Will Internet TV’s Rising Tide Raise All Boats?

Monday November 24, 2008 - Antonette Goroch

New media technologies always bring with them the specter of cannibalizing existing markets for existing players. Certainly this was the case with the introduction of the DVD, and television before that. The more recent rising tide of Internet TV is no exception to this rule.

In the case of Internet TV, the specific reasons for this fear, of course, are multifaceted, ranging from content protection to the disruption of existing content distribution chains, but the core issue is the same: new technology holds opportunity, but core assets must be protected.

For years this fear has led to reticence among mainstream content providers in really embracing the potential of Internet video distribution. But, as we’ve discussed in this space before, there has been a sea change in this trend during 2008, with a variety of basic cable network, broadcast network and major studio movie content now available through multiple sources on the Internet, whether free/ad supported (Hulu, Joost), pay-per-view (Amazon.com), or pay per download (iTunes).

Not surprisingly, with this expansion of content availability, Internet video usage has grown significantly. A recent IBM survey of 2,800 consumers in six countries, conducted online in the third quarter, found that 76% of people have watched Internet video in 2008 compared with just 60% in 2007.

Has this diminished traditional TV viewing? The major broadcast networks say it has not, citing TV viewing across demographics as being up 8% since 2000. NBC recently stated it had record viewership of 214 million during the 2008 Olympics, even with 3,000 hours of video available online. While still too early to say, it appears that Internet video will likely serve to grow the total viewing audience across platforms, rather than cannibalize existing ones—as was the case with both the DVD and the TV.

Still, its effect on the overall market is likely to be a dramatic one in certain key respects. Branding will become increasingly important as viewers seek familiar content across platforms. The ability to time shift with more on-demand availability is also likely to continue to increase in importance as viewers become more accustomed to a personal level of control. Ultimately, it will be the ability to adapt to these changing tides, not prevent them, which will prevent cannibalization.

Mobile DTV Coming

Monday November 17, 2008 – Stewart Wolpin

Details are beginning to emerge on the upcoming Advanced Television Systems Committee-Mobile/Handheld (ATSC-M/H) standard, AKA mobile DTV.

Once implemented, ATSC-M/H will enable consumers to receive local digital TV broadcasts on a variety of devices via either a built-in tuner or an add-on tuner dongle.

ATSC-M/H, based primarily on technologies from LG and Samsung, is currently in the "Candidate" Standard period and is being voted on by ATSC members. The balloting closes Nov. 25 and the standard is expected to pass, which opens the door for immediate product development.

Even though it has not been ratified yet, the broadcasters are already performing field testing. And equipment suppliers are already developing receivers and infrastructure equipment. The accelerated time table is designed to get mobile broadcast on the air as early as possible in 2009.

Expect to see product prototypes at CES, products which could include the first cellphones and Portable Media Devices (PMP) with built-in ATSC-M/H reception capabilities, USB dongles to enable laptops to be used as TVs, or even standalone handheld mobile DTVs.

The The Uncertain Future of FireWire

Monday November 11, 2008 - Antonette Goroch

Hollywood holds the power when it comes to the future of FireWire. But is this fast transport technology too fast for movie studios afraid of piracy?

FireWire is technologically superior for moving video when compared to other available options such as USB or HDMI. Unlike the bulky, uncompressed video of HDMI, FireWire compresses the video, making it far more versatile and fast in its transport. Unlike USB, which is tethered to the computer or host in its use, FireWire allows device independence and does not require a computer to “control” the interaction between devices.

One might think these attributes would make FireWire a favorite of CE companies, but Hollywood’s cool reception and higher chip costs have resulted in a dwindling use of FireWire in TVs and other CE products. Because of this, USB and HDMI have become ubiquitous in digital video products across the spectrum of HDTVs to set-top boxes, computers and peripherals, while FireWire has remained confined to a niche of high-end professionals/prosumers who work with video.

The one exception to this is in the U.S. digital cable market, which carries an FCC mandate that FireWire (and HDMI) be included in all HD STBs. While all other deployments of FireWire in digital STBs have been halted, the U.S. market has been quietly amassing a rather large installed base of FireWire STBs. Indeed, between the FCC requirement and the aggressive promoting of HD by cable operators, DTC estimates than nearly half of the digital cable installed base currently has at least one HD FireWire STB. Despite this, FireWire remains largely unused in the majority of these households, except by enthusiasts willing to seek out the needed drivers to make it work (somewhat ironically, the most likely group to engage in piracy).

The looming question is whether or not cable MSOs in the U.S. will begin to seek out ways to eliminate the 1394 requirement with the FCC. After all, why should they include the extra cost if it is unused? To date, they have not shown an interest in pursuing that, but it remains an open question for the longer term.

In the meantime there are still those that would like to see Hollywood’s fears assuaged and the potential of FireWire in the home video context realized. The most likely scenario is through the High-Definition Audio-Video Network Alliance (HANA). The association, formed in late 2005, showed promise during 2007 with members such as Samsung, Cablevision, Charter, JVC, Mitsubishi, NBC Universal, Sun Microsystems, Texas Instruments and Warner Bros. throwing their support behind the HANA effort. Despite these efforts, no actual products have shipped commercially to date. A new reference design unveiled in August, which more tightly integrates Internet content delivery within the coax environment, could breathe in new life. A cornerstone of the new design is ASCCT, a copy protection technology from IBM, which allows security and managed copying among both new and legacy HD products.

One thing is certain, though FireWire’s attributes are clear, the ultimate success or failure of FireWire in the home video context will ultimately rest with Hollywood’s approval. If this occurs, the U.S. cable market may provide a model for interoperable, networked HD home video products in growing markets worldwide.

Is There Life Left in the Video Optical Disc Recorder Market?

Monday November 3, 2008 – Stewart Wolpin

When DVD was first introduced a little more than a decade ago, it was assumed that recordable DVD, when it dropped in price sufficiently, would replace the VCR.

But a funny thing happened on the way to DVD recording price viability – well, actually, a couple of things. The DVD recording format was beset by a recording format war (remember "plus" v. "dash"?) which was followed by the introduction of the DVR, both events occurring around the turn of the century (the 21st).

By the time the DVD-R format war was over and DVD-R hardware prices had dipped to popular price points, the DVR, had effectively replaced the VCR. After a couple of years of robust sales, sales of DVD recorders have steadily declined the last couple of years. In 2007, sales of DVD recorders represented 9% of all non-PC DVD hardware sales, dropping to an estimated 7% this year and an estimated 6% in 2009.

Source: DTC

Most of these sales are in the DVD-R-mad Japanese market. Only a half dozen companies even stock multiple DVD-r SKUs – Panasonic, Toshiba, Sony and Philips.

Blu-ray seemed at first to follow the same path as DVD as far as recording is concerned. The introduction of play-only BD players immediately sparked speculation of the introduction of BD recorders. But with the U.S. market buying into DVRs, manufacturers have felt no compunction to bring Blu-ray recorders to market anywhere but in Japan, Australia and other limited Pacific Rim markets.

Until now. At CEATEC in Japan last month, Panasonic, Pioneer and Sony each announced enhanced Blu-ray recorder models, most with 1394 connections for transfer of MiniDV footage, or at least that's what we assume.

While Sony's six models are intended only for the Japanese market, Pioneer and Panasonic have both announced their intentions to market Blu-ray recorders in Europe sometime this year in limited markets; Panasonic's deck is targeted only for France, for instance. There also are reports that Panasonic will be the first to sell a Blu-ray recorder in the U.S. in the first half of next year.

How will BD-R decks be received outside of their current comfortable Pacific Rim markets? Probably not enthusiastically.

Obviously DVRs already occupy the place of VCRs for both standard and high-definition recording. Many high-end PCs include BD recording capabilities to fulfill video editing needs. While BD-R deck prices have dropped to less than $1,000US (a Sharp model is selling for $899US, but most of the new models will be priced much higher) sales are likely to be low. A new Panasonic BD-R deck currently sells in Australia for $2,299AUS. The worsening worldwide economy and the precipitous drop in the U.S. dollar won't help matters, either, especially in the U.S.

Blu-ray recorders will likely generate some initial excitement if and when they arrive in Europe and the U.S., but they likely will occupy only a niche market.