Camcorder Mess

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

Tuesday June 24, 2008

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.

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 AT&T (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

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

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.