Digital Consumer

• 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

• 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

• 10Apr

  “Business Questions Still Surround 3D” - Fox

  Broadcasting, HD and 3DTV No Comments

  Thomas Edwards, VP, Digital Television Testing & Evaluation, at Fox, was speaking this morning at the Digital Cinema Summit at the Las Vegas Convention Center, one of the many conference programs running concurrently with the NAB Show over the next few days. Fox, of course, is a sister company to BSkyB under the News Corp parent, and BSkyB, as we have regularly reported, is a firm advocate of 3D as the next major business opportunity.

  So it would be interesting to see Fox and BSkyB executives debate the business viability of 3D after Mr Edwards’ comments that he “doesn’t know if 3D can make money”. Edwards listed some of the obstacles he is facing as Fox experiments with 3D production and broadcasting. 3D equipment, particularly cameras and rigs, are still “hard to obtain”, and are fragile, large and heavy. Stereographers, the specialists responsible for the 3D experience, need to be trained. There are design issues such as placement of the score box and other graphics. There are issues of quality with broadcast 3D, which today (under BSkyB and Fox’s current side-by-side approach at least) is sub-HD quality. And there are challenges associated with keeping the 3D material in synch throughout the various stages of production.

  Edwards also didn’t seem to be convinced that 3D necessarily improved on the 2D experience when it comes to sports productions. He noted in particular that wide shots, such as a view of a full half of a soccer pitch, tended to reduce the players to “matchstick figures”. In certain close-ups, however, 3D clearly offered a benefit, allowing viewers to appreciate the positioning of players more accurately than in 2D.

  Edwards called for the beginning of mass production of 3D cameras, rather than the current range of custom-produced two-camera rigs, and that they should be much smaller than present designs. No doubt we will see some examples of early “integrated” 3D cameras here at the NAB Show, with Panasonic for one expected to announce its first model.

  Register for Strategy Analytics’ Analyst Breakfast at the NAB Show

  Client Reading: Global Audiovisual Market Forecast

  

  Posted by David Mercer @ 10:11 pm

• 18Mar

  Technicolor Shows Off 3D Prowess, But Will 2D Conversion Be Spanner In The Works?

  HD and 3DTV No Comments

  We were also with Technicolor today to see its latest capabilities in 3D production and distribution and hear about the company’s strategy. Technicolor is the new name for Thomson. The company is still trying to sell Grass Valley Group, so its strategy as presented today assumes an absence of GVG’s divisions.

  A key question for Technicolor and its competitors in the content production and distribution space will be whether 2D-3D conversion technologies will remove the need for 3D content origination. Sky has reportedly announced that it will refuse to accept any 3D television which has been converted from 2D, which is a good sign for the many vendors hoping to profit from this opportunity. But 2D-3D conversion is still likely to feature in consumer products such as TVs.

  Technicolor’s position is that these technologies will actually help to fuel demand for ‘true’ 3D, which will always provide a better quality experience than the alternatives. This seems like a reasonable position to take at the moment but vendors should watch carefully for progress in 2D-3D conversion technologies which could disrupt the market over time.

  David Mercer

  Client Reading: Global Audiovisual Market Forecast

  

  Posted by David Mercer @ 11:23 pm

• 10Mar

  Cisco’s Wireless HD Investment Hides Behind “New Internet” Hype

  Connected TV, HD and 3DTV, Wireless No Comments

  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

  

  Posted by David Mercer @ 3:31 pm

• 02Mar

  Sky’s new HDTV offer aims to restrict customer churn, but at what cost?

  Broadcasting, HD and 3DTV 1 Comment

  As a long term Sky TV customer I’ve often been frustrated at the lack of attention the company gives to its loyal customers relative to its interest in winning new ones. While I understand the business goal – winning new customers is always much more expensive than retaining existing ones – as a customer it can leave a sour taste in the mouth.

  That taste was sweetened this morning by an unexpected call from Sky customer services offering me a new HD DVR, together with 12 months’ subscription to HD channels, all at no additional cost. No set-top box charge, no “set-up fee”, no installation charge, no further commitment. The normal fee for an existing Sky customer to upgrade to this package, as still described today on the company’s website, is £180 - £60 set-up cost plus 12 months of HD channels at £10/month. From £180 to zero – that’s what I call a discount.

  I couldn’t let the fact that I don’t yet have an HDTV, or my general rule to reject all cold calls, prevent me from accepting this offer. Sky’s latest HD DVR should represent a vast improvement over my 9-year-old Sky+ model, in speed and ease of use, interface and EPG, and storage capacity. I won’t get the benefit of the HD channels, but maybe, just maybe, those free channels will be enough of an incentive for me finally to replace my CRT TV.

  Sky’s initial financial loss on this, and presumably many other HD upgrades, results from their determination to remain competitive in the years to come. The resistance of many of their customers to subscription fees is high, as shown by our own user research. We found that, while Sky’s overall satisfaction ratings are high, more than a quarter of Sky’s customers would switch to another provider offering the same service for 10% lower monthly fees. We also found that more than a third of Sky’s customers do not rate the company as meeting expectations on value for money.

  With this new offer, although it is limited to selected existing customers, is aimed at the right spot: to make sure its subscribers are not lured away by competitors such as Freeview HD, Freesat HD, Virgin Media and BT Vision. While none of these alternative providers offer the exact same package as Sky, they are each, in their own way, becoming more competitive in certain aspects. Slowly but surely it seems as though the UK pay and multichannel TV sector is finally opening up to greater levels of competition. Whether Sky’s financials can withstand the impact of these customer retention strategies remains to be seen.

  David Mercer

  Client Reading: BSkyB Results Shine But Warning Signs Evident In Customer Value Ratings

  

  Posted by David Mercer @ 1:56 pm

• 15Feb

  As 3D TV Approaches Commercial Launch, Will Consumers Be Misled By Standards Conflicts?

  Games, HD and 3DTV No Comments

  The rapid re-emergence of 3D in the television and video industries is beginning to reach “real” consumers. I was tempted into the Sony Style store in Boston’s Copley Mall recently by a window poster offering the chance to “see 3D in action”. After circling the store with no sign of said “3D in action”, a sales consultant pointed me, with slight embarrassment, to a PS3 connected to an LCD TV. “This should be showing 3D, but we were sent the wrong box.” Further inquiry revealed that “Singapore”, whatever might be there, had shipped a faulty hard disk drive for installation in the PS3, and the store was awaiting a new module, presumably along with the sort of firmware upgrade to be offered to all PS3 owners later this year to enable 3D Blu-ray playback.

  Personally I have seen enough 3D demos to last a lifetime, so this disappointment represented no great loss. But Sony will clearly have to avoid such problems for US-based customers interested in 3D Blu-ray players and TVs once they are offered for sale. Effective in-store technology demonstrations have always been one of the major obstacles to commercial success, and 3D will be no different. Minor issues such as these will be overcome as the technology matures, but they will be replaced by other practical questions such as how 3D glasses are stored, demonstrated and secured.

  Retailers will have other headaches too, as an excellent article in specialist trade publication, CE Daily, revealed last week. The incompatibility of passive (side-by-side) and active (eg Blu-ray) 3D systems is one of the major faultlines in the realm of 3D standards. The Blu-ray 3D standard specifies only the active approach, which is generally accepted to offer the best quality available today, and will be compatible with TVs with active displays and the transmitter necessary to communicate with active shutter 3D glasses.

  Panasonic recently became one of the first major companies to announce sales of new, active 3D TVs. It will sell 50” and 54” plasma sets in Japan, starting at around $4800. One pair of glasses will be included in the bundle; additional pairs will retail at around $112 each.

  But, as CE Daily’s Barry Fox reports, it seems, as long suspected, that some TVs will be launched which will only support passive 3D technologies, from vendors such as Hyundai and JVC. These TVs, which are likely to cost considerably less than the first active 3D sets, will be suitable for broadcast 3D services from Sky, which are only using the passive approach. But they will apparently not be compatible with 3D Blu-ray players (including the PS3), at least not without some modification or add-on transmitter device. They will also apparently not incorporate the latest HDMI 1.4 ports required for 3D Blu-ray and other potential active 3D systems.

  We wrote nearly a year ago that BSkyB, which had just announced its intention to launch a 3D service, was unconcerned by 3D standards issues. But that narrow perspective ignored the dilemma which now apparently faces retailers anxious to push sales of new 3D devices and software. Sky’s 3D customers will need new TV sets; but will retailers tell them (will they even know) that some of those TVs may not play 3D from Blu-ray discs? Buyer, as always, beware.

  Client Reading: Consumer Imperatives for Digital TV Media Browsers

  

  Posted by David Mercer @ 6:57 pm

• 10Feb

  US Pay Television Angst…or was that ennui ?

  Connected TV, Broadcasting, HD and 3DTV, Digital media No Comments

  A report we just published  analyzes the findings from a nationwide survey of 856 US Digital Pay Television consumers.  In it, we look at satisfaction for key performance  metrics, analyze customer willingness to churn, and look at the role of the bundle in mitigating churn.  This is presented at both an overall and platform-level (including Cable, Satellite and TelcoTV / IPTV). A few key findings from the report:

  Digital Television Satisfaction is High Overall, but Cable is Still Vulnerable

  Seventy-one percent of respondents in the survey reported to be “somewhat” or “very” satisfied with their current service. While this may seem like positive news for the digital television industry, the story changes somewhat when viewed at the individual platform level.

  The differences among Cable, Satellite, and IPTV were impressive, with  Telco/IPTV customers reporting 95% overall satisfaction, compared to 67% for Cable. Cable underperformed in virtually every satisfaction metric.

  Low Perceived “Value for Money” among all Digital Pay TV customers

  Virtually across the board—and irrespective of platform—respondents reported low satisfaction in the metric of `Value for Money.’ There was very little measurable difference by platform among respondents, and in all cases, fewer than 22% of respondents felt the service “exceeded” or “greatly exceeded” expectations of value for money.

  This is among the most important findings of study, as it underlines the vulnerability of pay television in its current state. Indeed, in a report published in 2008, we found that over 50% of US digital pay television customers would be willing to scale back or completely drop their television service if household budgetary circumstances dictated.

  Cable Customers Most Willing to Jump Ship

  Despite a high stated satisfaction rate, digital television respondents displayed relatively high price elasticity. A somewhat surprisingly high percentage of respondents indicated a willingness to switch providers when offered a competitive deal 10% or 20% cheaper than their current spend.

  Cable customers displayed the highest propensity to churn, with 47% saying they would switch for a 10% price discount. When the price discount was raised to twenty percent, over two-thirds (68%) said they were willing to jump ship.

  Malaise?  Angst?  Ennui?

  Whatever it is,  it doesn’t feel good.

  Despite a rather high stated satisfaction level, pay television customers in our survey indicated a substantial willingness to churn, and a general feeling that they were not getting high value for money from their television service provider.  Both of these factors further underline the threat that Over-the-Top (OTT) distribution poses to traditional service providers.

  Among platforms, IPTV appears to being doing best in terms of satisfaction and anticipated growth.  Its success, however, is not a foregone conclusion.

  

  Posted by bpiper @ 2:16 pm

• 15Jan

  IPTV Challenge: Differentiate Beyond Content

  Technology, Connected TV, Broadcasting, HD and 3DTV, Technology business, Digital media No Comments

  In a report to be published in the few days, my colleague Martin Olausson and I talk about the new challenges facing France Telecom (Orange), in light of a recent ruling by the French Competition Authority.

  According to a commission appointed by France’s Competition Council, Orange’s exclusive carriage of channels on its “Orange TV” IPTV platform “has drawbacks in the short, medium, and long-term,” rendering it “undesirable to maintain.” This decision could potentially have repercussions on the entire industry, and Orange will need to fundamentally alter its marketing strategy to stay in the game.

  A few thoughts…

  If not content, then what?

  Strategy Analytics has long held that content—particularly exclusive content—would be a key differentiator and driver of IPTV uptake. Recent developments in the hyper-competitive French market threaten to change that model. 

  Orange, which was unable to differentiate itself on the basic services level, has pursued an aggressive content strategy in recent years, spending over €200 million to acquire exclusive rights to sports and other content, packaged under its Orange Sport and Orange Cinéma Séries brands. The strategy has worked quite well for the operator, and utilizing exclusive content to market its pay TV services has led to rapid growth of its pay TV segments.

  Now all of that is in limbo, and the operator will need to find other ways to stand out.

  Pricing matters…but differs by region

  One of the takeaways of a report we published back in September was that platforms don’t matter to customers—features do.   Well, features and price.

  Further customer survey work we have just completed confirms that price as a churn motivator depends largely on the individual market. Our research shows French consumers to be the least motivated by price, and those in the UK most influenced.

  

  Much of this has to do with consumer perception. In France, all the major triple play service providers offer very similar packages at essentially the same price. Our interpretation is that the typical French consumer might not feel it worth the time to make a switch—even for a 20% discount. The perceived disparity is much greater in markets such as the UK, where pricing and bundling disparities are much more pronounced.

  Challenge is in finding ‘non-content differentiators’

  The recent ruling by France’s Competition Council suggests that the “traditional” differentiation through content may not be viable for much longer. As such, operators will be forced to find other ways to differentiate and “own” the customer. The easiest way to do this, in our opinion, is to control the gateway into the home and offer a better QoE, and more value for money (i.e. better bundles) for the consumers than the competition.

  Posted by bpiper @ 7:03 pm

• 06Jan

  Toshiba at CES: Blu-ray Is Launched, But Don’t Blink or You’ll Miss It

  Connected TV, HD and 3DTV No Comments

  Toshiba’s press conference focused almost exclusively on the launch of Cell TV in the US market. We have followed the progress of Cell technology for nearly the past decade, since Toshiba, Sony and IBM began its development. As a reminder, it lies at the heart of the PlayStation 3 system, and Toshiba has always made its intentions clear to launch a range of other consumer devices using the processor technology.

  Cell TV will use Cell for various capabilities: to deliver 3D pictures from 2D sources; to upscale video, including video from internet sources; and to support “Autoview”, which sets the TV picture automatically and adjusts for the room’s colour temperature. I did not get the chance to examine the performance of Cell in these tasks – I hope to see detailed demonstrations later this week.

  Cell TV will be Toshiba’s flagship model this year. It will also feature a range of connected TV features, including wireless HD (the WirelessHD standard), 802.11n, DLNA, USB movie, Net TV channels and videophone. Yes, like LG and Panasonic, Toshiba is also entering the rapidly emerging big screen videoconferencing space.

  The launch of Toshiba’s first Blu-ray player was mentioned more or less in passing, and it will be upgradeable to 3D capability. However, we question Toshiba’s commitment to BD given the company’s belief that “the future of video is online, and discs are in decline”. It seems the bitter legacy of the HD-DVD saga has not been easily forgotten.

  Client Reading: HDTV: Standards Muddle Clouds Outlook For Wireless Displays

  

  Posted by David Mercer @ 9:20 pm

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