January 10, 2009 22:01 dmercer
I saw Panasonic's demonstration of Blu-ray-based 3D system this morning. Demos are running in two small theatres on the Panasonic booth. They consist of 10 minutes of various movie, sports and games clips. Viewers are required to wear glasses. The material runs from a BD disc in a modified Blu-ray player. I’ve heard many positive reactions to 3D Blu-ray here at the show. It certainly seems to have a wow factor for some viewers. While the demos are certainly impressive, I have two general concerns. The first, which I highlighted yesterday (http://www.strategyanalytics.com/blogs/343/), concerns headwear. The second concerns the impact of the quality of the material. It was quite noticeable during the Panasonic demonstration that some material is considerably more effective in 3D than others. Perhaps it’s just my eyes, but some of the early sports clips involving many rapid and complex movements lacked clarity and could become quite difficult to watch for any length of time. By contrast, the brief clips from this year’s Beijing Olympics were immensely impressive. Apparently these were captured with special dual-camera systems from Panasonic, and the investment clearly paid off. But that is the point: before 3D begins to penetrate the sports and other broadcast sectors producers will need to make significant investment in upgrading cameras and other studio equipment. No doubt that is something Panasonic, one of the leading vendors in this market, is looking forward to. Likewise with movie content, fast action scenes still clearly present a challenge. Most of the other movie clips were impressive, and this is encouraging for the 3DBD opportunity which will clearly depend primarily on movie content. Panasonic is hoping for a 2010 launch, but much will depend on whether it can persuade other CE players and partners to unite around a single standard. That will be absolutely vital if 3DBD is to become successful because content providers will not want to adapt their productions to incompatible technology platforms. It also looks like something I wrote yesterday may have to be revised slightly. Samsung is demonstrating technology that turns any HD content into 3D, again with the user having to wear glasses – these link to a TV emitter via infra-red, similar to Nvidia’s system. The demo includes Xbox games, so it looks like 3D console gaming could be closer than we thought. The technology depends on processing chips within the TV, so it will be some time before it becomes widespread. In the meantime I’m sure Microsoft will be looking at alternative approaches to upgrading its Xbox platform for 3D. Client Reading: Digital Media Devices Global Market Report Add to Technorati Favorites

February 14, 2008 16:02 dmercer
ProSiebenSat1, one of Germany's leading commercial television broadcasters, will close its two free-to-air HDTV channels (ProSieben and Sat1) from tomorrow morning, 15th February. Instead the company will focus on increasing the availability of its 16:9 SD broadcasts. This shows, if nothing else, that the German market has some way to go to catch up with other countries, where 16:9 has been established for some years, and that HD may be a step too far, too soon. ProSiebenSat1 was one of the first broadcasters in Europe to take the plunge with free-to-air HDTV. Germany's TV market is characterised by the continued dominance of free-to-air broadcasting and the weakness of pay TV, relative to other European countries at least, and is often seen as being fundamentally different to other markets. So FTA HDTV may have seemed a natural development in Germany while other countries concentrate on pay HDTV services. But ProSiebenSat1's decision suggests that the laws of economics apply in German broadcasting as much as anywhere else. The fact is that in the early days of any new platform the audience is going to be tiny. HDTV requires users to buy or rent new set-top boxes, so a significant audience will only begin to emerge after some time. Any broadcaster believing that an HD channel can survive on advertising revenues alone in the early days is relying on wishful thinking rather than a sound business plan. Strategy Analytics' European HDTV scenario has always called for initial market leadership from the pay TV providers to establish the technology platform in the first few years, as indeed Sky is doing in the UK, using subscription payments as the primary business model. Public broadcasters will also find it difficult to participate initially because of lack of funding, although the BBC and others do have limited initiatives already in place. Wider availability of FTA channels will have to wait until the audience capable of receiving HD signals has expanded significantly from today's 1% of European homes. Client Reading: Europe's High Definition Homes: High Definition TV and Video Devices Forecast Add to Technorati Favorites

December 13, 2007 03:12 dmercer
One of Cisco's execs summed it up nicely today when he said John Chambers is extremely careful in treading the fine line between serving media companies and service providers. The company's Media Solutions group is at the front line of what should be a major new revenue stream, for Cisco and others, as media companies seek to distribute digital content to connected devices (See Disney/Streamboat's investment in Edgecast this week), ie, become service providers. At the same time, the Scientific Atlanta team are focused squarely on helping today's "service providers", ie cablecos and telcos, to meet the challenge of digital media. Most Cisco people do a good job of arguing that media firms aren't likely to compete directly with network access providers, at least in the near term. Either the internet isn't ready for media prime time, or cable and telcos will fight back with QoS and QoE tactics. Or media firms don't really want to bypass those folks, but are simply looking for new channels to supplement their existing ones. All those things may be true, and only time will tell. The outcome is inevitably going to be a mix of the two in the marketplace. What is uncertain is how influential advertisers can become in deciding the future. Cisco, like other tech firms, now needs to demonstrate to those companies just how much more effective the internet can be in maximising the effectiveness of their commercial messages. If they do a good job on that score, new business models around content will certainly emerge to take away some of the pain resulting from the inevitable downward pressure on paid content distribution models. The long term direction is unlikely to become clear for the next 2-3 years at least. Client Reading: Digital Disruption: Imminent and Long Term Threats to the Audiovisual Industry Online HD: Disney’s ABC Throws Down Gauntlet To Competitors, and Access Providers Add to Technorati Favorites

December 12, 2007 05:12 dmercer
Well, after day one at C-Scape I'm not much the wiser. The consumer tech vision is clear, but then it's not new either. What surprises me is that no Cisco exec has given me the same answer regarding the company's biggest challenge as it seeks growth in consumer media markets. The bulk of Cisco's revenues today comes from service providers, ie companies that depend on the end user relationship for a direct revenue stream. Scientific Atlanta, which is the company's major consumer technology division, depends on a similar relationship - consumers paying cable companies for TV and broadband service, and getting an SA set-top box for free as part of the deal. So much is transparent. Then Dan Scheinman, Cisco's SVP Media Solutions, described how Cisco is approaching media companies to help them distribute media to connected home devices, something we have talked about for many years at Strategy Analytics. Earlier in the day, as I mentioned previously, Cisco had invited the BBC's Erik Huggers to describe how the Beeb was offering full-length TV shows streamed over the web. So we naturally assumed Dan was talking about the same thing. But when I mentioned to Dan that what he was offering seemed to conflict with the SciAtl model of supporting managed delivery via network providers, he seemed taken aback. And he then suggested that he had been referring only to "short-form" video in his presentation, rather than full-length TV shows or movies. Longer-form video was apparently not quite ready for primetime, partly because it was not being distributed to TV sets yet. But then, I thought that's what Linksys was all about. Earlier in the day I spent time with Steve Silva, who joined Cisco from Comcast earlier this year. Steve is focusing on the home network device segment, and recognised the fact that the needs of service providers to manage devices across the home network could be in conflict with the needs of device manufacturers to develop products independently of service providers. In other words, Cisco's Linksys division sells products in the open retail market, but SciAtl sells devices to service providers. If Linksys sells a device that lets consumers stream video direct to the TV without the user having to subscribe to cable TV, it is competing with a set-top box provided by the cable operator (assuming the available content is similar, which is admittedly a big assumption). I am getting the impression that Cisco has just not given enough thought to managing the conflicting business relationships that are creating turmoil across the digital media and technology value chain. The company seems to expect, probably with good reason, that, whatever the outcome, it will do very nicely, thank you. After all, all content and devices will all be IP-based, one way or another. But it seems to have a blind spot about the impact all this could have on its existing customer base, and that should be cause for concern. I know Skip MacAskill, Cisco's AR man, is busy with managing the event, but these issues do seem to have been put left off the agenda. Perhaps we'll get more insight tomorrow. Client Reading: Digital Disruption: Imminent and Long Term Threats to the Audiovisual Industry Online HD: Disney’s ABC Throws Down Gauntlet To Competitors, and Access Providers Add to Technorati Favorites

September 25, 2007 09:09 dmercer
Following Sling's recent deal to distribute its Slingbox through UPC, the pan-European cable operator, announced at IBC, I drafted a comment that Sling could end up getting Tivo'ed. By which I meant that while Tivo started out as a disruptive force, it has depended on operator partners for its survival. Those partners' primary interests lie in maintaining a strong vertical relationship with their customer base, and reducing technology partners to vendor status. Sling also started out as a maverick independent, but deals with UPC and other distributors risk jeopardising its disruptive potential. So news that Sling is to be acquired by Echostar only intensifies those concerns. How disruptive can Sling be when it is owned by a major distribution partner of Hollywood? You can hardly blame Sling's founders for taking the money, and if they had a choice of similar partners, EchoStar was a good one. Charlie Ergen's outfit is as close to the maverick end of the scale as a Hollywood partner can be, but that ain't very close... According to EchoStar: "EchoStar has been pleased with the progress and commitment the company has made establishing Sling Media and the Slingbox as powerful and beloved digital media brands. EchoStar’s acquisition of Sling Media will allow us to offer innovative and convenient ways for our customers to enjoy their programming on more displays and locations, including TVs, computers and mobile phones, both inside and outside of the home. This combination paves the way for the development of a host of new innovative products and services for our subscribers, new digital media consumers and strategic partners." The sting is in the tail. It's not a question that Sling can be good for Echostar - it will allow the firm to offer new TV and web-based services. And it will put pressure on DirecTV and the US cable companies to address their own place-shifting strategies more urgently. But the interest centres on EchoStar/Sling's international strategy and partner relationships. I hope to have more by the end of the week, after Sling's press event in London on Thursday. Add to Technorati Favorites

September 6, 2007 21:09 dmercer
SES Astra's top brass, Ferdinand Kayser, President and CEO, and Alexander Oudendijk, Chief Commercial Officer, kicked off IBC tonight with an update to press and analysts on Astra's latest initiatives. Most significant is their attempt to wean German consumers off their favourite diet of free digital TV. 16.7 million Germany homes receive television through either their own or a community dish, and the vast majority of those watch only free channels. While analogue receivers are still numerous, the transition to digital is well under way, with around half now using digital receivers, again primarily to watch free-to-air channels. On September 1st SES Astra set about trying to change this by introducing a "basic pay" satellite platform called Entavio. SES Astra serves as the service provider and business enabler, but the platform is intended to be open to any broadcaster or device manufacturer that conforms to the system specifications. An Entavio set-top box will still receive vast numbers of FTA TV and radio channels, but it also has built-in addressability and pay TV capability. At launch, Entavio customers can choose to pay €1.99 a month for the new Premiere Flex package. They may also opt for the regular premium pay TV packages from Premiere. The plan sounds logical for broadcasters and device vendors, which are desperate to create additional value from the German market. But it would seem to be a momentous challenge to persuade millions of German TV viewers, who have never paid a monthly fee for TV, to start doing so, even if it is only €1.99 a month. Much will depend of course on what channels are on offer for this sum. There has been considerable controversy in Germany in the run-up to the Entavio launch, with arguments between consumer groups, regulators and broadcasters over the proposed migration of free channels to pay TV. I suspect there are many more battles to be fought before most Germans start paying up. Over The Top or Round The Back? Exploring The Emerging Multi-Billion Web Video Landscape, Revenue Outlook and Adoption Scenarios Attend Strategy Analytics' Analyst Forum at IBC. Registration is Free. Add to Technorati Favorites

July 23, 2007 11:07 dmercer
Or indeed, vice versa? Much of the discussion around Google's open letter to FCC Chairman Kevin J. Martin on 700MHz spectrum focuses on the impending battle between the former search engine and incumbent telcos. It can only be good news that an alternative competitor to dominant communications providers might emerge with the coming wave of spectrum sales. Whether Google will offer as "open" an alternative as any other potential bidder is debatable. "Open" is a word I normally treat with extreme caution, particularly when it comes to issues relating to network access and technology standards. What seems to be ignored is that Google has put some of its considerable weight behind the cable industry, by way of an investment in Spanish Wifi outfit FON. Time Warner Cable (with 8% of the broadband market) recently set itself apart from its telco rivals by encouraging its broadband customers to use FON's technology and shared broadband access model. Our report on the subject concludes: "Time Warner's acquiescence was a colossal win for FON, and an important milestone for shared broadband access". Google recognises that cable is the quiet foster child of the US telecoms industry. Still seen primarily as TV providers, cable companies in fact led the US industry into the broadband era, still have 54% of the market, and are stealing voice customers at a rapid clip. Also often forgotten is that cable is nearly as ubiquitous as fixed telco, and passes well over 90% of US homes. As the cable industry struggles to find a way into the mobile/wireless business to complete its quad-play offer, Google could prove to be a valuable partner in more ways than one. Add to Technorati Favorites

July 20, 2007 13:07 dmercer
SA analysts have been holding heated discussions on the potential of femtocells, an excellent example of a technology that has strategic implications across the traditional boundaries: mobile, fixed, home gateways, semiconductors, not to say mobile phones, of course. For background, femtocell is a very low power cellular transmitter designed for in-building use, and intended primarily to improve mobile phone coverage where signal reception is usually weak. Interest has been growing rapidly over the last year or so as we head towards the first commercial deployments, or so we are told. The main issue for me is what sort of company benefits from mass deployments of this technology. Technology vendors, naturally enough, can only see the upside. But what type of service provider or operator does it benefit? Mobile operators clearly wish to improve the customer experience, and potentially make savings on network costs by using a subscriber's home broadband connection for voice backhaul. But how does the broadband provider feel about this? In some cases it might be the same company, but even though there is much talk about multi-play and mobile/fixed convergence, the reality is that most home users (in the US/Europe context) do not currently buy mobile and broadband service from the same company. Multi-play adoption will grow, I have little doubt. And femtocell may be a way of persuading customers that a combined mobile/broadband service has benefits. But they could also create tension between mobile and broadband providers that are not tied in some way (the net neutrality debate comes to mind). And we suspect there are still a number of technical and regulatory challenges to overcome before large scale deployments are seen. Certainly some of the industry forecasts floating around at the moment seem to be wildly optimistic. Add to Technorati Favorites

June 13, 2007 12:06 dmercer
Further signs that the next gen DVD format war is swinging decisively towards Blu-Ray - in spite of all Sony's problems with PS3. Toshiba yesterday cut its US 2007 HD-DVD sales forecast to 1 million players, having previously cited a 1.8 million target. The reason, according to Toshiba's Digital Media Networks CEO, was "slower than expected sales". This seems to me a bit like saying "it's raining because it's raining". I think the 1 million target is still way too optimistic. Only 150,000 HD-DVD players have been sold in the first 14 months on the market, so it will take a tremendous ramp-up to sell another 850,000 in just 7 months. Prices are falling, of course, but HD-DVD hasn't even faced serious competition from BD players yet, and when the sub-$500 BD machines start appearing on store shelves we'll see exactly which way the wind is blowing. The issue now is how much more money Toshiba can afford to pour into its role as primary HD-DVD promoter. By the end of this year it will clearly be the minority format as far as players and titles are concerned. As we have suggested all along, I suspect the company will find refuge in highlighting HD-DVD's role as a PC upgrade. Whatever the decision, we should expect strategy shifts before too long.

March 5, 2007 22:03 dmercer
Today's DTG summit was a clarion call to politicians and regulators to ensure that the UK's digital terrestrial platform would carry HDTV signals in the future. Margaret Hodge, Minister of State for Industry and Regions, recognised that HD was a "contentious issue", but left the meeting too soon to hear just how contentious a subject it could be. Speakers suggested the government should take the decision of how to allocate spectrum back from the regulator, Ofcom, but Hodge was "not sure that Parliament is the best place to decide on consumer priorities". Before leaving, she left a glimmer of hope by suggesting that the spectrum decision "is not about maximising money for the Treasury". Personally I would want to get Gordon Brown's confirmation of that opinion before taking it as a matter of policy. The UK's digital TV industry, as represented by the DTG, in fact primarily represents those with an interest in promoting digital terrestrial television, as opposed to alternative digital television platforms such as satellite or cable. Principal supporters are the public service broadcasters, and consumer electronics manufacturers and retailers. This constituency is very concerned, and understandably so, that the DTT platform, so successfully established under the Freeview model, could lose out on the next innovation wave driven by HDTV. Ofcom is currently consulting on the best way to allocate spectrum freed up by the switch-off of analogue broadcasting. There was a distinct feeling at the DTG meeting that the prospect of this capacity being allocated to HDTV was more or less zero unless a significant change in regulatory approach is taken, as richer companies such as mobile operators will always be able to outbid opponents in any spectrum auction. One speaker after another put the case for free-to-air HD on DTT, including Sony, DSG (Dixons Stores Group), Channel Four and the BBC. Dixons' John Clare gave perhaps the strongest argument by citing recent (February) research that showed more than 40% of buyers of HD-Ready TVs plan to watch HDTV on the terrestrial platform. His argument that Ofcom needs to examine the most recent research before coming to a decision is certainly compelling. As we said in our recent report, France has taken the lead in Europe by clarifying the HD DTT direction. As the BBC's Tim Davie put it, the UK is heading for a situation where the 2012 London Olympics will be available to all French viewers, free to view and in HD, but not to UK viewers. This is the sort of argument that is likely to get politicians thinking, if anything will.