup but nothing that detracts significantly from the enjoyment. Again, it may be the case that this was not a serious potential Sky Sports pay TV customer, since he might never spend that much on Sky’s service in any case, but Sky will be fully aware of the threat from these over the top (OTT) sources. So the internet has become a direct competitor to traditional pay television and VOD services on both sides of the Atlantic. The broadband service provider in each case receives no additional revenue; instead new OTT service providers are emerging to meet consumer demand. The sports streaming sites, admittedly, would appear to be in breach of content rights laws, but their revenues are presumably derived primarily from advertising. With current broadband networks there has to be a question as to how many concurrent users of these OTT TV services the networks can sustain. Judging from what’s going on out there, it may not be too long before we find out just how far today’s internet, and the patience of BSPs, will stretch. Twitter: twitter.com/dmercer15 Client Reading: Digital Media Survey: An analysis of US Online Premium Video Users Add to Technorati Favorites

February 5, 2009 10:02 dmercer
A decade ago, Korea led the world in rolling out first generation broadband networks. By the early years of this decade more than 80% of homes used broadband services, and today access speeds to households in the major cities are typically 100Mbps. As the US and European countries debate government policy towards upgraded broadband networks, Korea has apparently set a new benchmark that others will struggle to match. The Korea Communications Commission announced this week that it would recommend investment of $24.6bn to enable access speeds to rise to 1Gbps (1000Mbps) in major cities. Smaller cities will have speeds of 50M-100Mbps. The KCC announcement puts into context Lord Carter’s recent “Digital Britain” interim report, which recommends that the UK should adopt a policy that guarantees “up to” (my banned phrase) 2Mbps to every home in Britain. This may be reassuring for remote Scottish hamlets, but is hardly a vote of confidence for the millions of urban households struggling along with under 8Mbps today. My colleague in Korea suggests that the recent KCC announcement is propaganda rather than a major change in government policy, since the backbone in Korea is already capable of supporting 1Gbps fibre to the home services. “There might be some investments on the Edge and some WDM but the major change will be the modem replacements and traffic management.” But even if we are sceptical about the politics, there can be no denying the intention of the Korean government to make sure its people and businesses are support by the most advanced communications networks. The broadband debate again raises the question of the demand for very high access speeds and the objectives of broadband policy makers. The example of Korea suggests that countries could get drawn into a game of broadband leapfrog to win kudos and political brownie points. So what if Koreans can get 1Gbps? What could anyone possibly want to do with that sort of data rate? As many in the US and UK have argued, 2Mbps should be good enough for most things. The problem with these arguments is that there is no way of proving today what applications could emerge if such networks were built. There is no point in seeing broadband purely in terms of today’s applications, which are still largely built around web browsing and low quality streamed video. Sooner or later video will move not just to today’s high definition (720p) but to 1080p and then to Ultra HDTV and beyond. And as Cisco is always telling us, telepresence as a consumer application is going to bring demand for high capacity two-way networks sooner or later. My own view is that there is no question that people will find ways to use bandwidth, however much they are given. Creativity has no limits. But that doesn’t necessarily mean there is economic justification in building new networks, or that new applications will make money. In the end, network investments depend on partnership between government and business, and countries must decide for themselves where the right balance lies. Twitter: twitter.com/dmercer15 Client Reading: Sputnik Moment: The Call for a National Broadband Policy Add to Technorati Favorites

January 13, 2009 13:01 dmercer
Last year we questioned whether the CES wow factor would make a return. Perhaps it is going too far to say the 2009 event fulfilled those wishes, but I got the sense that, in spite of the gloomy economic background, there was greater depth and commercial potential to the innovations than in recent years. And again perhaps it is reading too much into what inevitably are subjective impressions, but it may have been the challenging economy that encouraged exhibitors to demonstrate their readiness to benefit from the next technology transitions when the upturn finally appears. Of course there was nothing really new, and it would be wrong to go to CES or any other event with excessive expectations. Most innovations are evolutions or enhancements of existing technologies. The key is to look for genuine progress towards significant commercial opportunities, and this was clearly evident in connected TV, 3D and portable devices. While previous shows have seen a degree of experimentation in internet and web-enabled TV, this year there was a sense that widespread commercial rollouts are finally imminent. There is certainly no consistency in the approach to web TV, and, as we have seen, early implementations may be missing the real driver of consumer demand. But at least the products will be out there on retailer shelves, and vendors can start to learn what works and what doesn’t. 3D is at an even earlier stage in its lifecycle, although some would argue that its gestation began several decades ago. With so many false dawns behind it, 3D scepticism is understandable. But doubts over user acceptance should not cloud the fact that technical implementations are clearly improving year after year. The very best, such as Nvidia’s 3D gaming demonstrations, are very impressive indeed and well suited to their applications. Others, such as Panasonic’s 3D Blu-ray, can be extraordinarily good when the content production chain has been well designed, but are weaker with legacy material. As we move through the next decade 3D will certainly be playing an increasing role in some form or other in the digital home. The other broad trend is the increasing power of portable and mobile devices. Our research is tracking the role of personal technologies in bringing Internet applications to the digital home. As truly portable computing becomes ever more powerful, as evidenced by Nvidia’s new ION motherboard, growing numbers of consumers will see such devices as their primary digital home content gateway, connecting ad hoc to the large TV screen as required. These trends, while they will have near-term commercial impact, will also drive major new revenue streams for technology vendors and content providers alike over the coming decade. For that reason CES 2009 fulfilled its purpose to provide a vision of the future of consumer technology. The fact that fewer people – 110,000 attendees is the latest estimate – were there to see it is a sure sign that the industry is in the midst of a downturn, but it should not divert us from the fact that new technologies will inevitably replace old ones, fuelling new growth opportunities as soon as the economy allows. Twitter: www.twitter.com/dmercer15 Client Reading: Digital Media Devices Global Market Report Add to Technorati Favorites