Android G1 - What will it mean for mobile video?

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

Tuesday September 23, 2008

South Americais 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: DTC

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

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: DTC

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

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?

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.