Will Disney Find Digital Distribution Revenues in its Keychest?

Monday October 26, 2009 – Antonette Goroch

Disney took the wraps off its Keychest initiative for online digital distribution last week, as the company seeks to temper the effects of the growing slump in DVD sales (down as much as 25% at some studios). While this particular initiative seems unlikely to achieve that outcome, the shift in thinking from device based content security to device independent content security is pretty radical from such a major media player, and bodes well for the future of digital distribution.

Disney’s technology, which it plans to formally unveil next month, enables a consumer to buy permanent access to a title so that it can be played back across multiple devices, such as TVs, PCs or mobile devices, with the content housed in central databases rather than a consumer’s hard drive. A user is issued a “key” which checks in with a central database of ownership rights. With the system, Disney hopes to address one of the biggest issues facing widespread online digital distribution which is the ability to playback content securely in multiple digital contexts.

The challenges facing broad adoption of the initiative will be many. At a very basic level, because of the nature of any connected device strategy, adoption has to occur among a huge range of companies and industries. It seems unlikely that enough of a broad base of adoption can occur among so many competing players with different interests—many of whom will likely be wary of Disney having such a large degree of control over what would be vast databases of content usage information.

Still, the shift in thinking on Disney’s part is significant, and may ultimately be a key factor in reclaiming those falling DVD revenues. For too long major studios have tried to lock down content to specific devices and platforms to keep them secure, limiting their utility in an increasingly connected media environment. If consumers can’t easily play their content on multiple devices, they may balk at buying in the first place. Successful digital delivery, and its monetization for the Hollywood aftermarket, must be predicated on usage rights being attached to content not devices. Disney’s shift is a positive step toward building coalitions among companies with varying agendas. But they all have one shared agenda – sell as much content as they can. That’s kind of hard to do if it’s all locked down.

Death Knell for FireWire in STBs?

Monday October 19, 2009 – Antonette Goroch

Back when the conventional wisdom was that lots of HDTVs would include speedy FireWire connections the consumer electronics and cable industries hammered out an agreement (that the FCC formalized) that all digital HD cable STBs for distribution in U.S. must have a FireWire connector.

Since FireWire, for a variety of reasons, lost the TV popularity contest to HDMI, the cable industry wants to permanently kick it out of its clubhouse. In what will certainly be only the first of several similar filings, Intel petitioned the FCC last week for a waiver of the 1394 (FireWire) requirement in its planned HD cable STB chip design. The FireWire rule was writ in 2005 and FireWire has failed to gain traction as a usable interface for transfer of signals from STB to TV or for in-home networking. HANA (HD Audio Video Network Association), the most significant home networking initiative to utilize FireWire, disbanded late last year, leaving the interface all but dead in the cable context. Shipments of 1394 cable STBs have held steady in the U.S., but in other parts of the world where cable players don’t have to make nice with the interface, FireWire for TVs pretty much evaporated by 2008.

With this backdrop, it’s no surprise that vendors and operators alike will begin to take action to eliminate the FireWire requirement in the U.S. in coming months. Its inclusion costs the manufacturer about $5 per unit, which Intel says in its filing makes a system-on-a-chip design cost prohibitive—especially for a little used interface. Texas Instruments has countered that this is a small percentage of the overall STB costs, but operators, eager to cut costs in any way possible, aren’t likely to agree. The FCC, meanwhile, has shown great willingness to offer similar waivers in recent months, such as the waivers regarding separable security granted over the summer. Should the waiver be granted, it’s likely FireWire will be out of cable STBs entirely by 2009.

AVC/H.264: Keeping Camcorders Alive

Monday October 12, 2009 – Shelby Cunningham

We’ve come a long way. I remember waiting for my parents to set up the Betamax camcorder on Christmas morning. We had to wait for hours as batteries recharged and lights were set up. And in the 80s no one could even imagine uploading their video onto a computer to share with the world. Today’s camcorders are small, quick, easy to use and high-def. And the video software is so simple a child can use it. Leading the charge for camcorders and desktop software are products that use the AVC/H.264 video compression standard. AVC offers greater efficiency than many other compression technologies and can deliver the high-def pictures consumers desire.

People can now take captured video, upload it, edit it, and send it out or post it on YouTube in no time at all. The consumer camcorder market is still on a path to converge with the digital still camera market, but AVC/H.264 camcorders are taking over and will keep the traditional camcorder market alive, and eventually take over almost entirely.

Both camcorders and AVC/H.264 capable desktop software will be experiencing growth over the next few years. To date, DTC estimates that about 55% of aftermarket desktop software is AVC/H.264 capable, and will take up almost the entire desktop software category within a few years. At the moment AVC/H.264 camcorders only take up on estimated 29% of the entire camcorder market, but the market share is quickly rising as DTC estimates that they will take up 65% of the market in 2011, and keep going up from there.

So even though the camcorder and desktop software markets as a whole may be dropping, AVC/H.264 camcorder and desktop software shipments are rising up to take over their categories, and the video capturing and editing communities as well.

Source: DTC

Smartphones: Helping Mobile TV?

Monday October 5, 2009 – Shelby Cunningham

Smartphones are responsible for giving consumers one of their video fixes these days. They’re not just for early adaptors or businesses anymore, but are now being toted around by teenagers, poor twenty-somethings and every other segment of the population. And now that smartphone shipments are seeing some growth, what new innovations will they bring to the table?

It wasn’t until the era of the iPhone, Android and Pre that handsets handled video the way people actually wanted to watch it on the small screen. This generation of smartphones brings a form factor that is very video application friendly. AVC video compression in handsets is very mainstream now. In 2009 about 105 million AVC handsets shipped worldwide, and that will increase to 173 million in 2010.

Source: DTC

As more and more consumers pick up these higher end smartphones, this will allow for further innovation and video services. Third parties have already embraced the platform, and the success they are seeing is encouraging for content owners and services. The mobile TV platform is poised to see growth in the near future as well, with the hopeful take-up of mobile TV and other streamed content. So pull out your smartphone and watch some video, because that’s where most of the innovation is, not on your television set.