The Weekly Riff: Technically Not a Blog

3D Obfuscation

Mon, 8 Mar 2010 13:51:58 -0600

Monday March 8, 2010 – Stewart Wolpin

"-ready" – the scariest hyphenate in consumer electronics – is beginning to be indiscriminately slapped to the rear of "3DTV," officially opening the 3DTV obfuscation season. Or, as Elmer Fudd would put it, it's "3D-weady season," which somehow sounds more appropriate.

The "-ready" suffix should be familiar to most folks in the CE business. A decade ago, a burst of alleged HDTVs were confusingly labeled "HDTV-ready," a suffix everyone agreed didn’t mean, forcing the powers-that-be to precisely define "full" HDTV and ordered that HDTVs thus be labeled accurately.

As was the case with HDTV, the term "3D-ready" not only (and still) doesn't mean anything, it further muddies what is already confusing consumers about 3D. It also makes it twice as hard for those of us who have to try and explain all this when we first are forced staunch the misinformation hemorrhage.

It's really rather simple. Right now, there is only full HD 3D, which creates a 1080i frame for each eye. Full 3D HDTV can be achieved only with a 3D HDTV (not "ready" or "capable" or any other non-instructive descriptive suffix) equipped with HDMI 1.4 connectivity, connected to a 3D Blu-ray player with content encoded in MPEG-4 AVC/H.264 MVC (multiview video codec) and similarly equipped with HDMI 1.4. At some point, there may be half resolution 3D for firmware upgraded legacy HDMI 1.3 devices such as cable and satellite boxes, but none of these products or capabilities are on the immediate horizon and have nothing to do with the relative readiness of a 3D HDTV.

To watch this full 3D HDTV, consumers will need to wear active shutter glasses.

3DTV can be simplified further for consumers by removing all alphanumeric acronyms. All they need to know is:

3D HDTV + 3D Blu-ray + glasses = Avatar@home.

But as with HDTV, manufacturers and retailers seem to take a Looney Tunes approach to mis-explain their high-tech wares.

Take, for example, an email sent out to the media by a national retailer who shall remain nameless (okay, it was Sears) to announce the availability of two Samsung 3D LED LCDs and helpfully dispel three self-proclaimed 3D myths:

• Users are required to wear 3D glasses all the time.

Yes, Panasonsungshiba, spend millions of dollars on advertising and marketing to let people know they can take off their 3D glasses when they're not watching 3D TV. Thanks, because I'm still wearing mine from when I watched Michael Jackson's "Earth Song" 3D video on the Grammys telecast last month.

• After watching 3D and taking off the glasses, regular TV content is going to be fuzzy.

Millions worldwide have collectively spent hundreds of millions to watch Avatar in 3D, and not a single one of these Na'vi nerds found the world fuzzy after removing their 3D glasses. Blue, maybe, but not fuzzy.

• 3D TVs are going to be too expensive for the average household.

This is not a "myth," it's reality. Many homes don't have a large screen HDTV for a good reason: even at $1,000, 42-plus inch HDTVs are too expensive for most, and 3D sets are going to be at the top end of the large screen pricing scale (the cheapest Samsung set on the Sears' site, a 46-inch model, is $2,600). And considering the hardships the economy is causing, trying to convince Mr. and Mrs. America that 3D HDTVs actually represent a good buy is, quite frankly, just plain insulting,.

Worse, the Sears' Samsung 3D HDTV product page, consumers' first introduction to actual 3D HDTV sales spiel, mentions nothing about 3D glasses – not where to get them, not how much they cost, not that they have to be $100 active shutter glasses not cheap cardboard red-green glasses for anaglyph 3D or the Polarized sunglasses they snuck out with from the movie theater – not even that they'll need glasses. Imagine the first automobile salesmen neglecting to mention buyers would need to buy something called "gasoline."

Then there's Sears' "Making 3D Happen" FAQ page. First, there are headers for "Native 3D," "Virtual 3D" and "2D." "Native 3D"? "Virtual 3D"? I've been writing about 3D for more than a year, attending 3D demos and conducting intense Q&As with industry execs over the last few weeks, and I've never heard these terms. And I've not seen a single 2D-to-3D conversion that improved upon century-old stereoscopic postcard viewer.

And the first product descriptive term Sears' FAQ uses? "3D-ready HDTV."

Cue Elmer.

Keeping Track of the Chinese DTV Market

Tue, 23 Feb 2010 16:10:22 -0600

Monday February 22, 2010 – Shelby Cunningham

Digital TV displays are being sold by the millions in China, and most of those are connected to a digital cable or DTH satellite set-top box, which means most LCD DTVs are nothing more than “DTV ready.” The market for digital TVs integrated with terrestrial, satellite, cable, or IPTV tuners is only in its most infant stage. It’s only a matter of time before large numbers of DTVs will include over-the-air tuners and connections to the Internet.

In 2009 DTC estimates that less than 3% of all LCD DTVs shipped in China contained tuners growing to about 6% of the market by 2011. In the meantime, the market for digital TV displays is exploding creating one of the world’s fastest growing digital TV markets.

All industry eyes are on the Chinese market and DTC is now offering a Domestic Chinese LCD DTV Quarterly Tracking Service, which is being produced with China-based RedTech Advisors. The service tracks quarterly shipments, brand market share, and component supplier market share in this rapidly growing market.

The timing for the tracking service is important. To date, the government regulator (SARFT) has emphasized the digitization of cable systems, but as most of the large cable systems are transitioned from analog to digital (in the 2012-2013 time frame) look for the government to place more emphasis on rolling out digital terrestrial TV. As more TVs with integrated DTT tuners and Internet access ship into the Chinese market, DTC believes the complexion of the DTV market will change dramatically in the next few years.

Source: DTC and RedTech Advisors

Is Macworld Dead or Just the Beginning?

Mon, 15 Feb 2010 16:00:27 -0600

Monday February 15, 2010 – Antonette Goroch

This year’s Macworld marked a turning point for Apple, and the media industry at large, in both what was absent and present.

On the one hand Apple, which pulled out as a Macworld exhibitor last year, was gone for the first time, leaving attendance and exhibitors down by double digits. Gone was the traditional keynote from Steve Jobs announcing the latest and greatest in Apple’s technological evolution (the iPad was announced a couple of weeks ago). This absence was symbolic of Apple’s transformation from a niche computer maker with a devoted base of enthusiasts into a multimedia ecosystem of post-living room entertainment for the mainstream.

What dominated Macworld instead were mobile applications, expanding the utility of Apple’s mobile devices. Over 150,000 apps---a vast number---now fill the AppStore, many of which were on display, morphing iPhones, iPods and now iPads into an array of functionalities from entertainment to productivity, and from education to novelty.

The breadth represented is a microcosm of what Apple’s ecosystem has given rise to---a sum greater than its parts. It’s not about just single use devices anymore---a music/video player or a smartphone—but rather a family of devices with the ability to span many functions throughout a person’s daily life. Sure the announcement of the iPad was big news on its own, but it will be the applications and the content that truly give its ultimate value. And, Apple’s deals cut with book publishers, perhaps undoing the current e-books business model, is arguably more innovative than the iPad itself.

Perhaps this year’s Macworld is also symbolic of what Apple will ultimately have to do if its ecosystem is to survive---disappear. Not literally, of course, but in terms of further opening that ecosystem. To some extent Apple has already done this, through the release of its non-DRM iTunes music library last year. Its video library remains a closed system, though, and Apple still screens/controls all the apps in its AppStore, keeping the Apple ecosystem a highly controlled one.

If Apple can successfully transition its ecosystem into a more open one in terms of content and functionality, it will guarantee a future far more expansive than the humble enthusiast beginning embodied by Macworld.

If You Build It, They Will Videophone

Mon, 8 Feb 2010 15:10:03 -0600

Monday February 8, 2010 – Stewart Wolpin

Avatar's success is stoking 3D HDTV excitement, but another, more profound technological and sociological change is about to engulf the living room: the videophone.

Yes, futurists have been prognosticating ubiquitous videophones since, well, since futurists have been prognosticating; in 1964, the Bell System actually initiated a short-lived video telephone service between New York, Washington, D.C., and Chicago, and Dr. Heywood Floyd famously called his daughter on a space station pay video phone in Stanley Kubrick's 2001: A Space Odyssey.

But all videophone efforts, either via standalone phones or TV add-ons, have necessitated the purchase of two phones (it takes two to video chat), and a iPhone-like consumer crush to buy a pair and create a critical mass of videophoning households.

Why hasn't widespread videophoning happened? It's been postulated that phone chatters simply wanted to be heard and not seen. But this assertion is belied by the popularity of PC-based video chatting. It's hard to find either a laptop or desktop PC without a built-in Web cam; it's this "if you build it, they will call" that is the secret to video telephony outside the office.

Skype is supplying this Phone of Dreams solution. A slew of net-enabled models from LG and Panasonic due later this spring will include Skype-powered high-definition videophone capabilities built-in.

Consumers initially will have to buy an LG- or Panasonic-specific webcam, each of which will have four built-in microphones, probably for around $100. But everyone acknowledges these add-on Webcams are a temporary situation. By the fall, it's likely a number of high-end HDTVs will include a webcam and microphone array built into the bezel, just like on PCs. Toshiba's CELL TV, for instance, will include a built-in webcam for videophoning, presumably using Skype, although the company has yet to officially say so.

Within a few years, it's likely all Web-connected HDTVs will include a built-in webcam for videophoning. And as people grow used to videophoning, landline phone makers, seeking any way to boost sagging sales, will launch Skype-powered video phones for other rooms in the house, and LTE-powered cellphones will include forward-facing cameras to enable video calls.

Within a decade, everyone could have videophones in each room of the house, and enable a whole new way of looking – literally – at phone sex.

Chatting it Up: Desktop Video Communications Explodes

Mon, 1 Feb 2010 15:47:24 -0600

Monday February 1, 2010 – Maya Jasmin

It’s no longer just for the big shots ensconced in expensively equipped board rooms. High-speed IP networks, low-cost web cams and improved video compression are letting the rest of us in on video conferencing and video chatting.

It has been a foregone conclusion that many consumers would embrace face-to-face video communications when quality improved (dramatically) and costs came way down. That time has come as video communications desktop application software represents a new and rapidly growing market. That area of growth is fueled by the prolific age of instant messaging where most major market participants include video chat in their applications. Now all you need is a webcam and a PC to see the faces of your contacts.

A few major desktop software application providers, such as Google (Gmail Video Chat) and Microsoft (Microsoft Live Messenger) use the AVC codec as their video compression technology. DTC estimates that in 2009 a little over 70 million first-instance downloads of the AVC codec onto PCs came from video instant messaging applications, and we expect 238 million AVC downloads to come from those applications in 2014.

The main competitor to AVC/H.264 in this market is On2’s proprietary video communication technology, which is used by Skype, AOL IM (AIM), Yahoo! Messenger, TenCent QQ (Asia’s biggest provider), and ooVoo. Google is still actively pursuing the purchase of On2 so it remains to be seen where this acquisition will lead in terms of the desktop video communications market as a whole.

With an exact future of this market unknown and no current video technology winner, the field is seemingly wide open for video technology providers and explosive growth. This market encompasses all demographics of users from giddy school kids to doting grandparents, and every type of personal and business user in between. With friends, loved ones, and business associates just a click away this is definitely a market to keep an eye on!

Digital Video Downloads 2010: Format War in the Cloud or a Perfect Storm?

Mon, 25 Jan 2010 15:00:40 -0600

Monday January 25, 2010 – Antonette Goroch

With VHS, DVD and Blu-ray formats now battles of the past, are digital video downloads set to be the next big format war in the ongoing evolution of digital entertainment? Maybe not.

This month’s announcement at CES from the Digital Entertainment Content Ecosystem (DECE) consortium of both new members and some vendor selections for DRM/content management again puts a spotlight on the necessary infrastructure for mainstream digital video delivery over the Internet. DECE, backed by 48 members including notables such as Sony, Warner Bros, Cisco, Motorola, Widevine and DivX offers a competing ecosystem to Disney’s recently announced Keychest. Both efforts are cloud-based digital ecosystems meant to support the notion of “buy once, play everywhere” digital video delivery. Will this set the stage for an ecosystem war? If so, the stakes are high as content owners are trying to hit the right chord for electronic distribution to combat a gradual decline in DVD sales.

Source: Digital Tech Consulting

But a crippling format/ecosystem war may not necessarily be a foregone conclusion.. Though some degree of standardization is necessary for the broad industry support needed to “buy once play everywhere”, there is an increasing tolerance for multiplatform solutions in the marketplace. Theoretically, two ecosystems could coexist peacefully and grow the market for everyone, provided content providers don’t restrict their access to one format or another, thus lessening the value of both.

Recent activity by content providers suggests this may be the case, since they have adopted a strategy of offering programming to many different outlets via differing business models and technologies, rather than locking into just one. Should this tendency continue, the coming year could trigger a radically different landscape for digital entertainment content and its delivery, as these cloud based ecosystems significantly up the value proposition (on the part of both consumers and content providers) for digital downloads.

Is Cable’s Worst Nightmare About to Come True?

Tue, 19 Jan 2010 16:50:13 -0600

Monday December 28, 2009 – Antonette Goroch

It’s no secret that traditional pay TV operators (whether cable, DTH or telco) have been looking over their shoulders for some time at the prospect of “over the top” content (mainstream broadcast and pay TV content delivered via broadband Internet rather than traditional pay TV networks) gaining widespread traction among their subscribers and threatening their core businesses. Operators have been both terrified of the ramifications broadband holds for their high margin, walled gardens of content, while simultaneously enticed by the possibilities broadband holds for their own bottom lines.

These fears may reach a whole new level of realization next year, as Apple is reported to be in negotiations with ABC and CBS for a new “all you can eat” type monthly subscription content service in 2010. Clearly, the depth, breadth and usability of Apple’s content will be key to the model’s success and there have been few details to emerge regarding this. Still, Apple appears willing to put cash behind its effort, reportedly offering broadcasters (who have the most to lose for any impact this might have on their ad-supported model) from $2-$4 per month per subscriber for inclusion in the service.

The key question is—should Apple secure a fairly decent library of content (analogous say to the level Apple debuted prior services from music to video rental) will consumers, (or perhaps how many consumers?) turn off their rather expensive pay TV subscriptions in favor of a $30 per month on demand access to a handful of their favorite shows?

Pay TV operators have, to date, put their efforts behind massive bundles of TV/phone/Internet services which offer subscribers one flat fee for more content and services than most people could ever use. But how will consumers react if they are able to pay one low flat fee for broadband access, then cherry pick their desired content for desired devices for less money on a more a la carte basis (a model that cable operators have eschewed)?

Content providers have shown more and more willingness to put out their content to as many distribution points as possible—whether Internet, mobile or other alternate platforms—understanding that the landscape of tomorrow is one with multiple distribution outlets rather than one primary means as is the case today with pay TV.

This means Apple may very well have a strong offering come 2010, and pay TV operators might see the real effects of “over the top” content sooner than many may think.

Wireless HDMI: Bigger than 3D Monday

Tue, 19 Jan 2010 16:48:23 -0600

Monday January 4, 2010 – Stewart Wolpin

While CES will be replete with gaudy 3D HDTV and 3D Blu-ray demonstrations, likely complete with Avatar and Up! clips, a far more consequential innovation will be purposefully well-hidden – wireless HDMI.

Losing the annoying trailing HDMI cable connecting a consumer's A/V stack to their wall-mounted HDTV is an interior decorator's dream, and so a wireless solution is likely to prove far more popular in the real world than 3D.

Unfortunately, there's more than one way to skin this particular cable cat: Wireless HD (WiHD), Wireless Home Digital Interface (WHDI) and WiGig. A handful of companies are backing multiple consortiums: Hitachi, LG, Samsung, Sharp and Sony are all listed as supporters for both WiHD and WHDI, for instance; LG, Samsung and Panasonic are supporters of all three. Chip makers also are doubling up; Broadcom and Intel both are supporters of WiHD and WiGig.

While all three consortiums seek to provide a wireless uncompressed 1080p HDMI connection, each uses slightly different technologies and envisions slightly different usage cases.

WiHD has the simplest mission – provide a wireless HDMI replacement over the recently unlicensed 60 GHz band.

WiGig also operates in the 60 GHz band, but is a more multi-purpose and interoperable standard. WiGig is an extension of standard 802.11 WiFi with complete backward compatibility, the goal to provide a higher bandwidth – 7 gbps, 10 times faster than 802.11n – wireless connection for high-bandwidth functions such as transferring HD video from a camera to a PC.

Both WiHD and WiGig are short-range (10 meter) same-room technologies. Neither is strictly line-of-sight; if you stack your A/V gear underneath or next to your HDTV, the wireless stream will bounce off nearby walls to your HDTV to complete the wireless circuit. Implementation in larger rooms, therefore, could be challenging.

WHDI is a slightly different wireless animal; it aims to connect all devices to any display in your home. WHDI operates in the more flexible 5 GHz band (just like 802.11n), so it does not require line-of-sight and has an up-to 30-meter range, expanding equipment placement flexibility to multiple rooms.

Choosing Sides

At CEDIA a few months back, three HDTV makers – Sony, LG and Panasonic – all exhibited WiHD-enabled HDTVs, but none of these models are widely available.

But next week, several HDTV makers will unveil a slew of sets endowed with WHDI; most of these models will require the purchase of a separate wireless kit consisting of a wireless dongle for the TV and a transceiver STB, likely priced below $400.

The WiGig wireless HDMI specification isn't due until the end of 2010 at the earliest, and the first WiGig-enabled products of any kind likely won't be in stores until 2011.

There's no question consumers will find losing that dangling HDMI cable compelling. Even though a certain amount of consumer confusion is likely to ensue as WHDI and WiHD and its HDTV partners fire multiple marketing salvos when the latest wireless sets hit the market this spring, practical wireless HDMI is bound to be far more popular than the flashier 3D.

Bringing 3D TV Into the Home

Tue, 19 Jan 2010 16:47:22 -0600

Monday January 11, 2010 - Shelby Cunningham

You couldn’t throw a stick without hitting a 3D TV demo at CES last week. If you wanted to get to get a proper demo, though, you had to wear special glasses. The consumer electronics makers say 3D is so compelling that consumers won’t mind the glasses.

I’m not sure wearing battery operated glasses while sitting in your own living room may be an attractive situation to some. I know that I like to multitask while watching TV and movies, and I know I'm not the only one who does that. And if you're watching TV while wearing special glasses you can't frequently gaze over to the laptop or smartphone.

The one home entertainment sector that I can see bringing 3D TV into the home quickly and with high numbers is gaming. My reason for this is simple: You are generally fully focused on the screen at all times while playing a game. You have no desire to check Twitter or send an email or Google a random actor's name in the middle of a game and are, therefore, going to have no problem keeping this pair of glasses on and looking at the screen.

Sony announced pre-CES that the PS3 would be able to play 3D games when hooked up to a 3D TV thanks to a simple firmware update. While it makes sense that the PS3 will be the first to hit the 3D gaming circuit (they even had demos at CES) because of Sony's line of 3D TVs, the Xbox 360 probably won't be too far behind since the console is already 3D compatible. Now it's just up to the game makers to create incredible 3D games, as well as the consumers to want to buy the TVs and glasses.

What Does The e-Book Want To Do When It Grows Up?

Tue, 19 Jan 2010 16:42:29 -0600

Monday January 18, 2010 – Myra Moore

You want to read the book, see the movie, or play the game? How about all three at the same time? Or, maybe little bites of all three at once. It sounds ridiculous but it’s plausible that the embryonic e-book market could be moving in that direction.

Until now, the e-book and the corresponding reader were pretty cut and dry – a good facsimile of printed text (in shades of gray) on an electronic device. Avid book readers and gadget geeks are the target consumer and several million of us have taken the bait. But now the apparently irresistible urge to turn the e-reader into another electronic Swiss army knife has officially begun.

It was inevitable. First, you add the ability to play back mp3 audio files and load up some photos and the features check -box list begins to grow. The rumors of an Apple device/tablet that includes numerous electronic Swiss army knife implements right down to video playback and 3D capabilities, begs the question: What is an e-book reader, and maybe more importantly, what is an e-book?

We have yet to see an application where text, audio and video have been combined into a single electronic book/program (or whatever we’re going to call another potentially new media format) for view on an e-book reader. A U.S. startup, Spring Design, announced it will sell an e-reader this year that plays video. It looks like the device keeps up a wall between the video playback (in a small screen at the bottom of the device) and the reading of an e-book.

So I don’t think we have to worry about naming this new hybrid media anytime soon. But the ability to cram multiple promotional messages (read the book! See the movie! Buy the sound track! Play the game! Just push this button!) into one electronic expression has to have marketing execs salivating. Although it sounds like promotional Nirvana, the technology isn’t fully baked enough to enable this kind of application just yet.

My bet is that technology won’t be the big barrier though. Business models, content ownership, and copy rights hold the greatest promise for inhibiting the production and distribution of hybrid supercharged e-books. Will a publisher, movie studio, music label and content distributor each take a cut of the sale? Will there be revenue sharing among all if a consumer buys another product promoted in the e-book/program? How will all parties that contributed content agree on content security and management? Digital Rights Management (DRM) promises to be an especially thorny issue especially if the supercharged device has e-mail capabilities. Getting all the kids to play nice in the sand box will either take the aplomb of a great diplomat or a huge contract so heavy the involved parties will want to review it on an e-reader.

However this new kind of media and device get created, I’m not sure the avid book readers now buying the Kindle and Sony Reader are the likely buyers. Although today’s e-readers incorporate truly innovative technology that mimics the printed page and displays that page with minimal power, they’re pretty low-tech devices. Look for a lot of trial-and-error marketing as the stake holders try to figure out what they’re selling and to whom.

On the 1st day of Christmas…

Mon, 21 Dec 2009 15:03:39 -0600

Monday December 22, 2009 – Maya Jasmin

So Black Friday has come and gone and holiday shopping has officially entered the last minute stage and while hunting down my son’s Christmas requests I was stopped in my tracks by one seemingly harmless item. Now you may think it’s because I combed the world (both physical and cyber) over and couldn’t find the new hot “it” item, good guess but you would be wrong. My problem was quite the opposite; I had too many options from which to choose to grant this particular wish to my child

You see, I was trying to decide in which format I should purchase his favorite movie and apparently the makers of the movie weren’t too sure in which format (DVD, BD, electronic download) consumers want to have it either. My 4 year old has numerous video playback options – laptop, DVD, and BD.

Now maybe I was just delirious from continuous days of holiday shopping but this dilemma kept the movie on my list way longer than need be and got me to thinking how these various avenues of video distribution are faring in today’s marketplace.

According to DTC DVD is still king, currently DTC estimates that over 5 billion pre-recorded units will ship by year end 2009 and 4.8 billion units will ship in 2010. While decline is projected throughout the entire forecast period 3.5 billion units are still expected to ship in 2014, hardly a number to frown upon. Internet program buys also boast impressive estimates, coming in at 255 million in 2009 growing to 416 million and 946 million in 2010 and 2014 respectively. So while this toddler- phased content delivery option has a tall order to fill before it outpaces pre-packaged optical disc shipments, it’s faring pretty well.

Then there’s BD, the once thought heir apparent to DVD. DTC expects that 262 million BD will ship in 2009 growing to 591 million in 2010. By 2014 DTC expects that 1.9 billion BD will ship in that same year. So while BD shipments may never reach the success its predecessor, DVD, reached in its peak, BD is making a name for itself. Now armed with an arsenal of data and analysis I revisited my movie dilemma and what did I do?

I purchased the BD bundle that comes with a DVD and an electronic download version of the title; I figured there was no way I could go wrong with that. But I wonder how much longer I’ll be met with that option when purchasing video entertainment. The fact that the studio bundled an electronic download can’t be a good sign for packaged media. The day may soon come when I won’t even bother with the disc and just buy the electronic version. But then I can’t wrap it up, put a red bow around it and put it under the tree.

3D HDTV Update

Mon, 14 Dec 2009 11:21:28 -0600

Monday December 14, 2009 – Stewart Wolpin

Details about the timing, shape, pricing and availability of 3D HDTV continue to come into focus.

According to XpanD, a leading manufacturer of the active-shutter 3D glasses used in theaters and, the company hopes, in the home, the first 3D HDTVs will be coming in 3Q and 4Q next year. The first sets will likely be plasmas from Panasonic and LCD models from Sony, Vizio and possibly LG, with DLP projectors and LCD sets from Mitsubishi. Philips is expected to follow with its own 3D models in early 2011. All data and consumer grade DLP projectors equipped with Texas Instrument's DLP Link chip available in 2010 will be 3D capable.

Stunningly, XpanD's CEO, Maria Costeira, says the manufacturers expect to sell 100,000 3D HDTVs each in 2010, which sounds wildly optimistic to us.

Glasses Half Filled?

Two sets of glasses are likely to be bundled with each 3D HDTV; additional pairs will be priced between $75 and $150, depending on style and materials used – the technology and the lenses themselves will be the same. Consumers will be able to tote their own glasses to watch stereoscopic 3D movies or sporting events in 3D venues.

As we've previously noted, the glasses will be powered by rechargeable batteries with 250-hour viewing life spans. Users will get a single series of flashes when the glasses are down to four hours of power remaining, reducing the odds of them conking out in the middle of a game, movie or show. Glasses will have microUSB jacks for recharging, the XpanD is planning four-pair charging stations.

XpanD is currently in the design stage of consumer glasses, which will be sleeker and more stylish than the bulky near-goggles used in movie theaters. The company is designing models for particular constituencies, primarily gamers and kids. XpanD plans glasses in a variety of colors for gamers and fashion-forwards, and adorned with licensed characters to entice kids.

3D Broadcasting?

Most of the 3D broadcast action is happening outside the U.S., however. There are three hours of 3D broadcasts in Japan, for instance. FIFA will film up to 2 World Cup games this summer in South Africa for public venue showings; there are no plans to broadcast any of the matches live in 3D.

The U.K. has been the most active 3D market, at least in terms of content. Last year, the BBC broadcast an England vs. Scotland match to a theater in London; organizers of the London 2012 Olympics are planning to shoot some events in 3D, upcoming World Cup; and, Star is planning to launch the U.K.'s first 3D channel sometime next year, aimed initially at the pub market. Star already has shot several sports and entertainment shows in 3D.

All these 3D updates are fascinating, but one 3D pink-elephant-in-the-room question remains: will consumers don glasses to watch TV at home? XpanD says gamers and kids will be the Trojan horses for home TV glasses-wearing, but Costeira admits no one really knows how the whole glasses issue will shake out, probably the most interesting aspect of this entire topic.

U.S. IPTV: Flying High, But Challenges Await

Wed, 9 Dec 2009 10:07:31 -0600

Tuesday December 9, 2009 – Antonette Goroch

Though IPTV growth is has begun to slow in the markets of Europe and Asia, it’s only just heating up in North America. IPTV subscribers in the important U.S. market have climbed dramatically in the last two years, rising from just over 1 million in 2007 to a projected 5 million by year end 2009. While this growth is impressive, garnering attention from many of the largest worldwide IPTV suppliers once disinterested in the mature U.S. pay TV market, the questions of profitability and long term growth are still open ones.

Growth in U.S. IPTV has been driven almost exclusively by the two largest telcos, AT&T and Verizon. Both have seen strong gains all year, with AT&T reaching 1.8 million subscribers at the end of the third quarter, and Verizon’s FIOS TV reaching 2.7 million subscribers. Obtaining such gains in such a saturated market is no small accomplishment, but it surely has come at a high cost. Neither company has released figures on subscriber acquisition costs and few details on revenue per subscriber, both key metrics for long term success.

New subscriber deals typically include free set-top boxes for multiple TVs, free movie packages and no termination fees for disconnection. In many cases add to this the cost of truck rolls, since installation is complex and often includes line upgrade on the premises. Back-of-the-envelope calculations suggest subscriber acquisition costs could easily top $500 per sub, an almost unprecedented number in U.S. pay TV history. AT&T officials recently remarked that their IPTV subscribers would likely generate about $2 billion in bundled voice/data/TV revenues for 2009, but this translates to only $92 per subscriber per month for all three services. Assuming a generous 30% profit margin, it would take more than 18 months for these subscribers to generate enough revenue to justify that initial subscriber acquisition outlay—a tall order given there really is no long-term incentive to stay beyond convenience and service quality.

Clearly, all current efforts are on gaining as many subscribers as quickly as possible, as they should be if these services are to achieve viability. Very soon though, operators will have to shift their focus to what may be the more difficult task of retaining subscribers while reaching profitability.

Plasma HDTV: The Best Man Always Wins?

Wed, 9 Dec 2009 10:06:51 -0600

Monday November 30, 2009 – Stewart Wolpin

Sales of inferior consumer electronics formats often swamp superior all-things-being-equal alternatives, for reasons both mysterious and frustrating. For instance, Beta was clearly superior to VHS in side-by-side videocassette quality tests. Apple OS was and is clearly superior to Windows, yet Windows is the dominant format.

Plasma HDTV is the latest victim of this Bizarro World consumer preference. For a decade, Plasma has been clearly and objectively the superior HDTV technology; every recent LCD technological leap – 240 Hz, LED backlighting, for instance – are designed to pull LCD quality closer to plasma's purity.

Yet LCD TVs far outsell plasma displays. According to CEA, LCD HDTV sales in the U.S. have grown from 1.8 million sets to 26.8 million projected this year, and are expected to continue growing.

U.S. sales of plasma HDTVs, meanwhile, peaked in 2008 at 3.5 million sets, dropping slightly this year, and are expected to fall further in subsequent years.

Why has this happened? Misinformation dissemination on the retail sales floor is the most obvious culprit, according to J.D. Powers, which conducts regular surveys on this specific topic. In the first quarter this year, the survey company found 68.3 percent of salespeople wrong-headedly recommended LCD as the superior technology, a figure that's held pretty steady the last few years.

Continuing the Bizarro theme, in the second quarter the LCD recommendation rate fell to 59.4 percent – when LCD quality was improving – but plasma's recommendation rate held at around 30 percent.

What are salespeople saying to boost LCD purchases? LCD sets last longer. Plasma suffers from image burn. Plasma sets don't last as long. Plasma sets use more power. They reflect ambient light. Each of these claims is either simply wrong or misleading.

Panasonic and the Plasma Display Coalition are fighting back with an information/educational PR blitz touting plasma's advantages and dispelling the annoyingly persistent myths. But the A/V media has been consistent in its praise of plasma vs. LCD to no avail, and it's unlikely this latest PR effort will reach the ears of those hawking HDTVs at retail.

More importantly than why this has happened is what will happen now. Plasma's plunge has pushed plasma pioneer Pioneer out of the TV business, leaving only Panasonic, Samsung and LG selling plasma. As LCD technology improves, the differences between plasma and LCD diminish, which means consumers can concentrate not on quality but on brand choice, where LCD has an enormous advantage, and price, where LCD is gaining ground.

It won't be long before large screen skinny OLED displays enter the marketplace, sadly eroding what's left of the soon-to-be-history plasma HDTV business.

Where will they find $2.5 billion? In a tea cup

Mon, 23 Nov 2009 13:37:56 -0600

Monday November 23, 2009 – Myra Moore

It’s officially over. The last U.S. DtA converter box coupon has expired and the world’s largest analog shut-off for high-power broadcasters program comes to a close. DTC’s latest estimate for converter boxes shipped into the market is 46.2 million. (From DTC’s converter box tracking service)

DTC estimates the converter box program generated more than $2.5 billion in retail revenue, which came in pretty handy in the midst of the great recession that had many consumers staying out of the stores. They may have not been high-margin sales, but manufacturers and retailers were plenty happy to move those boxes.

How will box suppliers and retailers replace that revenue? With the holiday shopping season officially beginning this week (arriving earlier every year like store Christmas decorations on the heels of Columbus Day), and consumers only unclenching their fists by a small measure, the number of items that can replace the converter box is limited. The stripped-down portable DVD player is one candidate. Many of these are retailing in the $50-$80 range.

Perhaps a more interesting category is the emergence of what I’ll call “tea cup” TVs – little bitty 7” and 9” screens complete with an ATSC tuner, and in some cases, a DVD player. Most TV-only models hover in the $100 range but as we get closer to the end of the holiday selling season, off-brand sets will probably be heavily discounted and perhaps star as loss leaders in the big-box stores.

Some suppliers are finding efficiencies by using existing form factors like digital picture frames to come up with a tea cup TV to carry around in your purse, take to the pediatrician’s waiting room, or in the back seat of the minivan (although over-the-air reception isn’t going to cut it while in motion. Better buy one with a DVD player for the back seat).

And DTC believes that a DtA converter box market will continue for a couple of years. We estimate that there will likely be another 2 million units shipped in the next few years. For one or possibly two vendors and a natural retailer (think Radio Shack) for such a product, the DtA converter box market will continue to live – quietly.

Source: Digital Tech Consulting

Will Cisco’s Chinese Power Play Challenge Motorola’s Digital Cable Dominance?

Mon, 9 Nov 2009 14:57:21 -0600

Monday November 9, 2009 – Antonette Goroch

Motorola has dominated digital cable STB shipments for some time, with little challenge to its industry wide hegemony in terms of market share. Cisco’s latest acquisition, however, might provide one of the most credible threats to this industry order in some time. Cisco announced last week its intention to buy the STB holdings of Chinese manufacturer DVN Holdings, a leading player in the growing Chinese digital cable STB market. This move will immediately strengthen Cisco’s position as the second largest cable STB supplier, and draws attention to intense competition in the STB industry, as well as the growing importance of the Chinese market.

Cisco bought its way into cable STBs back in 2005, acquiring the number two U.S. digital cable supplier, Scientific-Atlanta. Since then, though, Cisco has lost market share—failing to gain traction in international markets that hold the industry’s growth prospects, while new competitors have entered the U.S., Scientific-Atlanta’s core market, posing a threat to existing shipments.

Source: Digital Tech Consulting

This latest acquisition could position Cisco well to strengthen its international presence though, and even challenge market leader Motorola in future years. In units alone, DVN won’t bring Cisco to Motorola’s size, since DVN shipped only about 2.5 million STBs in 2008. Along with Cisco’s 6.5 million, this would bring the total to only 9 million, just over half of Motorola’s 15 million. Still, China is the largest cable market in the world, with some 160 million subscribers (and growing), fewer than a third of which have upgraded to digital. If Cisco’s financial backing can help DVN grow its market share to somewhere between 25%-30% of Chinese shipments, Cisco could be looking at an additional 6-7 million units shipped annually, well within range of Motorola.

E-book v. tablet PC: Who cares?

Mon, 2 Nov 2009 15:51:59 -0600

Monday November 2, 2009 – Stewart Wolpin

With the introductions of the Barnes & Noble Nook, the IREX Reader, the coming Plastic Logic Que proReader (TBA at CES in January) all enjoining the Amazon Kindle and the varying Sony Readers, e-book readers have entered the ballyhoo and hoopla phase of media and gadget geek mindshare.

And further ballyhoo and hoopla will accompany Apple's rumored early 2010 launch of its tablet PC and how it will affect the e-book market.

My response to all this e-book v. tablet PC ballyhoo and hoopla is folderol and balderdash.

E-readers are likely to be this year's version of personal navigation device (PND), which enjoyed its own short-lived ballyhoo and hoopla period.

Let's start with e-book reader sales. Forrester forecasts just 3 million e-book readers will be sold this year, 10 million next year.

A tidy little business to be sure, and certainly the ballyhoo and hoopla surrounding each new e-reader introduction helps spread the e-book gospel a bit further.

But just as consumers discovered they didn't need a standalone PND, they also will discover they don't need a separate $259 e-reader since they likely have one already: an iPhone/iPod Touch, an Android, a Palm Pré or a BlackBerry, or a laptop or netbook PC. All of these smartphones and varying portable PCs offer multiple e-reader apps.

In 2010, a variety of sources estimate that 328 million smartphones will be sold, and a large percentage of these will be the app-happy models mentioned previously. And it is estimated that shipments of over 180 million portable PCs in 2010, with DTC estimating about 35 million of those will be netbooks.

Between smartphones and portable netbook PCs, we're talking a total of about 514 million e-reading capable devices in 2010, compared to maybe 10 million standalone e-readers. This is like marveling at the suddenly perfect kite-flying breeze – blithely ignoring the F5 tornado behind it.

Equally silly is the speculation surrounding Apple's long-rumored tablet PC. "Experts" have been predicting the domination of the tablet PC for nearly a decade, and they've never been right. Even with the emergence of multi-touch touchscreen technology mainstreamed by Apple and the iPhone, no one has yet made a case why the average technology customer would spend $600-$1000 on a tablet with an exposed 10-inch screen and no physical keyboard when only slightly less cool but far more functional netbooks are half that price.

In other words, technologists are vigorously debating whether a technology the market has shown it's not interested in (tablet PCs) will challenge a product that only a few well-heeled people want (e-book readers).

E-readers have definitely sparked a revolution in how people acquire and read books. But it will be already purchased multifunction devices – smartphones and portable PCs – that will serve more frequently as our e-reader.

Will Disney Find Digital Distribution Revenues in its Keychest?

Thu, 29 Oct 2009 15:07:33 -0500

Monday October 26, 2009 – Antonette Goroch

Disney took the wraps off its Keychest initiative for online digital distribution last week, as the company seeks to temper the effects of the growing slump in DVD sales (down as much as 25% at some studios). While this particular initiative seems unlikely to achieve that outcome, the shift in thinking from device based content security to device independent content security is pretty radical from such a major media player, and bodes well for the future of digital distribution.

Disney’s technology, which it plans to formally unveil next month, enables a consumer to buy permanent access to a title so that it can be played back across multiple devices, such as TVs, PCs or mobile devices, with the content housed in central databases rather than a consumer’s hard drive. A user is issued a “key” which checks in with a central database of ownership rights. With the system, Disney hopes to address one of the biggest issues facing widespread online digital distribution which is the ability to playback content securely in multiple digital contexts.

The challenges facing broad adoption of the initiative will be many. At a very basic level, because of the nature of any connected device strategy, adoption has to occur among a huge range of companies and industries. It seems unlikely that enough of a broad base of adoption can occur among so many competing players with different interests—many of whom will likely be wary of Disney having such a large degree of control over what would be vast databases of content usage information.

Still, the shift in thinking on Disney’s part is significant, and may ultimately be a key factor in reclaiming those falling DVD revenues. For too long major studios have tried to lock down content to specific devices and platforms to keep them secure, limiting their utility in an increasingly connected media environment. If consumers can’t easily play their content on multiple devices, they may balk at buying in the first place. Successful digital delivery, and its monetization for the Hollywood aftermarket, must be predicated on usage rights being attached to content not devices. Disney’s shift is a positive step toward building coalitions among companies with varying agendas. But they all have one shared agenda – sell as much content as they can. That’s kind of hard to do if it’s all locked down.

Death Knell for FireWire in STBs?

Thu, 29 Oct 2009 15:07:12 -0500

Monday October 19, 2009 – Antonette Goroch

Back when the conventional wisdom was that lots of HDTVs would include speedy FireWire connections the consumer electronics and cable industries hammered out an agreement (that the FCC formalized) that all digital HD cable STBs for distribution in U.S. must have a FireWire connector.

Since FireWire, for a variety of reasons, lost the TV popularity contest to HDMI, the cable industry wants to permanently kick it out of its clubhouse. In what will certainly be only the first of several similar filings, Intel petitioned the FCC last week for a waiver of the 1394 (FireWire) requirement in its planned HD cable STB chip design. The FireWire rule was writ in 2005 and FireWire has failed to gain traction as a usable interface for transfer of signals from STB to TV or for in-home networking. HANA (HD Audio Video Network Association), the most significant home networking initiative to utilize FireWire, disbanded late last year, leaving the interface all but dead in the cable context. Shipments of 1394 cable STBs have held steady in the U.S., but in other parts of the world where cable players don’t have to make nice with the interface, FireWire for TVs pretty much evaporated by 2008.

With this backdrop, it’s no surprise that vendors and operators alike will begin to take action to eliminate the FireWire requirement in the U.S. in coming months. Its inclusion costs the manufacturer about $5 per unit, which Intel says in its filing makes a system-on-a-chip design cost prohibitive—especially for a little used interface. Texas Instruments has countered that this is a small percentage of the overall STB costs, but operators, eager to cut costs in any way possible, aren’t likely to agree. The FCC, meanwhile, has shown great willingness to offer similar waivers in recent months, such as the waivers regarding separable security granted over the summer. Should the waiver be granted, it’s likely FireWire will be out of cable STBs entirely by 2009.

AVC/H.264: Keeping Camcorders Alive

Mon, 12 Oct 2009 15:30:18 -0500

Monday October 12, 2009 – Shelby Cunningham

We’ve come a long way. I remember waiting for my parents to set up the Betamax camcorder on Christmas morning. We had to wait for hours as batteries recharged and lights were set up. And in the 80s no one could even imagine uploading their video onto a computer to share with the world. Today’s camcorders are small, quick, easy to use and high-def. And the video software is so simple a child can use it. Leading the charge for camcorders and desktop software are products that use the AVC/H.264 video compression standard. AVC offers greater efficiency than many other compression technologies and can deliver the high-def pictures consumers desire.

People can now take captured video, upload it, edit it, and send it out or post it on YouTube in no time at all. The consumer camcorder market is still on a path to converge with the digital still camera market, but AVC/H.264 camcorders are taking over and will keep the traditional camcorder market alive, and eventually take over almost entirely.

Both camcorders and AVC/H.264 capable desktop software will be experiencing growth over the next few years. To date, DTC estimates that about 55% of aftermarket desktop software is AVC/H.264 capable, and will take up almost the entire desktop software category within a few years. At the moment AVC/H.264 camcorders only take up on estimated 29% of the entire camcorder market, but the market share is quickly rising as DTC estimates that they will take up 65% of the market in 2011, and keep going up from there.

So even though the camcorder and desktop software markets as a whole may be dropping, AVC/H.264 camcorder and desktop software shipments are rising up to take over their categories, and the video capturing and editing communities as well.

Source: Digital Tech Consulting

Smartphones: Helping Mobile TV?

Mon, 5 Oct 2009 10:49:31 -0500

Monday October 5, 2009 – Shelby Cunningham

Smartphones are responsible for giving consumers one of their video fixes these days. They’re not just for early adaptors or businesses anymore, but are now being toted around by teenagers, poor twenty-somethings and every other segment of the population. And now that smartphone shipments are seeing some growth, what new innovations will they bring to the table?

It wasn’t until the era of the iPhone, Android and Pre that handsets handled video the way people actually wanted to watch it on the small screen. This generation of smartphones brings a form factor that is very video application friendly. AVC video compression in handsets is very mainstream now. In 2009 about 105 million AVC handsets shipped worldwide, and that will increase to 173 million in 2010.

Source: Digital Tech Consulting

As more and more consumers pick up these higher end smartphones, this will allow for further innovation and video services. Third parties have already embraced the platform, and the success they are seeing is encouraging for content owners and services. The mobile TV platform is poised to see growth in the near future as well, with the hopeful take-up of mobile TV and other streamed content. So pull out your smartphone and watch some video, because that’s where most of the innovation is, not on your television set.

Digital TV Anarchy: Why the Internet Will Make Us Crave Simplicity

Mon, 28 Sep 2009 09:59:46 -0500

Monday September 28, 2009 – Myra Moore

The future of TV, with the promise of unfettered access to any and all programming through increasingly sophisticated TV receivers, has a kind of utopian ring to it (if utopian and TV can be used in the same sentence) . Fewer and fewer gatekeepers, a lineup of programming choices that will make current multichannel offerings look stingy, cheap production and distribution for aspiring film/TV producers, and greater access to programming unencumbered by security measures.

Sounds downright idyllic, doesn’t it? Maybe my glass is half empty, but it seems more anarchic to me. Untested business models, unfiltered programming choices, uncertainty (or disregard) of copy rights, and a lack of order or organization. At the very least, it’s going to be messy.

All the big TV suppliers have trotted out “connected” TVs and the limited Web access they provide suggests a step toward organization, but the limited access really has more to do with the partners they’re working with than a desire to provide consumers with a seamless and rich experience. Access to Netflix and Amazon online services, Yahoo widgets, and select photo-sharing sites, for example, doesn’t exactly harness the power and promise of delivering programming and other data over IP. It seems that there should be a middle ground somewhere between this narrow access and the senseless TV Web browsing that was kicked to the curb in the early 1990s. Remember Web TV?

After spending some time at the IFA electronics fair and the IBC trade show earlier this month, it is clear that middleware suppliers, conditional access companies, and software developers working within interactive TV standards see their futures in developing more sophisticated programming guides, search engine wizardry, and remote control platforms for these connected TVs. Companies like Rovi (formerly Macrovision), Open TV, Nagravision, and Alticast showed off their latest wares designed to tame the Internet TV beast without locking it in a cage.

It’s too early to say which of these efforts will do the most to harness and simplify video, data and graphic programming delivered over the Internet to the TV, but one thing is pretty certain. There are some who will welcome unrestricted and unfiltered access to Internet video programming viewed on the TV, but most of us just want to watch TV. So please make it easy.

Will Internet and Mobile Video Usage Growth Stunt TV Viewing?

Mon, 21 Sep 2009 12:02:03 -0500

Monday September 21, 2009 – Antonette Goroch

Consumers of new media are apparently the old dogs who are learning new tricks. Now that mainstream content providers are starting to loosen their death grips on their content, new viewer habits are emerging. The folks who distribute that content via old pipelines are hopefully paying close attention because viewers are changing the rules of what it means to watch TV.

Audience measurement research from Nielson revealed audience size growth of 47% for Internet video content and 70% for mobile video content from 2008 to 2009.

That this will affect television viewing is unavoidable--the question is how.

By all accounts mobile and Internet viewing are broadening the broadcast audience overall, not cannibalizing TV viewing. Indeed, Nielsen reports that TV viewing also grew by 2h 2 min per month. This also comes as no surprise, since media technology advances typically add to, rather than take away from the audience (such as the case of the VCR and packaged video media).

What’s changing is how people are watching. One of the most significant bits of data in Nielsen’s reporting is that an average of 28% of home Internet usage is simultaneous with TV viewing. The impact of this behavior on advertising revenues is unclear. If viewers are on the Internet and watching TV simultaneously, they are undoubtedly focused more on surfing during the TV ad spots. Are viewers absorbing both inputs? Does the distraction of the Internet mean that viewers watching a program from a PVR aren’t bothering to fast forward through the ads?

What is clear is that broadcasters (of all platforms) and content providers must retool old business models to conform to this new reality. Business models need to reflect this changing dynamic in viewing audiences. Taking these changes into consideration will be the key to taking advantage of growing consumption, rather than being rendered obsolete in a changing landscape.

PCs Pushed Aside (For Now)

Mon, 14 Sep 2009 14:36:40 -0500

Monday September 14, 2009 – Shelby Cunningham

Advanced Video Optical Disc PC sales have suffered during the recession. Instead of opting for the traditional PC with an internal Blu-ray Disc (BD) drive, consumers are favoring netbooks. Netbooks ship sans internal optical disc drive, allowing for a smaller form and lower price tag. Perfect for the current economic storm we are weathering.

But don’t fret if you are a fan of the traditional PC experience, DTC expects shipments of BD PCs to gain traction starting in 2010. DTC estimates about 4 million units to ship by the end of 2009 with a 226% year-over-year growth rate expected between 2009 and 2010 translating to over 13 million units shipping in 2010. DTC expects triple digit year-over-year growth between 2010 and 2011 as well with nearly 52 million units expected to ship in the latter.

Source: Digital Tech Consulting

While netbooks are certainly noteworthy machines that have done much to keep the PC business afloat during the rough economy, they do come with drawbacks that leave some consumers wanting more. For that demographic of consumers upgrading to a traditional PC is just around the corner and the change from just being able to do simple internet and word processing functions will feel quite nice.

DTAs: Friend or Foe to Advanced Cable Services?

Tue, 8 Sep 2009 11:10:22 -0500

Tuesday September 8, 2009 – Antonette Goroch

There’s been a lot of controversy in recent months over DtA STBs, but is it really much ado about nothing?

Cable operators, led by Comcast, are looking to DtAs (Digital-to-Analog adaptors) as a low cost way to transition networks to all digital, thereby reusing spectrum currently allocated to bandwidth hogging analog channels for more standard and HD digital channels. A key element of this cost savings is the lack of separable security in DtAs, eliminating costly CableCards and pushing prices below $50 per unit.

Of course, this is in direct contradiction to the 2007 FCC mandate requiring separable security in all digital STBs. Comcast has so far skirted this requirement by including no security at all---although reportedly an integrated security can be implemented by a software upgrade should Comcast decide to do so. Several vendors, however, sensing the enormous opportunity at hand, have applied to the FCC for temporary waivers from this requirement, saying DtAs are a transitional technology that will not impact the larger FCC goal of stimulating competition and a retail market for STBs. Such waivers would eliminate the need of operators to obtain waivers of their own, since the actual STBs would already be covered under the vendor waivers. Evolution Broadband, a supplier to several small rural operators, was the first to obtain a waiver in June, with the major players such as Motorola, Cisco and Pace soon following suit with their own applications.

The CEA, joined by several public interest groups, is crying foul, opposing these applications on the grounds that they will inhibit the adoption of both retail STB sales (since operators will favor the low cost DtAs over more expensive models), as well as tru2way products.

There are merits to both arguments. Should the FCC grant these waivers, the CEA argues that cable operators will favor these over more expensive models for quick digital upgrades argues. Indeed, DTC estimates more than 5 million DtAs shipped during 2008—almost a third of all U.S. shipments—and this will jump past 10 million in 2009.

But will this really inhibit the move to retail and advanced STBs?

In the short term, perhaps it will. In the long term, however, that’s not at all clear. DTC estimates that the market for DtA’s will be short-lived, perhaps three to five years, because they are a transitional technology. Now that the analog broadcast shift has occurred, new TVs will be all digital and won’t require a DtA to work with all digital networks. All digital networks, meanwhile will make it easier for cable operators to implement advanced services—which is in their interest to do. Advanced services, which will require both separable security and tru2way, are both more profitable and more competitive for ops. DtAs won’t likely inhibit cable ops from pushing these advanced services.. Rather, all digital networks will make it far easier for cable ops to offer them. And this will be a rising tide for all boats.

3D: Do We Really Have to Have Another Serving?

Fri, 28 Aug 2009 16:11:16 -0500

Monday August 31, 2009 – Stewart Wolpin

Imagine you've just completed the Thanksgiving feast – turkey, dressing, mashed potatoes, pumpkin pie: The works. Your body sinks into the sofa as the tryptophan and alcohol sends you gently in-and-out of consciousness. Just as you enter REM sleep, you're blasted awake by a loud shriek: "Time for dinner!"

Dinner?! You just stuffed yourself!

Like the after-effects of a big holiday feast, America is sleeping off the long digital TV transition. Instead of turkey, we've consumed a bellyful of dire government entreaties to make sure we have a tasty new HDTV, a side dish of digital cable box and a digital converter desert. After this HD smorgasbord, we are now happily dazed in our digital torpor.

Wake up! Panasonic (and presumably the rest of the HDTV/Blu-ray equipment and content selling contingency) want us to do it all over again, this time to transition from 2D HDTV to 3D.

Last week Panasonic held a number of small demonstrations of its 3D HDTV and 3D Blu-ray products. Its stated plan is to start shipping 3D HDTV and 3D Blu-ray products in 2010.

What is Panasonic's 3D system? More on the technology here.

Why the rush?

Under a cloud of increasingly lower margins for flat-panel TVs and Blu-ray Disc devices, and the slower-than-hoped-for uptake of Blu-ray devices, TV suppliers understandably see 3D HDTV as a tasty high-margin morsel next to the $99.99 Blu-ray Disc player. Consumers have only been snacking on low-cost smaller-screen LCD TVs during this nasty recession and now suppliers are busy in the kitchen whipping up the next high-margin TV technology.

A 3D home theater will require not only new 3D HDTVs and 3D Blu-ray players but also AV receivers, all equipped with the just announced HDMI 1.4 standard. Oh, and for this flavor of 3D TV, you’ll have to wear those stylish glasses.

3D HDTV is the perfect antacid to the current HDTV/Blu-ray market heartburns. Unlike Blu-ray with its hard-to-see qualitative improvements and hard to suss BD Live connectivity frills, 3D creates an immediate and compelling gulf between what was and what will be. For Joe Sixpack, the arguments for spending extra dough to improve from 480p and 1080p might as well be a discussion between Albert Einstein and Neils Bohr about the merits of quantum mechanics.

The differences between flat TV/DVD and 3D HDTV/Blu-ray? (Insert your own humorous night-day metaphor here.)

The problem is America is still bloated from the digital transition meal. Now that millions have spent millions on new HD gear, how will they feel about being told they now have to spend again/more on new gear to get the real advantages of HDTV?

We suspect that most of us are going to push back from the table and say “We’re pretty full right now.”

Stay tuned.

Checking in with STB Shipments

Fri, 28 Aug 2009 16:09:31 -0500

Tuesday August 25, 2009 – Shelby Cunningham

Networked connected set-top boxes (STBs) reached record shipment numbers in 2009, coming in stronger than expected. Digital cable STBs, Direct-to-Home (DTH) STBS and Internet Protocol TV (IPTV) STBs all totaled over 133 million units shipped in 2008, and are expected to ship over 150 million units in 2013.

Digital cable STBs saw an increase in shipments in 2008 due mainly to new Chinese rollouts, as well as the introduction of Digital-to-Analog (DtA) adapters in the U.S. The Beijing Olympics provided the opportunity for digital cable upgrades to happen quickly in China.

In the DTH Satellite STB market, shipments were fueled by a demand for high definition and other advanced systems in Europe. Also in Europe, IPTV shipments are maturing and therefore slowing. IPTV shipments did come in higher in North America, and weaker in Asia Pacific, but overall were largely in line with previous forecast.

Source: Digital Tech Consulting

Source: Digital Tech Consulting

45 Million Boxes in 18 Months: Who Knew?

Mon, 17 Aug 2009 09:58:23 -0500

Monday August 17, 2009 – Myra Moore

Who knew so many consumers would buy U.S. DtA converter boxes? That 45 million (DTC’s latest estimate from its tracking service) shipped into retail from January, 2008 through June, 2009 comes as a surprise to just about everyone.

We’ll even go higher. DTC estimates that given the large volume of coupon requests in June and July (on the heels of the deadline for requesting coupons) that number could hit 50 million by the end of the year.

So now that the U.S. successfully shut off the analog spectrum without a major disaster, what are lessons learned and why should anyone care now that it’s all over? First of all, folks in the business of making equipment and delivering over-the-air TV programs should care because there are lots of other countries that have yet to shut off analog transmissions. Translation: There’s still more money to be made on turning off terrestrial analog transmissions.

Lessons learned?

· A product category ripe for the old-style price wars can actually keep its average retail price steady for a sustained period. Granted, there wasn’t a lot of margin for suppliers and retailers to begin with, but it seemed like a dive to the bottom could have started a lot earlier. We’ve only witnessed serious discounting off the average $50-$65 retail price since the shut off occurred. Frankly, we expected to see lots of $40 price tags for converter boxes quite early in the program.
· Don’t underestimate the popularity of a government subsidy. Most prognosticators seriously underestimated the take rate of coupons within pay TV households. Those old analog sets in the basement or the garage? Good chance they’ve got the box.
· Procrastinators rule. There will be an onslaught at the very end. No matter how early you warn folks about the big day and how many times you tell them (ad nauseam), most are gonna wait.

Can Blockbuster Break Through the Bricks & Mortar?

Mon, 17 Aug 2009 09:56:15 -0500

Monday August 10, 2009 – Antonette Goroch

No doubt in response to Netflix’s popular video-on-demand set-top box (the Netflix player by Roku), Blockbuster debuted its Internet VOD service/STB to much fanfare late last year. But after almost a year of luke-warm reviews Blockbuster has been conspicuously silent about shipments of its branded set-top boxes or customer usage, leading many to question the long-term viability of the effort.

Blockbuster would seem to be well positioned to leverage its national presence into a successful VOD brand. It has a strong existing customer base, which it has extended fairly successfully into DVD by mail (a la Netflix) over the past couple of years. It also has existing deals with major studios that theoretically could be leveraged into shorter release windows and expanded catalogs of back titles. Never mind the failed VOD experiment with the infamous Enron back in 2001 – we’ll give Blockbuster a pass on that one seeing that its business partner couldn’t be relied upon to be honest with – well – anyone.

But despite this, unofficial estimates put STB shipment levels in the tens of thousands at best, far below what many had been expecting from the product. A couple of factors could suggest why reception hasn’t been what many were hoping for. While competitors such as Netflix, VUDU and Amazon have been extending their catalogs into HD throughout the year, Blockbuster remains SD only. Further, while Blockbuster has been able to secure some new releases ahead of competitors, its overall library is smaller---particularly in regards to popular TV content. Additionally, Blockbuster only allows a 24 hour viewing time from purchase—shorter than a bricks and mortar store rental. The bottom line is that Blockbuster has had little to differentiate its service in a recently crowded slate of VOD to the set-top competitors, and the market for such a single-use set-top box is inherently small.

Indeed, now that Netflix has essentially picked the low hanging fruit of early adopters with its Roku Netflix Player, differentiation will be increasingly difficult for most of these products. That’s no doubt why most players, both hardware and content alike, are seeking to expand their presence and capabilities through cross partnerships. Roku, for instance, just announced its newest player includes support for a variety of video codecs, access to the Amazon and Netflix VOD libraries. Similarly, Blockbuster is reported to be close to a deal with Sony to offer its content library via the PlayStation 3, as well as its own player. What seems clear is that with such a crowded market place for essentially the same content, Blockbuster (and other potential VOD service providers) can no longer rely on just a strong existing brand to make headway into the burgeoning market for Internet VOD. Indeed, Blockbuster’s experience indicates it will have to raise the bar considerably---both in terms of HD content, scope of delivery and the depth of their libraries—to gain any significant marketshare at this point.

LTE, Mobile DTV: A Change is Gonna Come

Mon, 17 Aug 2009 09:55:10 -0500

Monday August 3, 2009 – Stewart Wolpin

U.S. terrestrial broadcasters are buzzing about finally being able to monetize their forced investment in DTV with the advent of mobile DTV sometime later this year or early next year. Simultaneously, Verizon and, to a lesser extent, AT&T, are both buzzing about the future of their 4G LTE networks, due early next year and 2011, respectively.

These buzzes are not separate and distinct. Broadcasters and wireless carriers have been inexorably bound for nearly 50 years in their battles over precious spectrum – the recently concluded digital transition, the logical conclusion of these battles, has made both Mobile DTV and LTE possible.

This symbiosis between broadcasters and carriers will not change as both buzz about their new standards. Together and separately, in ways no one – including their prime promoters – can predict, mobile DTV and LTE will revolutionize how broadcasters and carriers deliver content and services, the how studios package content, the types of mobile equipment that will be manufactured to receive and view this content, and how consumers will consume all of these.

Verizon has been conducting LTE field tests in several markets and, according to published reports, have been achieving download speeds of up to 60 Mbps, faster even than its wired FiOS internet service. Real world speeds are likely to be less, but even if actual throughput is half of those reported, 30 Mbps is still nearly twice as fast as most wired broadband delivery methods. The mind reels with the possible positive effects on both mobile and home Web access and the negative effect on wired ISPs.

The official word from Verizon about LTE is a 20-30 city rollout in the second half of next year with full nationwide rollout planned for late 2013/early 2014. But parallel rumors have been flying about an Apple tablet due early next year and of Verizon rushing LTE rollout, prompting speculation of an LTE-powered Apple tablet and a future LTE iPhone later next year.

Exaggerations and speculations? Absolutely. But it's hard to deny the logic that such converged devices will flood the market.

At the last two CESs, for instance, both LG and Samsung demonstrated a variety of mobile DTV devices such as portable DVD players, portable TVs and mobile phones. Verizon and AT&T both have gotten into the carrier-subsidized netbook business, perhaps building a foundation for a range of LTE devices. Whether or not broadcasters and telecom carriers will take the symbiosis far enough to merge the two technologies into a single device is still not known. We think that it’s a possibility but not until all parties invlolved can figure out how to either make more money off the services, or to retain valuable high ARPU customers.

Do Gamers Care About the Bells and Whistles Anymore?

Mon, 27 Jul 2009 16:03:22 -0500

Monday July 27, 2009 – Shelby Cunningham

Looks like video game consoles aren’t as immune to the recession as everyone had originally thought. They sold well for a while, but now it turns out people bought their single consoles and aren’t going any further than that. Sure they’re playing more games than usual, but the variety of consoles in the home isn’t expanding, and people are playing a few games for longer periods of time rather than many games for shorter time periods.

But once you look at the numbers you realize, maybe some consoles are doing better than others, and it’s the others that make the whole market look like it’s taking a small dive. The Xbox 360 and PlayStation 3 (PS3) are more high-end than the Nintendo Wii and PlayStation 2 (PS2). They double as home entertainment centers and include more features and tote more connectivity than the Wii and PS2. Is that what people need right now?

So it appears that people are willing to spend money on entertainment, just not high-end entertainment. Consumers are keeping to the basics. In 2008 over 35 million “basic” consoles shipped worldwide, while only about 20 million “high-end” consoles shipped. The trend should remain the same for the next few years. Consumers can’t justify the need to purchase a high-end console when money is tight. During times like these a basic video game console and a working DVD player hooked up to whatever TV you already own should suffice as a home entertainment center. And apparently gamers can survive without being able to check Facebook and Twitter while they play Gears of War 2.

Source: Digital Tech Consulting

Just take a look at the PS2. The PS2 was released in 2000, making it 9 years old, and yet it is still selling strong. The PS2 even outsold the 3 year old PS3 in 2008. And because of the low $99 price tag Sony is even still releasing the PS2 into new markets around the world. Maybe if the recession hadn’t hit, the PS3 would be the top seller in the Sony lineup. But it’s hard to resist a $99 price tag, especially when current hot games are still being released for the console.

DTH Satellite in India: Is There Room For Anyone Else?

Mon, 20 Jul 2009 10:57:51 -0500

Monday July 20, 2009 – Antonette Goroch

India, only just beginning its transition from analog to digital, is now one of the fastest growing regions for pay TV. The Indian market, with more than 100 million TV households, is almost as large as the U.S. market, making it a handsome target for vendors and operators seeking high-growth territory. Even though digital cable, IPTV and DTH satellite operators have sought an early foothold, only satellite has gained real traction.

Indeed, DTH satellite providers have blanketed the country with inexpensive digital TV packages so fast and so well, one wonders whether other platforms have any hope for widescale success at this point.

DTC’s most recent look at the market showed DTH in India now reaching 12.3 million subscribers, up from only 7 million in 2007 and 3 million in 2006. Competition among operators is hot. Three new systems launched in 2008 (Reliance, Bharti Airtel and Sun Direct), joining the three market incumbents (DD Direct, Tata Sky and DishTV). Another system, Videocon, is due for launch in 2009, bringing the total number of systems available to seven by year’s end.

The crowded field has led to fierce competition and heavy discounting of STBs, (two operators, Sun Direct & Reliance, offer free STBs for new subscribers), which has helped stimulate demand in India’s large market. DTC expects that DTH will see significant growth over the next several years, with subscribers forecast to surpass 27 million by 2010, close to the size of the U.S. market.

Similar efforts are expected from both new IPTV systems and incumbent cable subscribers, but these operators will have to shell out a lot of capital to put in infrastructure in areas already covered by satellite. It could be a tough sell unless they can successfully differentiate themselves from satellite services. IPTV and digital cable’s two-way infrastructure will enable interactive services – a possible competitive advantage over satellite. Advanced services aren’t a guarantee of success. Any new operators will have to struggle to find profit in such a highly competitive, price-cutting environment.

Don’t expect either digital cable or IPTV to disappear in the region, however. Future partnerships between DTH and other wired providers, using hybrid boxes to extend the range of services already available through DTH, will likely be the next phase in India’s transition from analog to digital TV.

The Sky Is [Not] Falling (But PNDs Might Be)

Tue, 26 May 2009 10:31:56 -0500

Tuesday, May 26, 2009 – Stewart Wolpin

It's been reported that the U.S. GPS satellite constellation, maintained by the U.S. Air Force, is in danger of failure next year. While the author of said report exhibits a Chicken Little attitude toward the GPS guardians, it's hard to believe responsible parties would allow such a catastrophe to befall not only national security but to a critical consumer market.

How critical? CEA says in 2009, 17.4 million portable and transportable GPS navigation devices – in English that's GPS handhelds (Personal Navigation Devices (PNDs)) from folks like Garmin, Magellan and TomTom, as well as car-based GPS navigation systems – will be sold, more than twice as many as were sold just two years ago (8.75 million). According to CEA, GPS gadgets will be a $4-plus billion business this year.

Big business, right?

The Real GPS Business

Wrong. As the kids would say, BFD. This whole PND bubble may soon burst, even with a healthy economy and a healthy GPS satellite system.

Why? PNDs and car navigation systems represent a tiny fraction of the actual GPS navigation device market. Consumers are suddenly realizing their cellphone makes a better PND than a PND.

First, the statistical argument to support the first assertion.

Firm figures are hard to come by, but most if not all 3G smartphones include GPS capabilities (and most, if not all, new smartphones are 3G enabled), supported by subscription navigation services offered by Verizon, Sprint and AT&T.

According to our forecast, nearly 160 million smartphones were sold worldwide last year. Apple has sold more than 15 million iPhones, which may be more units than any single PND supplier, and which require no added GPS subscription – essentially, you get a free PND with every iPhone.

This also doesn't include 3G phones that aren't smart but still include GPS capabilities. AT&T says most if not all its 3G devices will include GPS capabilities this year, Verizon reports "most of our new feature phones and many smartphones (RIM, Windows Mobile devices) are VZ Nav[igator]-capable" and most of Sprint's phones are 3G/Sprint Navigation capable.

DTC estimates about 200 million cellphones will be sold in the U.S. in 2009, and about 91 million of these will be 3G.

Sort of makes those 17.4 million PNDs look as insignificant as an ant hill next to the Empire State Building, doesn't it?

It Makes A Nice PND

Now, to the second assertion – why cellphones are better PNDs than PNDs. Two reasons.

First, cellphones don't rely just on the GPS satellite system. Cellphones actually are equipped with assisted GPS (A-GPS), which means they use the cell network to assist the GPS system in locating you. A-GPS also means your location can be acquired in half the time than using just GPS, even indoors when your phone can't "see" the GPS satellites.

Second, cellphones are connected. Unlike most PNDs, cellphones can receive live traffic updates and up-to-date POIs (Points of Interest), including where to find the cheapest gas at any particular moment. And it could also mean that advertisers know where you’re located, which may not be a plus.

Yes, cell-based navigation services run around $10 a month (except for iPhone), but it'd take around three years before these fees would equal the price of a standalone – and not as well-endowed – PND.

So, why in this economy would a consumer with a GPS-equipped cellphone buy an additional slow, dumb traditional PND?

GPS satellites may come and go – but the halcyon days of the PND may already have come and gone.

The Converter Box: It’s Still Alive?

Mon, 13 Jul 2009 08:52:25 -0500

Monday July 13, 2009 – Myra Moore

So, now that we’ve checked off the U.S. analog TV shut down from the giant DTV “to do” list, we can declare the U.S. DtA converter box market dead. Right? Well, not exactly.

The shut-off occurred a month ago and our data indicates that plenty of people are still buying the boxes. Before the boxes started selling, DTC estimated that more than 30 million converter boxes would ship into the U.S. over the life of the coupon program. Other forecasters estimated fewer would ship. And it turns out we were right (although a little low).

Our quarterly converter box tracking service estimates that about 30 million boxes shipped through 2008 with another 7 million shipped in the first quarter of 2009 (http://dtcreports.com/documents/converterboxtrackingwebsite2.pdf). We’ve got analysts shopping for converter boxes all over the country and retailers report sales are still strong. When I popped into my local Radio Shack last week, the Shack folks were opening a new carton of Digital Stream converter boxes and restocking the shelves. When I asked if people were still buying the boxes now that the shut-off is over, I got the “why do you think we’re restocking the shelves?” look – along with a spirited sales pitch.

Source: Digital Tech Consulting

Less well-known consumer electronics brands like Digital Stream took a gamble when they designed boxes, got them certified and hit up major retailers for a slot on the shelf. It’s a one-time market and box margins are low. But the combination of acquiring real estate in a big retailer’s store (albeit temporary) and the rising interest in value brands that this nasty recession has produced may pay off. A little increased brand awareness and a foot in the door at Wal-mart or Radio Shack might lead to orders for portable DVD players, TVs, or, who knows, more converter boxes.

Blu-ray Doomsday?

Mon, 6 Jul 2009 11:36:19 -0500

Monday July 6, 2009 – Stewart Wolpin

DVD hardware makers and Hollywood studios have pinned their hopes on Blu-ray to revitalize the whole home theater and pre-packaged media market. They should be prepared for disappointment.

Even before the economy tanked, DVD was sliding down the razor blade of product commoditization. DTC believes that the entire non-PC DVD hardware category will dip 18% this year, buoyed only by the slightly growing portable/automotive market.

By contrast, only 5.7 million Blu-ray players will be sold this year, which represents only 4% percent of the total DVD market. And that's taking into account the increased inventory of Blu-ray titles, heavily-promoted new Blu-ray player brands such as Vizio, an increasing number of Blu-ray players that can stream online content, and shrinking Blu-ray hardware prices, which could conceivably dip below $100 by year-end.

Source: Digital Tech Consulting

The picture for Blu-ray gets increasingly fuzzy five years hence, when DTC believes the high-definition disc format will have to compete with a growing internet download and streaming market already being overwhelmed, like the music business, by downloads and streaming.

Blu-ray's boomlet is blocked by another thin barrier: HDTV ownership. Most consumers without at least a 50-inch HDTV will pass on a Blu-ray deck. HDTV household penetration, although growing, is only a small slice of the worldwide TV market. It's not that people don't like a higher quality picture. It's just that they'll choose a different way of getting it. In other words, it's not about the product, it's about human behavior.

Take my own home, for example. While mindlessly channel surfing, my wife will happen upon a movie she likes and start watching it, even if the film is half over, even if it's constantly interrupted by commercials, even if it's not even in high-def (oh, the shame) and pock-marked with ShamWow pitches, it doesn't matter. I gently suggest we could watch the film from the beginning commercial free and in high def on Blu-ray, or even just standard def on DVD. Nah, she says, I'm fine. I'm sure she's not the only sofa spud who would rather lump than load. Even I, so cinematically holier than thou, will record a movie to the HD DVR I find on HD cable for later 1080i viewing, even though I already own said movie on Blu-ray or DVD. And I'm sure I'm not alone and most viewers choose to watch from the HD DVR or just plain non time shifted and scheduled HD programs – most cable, satellite and telco systems now offer nearly 100 or more HD channels – over playing in on a Blu-ray or DVD player because it's simply way too much trouble to hunt down the disc, boot up the player, find the player remote, and switch the receiver or HDTV to the proper output. It's just easier to hit LIST and PLAY on the always handy cable remote.

It is this La-Z-Boy behavior that will eventually doom Blu-ray to little more than a niche market.

Not Tapped Out Yet

Mon, 29 Jun 2009 11:36:48 -0500

Monday June 29, 2009 - Shelby Cunningham

For some time, those smart engineers who tell us all about the technical intricacies of video compression technology told us that MPEG-2 had reached its efficiency peak some years ago. They said it was tapped out – no more improvements. But apparently technical breakthroughs for old technology happen, and broadcast encoder makers like Tandberg and Harmonic tell us that they have now managed to squeeze as much as a 20% gain in greater MPEG-2 efficiency, thus extending the life of this codec.

Even though MPEG-4 AVC usage is rapidly growing, it’s not doing it at the expense of MPEG-2 as STBs for digital cable, satellite, IPTV and terrestrial transmissions still decode MPEG-2. Even though a handful of services are only delivering programs in MPEG-4 AVC, the STBs and TVs are still capable of decoding both MPEG-2 and MPEG-4 AVC. Chip makers haven’t seen enough demand to efficiently make AVC-only chips, and media processors that decode MPEG-4 AVC still decode MPEG-2 at this point in time.

Including MPEG-2 in digital STBs and TVs seems to be a sure thing for a few more years thanks to the new greater efficiency, the need for backward compatibility and the current cost savings for chip suppliers to make hybrid chips. For now...

Source: Digital Tech Consulting

Diversification Key to STB Supplier Strength in Multiplatform Market

Mon, 22 Jun 2009 09:55:54 -0500

Monday June 22, 2009 – Antonette Goroch

While pay TV STB shipments were one of the few electronics segments to log growth in 2008, and are forecasted to continue their good fortune with gains again in 2009, the good times will not continue to roll for all STB suppliers. Suppliers will have to diversify their customer bases – both by geography and delivery platforms -- to remain standing as the market matures in many areas.

DTC’s most recent research showed that STB shipments across pay TV platforms saw some 21% growth between 2008 and 2009, but only some suppliers saw shipments grow, and others even posted declines. Though some region specific factors (such as new sub growth in China or DTA adapters for cable in the U.S.) boosted shipments on a case by case basis, a key factor for success was the ability to serve multiple systems and regions.

Successful suppliers were those able to tap into multiple markets and platforms, rather than one region, platform or system. Pace, once a fairly niche player for the European market, is forecasted to realize 16% growth in pay TV STB shipments from 2008 to 2009, more than twice the overall market rate, due to its successful efforts to expand its tier one system customers across platform and regions. Similarly, ADB, which also employs a multiple platform/region strategy, is forecasted to see 26% growth in pay TV STB shipments in 2009.

Those suppliers serving a less-diversified customer base were far more susceptible to the competitive nature of the pay TV business on a system-by-system basis. EchoStar, for instance, generates the vast majority of its STB shipments from Dish Network, the second largest DTH satellite operator in the U.S. EchoStar is forecasted to see shipments fall 8% in pay TV STB shipments in 2009 due to increased competition from both digital cable and IPTV, along with a maturing subscriber base of 14 years. EchoStar has made several moves to combat the situation by penetrating the North American IPTV market through the ViP-TV service (serving customers of the now defunct IP-Prime), as well as its joint venture in the Mexican pay TV market with Mexican cable operator, MVS Communications.

This type of diversity will only become more important over coming years, as declining demand in the U.S. and other mature pay TV markets slow shipment growth overall. STB suppliers able to establish themselves now with a diversified customer base will have a far stronger position as the market peaks and slows.

Where in the World is Digital Terrestrial TV?

Mon, 22 Jun 2009 09:54:37 -0500

Monday June 15, 2009 – Myra Moore

Now that the world’s largest shut down of analog terrestrial TV transmissions has occurred in the U.S., what’s next? Plenty, it seems. With the exception of Germany, The Netherlands, and a handful of smaller Western European countries, the rest of the world has yet to pull the analog TV plug.

In fact, 79% of the countries in the world haven’t even started commercial DTT transmissions, although 42% have pledged to do so in the near future. Not all countries will join the digital TV club as many need their limited resources devoted to more critical endeavors than building digital TV systems.

Source: Digital Tech Consulting

But companies selling infrastructure equipment or DTT receivers don’t have to worry about the well going dry just yet. From 2010 to 2013, some populous and/or prosperous countries are scheduled to shut off their analog systems – among them Canada, the U.K., France, Ireland, Italy, Spain, and South Korea. And there are a significant number of countries just now testing, building, or planning a system. They, of course, won’t be the gravy train that the U.S. has been with more than 1,000 terrestrial broadcasters building infrastructure and tens of millions of DTT receivers sold to consumers (including a forecasted 38 million D-t-A converter boxes).

Equipment suppliers will just have to work a little harder to tailor solutions to individual countries that will likely make their jobs harder by building systems that will vary slightly from country to country. Plus, the transition has already been completed for the U.S., which has 100 million TV households. Not many of those kinds of TV household penetrations left in the world – oh, except for China.

MPEG-4 AVC Sitting Pretty

Mon, 22 Jun 2009 09:53:15 -0500

Monday June 8, 2009 – Maya Jasmin

Adoption of the MPEG-4 AVC codec is advancing nicely with only a few years having passed since the first Advanced Video Codec (AVC) products debuted. While crowned as the heir to the ubiquitous MPEG-2 codec, it will be a while before MPEG-4 AVC is sitting pretty and alone on the video codec throne. For now the two codecs work nicely together even providing MPEG-2 device shipments with a boost as digital set-top boxes, TVs and other devices donning the latest technical advances are also supporting the MPEG-2 standard. And even though MPEG-4 AVC won’t cannibalize MPEG-2 anytime in the near future, the newer codec has also done much for introducing the MPEG standard into non-traditional devices, like mobile handsets, personal media players, and handheld video game systems.

DTC expects shipments of MPEG-4 AVC mobile handsets to sustain healthy double digit yearly growth throughout 2013 and probably beyond. Shipments are expected to reach 118 million in 2009 catapulting to over 700 million by 2013. Personal Media Players will experience robust shipment numbers throughout the forecast period as well, and even with slight declines in yearly growth in the outer years, DTC still forecasts shipments of 73 million in 2013. DTC also expects handheld video game systems to contribute heavily to MPEG-4 AVC product shipments in the future, but with limited insight into next generation systems as our current forecast does not include next generation handhelds. For more information about the adoption and impact of MPEG-4 AVC in video devices and downloads, please visit http://dtcreports.com/report_avc.aspx.

Source: Digital Tech Consulting

The Next Video Marriage: Broadcasters and Mobile Service Providers

Fri, 5 Jun 2009 09:43:18 -0500

Monday June 1, 2009 – Antonette Goroch

Subscriptions for mobile TV services (data or content plans including video/TV services) are on the rise with 3G services delivering most of the subscribers. DTC estimates that mobile TV subscriptions grew 37% in 2008, reaching just shy of 100 million worldwide.

Source: Digital Tech Consulting

The majority of these subscribers, more than 95 million, were 3G unicast subscribers, compared with just 3.5 million subscribing to broadcast (as opposed to unicast) mobile TV services. Broadcast services, however, are reaching many more than the 3 million subscribers as most mobile broadcast TV services don’t require a subscription. 3G mobile TV pay services are outselling pay mobile broadcast TV services for a couple of reasons: One is just simple math – there are far more 3G services that offer video than there are mobile broadcast pay TV services. Also, consumers have warmed up to the unicast packages because they are perceived to have more value by providing both on-demand content, as well as cheaper pricing plans and more varied content.

Mobile broadcast subscriptions, conversely, have typically carried high price tags for fairly limited packages of rebroadcast TV channels. Consequently, there has been little traction with new fee-based broadcast services. In the U.S. for instance, there had been high hopes for MediaFlo services launched by both AT&T and Verizon during 2007/2008. High prices, and the lack of a clear value proposition for consumers, however, have left results far shy of expectations, with 2008 subscribers barely reaching 100,000. Pay DVB-H services in Europe haven’t fared a lot better. Only South Korea’s S-DMB service has met with any measurable success with about 1 million subscribers.

While broadcast mobile TV services have floundered as premium subscriptions, they have fared far better under the free, ad-supported model. Indeed, while premium broadcast subscriptions showed little growth in 2008, handsets that include mobile TV tuners that receive free channels grew 46% during the period, rising from 38 million in 2007 to more than 55 million. Japan and South Korea, two of the first regions to offer free mobile TV broadcast services in 2006, made up the vast majority of installed handsets, comprising more than 50 million combined.

The challenge for either model will be achieving profitability. Though 3G TV is racking up subscribers, it is far more expensive and network intensive to offer unicast TV services compared to broadcast, leaving its profitability in doubt. A likely future scenario for this emerging pipeline (already being experimented with some, such as Telecom Italia) will be hybrid models that combine both the network efficiencies of using broadcast for popular high-traffic content, with the on-demand specificity and niche capabilities of unicast services.

VGS Media Center: How Will Version 2.0 Look?

Mon, 18 May 2009 11:49:56 -0500

Monday May 18, 2009 – Shelby Cunningham

Video game system (VGS) providers put their money on transforming their consoles into living-room media centers by building systems with internet connections and video optical disc drives in their latest devices. So far, so good. A percentage of gamers have embraced the online services, and DVD and Blu-ray Disc (BD) movies get played in the consoles.

The best strategy for a successful home media center is still being formulated, however. VGS makers will soon be giving us a glimpse of the next step in the media-hub strategy. Will they get it right?

All three console makers, with Xbox leading the pack, have had enough success with online services that offer games and video streams/downloads, that it’s certain that they will beef up these online offerings. So now that people have shown they want to sit on the couch and download games and media straight into their living room, will the next generation of consoles rely 100% on downloads and built-in memory and nix the optical disc drive all together? If rumors are correct, the first purely download-reliant VGS is right around the corner. The new PlayStation Portable (PSP) that many believe will be announced at E3 in early June will supposedly be sans optical disc drive and will rely on delivering all games digitally. Considering the unspectacular sales of UMD movie discs, this move isn’t surprising.

But let’s not stick a fork in the disc drive yet.

How will consumers react to not being able to play their last generation games on their new VGS if there is no receptacle for packaged media? Will they grudgingly accept that they will have to re-purchase the games as downloads? Or will Sony give PSP buyers a break and offer some free downloads with purchase? As for now, consumers aren’t ready to throw out their physical media. According to recent estimates from NPD, only 3% of home entertainment spending in March 2009 was on web-based downloads and online streaming. It also found that only 5% of consumers downloaded movies onto their video game consoles. Considering the relatively small uptake of game and movie downloads, console makers who choose to remove the disk drive altogether will have to risk alienating gamer enthusiasts.

How do we deliver this avalanche of content to all our gadgets?

Mon, 11 May 2009 10:22:26 -0500

Monday May 11, 2009 – Antonette Goroch

With a large amount of entertainment programming streaming to TVs, mobile devices, and PCs, the need for efficient content creation, management and distribution is more critical than ever.

DTC’s most recent research estimates that there were more than 239 million worldwide pay TV subscribers , 99 million mobile TV/video subscribers, and just under 12 million Internet video subscribers in 2008. And that doesn’t include people who only view free content. With this many people watching over limited bandwidth, technical efficiency is the new brass ring.

Source: Digital Tech Consulting

One example of the quest for efficiency is greater use of IP to the contribution level of content production, rather than just distribution to the end user. Companies, such as T-VIPS and other “behind the scenes” content management players are helping providers move content to and from multiple points using IP networks. This is of fundamental importance with multiple platforms that must now be considered. These range from a patchwork of set-top boxes, PCs, and mobile devices to multiple audio and video codecs, transmission networks, and varying bandwidth capacities that each piece of content must be calibrated for. Larger infrastructure companies are feeding this trend as well. Cisco, for instance, managed NBC’s Olympics coverage from Beijing in 2008 using such an IP-based system.

Although dabbling with new consumer distribution pipelines gets lots of attention, the more sophisticated use of IP technology to manage content before it gets to the consumer represents a dramatic – and likely permanent – shift in the business of content distribution.

Why Viewing Local TV on Mobile Phones isn’t DOA in the U.S.

Mon, 4 May 2009 10:00:21 -0500

Monday May 4, 2009 - Myra Moore

The naysayers are pronouncing local TV broadcasts to U.S. mobile phones dead on arrival because they say mobile phone service providers will never agree to let ATSC Mobile DTV receivers be built into service-provider handsets.

The argument goes like this: In order for local broadcasters’ OTA services to be successful, consumers must be able to view the programming on their mobile phones. In other words, with the exception of portable TVs for automobiles, consumers won’t purchase (in meaningful numbers) separate devices to view local TV programming. So far, we’re in agreement.

A frequent sentiment expressed among industry players at the recent National Association of Broadcasters (NAB) Show (April 20-23), is that mobile phone service providers will be perpetually unwilling to open the door to local TV broadcasters because free OTA broadcasts won’t deliver a direct revenue stream to service providers. Not surprisingly, no announcements have been made from providers like Verizon and AT&T to imbed OTA digital TV receivers in company-subsidized handsets when broadcasters begin the first transmissions later this year.

ATSC Mobile DTV is new and commercially untested; it will increase handset costs; and if service providers are considering the eventual inclusion of ATSC receivers, they’re certainly not going to tip their hands now. But we think there are a couple of reasons why service providers won’t be hostile to the idea.

· Free-to-air mobile TV reception can give consumers a “free” taste of receiving TV programming, which may lead to additional video snacking of premium content provided by the service provider.

· As more and more features are added to our Swiss Army Knife phones, the inclusion of broadcast TV receivers may be like cameras in mobile phones – ubiquitous and necessary to be competitive. In Japan, the vast majority of mobile phones (whether acquired through the provider or independently) includes a broadcast mobile TV receiver. The country has an installed base of more than 20 million TV-capable handsets. Most mobile phone providers selling full-featured handsets and services willingly choose to include 1seg TV receivers because many consumers want to receive local TV programming on their handsets.

Of course, it’s too early to know if the U.S. market will be similar to the Japanese (or Korean) market, but it seems premature to dismiss the idea that ATSC mobile TV receivers might someday make their way into phones.

One Device To Rule Them All

Mon, 27 Apr 2009 11:00:44 -0500

Monday April 27, 2009 – Stewart Wolpin

MP3 player. PND. digital camera. PMP. camcorder. E-book reader. mobile phone. All popular 21st Century gadgets. And all may be gone, at least in individual form, in five years.

Where will they go? We'll get the first hint sometime in late June/early July when the third generation iPhone appears. If the varying reports are accurate, the new iPhone will have 32 GB of memory, a 3.2 MP camera and video recording capability, along with all the other promised iPhone OS 3.0 improvements and the functionality brought by the nearly 30,000 third-party iPhone apps.

For years, the mobile phone has been absorbing other devices' capabilities, a digital version of the TV show Heroes' power-stealing character Sylar. First, they were just phones. Then they were PDA phones. Then they were camera phones. Then they were text messaging and email phones. Then they were music phones. Then they were Web browsing phones. Then they were multimedia viewing phones. Then they were GPS phones.

Some say the iPhone maybe have been the first cellphone to be the true sum of these disparate capabilities that has conquered the market, but phones running Android, Palm's coming webOS, BlackBerry, Symbian and Windows Mobile "open" cell OSs are not far behind.

Aside from the usual technological advancements and SoC developments, two trends are pushing us closer to one device to rule them all – cheap more copious flash memory and faster mobile networks.

On a gut level you probably realize how cheap flash memory is. But nothing is as dramatic as cold, hard statistics.

Kingston, which makes both flash memory cards and thumb drives, supplied me with its retail SD card pricing over the last few years:

Source: Kingston

You read right. You can now buy a 16 GB high-capacity SD card for nearly half the price of a 2 GB SD card just three years ago. Memory built into devices also is getting cheaper. Nothing exemplifies this more storage/less money than the Apple iPod Classic. See how prices have remained nearly constant over the last five years while storage capacity has increased six fold.

So much more storage for so little money could soon make the hard drive extinct, which means cheaper, lighter, more reliable and less power-hungry laptop PCs in five years – or even sooner – and enable a continued condensing of capabilities into fewer portable devices.

Then there's the coming of LTE (Long Term Evolution), a 4G network technology providing wireless mobile broadband speeds of 6-8 Mbps, 10 times faster than current 3G EV-DO and HSPA networks. Verizon will start offering LTE service sometime in the middle of next year in around a dozen or more markets, with AT&T likely to follow in 2011.

Faster networks aren't just for faster uploads or downloads, although that will be an obvious way to transmit high-resolution geo-tagged photos and videos from cellcams and maybe juice up the early efforts to improve video telephony. Verizon is actually funding a program seeking innovative ways of talking advantage of the LTE's speedier and roomier wireless broadband Autobahn.

What about Sprint's XOHM-branded WiMAX 4G service? After a year, it's available in only two markets, Baltimore and Portland, OR, and Nokia has discontinued the N810, its lone WiMAX handset. Only one new WiMAX handset, the Windows 6.1-powered Samsung Mondi, due in the next few months from Sprint, was announced at CTIA earlier this month.

Five years from now, we may view today’s phones to be as quaint as an 8-track cassette. Future phones may operate on 4G LTE networks, have bright and power-efficient OLED screens, 120 GB flash drives, 8 MP cameras, HD video capture, geo-tagging, video GPS, video telephony and access to thousands of downloadable applications – all for less than $200 (with that pesky 2 year contract).

If consumers want all those functions in one place, this will truly be one device to rule them all.

Internet Video Usage on the Rise

Mon, 20 Apr 2009 13:08:59 -0500

Monday April 20, 2009 – Antonette Goroch

Consumers have a voracious appetite for viewing video content on the Internet. No surprise there. Most of what they are consuming is free of charge, while the providers are supposed to be making money from selling advertising. But what happens when there aren’t enough advertising dollars to support on across-the-board “all you can eat for free” business model?

According to comScore/Media Metrix, Google’s ad-supported YouTube alone generates from 70%-90% of traffic in all world regions. While this clearly has fueled usage, it has failed to generate profits. Indeed, because of the high costs of servicing this bandwidth, Google is consistently operating YouTube at a loss. YouTube’s recent announcement that they will carry full length TV shows and movies from big name studios is an obvious attempt at generating more revenue through advertising.

DTC estimates nearly 400 million Internet viewers worldwide are streaming or downloading some 23 billion videos monthly. The largest concentration of viewers is in the U.S. with more than 150 million viewers. Not coincidentally, the U.S. also has the greatest number of content offerings available via ad supported, subscription and transactional business models. Usage in countries like the U.K., France, Italy, Spain, Japan and South Korea, is increasing exponentially.

Most of that content is made available free to the consumer. Although less than 1% of video streams/downloads are purchased directly by the consumer, there is hope for pay business models as DTC estimates that there was 20% growth pay services in 2008. Apple is the undisputed leader worldwide in premium/pay video downloads, but has more recently been joined by others such as Xbox Live, Amazon, Blockbuster, Netflix, and blinkbox.

It’s not clear how Internet video usage, free or premium, will affect the incumbent pay TV business. At the recent NCTA conference in Washington D.C., the largest cable operators seemed relatively complacent thinking of Internet video (i.e. over-the-top content) as a long term issue, rather than a near term threat. With Internet video providers already attracting hundreds of millions of viewers, pay TV operators may benefit from seeing the explosion of online video consumption as a near-term threat and/or opportunity. Anyone counting on a slowing of appetite for consuming TV and other online video entertainment might lose their seat at the dinner table.

Netbook or Bust?

Mon, 13 Apr 2009 10:23:50 -0500

Monday April 13, 2009 – Maya Jasmin

With the troubled economy, rising unemployment, and uncertain futures weighing heavily on consumer’s purchasing decisions, once deemed recession proof markets are obviously feeling the current recessionary blow. PC is one such market feeling the pain and PC companies are adjusting sales and shipment forecasts down. DTC has revised its PC forecast to reflect the economic effects on the market and expects to see at least a 10% decrease in PC shipments in 2009 as compared to shipments in 2008. While forecasts may seem dim, a mini hero is emerging. The netbook, which comes with a cheap price tag and stylish design, is soaring in popularity and its sales are doing much to keep the personal computing market afloat.

In addition to helping PC shipments remain robust, netbooks may be instrumental in changing how PCs are distributed. Until very recently, buying a computer at a store or online was the only way to acquire one. However, some internet service providers are now offering a new way to purchase hardware. Like cell phones, netbooks are offered for a very low cost (usually around $100) at say a Radio Shack or an AT&T store in select markets. But the purchaser is required to sign up for contracted internet service in exchange for the low-cost machine. The contract is generally for a two year period and service prices range anywhere from $49.99 to $69.99 a month.

While this model has worked for the mobile phone market, is it really transferable to the PC market where consumers are used to buying their hardware in a traditional manner? A netbook for $100 sounds good, but what about being locked into a $60/month internet service contract for 24 months? At that rate your $100 netbook turns into a $1,500 purchase, excluding taxes, surcharges, and fees. Of course, a monthly internet service fee is required whether or not you get the service from the netbook provider, but with the netbook provider you lose the flexibility to shop for a better deal, or just change your mind, at a later date. It all comes down to the wallet, though. With tightened budgets, we’ll have to wait and see if consumers think the new business model represents a short-term good deal, or a long-term lousy deal.

The Ethernet Dilemma

Mon, 6 Apr 2009 10:09:08 -0500

Monday April 6, 2009 – Stewart Wolpin

It is rare that the major consumer electronics companies are so – well, to avoid being completely insulting, let's say short-sighted.

Over the last few months, there have been many new HDTVs that include specialized Web surfing capabilities such as Sony's Bravia Link, Panasonic's Viera Cast, and the Yahoo! Widgets available on some Samsung and Sony models.

All these connected HDTVs and Blu-ray players, however, require an Ethernet jack to connect them to the internet.

Approximately 60 percent of U.S. homes have broadband, and therefore Ethernet, connections. But how many of these U.S. homes have an Ethernet jack in their living room?

I've seen no data to answer this question. I've asked any number of people who would either be in a position to know or would need to know, but all I get is a shrug of the shoulders.

My guess? Hardly any.

And yet, there are no connected HDTVs and no Blu-ray Live decks that include Wi-Fi capabilities.

How do these companies hope to sell any of these connected devices if consumers have no way to connect them?

Why haven't these manufacturers included Wi-Fi connectivity? Good question. I don't think it's cost. Most of the current media streamers such as Apple TV ($230, $330), Myka ($280-$390), the Kodak Theatre HD Player ($300), and the varying streamers from Netgear such as the Digital Entertainer Elite EVA9150 ($400), are equipped with Wi-Fi connectivity. And TiVo offers Wi-Fi adapters for its HD DVRs. It seems Wi-Fi connectivity can be easily built into or included for a living room device without adding appreciably to the price. Perhaps there are issues with consistent quality and/or connectedness, or concerns about signal security that have kept suppliers from incorporating Wi-Fi?

At least the Blu-ray Live deck makers are getting the message. Sony will start to sell its WiFi-enabled BDP-S560 ($350) in July; Samsung hasn't said when it will start selling its as-yet unpriced BD-P4600 and BD-P3600 Blu-ray decks, which will include Wi-Fi dongles.

But that still leaves a lot of connected HDTVs and Blu-ray Live decks with no way to wirelessly connect them – and a lot of advanced products with limited constituency to sell them to. Device makers may have a perfectly good reason for leaving Wi-Fi out of their business plans, but they didn’t include me in on their plans.

IPTV Growth Continues Despite Economic Decline

Mon, 30 Mar 2009 14:32:24 -0500

Monday March 30, 2009 – Antonette Goroch

Like other pay TV platforms, IPTV has proven resilient in the face of global recession with STB shipments rising during 2008 and showing similar strength in the first months of 2009. By utilizing the ability to differentiate itself as a more advanced offering, as has been the case in the U.S., global IPTV growth will continue to come from a mix of tier two and three-tier launches.

Indeed, DTC’s most recent survey of the market found shipments came in slightly higher than previously forecast, reaching just under 14 million units compared to our expectation of 13.5 million for the year. Some systems are beginning to show signs of maturity, with new subscriber growth slowing, but overall new systems are continuing to launch and the platform’s prospects remain strong.

IPTV has found a strong foothold over the past five years, particularly in Europe and Asia, with France having emerged as a major hotspot. Though many of these early deployments have begun to slow and show signs of maturation, such as those in Hong Kong, France or Italy, new launches are continuing apace in the regions of Eastern Europe, the Middle East and Africa. 2008 deployments included new services launched in Montenegro, Macedonia, Croatia, Lithuania, the United Arab Emirates and Morocco.

The U.S. market also showed unexpectedly strong growth during 2008, accounting for some 24% of all IPTV STBs shipped. Though the SES service IP-Prime ceased operations due to a lack of subscriber growth, both AT&T and Verizon experienced substantial subscriber gains, each passing the 1 million subscriber mark. This was no small feat for a market as competitive as the U.S. and demonstrated the power of an integrated, triple play advanced TV product, even in difficult market circumstances.

Latin America has seen little in the way of IPTV to date, with only a few fledgling systems in Brazil and Colombia, but seems poised for growth with several announcements of new launches planned for 2009, including Brazil, Argentina and Uruguay. A large and influential Latin American market such as Brazil could boost market share if the services take.

Source: Digital Tech Consulting

What’s so Standard about Standards?

Mon, 23 Mar 2009 10:27:46 -0500

Monday March 23, 2009 – Myra Moore

A lively panel discussion of TV manufacturers that took place at the DVB World conference on March 10 put a hot light on the subject of standards and their limitations. Even if you specify a TV or a set-top box to comply with the world’s most frequently used transmission standards – say DVB and its multiple iterations – you can easily end up with receivers that can only work in a single territory. Despite all our talk about a global marketplace, there aren’t any truly international digital TV standards. A little DVB here, a little ATSC there and some T-DMB peppered around the world and you have a big pot of DTV gumbo.

But when you have a large region, such as Europe, where every digital terrestrial broadcasting country on the continent uses the same DVB-T standard, even those receivers can vary wildly depending upon the audio and video compression standards used, the presence and type of middleware, or the presence of a smart card reader if pay services are available (just to name a few options). Standards don’t quite live up to their promise when the set-top box you bought for use in Germany can’t fully function in Norway. Most consumers tend to take this in stride – it’s called conditioning.

But TV and STB makers get the vapors when every country rolls out its own interpretation of the “standard”. It requires manufacturers to make STBs and TVs that are different from the ones it built for that country’s neighbor. This is a rational complaint as it is a costly and inefficient practice. This is the point the TV makers made at DVB World and many attendees (including broadcasters that foster this practice when they specify DTT systems) had some sympathy for their plight.

Sympathy doesn’t really matter, however. Most agree that standards that allow some flexibility – which enable innovation and experimentation – are preferable to those that lock down every element in a system. TV makers will apparently continue to pay the price for flexibility. Perhaps hosting a lavish retreat where all DTV system decision makers get together and agree on common specifications for receivers would be a good investment for the world’s TV manufacturers (ignoring possible anti-trust issues for a moment). But in today’s climate where luxury perks are about as popular as credit default swaps at a support group for embattled investors, maybe cross-country cooperation will have to wait.

Will the Wii be Able to Compete?

Mon, 16 Mar 2009 13:57:59 -0500

Monday March 16, 2009 – Shelby Cunningham

As people increasingly use their video game consoles to stream movies and tv shows, will the Nintendo Wii fully step into the game? It has been announced that Nintendo will launch a video channel on the Wii in 2009, but only in Japan and it will only show Nintendo-produced content. While Xbox 360 owners can stream anything from Netflix, Japanese Wii owners will be able to watch cartoons and educational and lifestyle shows created by Nintendo. Some of the content will require payment, but other programs will be free with ads mixed in.

Nintendo hinted that it will offer video channel service overseas later in the year. When that service heads West to the U.S., will Wii owners receive only Nintendo-produced content just like the Japanese owners? If so, will the “walled garden” approach fly with U.S. Wii owers? Japan may embrace the Nintendo-provided content as the brand is wildly popular in Japan, but that brand loyalty may not be as strong in other countries. In the US, console owners have embraced watching hit Hollywood movies and popular TV shows on their video game consoles.

Sure Nintendo made up about 64% of the video game console market in 2008, but a lot of these owners are casual gamers who may not have any interest in streaming video through their Wii. If Nintendo creates original content for different worldwide markets then they will be investing a lot of money and time into something that may not be well received. Although by making some of the content free with advertising they are insuring that people will at least give it a shot. So now all that remains to be seen is what Nintendo will choose to show on this channel outside of Japan.

I suppose Nintendo could populate the US video channel with Pokémon and hope children will still flock to the cuddly Pikachu creature and collect all of the video downloads, but until the content is announced I remain wary of how well a channel full of purely original content will do outside of Japan.

Net-tops Gain Momentum in 2008

Wed, 11 Mar 2009 10:52:52 -0500

Monday March 9, 2009 – Antonette Goroch

Excitement about the application of Internet connectivity in STBs has grown immensely over the past year, leading to several important standalone product announcements in 2008, as well as stronger than expected shipments for the period. According to DTC’s most recent estimates, more than 1.1 million units of standalone Internet STBs shipped in 2008, nearly five times the roughly 200K that shipped in 2007. This jump in shipments was largely due to the success of the Netflix box by Roku, which achieved a compelling mix of low cost ($99) with an existing online content consuming base (Netflix subs), though Apple TV also performed slightly better than expected.

This strength has led to a flurry of activity for the category, including both new products and expanded functionality for devices. The most notable of these is Blockbuster's recent entry into the market, challenging Netflix with a STB manufactured by 2Wire, now available free with purchase of $99 worth of rentals ($1.99 thereafter). Other notable announcements include Roku's expansion beyond just Netflix content into other sources, including the Amazon Unbox library, as well as a large expansion of VUDUs HD content library.

But despite this relatively strong year, DTC believes standalone Internet STBs will ultimately be a small, early adopter/hobbyist product category. Indeed, while we believe that the next two years will see continued success from both the Netflix and Blockbuster offerings, for the long term, DTC expects the bulk of Web delivered TV content going to integrated devices, such as pay TV STBs, game boxes or Blu-ray players. These products will play an important role in the near term however, by establishing the viability of Internet-to-TV content delivery, and the conditions necessary for its success.

HD Camcorder + Digital Camera=???

Mon, 2 Mar 2009 10:33:01 -0600

Monday March 2, 2009 – Stewart Wolpin

We're soon going to have to come up with a new name for a new type of digital imaging product that could dominate the still picture/video-taking business in short order.

Digividicam?

Camvid?

Cameracam?

Digicam?

Why am I fussing with this silly nomenclature?

In the last couple of months, most of the major digital camera makers – Sony, Kodak, Panasonic, Canon – have joined Casio in adding H.264 HD video recording capabilities to models priced around $250 and up.

At the same time, a growing number of both familiar and unfamiliar camcorder manufacturers – Sony, Samsung, Sanyo, DXG – have introduced H.264 SD-based camcorders that also snap high megapixel (usually 5 MP or higher) digital stills, priced at around $250 or less.

Many of both types offer minimal – 3x-5x – optical zoom lenses, 2.5-inch and larger LCD screens, USB and, sometimes, HDMI jacks.

Exhibit A is the Sanyo Xacti VPC-GC10, due next month. It has a 5x optical zoom, offers 50-1600 ISO settings, a 285-degree swivel 3-inch widescreen LCD monitor, shoots 1280 x 720p H.264 video and snaps 10 MP digital stills via a CMOS sensor – for $199.99.

Okay, no peeking at an online picture. Is it a digital camera or a camcorder?

Sanyo has dubbed it and its other new merged-imaging models Dual Cameras. Nah, too many syllables.

How about Dualcams?

Yes, H.264-equipped digital cameras have a raft of digital photo specialty features – face detection, smile detection, panorama, et al – and processors designed to optimize digital stills. And high-megapixel-still-equipped H.264 camcorders have processors to optimize digital video. But there's no reason why these features can't and won't be merged.

Yes, form factor is an issue. Is the rectangular shape of a digital camera to best way to shoot video? Is a vertical pistol-grip or a beer-can-shaped camcorder the best way to snap stills?

For $200 to do both high-def video and high-megapixel stills, I'll bet consumers won't care how they're shaped. We just need to figure out what to call them.

Source: Digital Tech Consulting

Old School Rules: OTA King of the Hill – For Now

Fri, 20 Feb 2009 15:33:52 -0600

Monday Feburary 23, 2009 – Myra Moore

Over-the-air TV obituaries have been so ubiquitous in recent years, you might think the grave diggers are about to shovel the final earth that will bury the old-school terrestrial TV model.

Granted, it’s not the mighty TV delivery giant it used to be, but an examination of recent Digital TV receiver shipments illustrates why “the reports of its demise are greatly exaggerated.” In 2008, more than 55 million digital terrestrial receivers (set-top boxes (STBs) and TVs) shipped in the United States, while almost the same number shipped into the European market.

Digital transitions are helping to propel Digital Terrestrial TV (DTT) receiver sales above those for Internet Protocol TV (IPTV), digital cable, and Direct-to-Home (DTH) satellite reception. Naturally, the 2009 analog shut-off in the United States is a significant factor in those life-affirming sales. The U.S. and other ATSC standard countries, though, won’t carry the 17% CAGR that DTC projects for DTT receiver shipments through 2013. It will be the European-created Digital Video Broadcasting – Terrestrial (DVB-T) standard that will do the heavy lifting. The chart below depicts the (current) three major digital terrestrial transmission standards and their projected shares in receiver sales.

Source: Digital Tech Consulting

That’s a lot of OTA receivers sold in the next few years. If the new Chinese DTT standard is added to the mix (currently a small part of the overall market), 2010 DTT receiver shipment totals are estimated to be as high as 172 million. DVB-T is the steady digital OTA work horse for a couple of reasons: 1) the standard has been widely adopted all over Europe and other parts of the world – namely India, which will fuel significant growth throughout the forecast period; and 2) there is still a lot of growth left for high-definition transmissions in DVB-T territories.

DTT started out as a way to get more channels into a single slice of spectrum; not for using most of the gained bandwidth for one channel of HD programming. Now, however, compression and transmission technology evolution, and smaller digital displays are helping to create demand for new high-definition receivers. So, not dead yet.

DTV Snapshot

Tue, 17 Feb 2009 10:09:42 -0600

Monday February 16, 2009 – Maya Jasmin

With digital television at the forefront of everyone’s agenda, it’s important to recognize how prolific the technology truly is, way beyond buzz about analog transitions and digital converter boxes . Digital television is not a new concept by far and has existed in Pay TV form for many years. And with countries around the world planning and executing mandatory transitions to digital terrestrial transmissions it’s important to put the different DTV platforms into perspective.

Terrestrial reception is by far the leading platform in digital television and will continue to be throughout the foreseeable future. DTC forecast 140 million Digital Terrestrial Television (DTT) receivers will ship in 2009 growing to an astronomical 300 million units by 2013. Even with the countries that have yet to transition cyclically adding DTT set top boxes (STB) and Digital-to-Analog (DtA) converter boxes, Integrated Digital TVs (IDTVs) make up an overwhelming majority of DTT receiver shipments throughout the forecasted period.

Albeit in a distant second place, Direct-to-Home (DTH) Satellite receivers still manage to log impressive shipments. Sixty-eight million units are forecasted to ship in 2009, growing to 71.5 million shipments in 2012 which will serve as its peak. The growth will come primarily from emerging DTV markets such as India and Africa.

The digital cable platform is estimated to ship units in the tens of millions with constant year-over-year growth throughout the forecasted period. DTC expects nearly 41 million units to ship in 2009 growing to 44 million in 2013. Expansion of digital cable services in China and plans for populating hybrid analog/digital cable systems with DtA converters in the U.S., are the primary catalysts for growth.

Lastly, Internet Protocol Television (IPTV), the most infant Pay TV platform is proving to be the fastest growing in the Pay TV world. IPTV is forecasted to realize a CAGR from 2008-2013 of 13%, and is the only Pay TV platform to experience a double digit CAGR over that time. DTC estimates that IPTV receiver shipments will reach18.5 million in 2009 and grow to 25 million by 2013. With the technology expected to improve and adoption expected to increase IPTV receiver shipments should realize growth for years to come.

If you would like to learn more about the DTV receiver landscape, please visit dtcreports.com/report_stb.aspx. A new report with the above referenced data and much more is now available.

Digital Cable Receiver Shipments Up, But Profit May Be More Elusive

Mon, 9 Feb 2009 16:17:49 -0600

Monday, February 9, 2009 – Antonette Goroch

The economic meltdown may be wreaking havoc on the consumer electronics industry, but the global market for digital cable receivers is surprisingly healthy. The worldwide upsurge in demand, however, is more for low-cost receivers vs. the more full-featured high-cost STBs that have dominated the market in recent years.

Indeed, DTC’s most recent analysis of the market shows stronger than expected unit shipments in 2008, surpassing 45 million units compared to our previous expectations of just 39 million. Two things are driving this bright spot—exceptionally strong growth in the Chinese digital cable market and U.S. cable operators needing to clear analog transmissions off their systems to make room for more HD programs.

Chinese digital cable subscriptions grew substantially in 2008, propelled by the Olympics and a favorable regulatory environment for operators. According to government figures, digital cable subscribers in China rose from 24 million in 2007 to 44.5 million in 2008 generating high growth in digital cable receiver shipments.

Comcast, meanwhile, the largest U.S./worldwide digital cable operator, began what is sure to be a trend among cable operators, placing large orders for low-cost digital-to-analog (DtA) converters that will be placed in homes that still have analog service. Many cable operators who still deliver analog programming want to free up bandwidth by delivering only digital programming to the home. In order to accommodate their customers who don’t want to purchase the digital service, cable operators will use these low-cost, small footprint DtA converters that allow subscribers to view the programming on analog TVs. Millions of the devices will likely ship into the market in the near future continuing to help boost digital cable receiver sales during severe economic conditions.

Despite these favorable shipment numbers, the market may be less lucrative for receiver vendors than it appears. A large portion of these units—those going to China, India and the U.S. DtA market—are bare bones, low-cost models. For example, Comcast reports it is paying just $35 per DtA unit. It’s unlikely there’s much margin for the converter makers, but given the current conditions, they’re probably glad to get the orders.

DTV transition/MediaFLO

Mon, 2 Feb 2009 10:54:42 -0600

Monday February 2, 2009 - Stewart Wolpin

By the end of this week the deadline for ceasing analog TV transmissions will likely have changed to June 12.

Sanity reigns.

According to Nielsen, more than 6.5 million U.S. households, or 5.7% of all homes, aren't ready for the upcoming transition.

There are those who say that this is too small a percentage of the population to stall such an expensive and extensive transition. But how many unprepared households are too many to delay the analog turnoff? I would argue that one is too many. That may not be possible, but all reasonable precaution should be taken toward reaching that goal.

The bill to extend the deadline is headed to becoming law this week if the House passes the legislation (Senate already has) and President Obama signs the bill.

The bill will, unfortunately, permit individual stations to voluntarily turn their analog broadcasts at anytime after Feb. 17.

The change will likely pose little trouble for the consumer electronics business. There may be a small increase in overall converter box sales with the extension, although DTC’s converter box study forecasts that box makers will likely realize only about a 6% increase in overall sales with a June extension. DTC forecasts that an estimated 37 million boxes will ship into the marketplace through the life of the program if the shut off is extended.

Companies that have purchased the right to use the spectrum that will be vacated by terrestrial broadcasters, such as Qualcomm, will likely be the biggest losers. On Feb. 18, Qualcomm was due to launch its MediaFLO mobile TV service in 12 new markets. Qualcomm says it will have access to an additional 40 million potential customers through the use of the vacated spectrum. According to Qualcomm, millions of dollars have been spent in preparation for a Feb. 18 launch of MediaFLO services in these new markets.

Qualcomm’s CEO Paul Jacobs wrote, "[W]e believe that it would be unfair, unjust and inappropriate to delay the DTV transition beyond Feb. 17, 2009."

No company, including Qualcomm, having banked, literally and figuratively on the Feb. 17 turnoff date, deserves to be penalized by the delay. But as Clint Eastwood's William Munny growled to Gene Hackman's Sheriff Little Bill Daggett before blasting him in the face with a shotgun at the end of Unforgiven: "Deserve's got nothin' to do with it."

But obviously the government thinks the ability of 6.5 million households to be able to receive TV signals to be more deserving.

A Missed Deadline?

Mon, 26 Jan 2009 10:31:15 -0600

Monday January 26, 2009 – Myra Moore

With the “date certain” for ending analog terrestrial TV transmissions officially uncertain, the person in charge of inventory management for an electronics retailer or a converter-box maker is probably flipping a coin to decide whether or not to order or to make more digital-to-analog converter boxes.

Those inventory managers may have to wait until Congress votes on pending bills that specify the analog TV shut-off date be moved from February 17 to June 12 to know if they made the right decision. The good news is that many retailers prepared for the expected high demand for boxes in January and February by stocking up in the fourth quarter of 2008. The bad news is that the NTIA announced on January 5 that the converter box coupon program had been exhausted at that time and that consumers would be placed on a waiting list as more coupons become available.

Digital Tech Consulting (DTC), which has been conducting research on the digital-to-analog converter-box sales for nine months, recently completed work on estimating fourth quarter shipments of converter boxes and found that retailers are well prepared for expected demand.

DTC estimates that 33.5 million converter boxes have shipped into the U.S. marketplace with about 9 million of those boxes still available for those who had not purchased a box by the end of December, 2008.

Of course, the estimated existence of 9 million boxes in the pipeline doesn’t have anything to do with whether or not all the consumers who want to buy them will be able to do so with a coupon (DTC’s research finds that nearly 4 million boxes have been purchased without coupons). We don’t know if the NTIA coupon availability problem can be solved within the nearly three weeks before analog TV transmissions are scheduled to end, but if it can be, there should be plenty of boxes for which those coupons can be redeemed.

Source: Digital Tech Consulting

CES 2009 Brings the Internet and TV Closer Than Ever

Mon, 19 Jan 2009 10:43:09 -0600

Monday January 19, 2009 – Antonette Goroch

The wide array of Internet to TV products at this year’s Consumer Electronics Show in Las Vegas made it evident that the link between TV and Internet is only getting stronger. How this trend will ultimately reshape the landscape of television content is unclear, but some effects can already be seen in a variety of new services and products from existing players.

On the one hand, there were a number of products that enable direct connectivity between Web content and televisions. Internet connected TVs were all the rage, with new models from Sharp, Samsung and LG, among others, that allow consumers to access Internet and video content, such as that made available by Yahoo or YouTube, directly to their TVs. Meanwhile, Internet-PC-TV connected products also gained momentum with new products like D-Link’s PC-on-TV player or Buffalo’s LinkTheater, which wirelessly stream Internet content from a users PC to the TV via a home network with unprecedented ease of use. Buffalo’s products allow remote access to one’s home network content via the Internet, and the ability to automatically queue BitTorrent files.

Additionally, existing TV related products continue to evolve to incorporate more Internet-like features, such as search and personalization. Tivo, for instance, unveiled a new software release for its set-top boxes which integrates new search functionality that not only lets users search for programs from their cable listings, but also brings in content from Amazon, CinemaNow, Jaman and YouTube. Fee-based content can automatically be purchased directly from this interface and added to the DVR.

Another example, which more clearly reveals how these trends might shake up the traditional pay TV business, is Macrovision’s radical change in product offerings. Once solely a content protection business, building its success around scrambling and encrypting content for pay-per-view and premium cable TV, Macrovision is now focusing on its more recent intellectual property acquisitions that create extensive program guides and search.

The move is telling, for Macrovision and others, because it foreshadows a TV landscape where value is created not so much by owning and restricting content, but rather better enabling navigation through vast quantities of content available through a multitude of sources.

More Proof that Optical Discs Aren’t Going Anywhere Yet

Mon, 12 Jan 2009 11:38:42 -0600

Monday January 12, 2009

Despite the slowing sales of DVD devices in major markets, the video optical disc device market is forecasted to sustain its current rates of annual shipments for the next few years. The last big jump in shipments occurred between 2007 and 2008, after which the market dropped a bit due to a decline in DVD device shipments, but now that Blu-ray has begun to catch on the shipments are on a slight rise again. Just don’t expect to see the Blu-ray market produce the kinds of shipment volume that characterized the DVD industry.

DTC has been tracking the optical disc device and pre-recorded disc market for years and puts out an annual data-rich report. For information about this report please visit http://dtcreports.com/report_optdisc.aspx

Source: Digital Tech Consulting

U.S. Economic Woes May Bring Unlikely Winners to Pay TV

Mon, 5 Jan 2009 12:21:41 -0600

Monday January 5, 2008 - Antonette Goroch

Pay TV has traditionally been a recession proof industry, steadily growing through the economic turmoil seen in both the late eighties and the early nineties. But competition is set to be far more fierce in US digital pay TV during 2009 than in previous recessions, and this new climate may bring some unlikely beneficiaries.

Despite economic downturn, digital pay TV subscriptions are not likely to stop growing during 2009, particularly in light of the digital broadcast transition in February. In this atmosphere, though, consumers will be keen on finding the best value in their spending decisions—even in pay TV. Consequently, bundled services will become more attractive than ever—offering both added financial value to consumers in multiple services, as well as the perceived value of savings through one bill.

Ironically, telcos, the newest and smallest of the U.S. pay TV pipelines, may be the best suited for offering the most advanced package of bundled services. While not yet widely deployed compared to their DTH satellite and digital cable competitors, both ATT and Verizon have the ability to offer the coveted “quad play” of mobile/phone/broadband/advanced TV—indeed Verizon began offering such services earlier this year in certain markets. Additionally, their IP based architecture adds to their ability to offer new cross-platform and “over the top” content.

FiosTV by Verizon and U-Verse from ATT both hit important milestones this year, reaching 1.4 mil and 1 mil subscribers during December, respectively, signifying they are in this game for the long haul. Equally significant, both are aggressively rolling out pay TV in major markets. This will pose a clear challenge to incumbent cable and DTH satellite providers, as the major telco/IPTV operators attempt to cherry-pick the most high-ARPU subscribers through advanced bundles of HDTV, broadband, mobile and mobile TV, and may foreshadow rapid growth—despite economic slowdown--for this new generation of IPTV service.

Source: Digital Tech Consulting

Optical Disc Shipments

Tue, 30 Dec 2008 09:55:38 -0600

Monday December 29, 2008

Here’s a little forecast snapshot as we look ahead to new video disc formats and how they will stack up against the highly successful DVD format. Growth of pre-recorded DVDs will continue to slow and take a sharp turn south by 2013. Only Blu-ray and other pre-recorded disc formats will log growth in the forecast period. In January, DTC will publish the third edition of its The Video Optical Disc, Devices and Media: Worldwide Shipmentsreport which is a data-intensive report that provides detailed worldwide forecasts of the Video Optical Disc devices and media market. DVD and Blu-ray devices, DVD PCs, video optical disc videogame systems, and pre-recorded discs are forecasted through 2013. For more information please contact us at info@dtcreports.com

Source: Digital Tech Consulting

The New Camcorder Business

Tue, 23 Dec 2008 10:26:53 -0600

Monday December 22, 2008 – Stewart Wolpin

A consumer goes into a store to buy a camcorder. On one shelf are AVCHD or HDV camcorders from Sony, Canon, JVC, Panasonic and Samsung, which list for around $1,000.

On another nearby shelf are HD camcorders that are $250 or less, are about the size of a deck of cards, and look (and are) really simple to operate.

The consumer knows that the Sony, Canon, JVC, Panasonic and Samsung camcorders are better. But four times better?

I'm willing to bet two things. First, these cheap HD camcorders will sell as well if not better than traditional HD camcorders in Q4 in the U.S., and, second, they will come to dominate the worldwide camcorder business in the coming years.

Traditional camcorder manufacturers derisively refer to these cheap camcorders as "toys." But this dismissive attitude sounds achingly familiar to the way the Big 3 automakers dismissed the then-new tiny gas-efficient foreign imports back in the day. We all know how that hubristic attitude worked out.

These "toy" HD camcorders are a relatively new phenomena and their availability is mostly confined to the U.S. market at the moment. It's only been in the last month or so that Creative Labs announced its Vado ($229.99) and Flip its MinoHD ($229.99), and Kodak started selling its Zi6 ($179.95), all of which join the previously introduced DXG 567V ($179). All capture either 720p or 1080i video using H.264 compression to flash memory, either built-in, to a removable SD card, or both, run on a couple of AAs, have a tiny LCD view screen, a flip-out USB jack for simple PC/Mac connections and cheap plastic lenses.

These four models are likely to be joined by others from other manufactures, some well-known some unknown, and likely none from Sony, et al. As time goes on, flash-based "toys" will not only outsell higher-end HD camcorders, but $250-plus standard definition models from Sony, et al, as well. In a couple of years or so, standard definition camcorders will disappear and the all-HD camcorder market is likely to split similarly to the digital camera world. These HD "toys" will become the predominant point-and-shoot market while HD models from Sony, et al, become the analogous D-SLR high-end.

Like the digital camera world, consumers know that HD camcorders from Sony, et al, capture far higher quality video. But for a quarter of the price and point-and-shoot operational simplicity, the video these new "toy" camcorders capture will more than just suffice, and will become the camcorder business.

Will the House Brand Finally Win?

Tue, 16 Dec 2008 13:19:57 -0600

Monday December 15, 2008 – Shelby Cunningham

If the big-box discount retailers are the ones to sell the most consumer-electronics products in this recession-burdened holiday season, will the growing attractiveness of private-label store brands put big dents in market-share usually held by traditional consumer electronics brands?

The tanking economy coupled with big-box stores devoting more shelf space to private-label brands could upset the TV market-share apple cart. More shelf space inherently increases consumer visibility, and leveraged with cheaper prices and bigger screens for the buck, this may be the recipe that allows house brands to eat into that coveted market share generally occupied by household names.

Traditionally companies like Sony and LG win out with huge sales compared to store brands and lesser known brands like Trutech and Insignia. But discount retailers can drive greater profit margins with house brands especially in this times when consumers are ripe for bargain shopping. With some stores giving the off brands prime shelf space previously reserved for name brand products, perennial popular brands like Sony and LG may lose some market share.

A coworker admitted being tempted to buy a house brand TV while out Christmas shopping at a big box store just because it was so inexpensive. She resisted the urge because there wasn’t a need for a new TV in her home, but retailers are fostering similar interest from lots of consumers, and DTC expects that everyone won’t exercise the same discipline.

EchoStar Turns to Latin America for New Growth

Mon, 8 Dec 2008 10:58:33 -0600

Monday December 8, 2008 - Antonette Goroch

EchoStar’s recent announcement that it is forming a joint venture with MVS Comunicaciones, one of the largest media/telecom companies in Mexico, reflects both a maturing of the U.S. market for digital TV and the prospect of renewed growth in the Latin America market. The move, which involves the use of EchoStar’s 77° W orbital slot to offer a digital TV package into Mexico, DISH Mexico, is telling on several levels.

DISH Network (EchoStar’s DTH programming arm) has seen subscriber growth slow dramatically in the last year, driven by both saturation in the U.S. market overall and heated competition from both digital cable and IPTV. While EchoStar has been able to maintain revenues, through growth in ARPU for both subscription services and equipment from HD, its set-top box (STB) shipments and subscribers declined in 2008.

To combat these cyclical turns, DISH Network has sought to diversify its revenue base, seeking to increase STB sales through other channels, through new technology (all AVC STB, Sling Media acquisition), and new markets--even reaching out to U.S. cable operators, their one staunch rivals—to supply next generation STBs.

The MVS deal is driven by this same impulse to expand markets, and, interestingly, makes use of an orbital slot which EchoStar had originally petitioned the FCC to use for U.S. local-into-local and HD broadcasts. The alliance will give EchoStar a firm foothold in an area where the incumbent DTH provider, Sky Mexico (controlled by DirecTV after a merger with the News Corp entity four years ago), has operated with little competition from cable providers and has seen a recent uptick in subscription growth during the last year. MVS, which currently serves some 570,000 analog cable subscribers (which will be targeted for marketing the new service), will be a strong partner to EchoStar and will likely give DirecTV a run for its money.

For EchoStar, the benefits are clear. It will certainly gain a new foothold for its STB shipments and subscriber revenues in a far less competitive market. This will no doubt buffer the heavier competition and market saturation in the U.S. market, and help reinvigorate its bottom line.

Will Internet TV’s Rising Tide Raise All Boats?

Mon, 24 Nov 2008 16:03:09 -0600

Monday November 24, 2008 - Antonette Goroch

New media technologies always bring with them the specter of cannibalizing existing markets for existing players. Certainly this was the case with the introduction of the DVD, and television before that. The more recent rising tide of Internet TV is no exception to this rule.

In the case of Internet TV, the specific reasons for this fear, of course, are multifaceted, ranging from content protection to the disruption of existing content distribution chains, but the core issue is the same: new technology holds opportunity, but core assets must be protected.

For years this fear has led to reticence among mainstream content providers in really embracing the potential of Internet video distribution. But, as we’ve discussed in this space before, there has been a sea change in this trend during 2008, with a variety of basic cable network, broadcast network and major studio movie content now available through multiple sources on the Internet, whether free/ad supported (Hulu, Joost), pay-per-view (Amazon.com), or pay per download (iTunes).

Not surprisingly, with this expansion of content availability, Internet video usage has grown significantly. A recent IBM survey of 2,800 consumers in six countries, conducted online in the third quarter, found that 76% of people have watched Internet video in 2008 compared with just 60% in 2007.

Has this diminished traditional TV viewing? The major broadcast networks say it has not, citing TV viewing across demographics as being up 8% since 2000. NBC recently stated it had record viewership of 214 million during the 2008 Olympics, even with 3,000 hours of video available online. While still too early to say, it appears that Internet video will likely serve to grow the total viewing audience across platforms, rather than cannibalize existing ones—as was the case with both the DVD and the TV.

Still, its effect on the overall market is likely to be a dramatic one in certain key respects. Branding will become increasingly important as viewers seek familiar content across platforms. The ability to time shift with more on-demand availability is also likely to continue to increase in importance as viewers become more accustomed to a personal level of control. Ultimately, it will be the ability to adapt to these changing tides, not prevent them, which will prevent cannibalization.

Mobile DTV Coming

Mon, 24 Nov 2008 16:02:43 -0600

Monday November 17, 2008 – Stewart Wolpin

Details are beginning to emerge on the upcoming Advanced Television Systems Committee-Mobile/Handheld (ATSC-M/H) standard, AKA mobile DTV.

Once implemented, ATSC-M/H will enable consumers to receive local digital TV broadcasts on a variety of devices via either a built-in tuner or an add-on tuner dongle.

ATSC-M/H , based primarily on technologies from LG and Samsung, is currently in the "Candidate" Standard period and is being voted on by ATSC members. The balloting closes Nov. 25 and the standard is expected to pass, which opens the door for immediate product development.

Even though it has not been ratified yet, the broadcasters are already performing field testing. And equipment suppliers are already developing receivers and infrastructure equipment. The accelerated time table is designed to get mobile broadcast on the air as early as possible in 2009.

Expect to see product prototypes at CES, products which could include the first cellphones and Portable Media Devices (PMP) with built-in ATSC-M/H reception capabilities, USB dongles to enable laptops to be used as TVs, or even standalone handheld mobile DTVs.

The Uncertain Future of FireWire

Mon, 10 Nov 2008 15:12:37 -0600

Monday November 11, 2008 - Antonette Goroch

Hollywood holds the power when it comes to the future of FireWire. But is this fast transport technology too fast for movie studios afraid of piracy?

FireWire is technologically superior for moving video when compared to other available options such as USB or HDMI. Unlike the bulky, uncompressed video of HDMI, FireWire compresses the video, making it far more versatile and fast in its transport. Unlike USB, which is tethered to the computer or host in its use, FireWire allows device independence and does not require a computer to “control” the interaction between devices.

One might think these attributes would make FireWire a favorite of CE companies, but Hollywood’s cool reception and higher chip costs have resulted in a dwindling use of FireWire in TVs and other CE products. Because of this, USB and HDMI have become ubiquitous in digital video products across the spectrum of HDTVs to set-top boxes, computers and peripherals, while FireWire has remained confined to a niche of high-end professionals/prosumers who work with video.

The one exception to this is in the U.S. digital cable market, which carries an FCC mandate that FireWire (and HDMI) be included in all HD STBs. While all other deployments of FireWire in digital STBs have been halted, the U.S. market has been quietly amassing a rather large installed base of FireWire STBs. Indeed, between the FCC requirement and the aggressive promoting of HD by cable operators, DTC estimates than nearly half of the digital cable installed base currently has at least one HD FireWire STB. Despite this, FireWire remains largely unused in the majority of these households, except by enthusiasts willing to seek out the needed drivers to make it work (somewhat ironically, the most likely group to engage in piracy).

The looming question is whether or not cable MSOs in the U.S. will begin to seek out ways to eliminate the 1394 requirement with the FCC. After all, why should they include the extra cost if it is unused? To date, they have not shown an interest in pursuing that, but it remains an open question for the longer term.

In the meantime there are still those that would like to see Hollywood’s fears assuaged and the potential of FireWire in the home video context realized. The most likely scenario is through the High-Definition Audio-Video Network Alliance (HANA). The association, formed in late 2005, showed promise during 2007 with members such as Samsung, Cablevision, Charter, JVC, Mitsubishi, NBC Universal, Sun Microsystems, Texas Instruments and Warner Bros. throwing their support behind the HANA effort. Despite these efforts, no actual products have shipped commercially to date. A new reference design unveiled in August, which more tightly integrates Internet content delivery within the coax environment, could breathe in new life. A cornerstone of the new design is ASCCT, a copy protection technology from IBM, which allows security and managed copying among both new and legacy HD products.

One thing is certain, though FireWire’s attributes are clear, the ultimate success or failure of FireWire in the home video context will ultimately rest with Hollywood’s approval. If this occurs, the U.S. cable market may provide a model for interoperable, networked HD home video products in growing markets worldwide.

Is There Life Left in the Video Optical Disc Recorder Market?

Mon, 3 Nov 2008 10:29:22 -0600

Monday November 3, 2008 – Stewart Wolpin

When DVD was first introduced a little more than a decade ago, it was assumed that recordable DVD, when it dropped in price sufficiently, would replace the VCR.

But a funny thing happened on the way to DVD recording price viability – well, actually, a couple of things. The DVD recording format was beset by a recording format war (remember "plus" v. "dash"?) which was followed by the introduction of the DVR, both events occurring around the turn of the century (the 21st).

By the time the DVD-R format war was over and DVD-R hardware prices had dipped to popular price points, the DVR, had effectively replaced the VCR. After a couple of years of robust sales, sales of DVD recorders have steadily declined the last couple of years. In 2007, sales of DVD recorders represented 9% of all non-PC DVD hardware sales, dropping to an estimated 7% this year and an estimated 6% in 2009.

Source: Digital Tech Consulting

Most of these sales are in the DVD-R-mad Japanese market. Only a half dozen companies even stock multiple DVD-r SKUs – Panasonic, Toshiba, Sony and Philips.

Blu-ray seemed at first to follow the same path as DVD as far as recording is concerned. The introduction of play-only BD players immediately sparked speculation of the introduction of BD recorders. But with the U.S. market buying into DVRs, manufacturers have felt no compunction to bring Blu-ray recorders to market anywhere but in Japan, Australia and other limited Pacific Rim markets.

Until now. At CEATEC in Japan last month, Panasonic, Pioneer and Sony each announced enhanced Blu-ray recorder models, most with 1394 connections for transfer of MiniDV footage, or at least that's what we assume.

While Sony's six models are intended only for the Japanese market, Pioneer and Panasonic have both announced their intentions to market Blu-ray recorders in Europe sometime this year in limited markets; Panasonic's deck is targeted only for France, for instance. There also are reports that Panasonic will be the first to sell a Blu-ray recorder in the U.S. in the first half of next year.

How will BD-R decks be received outside of their current comfortable Pacific Rim markets? Probably not enthusiastically.

Obviously DVRs already occupy the place of VCRs for both standard and high-definition recording. Many high-end PCs include BD recording capabilities to fulfill video editing needs. While BD-R deck prices have dropped to less than $1,000US (a Sharp model is selling for $899US, but most of the new models will be priced much higher) sales are likely to be low. A new Panasonic BD-R deck currently sells in Australia for $2,299AUS. The worsening worldwide economy and the precipitous drop in the U.S. dollar won't help matters, either, especially in the U.S.

Blu-ray recorders will likely generate some initial excitement if and when they arrive in Europe and the U.S., but they likely will occupy only a niche market.

Convergence and the Personal Media Player

Tue, 28 Oct 2008 16:36:58 -0500

Tuesday October 28, 2008 - Shelby Cunningham

Everywhere you look someone is trying to cram more functions into a single device. From cell phones that moonlight as music players, to video game systems that playback high definition video, all the way to refrigerators with built in televisions and internet access, convergence is all around us. The reasons and benefits coming from convergence are obvious, but will all consumers buy into this obvious and efficient trend?

Apple introduced an MP3 player that also played video to the masses in late 2005, and since then sales of Personal Media Players (PMPs) have exploded. And now the PMPs have morphed with the mobile phone. Despite the popularity of the iPhone and other Swiss Army knife-like devices, the stand-alone PMP market is still quite strong. In fact it is rapidly taking over the audio-only player.

The PMP market will continue to grow over the next four years, going from 60 million in 2007, to 107 million in 2011. Video capable PMPs will become increasingly more common as the cost to add the capability to PMPs goes down and consumer demand goes up.

Source: Digital Tech Consulting

It’s going to take a lot more than just the availability of these devices for convergence to fully take over. Yes, I am aware that my iPhone doubles as an organizer and an iPod, but I haven’t loaded a single song or video onto it. Why is that? It could be because my dedicated iPod is still in good working condition, or maybe I’m afraid of losing everything at once if the device fails, or just don’t yet think of my phone as a place to listen to music and watch movies.

For the next few years people are going to continue to carry multiple devices around when they could carry one fully converged device despite the convenience and efficiency. It could be that consumers will replace dead iPods with a multifunction device rather than another basic MP3 player. People have already begun to use their PlayStations as home entertainment centers, so it’s not as if they don’t get the two-in-one concept. Consumers will eventually get used to having one handheld device rather than two or three, but for now the PMP market has nothing to worry about.

Over the top with mobile broadband

Mon, 20 Oct 2008 16:39:55 -0500

Monday October 20, 2008 - Antonette Goroch

As mobile carriers compete for bigger and better content offerings, is it the big companies or the consumers who benefit in the end?

With some 3 billion worldwide users, the mobile content delivery platform is coveted territory. To date, service providers have been strict gatekeepers with their subscribers, reaping the huge profits from an array of ringtones, screen savers and games. The next frontier, of course, is video content, and already there are a growing variety of mobisodes, TV episodes and even movies available from virtually all carriers. With the advent of mobile broadband the next frontier could be far more complicated.

The idea of “over the top” content delivery (bypassing the service provider network) has been simmering in the world of pay TV for some time, as operators seek to balance the advantage of offering broadband data services with the possibility that users could begin to use that connection to get content competitive to regular pay TV packages. Mobile operators are now doing a similar balancing act, seeking to make use of 3G and 4G network infrastructures for attractive mobile broadband access while trying to make the most out of direct content sales. Some providers, such as Sprint, have embraced the idea of “open access”, using the availability of third party Internet content as a selling point, while others, such as Verizon, have limited access to mobile broadband and seek to beef up their own walled garden of content.

The momentum is unmistakable, though. Mobile broadband users grew from just 11 million last year to more than 50 million in 2008 and are growing at about 4 million users per month, according to the mobile industry trade group, the GSM Association. Regardless of how operators choose to slice the pie, DTC believes that the big winners in this equation will be consumers, who will have access to far more content than any walled garden could ever provide.

Can’t we just download at home?

Mon, 13 Oct 2008 09:53:57 -0500

Monday October 13, 2008 – Stewart Wolpin

Toshiba will not be joining the Blu-ray camp any time soon. Considering how much high-def content is now being downloaded, streamed and available via broadcast, this is probably not a bad strategic decision.

While Blu-ray remains the hottest and highest-quality movie playback system, DTC estimates that the non-PC Blu-ray devices will only account for around 12% of the total video optical disc devices market by 2010.

Instead, the former HD DVD hawker is investing, along with MOD Systems and NCR , in a new HD download/streaming system to take advantage of this content download trend.

It may not be the technology, but the logistics of this new system that raises questions about the strategic soundness of Toshiba's new non-HD DVD, non-Blu-ray direction.

MOD Systems and NCR are developing retail kiosks to enable consumers to download and transfer video content to a variety of portable devices compatible with Windows Media DRM and native SD security (i.e. not iPods or iPhones) and/or to SD memory cards. The theory? Philips executives say that they believe that SD slots will be pervasive in all consumer electronics devices.

MOD Systems is currently in discussions with all major studios for video content. Pilot systems will go into operation later this year and the full launch is scheduled for Spring 2009. MOD Systems' goal is to deliver content to the consumer within three to five minutes.

Initially, content will be available only in standard definition, but the service may also be applied to downloads of high definition content in the future, Content will be encoded with Windows Media DRM and native SD security.

Early next year, Toshiba will unveil a new set-top box to play back these store-burned SD cards.

We have a lot of questions. First is cost. A consumer will likely need at least a 1 GB card to store most of these compressed high-definition movies, probably 2 GB. The cost of a 1 or 2 GB card combined with the cost of the content could cost around the same as a Blu-ray disc. That's without knowing the comparative quality, availability of content extras, playback on other non-Toshiba compatible devices, and DRM issues

But the biggest fly in this digital ointment is the "go to the store" part.

The appeal of downloading content rather than purchasing a pre-packaged standard definition DVD or Blu-ray is the convenience of acquiring high-definition content without leaving home.

Admittedly, this is a gut-reaction to a single thin-on-details press release and other equally-deficient news reports. We'd like to see a bit of the blanks filled in. But we can only hope Toshiba at least includes a download-at-home component to this SD scheme.

Content Providers Fuel Internet Growth

Mon, 6 Oct 2008 09:31:27 -0500

Monday October 6, 2008 – Antonette Goroch

After scatter shot and mostly token efforts to make their content available over the web, mainstream TV and movie programmers are finally taking the Internet seriously. The Internet won’t displace DVD and pay TV as a primary distribution channel, but most traditional content providers now recognize that the Internet will someday be a big dog on the content-distribution block.

The 2009 fall TV season marks a turning point for Internet video with a record number of new/first run movie and TV titles available, and additional ways to purchase and view content. This will go far in breaking down select barriers standing in the way of commercial success for Internet video content.

Last year, the Apple iTunes store dominated the pay-per-download movie market with nearly 70% marketshare, and was virtually alone in offering TV episodes from basic cable networks, accounting for some 90% of video downloads. This year Apple has beefed up its movies and cable network TV show library and now includes rentals. Apple is joined by the Amazon VOD store, which offers a library of first-run TV and movies for purchase or rental. Meanwhile, companies like Hulu and Joost, as well as TV networks, are offering a variety of free, ad-supported TV episodes and clips. Content providers are releasing the same libraries across these outlets, timing these releases with other pipelines (such as broadcast or pay TV). In essence, they are now conceding that the Internet is a viable incremental distribution channel instead of just a threat to their existing business.

The “net conversion” isn’t complete, however. Most web offerings fall under the “walled garden” business model and a lot of content is confined to the PC. But the shift is clear. Many mainstream content providers now have coherent strategies for Internet distribution that include high-quality content both in terms of video quality and production values. This is certain to drive usage and help make the business case for commercial video over the Internet, which will be key in compelling content providers to further loosen the reins on their online offerings.

Android G1 - What will it mean for mobile video?

Tue, 30 Sep 2008 10:55:15 -0500

Tuesday September 30, 2008 – Stewart Wolpin

Even though the first Google Android phone has been unveiled – the T-Mobile G1 – there are still many questions about both its initial and its ultimate functionality and capabilities.

After a brief exploration of Android, there seems to be a lot of function and capability missing. But the theory is developers will write programs addressing any consumer needs or desires and the Android operating system itself can be upgraded.

All of this speculation is premature, however. There's still a month to go before the G1 is actually available (October 22) and the Google Android Market application download store opens.

But what can we project about how Android will affect the video download and streaming market?

In the short term, it will have little affect. First, the G1 is merely the first Android-powered device. There certainly will be more, including some non-mobile phone devices. An Android-enabled cell phone is due out from Sprint early next year, but there haven’t been any announcements. And while Verizon has aligned itself with LiMo, the Linux open source mobile OS, and AT&T has the iPhone, nothing stops either carrier from adding an Android phone to their portfolio in the future. Critical mass will be, well, critical, for Android to have an impact on the video download or streaming market. Second, Google has partnered with Amazon for music and video purchases. It makes sense, therefore, that Amazon has already confirmed an Android mobile music and video store.

It'd be better for their partnership and Amazon's aim to compete with iTunes, if the Amazon video player were part of the Android operating system rather than a separate application, but it's way too early to speculate on how this will, excuse the pun, play out. Developers also are likely to build CinemaNow and Netflix player apps, or apps to play back QuickTime, and DivX files, but who knows when – or if – that'll happen.

What we can project is that Android's ability to impact Apple's hegemony over the downloadable movie marketplace is hampered by the G1's carrier.

T-Mobile, with around 30 million subscribers, is the smallest of the four major cellphone carriers. AT&T, the largest, has around 65 million subscribers. So not only does iPhone have a 10 million unit installed base head start on the G1, the iPhone's potential sales base is more than twice as big, at least in the U.S., as the G1.

Also, T-Mobile just launched its 3G HSDPA service in the U.S. 3G is an absolute necessity for downloading large video files over-the-air to an Android device. Right now, T-Mobile has 16 3G markets active, and plans to have 22 when the G1 launches and 27 by mid-November. That's fine, but AT&T has more than 300 3G markets, and likely 350 markets by the end of the year.

Downloading movies to your desktop for transfer to the G1 may not work, either. Even if the G1 included the correct DRM technology, there is no Android desktop syncing program a la iTunes to ease content transfer.

Of course, someone – even Google – may build an Android desktop syncing application, along with all the other necessary video decoders for playing back the wide variety of video content available.

The nature of Android itself – a completely open operating system – could cause a seismic shift in the portable media player and downloadable video marketplace. In two or three years, Apple and iTunes may be fringe providers, overwhelmed by a flood of Android-powered devices and the availability of myriad downloadable video streaming or player apps.

But we're getting ahead of ourselves. At the moment, Android provokes more speculation than actual business. Steve Jobs can sleep soundly, at least for a little while.

Checking on DTT in South America

Tue, 23 Sep 2008 16:03:44 -0500

Tuesday September 23, 2008

South America is off to a slow start in getting digital terrestrial TV (DTT) off the ground. Multiple transmission standards are being chosen and receiver costs are high in a region where price sensitivity is a primary factor. Brazil is the first country to finally begin the process, and it chose a slightly modified version of Japan’s ISDB-T standard. To date, no other South American country has chosen this standard, which calls into question how much cohesion can exist in the region.

Last week Colombia announced that they have chosen the European-centric DVB-T as its standard, with the hope that other countries would go that route as well.

To date, set-top receivers in Brazil carry price tags up to $800 a box. But that barrier is set to be cleared as suppliers say they are readying affordable set-top boxes for shipment in late 2008. As prices drop, shipments of DTT set-top boxes to Brazil will increase about 77% between 2008 and 2009.

Source: Digital Tech Consulting

Will smaller undecided countries follow Brazil or Colombia as they evaluate transmission standards? Or, will they follow their Northern neighbors, Mexico and U.S., and consider the ATSC standard? Many countries are in the undeclared camp. Right now it looks like South America could be left with a mixed bag of standards.

Content Explodes on the Mobile

Mon, 15 Sep 2008 11:52:04 -0500

Monday September 15, 2008 – Antonette Goroch

The spotlight is now on mobile content after the initial buzz of network capacity and devices. The next focus should be on getting the business model right.

This was evident at the CTIA wireless show in San Francisco this week, with an array of announcements and initiatives for the U.S. mobile market focusing on more video content, more open mobile networks able to draw on the ever increasing wealth of web content, and more tools for personalization/social networking facilitating user generated content.

Verizon, for instance, had no new handsets to announce, but rather focused on the new video channels it was adding to its V Cast service, including new on demand access to shows like The Office, CSI, and The Hills. AT&T, meanwhile, announced a new “my communities” feature which allows users to access and manage all their social networking, such as Facebook and MySpace, through a single mobile access point. Add to this a variety of new tools and browsers for third party developers of all sizes to create content accessible across all mobile platforms, and you have a content explosion waiting to happen. You can see why this is just the beginning of the content revolution on the mobile device.

The quest for the right business models is still incomplete. Operators have experimented with pay video content services in the U.S., but uptake has been modest due to high prices and relatively little content up to this point. DTC estimates that there are only 6-7 million pay mobile video subs in the U.S. currently. The mobile video experience abroad suggests that free, ad supported models are the ones which can really drive penetration, but the volume of U.S. mobile video users has not yet been large enough to really stimulate advertiser interest in the medium here.

Source: Digital Tech Consulting

This could all change over the course of the next year, however, as this plethora of new content and tools is bound to drive consumer interest and video usage overall. The real challenge is monetizing it into a sustainable business.

Wilmington: The Transition Guinea Pig

Tue, 9 Sep 2008 16:41:08 -0500

Today DTC brings you the third and final part of the DTV Transition series:

Monday September 8, 2008 – Stewart Wolpin

If you want a clue as to how the digital transition could go next February, tune into Wilmington, NC this week.

Earlier this year, Wilmington's local TV stations volunteered to be the analog TV cutoff guinea pigs. On September 8, the analog turnoff becomes real and permanent in Wilmington.

Whatever the early transition brings in Wilmington, however, it will not be representative of what will happen in the rest of the country five months from now due to the fact that every area will bring its own unique conditions and challenges.

For one thing, only an estimated seven percent of Wilmington's population – around 10,000-15,000 homes – gets its TV signals exclusively over-the-air (OTA), although there is likely a good number of pay TV households that use an OTA TV set, as well. For another, Wilmington's local TV stations, the FCC and the NAB have all been running a publicity full-court press – shopping mall kiosks, and outreach through churches, local service clubs, senior citizen centers, and TV PSAs – to make sure every resident is prepared for the shut off.

Because Wilmington’s terrain is flat, the level of reception success residents may experience won’t necessarily be repeated in communities with hilly terrain. Hilly, mountainous and wooded areas will likely present more barriers for residents receiving all TV stations available in the area.

It’s been well documented that reception gaps will likely exist. Earlier this year the FCC initiated field tests to determine where these reception gaps may exist. The NBC affiliate in Wilmington, for instance, had to change its transmission site to a taller tower southwest of the city to ensure optimal digital coverage.

In an effort to further ease the shock of transition, the FCC has targeted 80 markets with more than 100,000 OTA households for the kind of saturated marketing effort used in Wilmington to discover and repair potential consumer knowledge and digital reception gaps before the February turnoff.

Whether or not the combined efforts of all concerned to make sure no one loses their TV signal on February 18 is successful is, of course, the $64,000 question.

Will DISH Network Drive a New Spike in AVC STB Shipments?

Tue, 2 Sep 2008 10:37:46 -0500

Tuesday, September 2, 2008 - Antonette Goroch

That H.264/AVC would be the next generation codec to MPEG-2 for commercial digital video applications has been evident for some time. The pace at which that transition would occur has been far less obvious, given MPEG-2’s widespread digital legacy. The recent announcement by Dish Network, the second largest DTH operator worldwide, that it would adopt H.264/AVC for all of its broadcasts—both SD and HD, not just HD as most other operators do—may have just sped up that timetable considerably.

Dish Network, along with DirecTV (the largest U.S. DTH operator), led the way in H.264/AVC deployment back in 2005, as the two were the first DTH operators to adopt the standard for HDTV deployment. Within two years DTH AVC set-top box (STB) shipments had reached nearly 5 million annually, and AVC is now the standard for DTH HD deployments worldwide. DTC’s most recent forecasts expect nearly 10 million shipments for the category in 2008. But, as DISH spreads the use of AVC throughout its subscriber base, hastening the end of its MPEG-2 legacy, AVC STB shipments could see even stronger growth overall -- particularly if this trend is picked up by other operators such as DirecTV or BSkyB.

The reasons for DISH’s strategic shift are likely two fold. Fundamentally, AVC is all about bandwidth—and bandwidth is at a premium now more than ever. Maxed out multichannel markets find operators adding channels (particularly HD channels) to sweeten their offerings. Indeed, DISH says it will offer some 150 HD channels in this new advanced package to be offered first in 21 markets. But DISH Networks’ subscriber growth is also slowing, and this new phase of service offers ample opportunity to beef up STB shipments (down this year) at the recently spun-off EchoStar Corporation (DISH’s STB arm) by converting its roughly 14 million subscribers to these new advanced models.

These competitive realities are not unique to DISH Network, and are shared by multichannel operators overall. That’s why its all the more likely DISH’s moves embody a fundamental tipping point in the transition to H.264/AVC, which leaves a non-MPEG-2 market not so very far off.

Turn on, Tune in, Turn-off

Mon, 25 Aug 2008 10:01:03 -0500

Monday, August 25, 2008 - Stewart Wolpin

Last week DTC gave you some insight into why consumers who have heard the digital TV transition promises and purchased a digital converter box may be greatly disappointed once the hook up their new boxes. This week Stewart Wolpin delves into more problems being faced when the analog signals switch off.
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We are now six months from digital-TV-transition day. On February 17, 2009, when analog terrestrial television broadcasts cease, there will be millions of TVs that will go dark. There is an undercurrent of dread as industry and government players contemplate how big of an impact this will have on American households.

An analysis of the National Telecommunications and Information Administration (NTIA) coupon-redemption data and DTC’s estimates of ATSC digital-to-analog converter boxes shipped provides a glimpse of how many screens will go dark. And the news isn’t necessarily encouraging.

The NTIA recently announced that more than 23 million coupons had been requested as of mid August. Nice, but…

Nielsen, the TV ratings people, estimates there are 14 million over-the-air (OTA) households. This estimate doesn't take into account unconnected analog TVs in cable or satellite homes. Many unconnected homes have two or more analog TVs, and many connected homes have at least one unconnected analog TV. DTC estimates that there are about 38 million terrestrial analog TVs in use today.

Of those 23 million coupons, NTIA reports that 8.3 million have been redeemed to date. At that rate, the industry will be a long way from “converting” those 38 million analog TVs. Of course, there will be some analog TV sets replaced with integrated digital TVs, or analog sets used only with DVD players and videogame systems that won’t require a converter box. That will still likely leave millions of sets that aren’t ready for the transition.

Yes, NTIA is sure to turn up the effort to educate people on how to prepare for the February 17 cut-off day. But the job won’t be easy.

First, a large number of people don't even know there is a DTV transition to begin with, if they even understood what it meant. A couple of months ago, Best Buy ran a survey on the subject. Forty percent of those queried don't know the date of the turn-off and 54% don't know why it's happening. Count me in that latter group.

A few days later, CNN.com ran a similar admittedly unscientific poll. Of nearly 110,000 responses, 70% said they knew the date, but 22% said they didn’t, and 8% answered "what's digital transition?" That's 22% and 8% of people who own a computer and read a Web-based news site. How much of a chance do non-technical people have to know what's going on – or, more accurately, what's going off?

For instance, last weekend while in the checkout line in a big discount department store, I watched a shopper in front of me unloaded a no-name 13-inch analog TV from his shopping cart. It was bad enough that the poor guy didn’t know his new TV would go blank in six months, but it was even worse that the store still sold it to him.

Here’s the kicker. The more than 14 million unredeemed coupons are or soon will be, useless. They have to be used within 90 days, and you can't reorder.

Magical Results May Vary

Mon, 18 Aug 2008 10:26:52 -0500

Digital-to-Analog Converter Boxes: A Little Expectation Management May be in Order

Monday August 18, 2008 – Myra Moore
Some consumer ads regarding the DTV transition imply that digital-to-analog converter boxes will deliver a dramatically-improved TV viewing experience over that of receiving over-the-air analog signals. Fair enough if all reception conditions are near perfect, but like most things, perfection is seldom achieved.

Granted, my analog over-the-air reception with a pair of rabbit ears is pretty poor, but that’s no surprise. But if I had bought into the implied promises communicated through some of the DTV transition ads (http://www.youtube.com/watch?v=ovVWKFSr26o&feature=related), I would have been pretty disappointed in the converter box I hooked up to my analog TV a couple of weeks ago.

The message prominently highlighted in some of the spots is that digital equates to a better picture, better sound, and more channels. And it does, if you get strong, uninterrupted reception of all digital signals available in the area. But my analog TV, which is a secondary set stashed in the spare bedroom, and new converter box are hooked up to rabbit ears. Out of all the digital terrestrial channels available in the Dallas/Fort Worth area, only one came in clear and without frequent pixelation. The rest displayed more pixelation than clear picture or no signal at all. Some consumers will hook their converter boxes to an outdoor antenna and will likely get much better results than I did. But I’m betting that there will be plenty of people who will take the “easy” rabbit ear route that I did. Maybe they’ll get better results than I did, but it’s a crap shoot.

It wasn’t a big disappointment. My expectations were pretty low going in, but then I’ve followed the digital terrestrial TV business as a market analyst since its inception and knew about potential reception problems before hooking up the rabbit ears. But most people have no frame of reference or experience with digital terrestrial TV and don’t have any reason to take the messages of ”improved quality and more channels” at anything but face value.

It’s a foregone conclusion that some consumers will be frustrated and confused with the converter-box program. The temptation to paint the transition as a wholesale improvement over the existing system is hard to resist – it helps sell converter boxes and to convince over-the-air only households to prepare early. Maybe introducing some expectation-management messages into the transition process is a good idea. The inclusion of an asterisk to the message that the magic of digital will result in receiving more channels and great pictures* may be in order.

*Magical results may vary according to antenna type and reception conditions.

Will DivX Help Sony Take on Apple?

Tue, 12 Aug 2008 10:07:29 -0500

Monday, August 11, 2008 - Antonette Goroch

That no one has succeeded in challenging Apple’s dominance of the Internet video download market is both fact, and, to some prognosticators, prophecy. But DTC believes that Apple may face a credible challenger in Sony with the help of DivX.

Sony announced that it would allow its movie and television content to be distributed in the DivX format in January. Since then a steady stream of announcements from Sony and others suggest a broad, DivX-based ecosystem strategy, which could ultimately challenge Apple’s dominance for paid videos.

Indeed, over the past six months Sony has extended its original content agreement to include international releases, and made certification agreements across a range of product types, including the Playstation 3 and Blu-ray video optical disc. Add to this Sony’s new model of Blu-ray player, which also includes Internet access, and the picture becomes even more interesting.

Meanwhile, CinemaNow, one of the longest running Internet VOD sites with mainstream studio content, announced in late July that it will begin offering some (as yet unnamed) titles in the DivX format---undoubtedly Sony titles will follow by the end of the year. Certainly they will also be available through Sony’s own Sony Connect online properties to serve the Playstation platform.

Why might Sony succeed where others have failed? Because Apple’s digital entertainment ecosystem has seamlessly fostered growing mainstream commerce, but is still a closed network. Only Apple files will play in the Apple ecosystem. By aligning itself with DivX, Sony gains the benefit of a commercially secure platform (a la DivX’sOVS DRM) coupled with a thriving open platform that allows for a greater consumer base.

The potential of this sleeping giant is rather vast. DivX already boasts an installed base of over 100 million devices (predominately DVD players), which could easily double in short order if product suppliers other than those that make DVD players include DivX compatibility with mobile phones, and cameras. Indeed, DivX has spent the year announcing a swath of new DivX certified devices which include products for home networks (DivX Connected), mobile phones, Blu-ray players, as well as several promising chip level initiatives with Broadcom (set-top boxes) and AMD (mobile). Sony’s content will soon be available for purchase and playback by this entire “three-screen” installed base.

Additionally, there is already a great deal of DivX content on the Internet, meaning Sony won’t have to rely only on its own catalog to drive the platform overall. Stage6, DivX’s now defunct online clearinghouse, claimed some 17 million members before it was shutdown—and that was with no mainstream content. As a point of reference, DTC estimates Apple has about 16 million video customers.

If Sony can successfully tap the growing base of DivX devices, one thing is clear: the balance of power in the burgeoning Internet video market will have significantly shifted.

SAVE THE DIGITAL CAMERA!

Mon, 4 Aug 2008 12:16:52 -0500

Monday August 4, 2008 – Stewart Wolpin

Mobile phones are designed for communications. Digital cameras are designed for imaging. And yet, slowly but surely, the mobile phone seems to be replacing the digital camera as a primary, day to day picture-taking and video-recording device.

Camera phones outsell digital cameras around four-to-one. More than a billion camera/camcorder phones are likely to be sold worldwide in 2010. In comparison, DTC estimates that 119 million digital cameras will be sold this year. And folks holding up a mobile phone to snap a picture or capture candid video has become a common sight around the world.

DTC estimates that global digital camera sales will drop 5% in 2010 compared to 2009. By comparison, DTC expects global sales of mobile phones with digital imaging capabilities to rise significantly this year.

According to PMA, camera phones were present in 46% of U.S. households in 2007, up dramatically from 35% and 26% in the previous two years. In a recent survey, photo sharing site Flickr reported that nearly a quarter of shots uploaded to its site came from mobile phone cameras, and nearly 41 percent of users were uploading pictures taken by a mobile phone camera.

These trends are likely to continue. Mobile phone cameras have been vastly improving, moving from VGA to 1.3 megapixels (MP) to 2.0 MP. A growing number of phones now include 3.2 MP cameras, and a handful have 5 MP cameras. In the fall, Sony Ericsson will begin shipping the 8 MP Cyber-shot C905. Considering its imaging ergonomics, lens and advanced feature set, the C905 is more a digital camera with a built-in mobile phone than vice versa.

Mobile phones also add the convenience to send just-shot videos via messaging or email, or to upload them directly to video sharing sites such as YouTube, a feature only one or two digital cameras can match.

Is the standalone digital camera doomed?

Source: Digital Tech Consulting

AVC/H.264 to the rescue?

One way digital camera makers can battle this erosion is to offer higher-resolution video recording. Yet, DTC estimates only about 19% of current digital camera models include MPEG-4 Visual video recording capabilities, and at this writing only Casio offers models with AVC/H.264 HD video recording.

What's even more surprising, prominent digital camera makers Canon, Polaroid, HP, Panasonic and Pentax sell NO digital cameras with MPEG-4 Visual video recording. Instead, all offer Motion JPEG, which allows users to extract still frames.

Canon and Panasonic make and sell AVCHD camcorders, so are quite capable of adding HD video capture to its digital cameras. But the two companies are likely fearful of camcorder cannibalization if they added AVC/H.264 video recording to their digital cameras.

These no-AVC decisions run counter to consumer desires. According to a 2008 J.D. Power Digital Camera Usage and Satisfaction Study, 40%of users used their digital camera to record video, but 52% wanted the capability. Sixteen percent cited high-definition video recording as one of the five most important features that would influence their digital camera selection.

With this increased competition from sub-$100 flash camcorder mobile phones with video capture, digital camera makers have gotten the message. In September, two top 10 digital camera makers will add models with AVC/H.264 video capture.

DTC expects more digital camera manufacturers will add AVC/H.264 video capture as well as some kind of uploading abilities.

If not, standalone digital cameras could soon become as much of a technical dinosaur as the vinyl record turntable, audio cassette player and the VCR.

Who has the Top Selling Videogame Console?

Mon, 28 Jul 2008 17:24:18 -0500

July 28, 2008

The Nintendo Wii may be flying off the shelves, but without a video optical disc drive, can they survive? Since it is highly unlikely that the Wii will add a video optical disc drive in the current generation’s console, the Sony PlayStation 3 (PS3) and Microsoft Xbox 360 are left alone to create growth in the video optical disc portion of the console market. And video game console shipments should reach their peak this year.

Even though Microsoft made it onto the market first, the PS3 is poised to outsell the Xbox 360 this year. Price cuts, a Blu-ray victory, and a strong presence in the Asian market that Microsoft can’t seem to match give the PS3 a leg up. Also, the PlayStation 2 (PS2) is the best selling video game console in history, and Sony hopes owners will soon upgrade to PS3 once shipments of the PS2 cease.

It shouldn’t be too long before we start hearing about the next generation of these three consoles. It will be interesting to see if the Wii includes a video optical disc drive the next time around. But truthfully, Nintendo may not need to add an optical disc drive to keep ahead of the pack. The Wii is the only console that is a pure video game system without extra features, which is how Nintendo can keep its prices far below those of the competitors. The Sony and Microsoft are really pushing their media center capabilities lately, focusing on video downloads, HDTV, and Blu-ray capabilities. Those media options sound like a great selling point, but at those prices the Wii still leads the way with 50% of the estimated market share for 2009 shipments, and with no signs of slowing down.

So could it be that simplicity is the way to stay ahead?

New Horizons for DTH Satellite Expansion

Mon, 21 Jul 2008 09:57:45 -0500

Monday July 21, 2008 - Antonette Goroch

With the North American and European Direct-to-Home (DTH) satellite markets having reached a near saturation point, where and how will the DTH satellite market find growth in a highly competitive pay TV marketplace?

India is where the industry is finding growth. But the growth will be of a different variety than the industry has experienced in the past.

India is fertile ground. It has one of the largest populations in the world, which counts some 120 million TV households (HH). In addition, there are now five DTH satellite services, up from just two in 2006. These services, which include both free-to-air (FTA) and pay segments, offer an improvement in channel capacity and quality in comparison to existing analog cable or terrestrial services which blanket the region. DTH satellite set-top box (STB) prices are coming down as competition heats up. In fact, as of mid-2008 Dish TV is offering a free STB with new subscriptions, speeding up subscription acquisition. Further, new government regulations instituting interoperable conditional access technologies and STB standardization, have provided programmers with a greater means to further monetize FTA households, as well as contributed to dropping upfront costs.

Despite the initial success, the market players are still working their way through some road blocks. Operators are experimenting with business models that can tap into the region’s demand for high-quality digital TV, while sustaining profits. Tata Sky, for instance, India’s first fully operational country-wide DTH satellite system, saw strong growth in subscribers after its 2006 launch, reaching 1 million in less than a year. This growth has tapered off in recent months, however, as Tata Sky has sought to tweak its business model to favor more pay channels and less FTA. The competitive environment makes such moves difficult however, as market pressures force operators to subsidize hardware costs and keep prices low. It was this reality that led rival service, Dish TV, to see record operating losses, even as they were cutting installation charges for new subscribers along with handing out a free STB.

One good thing about being the newest satellite kid on the block is that India is ripe for new-service implementations by those who are the most innovative competitors. Bharti Airtel, a division of the larger Bharti Teletech, plans to launch an MPEG-4 AVC based DTH satellite system this year. It’s rumored the service will be incorporated with Bharti’s broadband infrastructure for an integrated Internet/DTH satellite service. Not only do these plans help shape the fledgling DTH satellite market in India, they may serve as future models for satellite services worldwide.

DVD-R: RIP

Tue, 15 Jul 2008 13:42:03 -0500

Monday July 14, 2008 - Stewart Wolpin

All the publicity surrounding the late battle between Blu-ray and HD DVD, along with the slow-and-steady rise of cable, satellite and IPTV box DVRs, has obscured the decline and near extinction of the non-PC DVD recorder. It seems only yesterday that DVD+R vs. DVD-R was the industry's most potentially volatile and damaging format war.

In its heyday just two years ago in 2006, there were 24.9 million non-PC DVD recorders sold worldwide, representing a substantial 15% of all non-PC DVD sales.

How times have changed. DTC estimates that non-PC DVD recorders now represent just 7% of all non-PC DVD sales, or 9.9 million units, further shrinking to 3% and 3.6 million units by 2013.

DVD recorders were available by themselves or in combination with hard disc drives or VHS decks. This latter combination, the easiest way of dubbing old VHS tapes to disc, are the popular configuration of DVD recorder still on sale. While Toshiba, Panasonic and Sony remain the primary booster of DVD recorders, few new decks are being introduced. Most of the fringe manufacturers who hoped to capitalize on a once promising product category have dropped out of the market completely.

The rise of the DVR has lead directly to the decrease in DVD recorder popularity. Just two years ago, less than 5 million STBs included a DVR, including 1.7 million non-DirecTV TiVo boxes, according to CEA. Currently there are still only 1.7 million TiVo-owned subscribers, but CEA projects nearly 16 million DVR STBs will be sold this year. CEA reports 25 percent of American homes have a DVR and The Carmel Group forecasts more than 50 percent of cable and satellite homes will include a DVR-equipped STB by 2010. DirecTV already reports 41 percent of its users have a DVR-equipped receiver.

This speedy DVR adoption stands in stark contrast to the rapid drop in DVD recorder sales.

DVR isn't the only culprit contributing to the demise of the non-PC recorder. Originally intended as a replacement for the VCR, a role obviously usurped by the DVR, the DVD recorder's primary usage evolved into a camcorder dubbing device. But the rise of DVD-based camcorders obviated the need for DVD dubbing.

In spite of decreased importance, there are pockets of DVD recorder popularity. For instance, Japan is DVD recorder crazy; DTC estimates that 40% percent of worldwide DVD device units – and the primary reasons Japanese manufacturers continue to make DVD recorders – are sold in Japan. Japan is so DVD recorder crazy, it is the only market in which Blu-ray recorders are sold. Pioneer announced on July 7 it would start selling a Blu-ray recorder in Japan by the fall. According to Fuji Chimera Research Institute, Blu-ray recorder demand in Japan is expected to increase 18 fold to 3.6 million units by 2012.

To paraphrase Monty Python, the non-PC DVD recorder may not be dead, but it was coughing up blood this morning.

Netflix's Roku Success: What does it mean for the STB?

Mon, 7 Jul 2008 10:20:44 -0500

Monday July 7, 2008 - Antonette Goroch

News that Netflix had sold out of their recently unveiled Roku set-top boxes (STBs), which allow users to stream movie content directly from Netflix to the TV via its “watch now” feature, in just three weeks has left many puzzled about what this means for the future of the STB and on-demand movie delivery. Rather than portending a future of more “Internet TV” devices that will compete with current set-top devices for consumer dollars and eyeballs, though, this is more likely evidence of the incremental evolutionary path of STBs which will come to include these technologies, and more, as content distribution becomes more fluid and multiplatform based.

The Netflix STB by Roku is not the first Internet STB to hit the market in recent years. AppleTV and Akimbo, among others, have failed to gain much traction though, due to high cost of the units, and a lack of overall content availability. Netflix/Roku have found success where others have failed because their model is cheap (only $99), easy to use (connects right to a users existing Internet connection—no PC necessary) and plugs into an existing ecosystem of content/users (Netflix’s user base of 8 million+ customers and more than 10,000 movie titles).

While these early returns are no doubt promising, they are more likely to offer a proof of delivery concept, and evidence of what consumers want in a service, rather than a new standalone product category. The argument that consumers don’t want a myriad of STBs each doing one thing littering their living rooms is a sound one. But already rumors abound that Microsoft is negotiating with Netflix to integrate the technology into the Xbox 360, which could be a boon for both companies, boosting Netflix’s user base and and enhancing the utility of the Xbox 360. Meanwhile, Netflix has also said it is in discussions with other consumer electronics manufacturers to integrate with DVD players and DVRs, and is seeking a broad-based ubiquity.

Netflix’s motivations in these moves are clear. The DVD by mail market is expected to peak over the next five years, and Netflix will need to leverage its subscriber base into new modes of content delivery if it is to survive. If it can use the Roku technology to adapt itself into a variety of existing STBs through partnerships, rather than just the current standalone model, it will be well positioned to both survive and thrive.

Camcorder Mess

Tue, 1 Jul 2008 13:13:55 -0500

Monday June 30, 2008 - Stewart Wolpin

The camcorder market is in a time of transition right now, and HDD and pocket flash models are winning out over their more expensive AVCHD beer-can sized alternatives. Because of falling prices however, rising capacity and a smaller sexy size for flash media, the market will quickly be dominated by this popular format.

Although DTC anticipates that flash will be the clear format winner by the end of our forecast period, the camcorder market is currently a mess. Considering all the recording formats (high def, standard def, VGA def) and media types (hard disk drive (HDD), DVD, MiniDV, imbedded flash, removable flash), and combinations thereof, there are nearly 24 different types of camcorders fighting for dwindling market share. Long gone are the days when consumers were limited to a choice between Hi8 and VHS-C.

DTC estimates that in 2008, the worldwide camcorder market will total about 18 million units, 4 percent more than 2007. However, this increase is due solely to sales of sub-$200 compact flash camcorders such as those made by Pure Digital; sales of so-called mainstream models from traditional market leaders Sony, Canon, JVC, Panasonic and Samsung have dropped almost 19 percent from about 14.8 million units in 2007 to a projected 12 million in 2008. And the sales situation doesn't figure to improve for the top makers as they drift increasingly toward higher-priced models; in 2009, DTC estimates worldwide sales are expected to increase another 4 percent, but sales from the top five will drop 6 percent.

Even with the low-priced flash insurgence, the leading camcorder media is HDD. But HDD's plurality isn't likely to hold, and the cost of low capacity blank media is depreciating the perceived value of DVD models. Last week, JVC became the fourth top 5 camcorder maker to announce a flash-based AVCHD model, leaving only Samsung of the top five camcorder makers resisting the AVCHD surge. While AVCHD models currently represent only 4 percent of all camcorders sold in 2007, the combined marketing efforts of Sony, Canon, Panasonic and JVC is likely to boost AVCHD's market share to 16 percent next year.

Flash memory also offers greater advantages to consumers. Flash-based camcorders, either with embedded flash, removable flash or both and regardless of video resolution, are smaller, lighter and sexier than their bulkier HDD counterparts. Consumers have already shown a desire for sub-$200 palm-sized flash-based camcorders from Sanyo, Aiptek and models made by or licensed from Pure Digital, which continue to eat into the market share of the traditional camcorder market leaders.

Finally, flash memory prices continue to drop like a cement-weighted stool pigeon in a murky river. At some point in the next two-to-three years, prices of high-def flash models from the top four makers will draw even with current HDD models.

Video Optical Discs: DVD vs Hi-Def

Tue, 24 Jun 2008 16:21:28 -0500

Electronic distribution may be the way of the future, but physical optical discs are still shipping at strong rates. About 5.5 billion pre-recorded video optical discs will ship in 2008. North America dominates both the DVD and Hi-def video optical disc markets, claiming about 47% of all video optical discs shipping in 2008.

Even after DVD discs hits saturation around 2009, the shipment numbers will far outweigh those of the other optical disc formats, such as Hi-def and UMD. Advanced Optical Disc (AOD) shipments will never achieve the mammoth numbers that DVD achieved in its heyday. As the chart shows, by the end of the forecast the two different optical disc types, DVD and AOD, barely get close to meeting up in the middle, with billions of disc shipments separating them.

Electronic distributors are making huge strides with content sales on the PC, but the content rarely leaves the PC itself. So until electronic content is more easily available on the television set, video optical discs still have the run of the household TV set.

Mobile TV in the U.S.

Mon, 16 Jun 2008 12:20:07 -0500

Monday June 16, 2008

Will Mobile TV finally give U.S. broadcasters some return on their digital TV investments?

Ten years hence the dawn of digital terrestrial TV and broadcasters still haven’t figured out how to profit from it. Enter mobile TV, and now broadcasters may see a way to capitalize on it, but will they succeed?

A smattering of U.S. mobile TV services has deployed, all of which require subscription fees and none of which are offered by incumbent over-the-air broadcasters. The number of subscribers appears to be modest at this point but it’s much too early in the market to keep strict score.

But DTC believes that terrestrial broadcasters who offer free, ad-supported content to mobile devices are in a position to finally get a return on the millions of dollars they’ve sunk into building the digital TV transmission infrastructure.

At least their brethren in Korea and Japan are finding a healthy viewership for their ad-supported mobile TV broadcasts. In fact, these free services are running rings around subscriber-based broadcast-based mobile TV offerings. Digital Tech Consulting estimates that 85% of worldwide mobile TV users get free, ad-supported signals. Apparently, people are so accustomed to ads being on the television that they don’t mind them appearing on their mobile device as well.

So far U.S. mobile-telephone service providers Verizon and ATT (both use the MediaFlo platform) have opted to employ the subscription business model for their over-the-air mobile TV channels. DTC estimates that there will be about 20 million subscribers to pay mobile TV services worldwide in 2008, increasing to more than 40 million by 2012. But considering that 20 million subscribers is only 15% of the overall population of mobile TV viewers, U.S. broadcasters may be wise to stick to their tried and true stationary TV business model of selling advertising for new mobile TV services.

Much of the success of mobile TV in other countries hinges on a large number of public-transport commuters. But America’s automobile society doesn’t foster a large public-transport commuter population and that could seriously limit the number of mobile TV users willing to add another subscription fee to their monthly budgets.

Cable Ops: The Dumb Pipe Dilemma

Mon, 9 Jun 2008 14:40:15 -0500

Monday June 9, 2008 - Antonette Goroch

When it comes to new media content delivery, are cable companies just providers of a “dumb broadband pipe”?

In their traditional roll of delivering TV programming, operators don’t just sell hook ups to the pipes; they sell the stuff that flows through the pipes. That doesn’t take away from the rewards of selling just the hook up to the Internet. For nearly 10 years cable operators have deftly taken advantage of selling high-speed Internet access (with the Internet’s free content) hooked up to their big pipes thus locking in one of the few rock-solid revenue streams -- plain old access. This revenue stream is now a staple for cable operators, bolstering revenues and subscribers, even in the face of significant competition from satellite operators.

But times have changed.

As the Internet becomes ever more entertainment-content rich, cable operators, as mere access providers, find themselves left outside of the magic revenue circle. For decades they’ve enjoyed the dual revenue streams of content tiers and advertising in their core TV business. Unembellished access service is a nice revenue stream but it can’t compare to the potential revenue from selling Internet content and advertising.

This is the dynamic surely at play in Time Warner Cable’s recent foray into metered Internet usage. In a market test, Time Warner Cable is placing a fixed level of usage for its broadband service with additional charges for overages. In this way, Time Warner Cable hopes to hone in on the “five percent of subscribers who use up half the capacity.” You know those pajama-clad peer-to-peer and Slingbox bandwidth pigs frequently parked in front of their computers.

The problem with this approach, and ultimately why it probably won’t succeed, is that this 5% are heavy users of content (whether it be free or paid). (Couch potatoes of the future perhaps?) By making its access product less attractive to those who consume more content, and in effect discouraging greater content consumption, Time Warner Cable puts itself in the position of alienating those very consumers who represent the future of on-line content and advertising revenues it would love to cash in on.

More importantly, as Internet entertainment content becomes ever more available, people will demand more bandwidth. Placing punitive limits on bandwidth will only make a cable operator’s access product less attractive in a highly competitive market. With telcos poised to nip at cable’s heels with a triple play package of their own, cable operators can’t afford to diminish what has become a fundamental part of their business.

Picture This

Mon, 2 Jun 2008 11:01:43 -0500

Monday June 2, 2008 - Stewart Wolpin

Every once in a while the tech world gets jolted by a simple, low-tech product that fulfills some latent desire. The compact audio cassette and the VCR are good examples.

This latest low tech surprise is the digital picture frame. They're more 19-inch TV drab than flat panel cool. Many are cobbled together mostly in China using spare, old or even used LCD panels, off-the-shelf components and user interface programming your 12-year-old could have written. Despite their lack of “it product” status, they are flying off the shelves.

DTC estimates that the total market for digital picture frames has more than doubled in each of the two years the frames have been available, expanding from about 11 million units worldwide in 2007 to an estimated 24 million units in 2008.

As with any new product, new brands have bobbed to the surface. The most prominent is Pandigital, which DTC estimates will be the top seller of digital picture frames in 2008.

But as the digital picture frame market develops, older, more well-known brands will jump to the fore. The most well-known brand in the photo field is, of course, Kodak, which DTC estimates has already moved into the number two slot.

Kodak's share is bound to grow thanks to the industry's first bit of sophisticated symbiosis. Earlier this month, Kodak started selling its frames with a free offer to pre-load up to 100 pictures a consumer has uploaded to his Kodak Gallery online photo storage account. This service eliminates the most vexing aspect of digital picture frame functionality, loading in pictures. This is especially critical since the products aren’t designed, or marketed, to appeal to tech enthusiasts.

As the digital picture frame market grows – DTC estimates that unit shipments will reach about 43 million by 2010 – competition will push frame makers to improve their products, add features such as video capabilities (now available on about 13 percent of models), and simplify the user experience.

We also expect the entrance of additional manufacturers into the category, especially other digital camera makers. Currently, Kodak is the only digital camera maker among the top 10 digital picture frame market share leaders. We also expect that once Kodak's picture frame/Kodak Gallery gambit pays off with increased market share, other frame makers will seek partnerships with unaligned online photo sites.

Digital picture frames may not be as fashionable as flat panel HDTVs, but they will soon be more ubiquitous.

Anyone Going to Make Money on D-to-A Converter Boxes?

Tue, 27 May 2008 10:40:00 -0500

Tuesday May 27, 2008

DTC’s analysis of converter-box costs paints a pretty grim picture for manufacturers and retailers hoping to make money selling converter boxes for the U.S. analog TV shut-off next year. Those selling the boxes at or near the government-issued coupon value of $40 will realize miniscule profit.

So, coupon in hand, we went to a Best Buy store last week to see if we could walk out with a box without having to open a wallet. Our buyer walked out empty handed because she didn’t want to spend the $59.99 Best Buy required for its box.

After a little digging, she found places to buy a converter box for around $43 discovering that even this early in the transition, consumers can buy for just a few dollars over the coupon amount.

So how much did it cost to make those $43 converter boxes? DTC’s analysis of general component and royalty costs points to a total bill of materials and royalties of about $28-$32 per box. These are estimated costs for the boxes’ major components and don’t include assembly, shipping and tariff costs. It also doesn’t account for any markup by manufacturers or retailers. About $18 is attributed to component costs with about $12 attributed to licensing fees.

DTC does believe that some participants will realize benefit despite the dismal profit picture. TV suppliers and retailers who can convince D-to-A converter box shoppers to upgrade to a $40-discounted digital TV instead of buying the box will likely make better margins on the TV sale. And, assuming that all the converter box makers play by the rules, the owners of the technology intellectual property that goes into the boxes should enjoy a nice spike in licensing revenue in 2008 and 2009.

The Price of Inaction in the Digital World: A Cautionary Tale

Mon, 19 May 2008 10:12:36 -0500

Monday Mary 19, 2008 - Antonette Goroch

What can the video industry learn from its music-industry cousin about digital distribution of its products? That inaction can result in irreparable damage.

Attendance at the National Association of Recorded Music’s (NARM) annual convention held last week brought together music-business participants who are still stumbling through the transition from traditional to new distribution of their products. The event, held in San Francisco, where the giant downtown Apple Store cast a long shadow over the gathering was a fitting illustration as to why the packaged music media business is in such dire straits, and how continued inaction can only bring more turmoil to the business. Indeed, Apple’s iTunes, which just surpassed Wal-mart as the largest retailer of recorded music, provided a fitting backdrop for the event, which this year included “Digital NARM”, a subset of the conference focused exclusively on digital distribution issues with representatives from companies like Napster, MySpace, Sandisk and Motorola.

While the context for this discussion was music, the issues are the same in the video world—how to preserve the core businesses, while embracing new distribution models and strategies. There were familiar debates--- How DRM can decrease or eliminate piracy while facilitating a valuable customer product and experience…What business models and price points work for both the customer and distribution value chain…What are the new modes of delivery for content via mobile and Internet…What are the roles of social networks and Web communities in content sales…

But the music industry (like the video industry) still seems stuck in these debates, with very little resolve, as the large players focus on experimentation rather than full scale implementations of digital distribution strategies. The price of such inaction is clear, and serves as a cautionary tale for the video entertainment industry---continued declines in CD sales and billions of songs downloaded for free over peer-to-peer networks by a new generation of consumers, even as legal digital distribution sales reach record levels.

The chart illustrates how electronic distribution of video will be a significant part of the video-entertainment landscape. Although pre-recorded DVD discs will continue to ship in the billions of units annually, there will be little or no growth in the DVD business, while iTunes video sales will experience significant growth. And Apple is not the only supplier, although it is currently the largest one.

Will Blu-ray ever be the next DVD? Read on to find out

Thu, 15 May 2008 15:30:54 -0500

Monday, May 12, 1008 - Stewart Wolpin

Now that Blu-ray has won the high-definition DVD war, the expectation was that sales would explode and that in a few years, Blu-ray decks would outsell even standard definition DVD.

However, not only haven't sales of Blu-ray decks substantially increased, but DTC does not expect Blu-ray to represent any more than a third of all DVD devices sold five years hence.

DTC estimates that in 2008, global non-PC Blu-ray deck sales will represent only 3 percent of all DVD devices sold. DTC believes this percentage will increase to only 31 percent by 2013.

There are several market-specific reasons why Blu-ray will not replace DVD. But historically, no mainstream media format has ever been replaced by a slightly improved compatible product. For instance, digital audio tape could not displace the compact cassette, S-VHS did not supplant VHS, and neither SACD nor DVD-Audio replaced the CD. Blu-ray presents no practical advantage over standard DVD such as added convenience or longer play, as was the case when vinyl records replaced wax, CD replaced vinyl and DVD itself replaced VHS.

Blu-ray's success on any level is predicated on two primary factors: HDTV ownership and price. Only owners of HDTVs are likely to even consider a Blu-ray purchase. Only those owners who can afford 50-inch and larger HDTVs are likely to be able to afford a Blu-ray deck.

It also is unlikely companies that market lower-end or portable DVD players will enter the higher-priced Blu-ray device market for many years. Without the price competition the presence of these brands often incite, Blu-ray prices will remain two-to-three times higher than standard DVD product.