Convergence and the Personal Media Player

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: DTC

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 Over the top with mobile broadband

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?

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

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.