Who has the Top Selling Video Game Console?

Monday 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 videogame 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

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

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?

Monday July 07, 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.