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

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.   

Bringing 3D TV Into the Home

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. 

Wireless HDMI: Bigger than 3D

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.

Is Cable’s Worst Nightmare About to Come True?

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.

On the 1^st day of Christmas…

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

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

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?

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.

Internet Connected DTVs: Steadily Climbing

Monday November 16, 2009 – Shelby Cunningham

Internet connected Digital TVs are making their first big splash in the TV market and DTC is forecasting a rapidly growing market in the Americas, Europe and Asia-Pacific markets.

How these TVs will be used by consumers isn’t entirely clear but they are marketed as a way to pull in Internet video content independent of any gated TV services. The result is a competitive threat to gated TV service providers. What is also unclear is how consumer would manage an ever-increasing growing and fragmented line up of programs.

We assume that the middleware and software whizzes will eventually help consumers from drowning in the sea of unmoored programming and those consumers will want the option to access select video-centric sites on their connected TVs. To that end, DTC estimates that more than 6 million connected IDTVs will ship into these three markets in 2009, tripling to about 18 million units shipped in 2010.  Although IDTVs only make up about 4% of total TV shipments in these regions at the moment, they quickly rise in numbers to 33% of all shipments in 2012. 

Source: Digital Tech Consulting

This fast growth can be attributed to price range and competition amongst suppliers.  Connected DTVs are in the upper price range of TVs, which were not so popular during this economic downturn.  Competition amongst top suppliers will pull IDTVs down into the popular mid-range pricing which will increase shipments, and consumers will start snatching them off the shelves in greater numbers in 2010. 

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

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?

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.