Digital Consumer

• 17Jun

  Assessing the Real Threat of OTT

  Technology, Connected TV, Broadcasting, Digital media, IPTV 1 Comment

  Some say that OTT is the “most over-hyped and over-anticipated phenomenon in tech history,” others would have you believe the end is nigh for traditional pay television as we know it.

  The truth?  As usual, it’s somewhere in between.

  A report we’ve just published, “Over-The-Top vs. TV Everywhere: How Disruptive is OTT to the Pay TV Business?” concludes that while the reaction to OTT has been perhaps overhyped, online distribution does pose a potential threat to the traditional pay television model.

  The numbers to-date, however, don’t necessarily portend an imminent  collapse of pay television as we know it. . In fact, US pay TV service providers added nearly 2 million additional subscribers in the first quarter of 2010, despite an increasing threat services such as Netflix, Hulu, and YouTube.

  

  That’s not to OTT should be ignored, however.  Survey research we published in early 2010 showed that US consumers perceive a relatively low “value for money” for pay television services.  

  OTT services can potentially capitalize on pay TV’s biggest shortcomings, namely a lack of flexibility in selecting channel packages, and a low perceived value for money.

  -Ben Piper

  Posted by bpiper @ 5:28 pm

• 24May

  GoogleTV: “You Get the Idea”

  Technology, Connected TV, Broadcasting, Digital media, IPTV 1 Comment

  Google last week unveiled GoogleTV, heralded by Intel CEO Paul Otellini as “the biggest improvement to television since color.”  And hey, what fun is a huge announcement without unrestrained hype, hyperbole, and flashy demos?  Right?

  Whooops!

  Never Work with Children, Animals, or Bluetooth

  Demos often seem predestined to fail.  Anyone who has been on the receiving end of a trade show demo can attest to that.  Well, this isn’t working as planned, but you get the idea moments are hardly rare.

  So it was not a big surprise to see the Google TV demo hampered and delayed by technical glitches.  For a  technology meant to harness the power of Internet, and bring the experience to the television seamlessly, this was not particularly confidence-inspiring. 

  But we still get the idea…

  Introducing WebTV 2.0?

  Some of us are old enough to remember painful previous attempts at bringing the experience of the Web to the television screen.  Was WebTV simply misunderstood?  Or was it ahead of its time?

  Perhaps both.  

  What WebTV fundamentally missed was the singular and individual nature of Internet experience  One could argue that it did little more than render the tv screen a monitor viewable by the whole family.  The result was an experience similar to having someone read over your shoulder.  Creepy and annoying.

  To be sure, the technology has been there for years—it’s the business case that has been lacking.

  Why it just might work this time

  GoogleTV has a fighting chance this time, for several reasons…

  Cord cutting is fast becoming a reality

  Today things are markedly different.  With a growing abundance of online video, “Cord cutting,” the notion of Cable and Satellite customers moving to unmanaged free or almost free Internet-based platforms, is fast becoming a reality. Strategy Analytics sees the number of so-called “cord cutters” exceeding 10% of US television households by the end of the year. Video will continue to dominate, accounting for over half of all of all consumer Internet traffic in the next five years.

  

  Source: Strategy Analytics

  Although the GoogleTV talking points bill the platform as “complementary” to cable, satellite and Telco TV, make no mistake—GoogleTV is a competitor to traditional “managed” pay tv.

  It satisfies a demonstrated need

  While it has been possible to emulate a pay tv environment with a game console, a tv and a PC, the level of sophistication required to knit these together into a seamless and enjoyable viewing experience went far beyond the aptitude or interest of the average consumer. GoogleTV may just bridge that gap.

  Observational research of Connected Media Users in the US and Europe, performed under the auspices of Strategy Analytics’ Digital Home Observatory, uncovered some common missing elements consumers identified in today’s Over the Top (OTT) ecosystem

  In addition to the desire for an integrated experience across devices, respondents brought up the wish for a more personalized viewing experience, and the ability to discover new relevant content based upon their existing likes and interests, and more relevant advertising and payment options.

  These are all places where GoogleTV can deliver.

  The Power of the Value Chain

  As strange as it may seem to see Sony chief Howard Stringer sharing the stage with Google and talking about “openness,” a critical success factor for GoogleTV is the power of its value chain, and the A-list partners it has teamed up with. Along with Sony, the presence of Intel and Logitech, as well as BestBuy and Dish bring some credibility to the table.

  TBD?

  Pricing

  Rumors are floating around about likely price points, but nothing firm as of yet. This could be critical, as a $399 Logitech “companion box” sounds like it may collect dust on the BestBuy shelves.

  Content

  Somewhat surprisingly absent from last week’s announcement was any real mention of the content side. Sure, there was lip service paid to “You Tube Lean Back,” but nothing of any great consequence. YouTube, which turns five this year, is starting to offer full-length movies, though it still lacks enough professional content to make it a viable alternative, and UGC (User Generated Content) is, by nature, ephemeral. How many times can you watch “David After Dentist?”

  And what about Sony’s extensive library of television series and movies?

  Net Neutrality

  As I mentioned in an earlier blog, the goings on with the FCC are doing very little to inject any sort of confidence or certainty into the minds of investors. And even though Chairman Genachowski’s “Third Way” strategy appears to be the current path, the fight has not even started with the MSOs and Telcos.

  Expect this to be tied up in court for the next few years.

  And that, we get.

  -Ben Piper

  Posted by bpiper @ 4:08 am

• 20May

  Google TV: how to implement the great vision?

  Connected TV, Technology business 1 Comment

  
  I remember a couple of years ago, I read a great book called The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture by John Battelle. In the book, the author depicted a scene that a mom ordered a baby diaper product for her kid due to a TV commercial shown on her TV. And this specific diaper commercial was displayed to her at this time because the advertising system knows her information and web search queries. This scene sounded for me at that time like a futuristic novel, which is beautiful but not realistic.

  Today Google announced Google TV, a product that could be a big stride toward realizing the scene. Basically, Google TV is a set-top-box that enables users to consume web content on the TV screens. Although it is not new and companies like Boxee are already doing this, it is still great to see that Google offers a nice integral interface between TV and web content so that you don’t have to press input button in order to switch to computer desktop. More importantly, you have the universal web search on your TV screen, which could potentially tap a huge advertising market for Google. TV advertising is a $165 billion market. And if the vividness of TV commercial could be combined with interactivity of online ads and the information of users search intention, it would create the new generation of TV advertising and help Google build its next multi-billion dollar business. I believe it is a great vision that Google has.

  But barriers remain. The vision will only be achieved if Google TV can hit critical mass. The key strategy for Google TV is to extend its search to more audiences rather than selling the boxes. To realize this strategy, Google TV needs to be adopted by mainstream population. But do normal users nowadays have clear understanding of Google TV and its benefits? Probably not. Even if they do, are they willing to spend money on the benefits and how much? We don’t know the price point for Google TV yet, but this is a question to be answered. If the value proposition is not strong enough, it is hard for Google TV to achieve mass adoption.

  Moreover, Google TV could potentially hurt cable business given the abundance of web content. If we can get the same show online for free, there is a fair change that we might want to cut our cable subscription. In this case, content producers’ largest revenue contributor, cable companies, will put more pressure on content owners, letting them put less shows online for free. Then we will either see less free premium content online or more paywalls for online premium videos. This may eventually make free web video content less compelling.

  In short, to achieve Google TV’s great strategy and vision, many consumer and operation related issues are waiting to be resolved. And implementing it is not an easy job.

  Jia Wu

  Posted by Jia Wu @ 10:33 pm

• 19May

  Many Barriers Ahead For Targeted Ads

  Connected TV, Broadcasting, IPTV 1 Comment

  As our recent report pointed out, the potential of internet and IPTV has failed to materialise. One area of untapped potential is interactive or targeted advertising. In spite of more than a decade of red button adverts in the UK these services have never proved commercially viable and in fact were recently withdrawn completely by Sky.

  Trials of new technologies continue, however, and Sky has just completed a trial called Adsmart. Its partner was Mediacom, using technology from Packetvision and ads from Nat West, the UK bank. Mediacom’s Managing Partner of Implementation & Futures Rhys McLachlan, presenting at this morning’s Broadcast and Beyond conference, called the trial a technical success, but went on to describe the key findings, most of which seemed to present targeted TV ads not so much as an uphill battle as an attempt at Mount Everest.

  The first conclusion is that current television audience segmentations are ‘rudimentary’ at best. In spite of using Sky’s own extensive customer database, McClachlan concluded that the segmentations currently used ‘cannot be validated’. As far as advertisers are concerned there is simply no consensus on how such audience data should be employed.

  Mediacom also found that it was very difficult to find the right metric for audience measurement, and that, critically, it was very difficult to prove the ROI from targeted ads.

  Finally, in spite of the advanced technology used, there was simply no proof that advertisements had been delivered and viewed. Effectiveness measurement depended simply on ‘good faith and intuition’.

  In spite of these challenges investment in advanced advertising trials continues, and broadband is the key to the future success, according to McClachy. The biggest challenge of all is developing technology which can help advertisers differentiate between single and multi viewer consumption. As we have also noted previously, asking TV viewers to log in, as some emerging services do, does not solve this problem. Even with the latest advanced technologies in the IPTV world, it seems there is still a long way to go before advertisers will be convinced to spend money on using them.

  David Mercer

  Client Reading: Chasing the Elusive IPTV Business Model: NDS, Cisco and Comcast to the Rescue?

  

  Posted by David Mercer @ 4:26 pm

• 18May

  Net Neutrality at the Cable Show: Genachowski Goes Hollywood

  Connected TV, Broadcasting, Broadband, Digital media 1 Comment

  Downtown LA’s Nokia Theater, venue of the Season 7 and 8 finals of American Idol, played host for a highly anticipated - though somewhat poorly attended - keynote from FCC Chairman Julius Genachowsi.  The interview format, moderated by NCTA president Kyle McSlarrow, was heavy on platitudes, and light on real news.

  “Let’s roll up our sleeves, and get down to business!” seemed to be overarching theme.

  In a very brief press conference later in the day, the Chairman did respond to some slightly tougher questions - and gave a pretty non-responsive answer to one posed by yours truly

  A “Healthy and Fair” Third Way?

  April’s court decision “has created a problem, and has damaged the legal foundation,”  according to Chairman Genachowski.  The FCC’s was faced with several options, according to a statement issued by the FCC:

  • Do Nothing

  The Commission could continue relying on Title I “ancillary” authority, and try to anchor actions like
  reforming universal service and preserving an open Internet by indirectly drawing on provisions in Title II
  of the Communications Act (e.g., sections 201, 202, and 254) that give the Commission direct authority
  over entities providing “telecommunications services.”

  • Deploy the “Nuclear Option”

  The Commission could fully “reclassify” Internet communications as a “telecommunications
  service,” restoring the FCC’s direct authority over broadband communications networks but also
  imposing on providers of broadband access services dozens of new regulatory requirements.

  • Third Way

  With each of these deemed “too extreme,” the Commission instead has decided on a so-called “Third Way,”  a “Healthy and fair option” which would:

  • �
    • Recognize the transmission component of broadband access service—and only this component—
      as a telecommunications service;
    • Apply only a handful of provisions of Title II (Sections 201, 202, 208, 222, 254, and 255) that,
      prior to the Comcast decision, were widely believed to be within the Commission’s purview for
      broadband;
    • Simultaneously renounce—that is, forbear from—application of the many sections of the
      Communications Act that are unnecessary and inappropriate for broadband access service; and
    • Put in place up-front forbearance and meaningful boundaries to guard against regulatory
      overreach.

  Unfortunately, the FCC’s chosen path, reclassifying ISPs as common carriers and “forbearing” the majority of Title II regulations, hasn’t done much to instill confidence.  Critics say it opens the door to potential pricing regulation going forward, though the Chairman insists that is “off the table.”

  The key enforced provision, Section 202, prohibits carriers from making any “unjust or unreasonable discrimination” in the way it charges.  Section 208, another provision on the table for enforcement, allows carriers, enterprises, and individuals to file complaints directly with the FCC for violations.

  Buckle Up and Hang On

  Along with many others, I have long operated under the assumption that, in principle, net neutrality was decided with the election of Barack Obama in November 2008. The latest court rulings have insinuated more fear, uncertainty and doubt into the mix.  And markets don’t adapt well to fear, uncertainty and doubt.  I would suggest everyone buckle in tight, because this ride isn’t over.  

  See You in Court!

  The process will be slow, there will be numerous legislative challenges and speed bumps–Representative Cliff Stearns from Florida recently introduced a bill that would require the FCC to deliver a detailed cost-benefit analysis to Congress before moving forward.  When I asked the Chairman yesterday about this, he only said that FCC “will work with Congress as a resource.”

  Not to mention the court cases…we should anticipate numerous legal challenges in the forthcoming months, and it wouldn’t surprise me to see this ultimately end up in the Supreme Court. The real brunt of this will be felt by OTT ecosystem players.  Over the Top, by its very nature, is predicated on an open Internet.

  Twelve, eighteen, or twenty-four additional months of limbo is the last thing these guys need. 

   -Ben Piper

  Posted by bpiper @ 3:35 am

• 16May

  NCTA 2010: the disparity between innovation and technology adoption

  Technology, Connected TV, Broadcasting, HD and 3DTV, Digital media 2 Comments

  
  As the US government is investigating Goldman Sachs’ case in which the financial titan allegedly materially misstated and omitted facts in disclosure documents for a synthetic CDO product, many financial industry analysts claim that the financial service industry has not innovated anything for its customers in the past 40 years except the ATM machines. Unlike the financial service industry, the Telecommunications, Media and Technology (TMT) sectors have been at the forefront of all kinds of innovation for many years. And again at this year’s NCTA The Cable Show 2010 in Los Angeles, a myriad of innovation demonstrated here has shown us that the media, cable and technology industry is still marching ahead with strong momentum.

  The big themes here this year, probably similar to many other media and technology trade shows, are home 3D and TV Everywhere technologies.

  3D technology has been hyped for sometime, with the movie Avatar pushing it to a recent peak in real user consumption. Followed by Alice in Wonderland, How to Train Your Dragon and more new 3D movie releases, 3D’s initial success in movie theaters is undeniable. But more problems emerge when it comes to the mainstream home adoption of 3D technology, such as the lack of content support, the hassle of wearing a glass and consumers’ willingness to pay for 3D. Technology providers are fearless for these problems, with companies like Motorola, Ericsson, NDS, OpenTV and a lot more demonstrating their development and commitment in this realm. Meanwhile, the atmosphere under the theme is a little different from the hyped 3D world. When we talk to executives from various firms in cable and technology industry, most of them acknowledge that the mainstream home 3D adoption will take longer than we think, as the industry makes effort to address the problems pertaining to 3D in the home. Therefore, it is reasonable that 3D technology will continue its evolution as the next growth area for the industry while its entry to most of our homes might take over ten years to be realized.

  TV Everywhere is another major topic at The Cable Show 2010. TV Everywhere here not only refers to the initiative which the cable industry in working on, but also touches upon anythings that could enable users to watch videos on any device anytime anywhere. Major cable companies continues their progress on the project, which offers their existing cable subscribers to watch the programs they already subscribed to on any device they want. The Wimax-based 4G network provider Clearwire, Sprint, Time Warner Cable and Comcast’s 4G service partner, is rolling out its service in increasing number of US cities. The 4G network with higher bandwidth comparing to current 3G network could help users consume more traffic intensive content, such as HD video and video games, on the go. Echostar’s Slingbox forges ahead the place-shifting TV service. In addition to the consumer product line, the place-shifting technology is integrated to its set-top-boxes, allowing operators to deliver a seamless place-shifting experience across TV, computer, and mobile devices. Furthermore, the online video platform industry carries forward their services helping cable and media firms improve their online video delivery process. While it is exciting to see all these innovation going on at the show, it is believed that the mainstream adoption of consuming any media content anytime anywhere are still going to take years to consummate.

  Jia Wu

  Posted by Jia Wu @ 9:40 pm

• 10May

  Strategy Analytics gives keynote analyst presentation at major Connected TV conference

  Connected TV, Broadcasting, IPTV 1 Comment

  The Connected TV World Summit takes place in London next Tuesday, 18^th May. Key speakers includes Griff Parry from Sky, Harris Morris, the CEO of Harris, Ian Mecklenburgh of Virgin Media, and Neale Dennett, Head of VOD, ITV plc.  

  My colleague, Peter King, will be giving the keynote analyst presentation. He will present our own independent analysis of the connected TV opportunity. He will also be giving the audience insights into the changing behaviours exhibited by early adapters of connected TV products and services. This research will be drawn from our Digital Home Observatory, which uses ethnographic techniques to explore emerging attitudes and behaviours in the digital home environment. 

  You can attend the conference in person, or watch the event on line and free of charge. Registration details are here: http://connectedtvsummit.com/register.html.

  David Mercer

  Client Reading: Global Audiovisual Market Forecast

  

   �

  Posted by David Mercer @ 12:25 pm

• 27Apr

  Is Nokia’s N8 Smartphone the First Converged Set-top Box Phone?

  Connected TV, HD and 3DTV, Digital media, Wireless, Handsets 1 Comment

  Nokia today introduced its new smartphone, the N8, the first based on the Symbian 3 operating system. It’s got a great 12Mp Carl Zeiss camera, social messaging widgets and Ovi Maps. Symbian 3 allows for user-selected home screens, multi-touch and gesture support and improved UI, graphics and speed through its Broadcom graphics and 680MHz processor. So far, so good. But what we really want to know is, how does it handle video?

  As we’ve mentioned previously, Nokia has promoted TV out capability on its N series smartphones for several years, and has talked about one day delivering DVD quality video from handsets to TV screens. Previous smartphones have fallen short but it seems as though the N8 may finally be reaching this goal (although we look forward to seeing this demonstrated in person rather than on a conference call).

  The N8 captures HD video (720p) at 25fps. It supports H.264, MPEG-4, VC-1, H.263, Real Video
  10, ON2 VP6 and Flash video file formats. Most importantly it features HDMI for output to digital HDTV displays, therefore potentially taking on the role of “set-top box” to the TV screen. Nokia emphasises the ability to play back user-generated video on the TV, but the phone can clearly potentially also serve as a video player for much HD content, rights issues permitting. To emphasise this point, the N8 will come pre-shipped, depending on region, with appropriate “web TV” applications, such as the BBC’s iPlayer in the UK (although it is not clear if these will support HD rather than just SD).

  Functionally there is still some way to go. The N8 can push HD video to a 40” LCD over an HDMI cable, but it’s not likely to be a long cable, so to control what’s happening on the big screen the user must keep returning from the sofa to the handset. We mentioned the need for a remote control to Jo Harlow, Nokia’s head of Symbian Devices, who told us it was an interesting idea which she would recommend to her team for consideration. For reference, while we welcome the opportunity to support Nokia’s product development activities, this blog has highlighted this problem previously. Third party vendors will no doubt step into this gap until Nokia brings out its own solution.

  In any case there is a genuine question as to whether users will accept the mobile phone functioning as a “set-top box” when it is, after all, their main gateway to personal communications and the handheld web. Even if the N8 can play a 2 hour HD movie on the big screen, will owners be happy to let go of it for that length of time as they relax in the armchair? The answer to that problem will have to be wireless HD connectivity, another subject we have covered extensively.We are sure that this is also on the roadmap of Nokia and other handset vendors over the next couple of years.

  David Mercer

  Client Reading: Global Audiovisual Market Forecast

  

  Posted by David Mercer @ 6:39 pm

• 16Apr

  Sezmi Says Prospects Look Good For Hybrid Wireless/Broadband TV

  Connected TV, Broadcasting, Broadband, Digital media 1 Comment

  “Hybrid” was one of the hot themes at this year’s IPTV World Forum a couple of weeks ago in London, in spite of the fact that the concept of melding two or more services into one is hardly new. But the term was scarcely mentioned here at the NAB Show, and when I suggested to Sezmi’s VP of Network Engineering and Operations, Veeraraghavan Krishnan, that his company offered a hybrid solution it didn’t appear to ring any bells.

  But hybrid TV is exactly what Sezmi has developed. The company began its commercial launch six weeks ago in Los Angeles and its set-top boxes are available in Best Buy at $299. Customers receive the standard digital terrestrial TV ATSC channels available in their local area, together with content delivered in two additional ways: via the broadband Internet connection; and in additional capacity over the wireless broadcast signal, which Sezmi licenses from local broadcasters. Sezmi’s playout facility in Florida determines what spectrum is available in each location and balances the use of broadcast and IP delivery accordingly. In general the system pushes more popular content to the broadcast spectrum, as expected, but is flexible enough to adapt on an hourly basis.

  Krishnan took me briefly through the viewer guide. The clever thing about Sezmi is that there really is no easy way for the user to know how content is delivered. The menu disguises the content’s origin, whether it arrives on demand over the Internet (and downloaded progressively), or stored on the set-top box’s 1TB HDD. The demonstration on the show floor inevitably suffered from some buffering and access issues. Sezmi claims that users require a 1.5Mbps broadband connection in order to watch internet-based video.

  We also discussed Sezmi’s decision to offer personalised content. When the box is switched on users have to log in, either as individuals or as a guest. We’ve pointed out before that the large screen TV is problematic when it comes to personalisation because it is usually sited in a multi-viewer environment. Which family member is supposed to log in to see their personal recommendations when everyone else is also watching TV? Krishnan did not appear to have an answer to this point beyond suggesting that the family should log in as a “guest” in their own home…

  It’s important that Sezmi sorts out its position on this question because one of its next steps will be to introduce targeted advertising. If broadcasters and, more importantly, advertisers, are to benefit from that capability they will need better clarity on which viewer or viewers they are targeting.

  There have been lots of discussions about Sezmi’s opportunities and business models. The assumption seems to be that people will not pay $299 up front for a subscription TV service that costs either $4.99 or $19.99 a month. As always, I’m not sure it’s as simple as that, and there may well be segments who find that a lower cost alternative to cable or satellite TV which blends broadcast and online content may be attractive. Whether those segments are large enough to sustain Sezmi towards profitability seems rather uncertain, but broadcasters cannot afford to ignore this sort of innovation in their battle for survival.

  David Mercer

  Client Reading: Global Digital Television Forecast: 1H’10

  

  Posted by David Mercer @ 4:41 pm

• 30Mar

  Broadcasting in Turmoil and Online TV Disruption: Analyst Breakfast at the NAB Show

  Connected TV, Broadcasting, User Experience No Comments

  A quick heads-up that we are offering a complimentary analyst breakfast at this year’s NAB Show in Las Vegas on April 13th. With our partners from D. I. S. Consulting we’ll be examining the outlook for the professional and broadcast industry, which has been badly hit by the recession over the past 18 months. We’ll also be presenting new research from our Digital Home Observatory to illustrate how the viewing habits of the next generation of digital consumers are evolving as a result of the proliferation of connected TV devices.

  Pre-registration is advised by visiting here:

  Event details are as follows:

  Breakfast Presentation from Strategy Analytics and D.I.S. Consulting: “Broadcasting in Turmoil: Recession, Recovery and Online Disruption”
  Date: Tuesday, April 13, 2010
  Time: 7:30 am - Breakfast and Registration 8:00 am - Presentation
  Location: Las Vegas Convention Center, Las Vegas; Room S225 South Hall Upper Level

  David Mercer

  Posted by David Mercer @ 2:58 pm

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