ASOs in Emerging Markets –Boosting Up STB Growth

Monday June 27, 2011 – Jing Sui

Planning for analog TV shut-offs is well underway in many countries that are just beginning to turn on digital terrestrial TV transmissions. But it will be years before there is worldwide (or near worldwide) switch to digital terrestrial broadcasts, and two countries that will have a major impact on STB and TVs sales – India and China – have barely begun the transition from analog to digital terrestrial broadcasts. That’s why there’s still a lot of life left in the digital STB market.

DTT receivers –both STBs and TVs -- will log healthy growth in emerging markets throughout the decade. Now that parts of Western Europe and the United States have completed successful analog shut-offs, millions of households in Eastern Europe, Latin America and Asia/Pacific countries will soon add STBs or IDTVs to their homes. Thanks to these analog shut-offs, DTC expects to see about 41.7 million digital terrestrial STBs ship in 2016.

Although there is a high penetration of pay TV in the most developed nations, there is a significant dependence on free over-the-air (OTA) broadcast transmissions in other parts of the world. For those pondering the end of OTA broadcast TV due to “cord cutting” and proliferation of pay TV services, they only need look to the continued march to digital OTA broadcasts over the decade to understand the worldwide digital TV market.

What is Blu-ray's Future?

Monday June 20, 2011 – Stewart Wolpin

DVD replaces VHS, and Blu ray replaces DVD in the land of home video formats. Right?

But is Blu-ray's future as the primary home video format secure?

Not really.

I don't need to be descended from Nostradamus to know this. After six years, a new format ought to be more popular than the format it is replacing. And Blu-ray was and is not as popular as DVD was and is.

Twice as many DVD players were sold in that format's first six years (1997-2002) as Blu-ray decks in its first six years (or will when this sixth year is over). And Blu-ray's numbers have been boosted by early HD-DVD sales plus sales of Sony PlayStation 3.

Blu-ray Blues

Why is Blu-ray lagging behind DVD? It's not because of price. According to CEA, the average selling price (ASP) of DVD decks in 2002 was $142. Blu-ray decks are already selling around he $120 range and prerecorded movies are selling in the $20 range.

Here are some of my guesses as to why Blu-ray is singing the blues:

• Blu-ray is more an upgrade of DVD than a radical format replacement, as DVD was to VCR. And replacement formats – Super VHS, SACD, DVD-A, for instance – never do well compared to the original.

• Sales of TVs of less than 50 inches make up the majority of digital displays around the world. This leaves a huge number of consumers with no reason to switch from "good enough" DVD. Even though the number of buyers of 50-plus inches is inching upward, it'll take a long time – perhaps too long – to make a difference for future Blu-ray sales vitality.

• Blu-ray is a dud for portable products because Blu-ray's resolution advantages are invisible on small portable screens. And large screen smartphones and tablets that are able to stream or store movies are becoming the dominant mobile video viewing screen.

• Streaming content availability (incuding pay TV VOD services) is eating into packaged media sales. Anyone believe the percentage of non-packaged media isn't going to grow, perhaps geometrically, as time and technology move inexorably forward? Anyone? Bueller? Bueller?

Blu-ray's Streaming Future

It's not that Blu-ray sales aren't healthy and growing. DTC projects that shipments of Blu-ray decks world wide will move to 84 million by 2014.

But this global growth is primarily due to so much of the rest of the world catching up to the U.S. in Blu-ray and large screen HDTV adoption. Based on Blu-ray's comparatively creeping growth rate, much of the format's growth is normal new format upward bell curve momentum, not the excited land rush DVD was.

Yes, I'm ignoring 3D, which many Blu-ray deck makers are already doing. Well, not ignoring, exactly, but relegating to secondary marketing emphasis.

Instead, Blu-ray deck makers have been marketing their Blu-ray wares as media streamers with, oh yeah, a disc player. I, personally, have used my connected Blu-ray to view more streaming Netflix than Blu-ray movies. I'm sure I'm not the only connected Blu-ray deck owner who uses its media streaming features more than its disc playing features.

And maybe that's the future of Blu-ray.

Digital Set-Top Box: The Foreseeable Growth in Emerging Markets

Monday June 13, 2011 – Jing Sui

Even though consumer retrenchment and overall market maturity in North America and Western Europe led to lower than expected growth in digital STB unit shipment volumes, the demand for digital STBs is boosting up silently in the other parts of the world – in emerging markets like Asia, Latin America and Eastern Europe.

Digital pay TV subscription growth in emerging markets accelerates overall STB shipments. Asia-Pacific is expected to enjoy strong pay TV subscription gains from 2010-2011, rising from 174.7 million to 230.8 million as digital cable and IPTV systems in China continue to prosper. DTH satellite systems in India, Indonesia, Vietnam and the Philippines are also growing steadily, leading to increased TV subscription gains. Similar to Asia-Pacific, pay TV services in Latin America are also growing rapidly. DTC forecasts that there will be more than 6 million new pay TV subscribers in 2011. The considerable forecasted growth in Asia will help to lift up the entire market all the way through our forecast period, even though new subscriber acquisitions in North America and Europe are expected to show very little growth.

3D Déjà Vu

Monday June 6, 2011 – Stewart Wolpin

Shocking! According to The New York Times ("3-D Starts to Fizzle, and Hollywood Frets")and Memorial Day box office receipts for the 3D versions of Kung Fu Panda 2 and Pirates of the Caribbean Part 4 (or whatever this latest buccaneer mishegas is called) fell short of expectations, perhaps presaging the fadeout of the current 3D phenomena.

Why shocking? This isn't the first time Hollywood has attempted to promote 3D only to have consumers soon lose interest.

It's not even the second.

Or the third.

In a bizarre case of déjà vu all over again (and again, and again), this is the fourth – FOURTH! – 3D merry-go-round for Hollywood. But this time, Hollywood has dragged TV and Blu-ray manufacturers into its George Santanaya-defying 3D delusion.

And it's 1, 2, 3 strikes you're out…

The first 3D history Hollywood forgot to remember and be doomed to repeat was the Roaring '20s.

In 1922, The Power of Love was the first commercially released full-length stereoscopic 3D movie. The power of its success triggered a five-year surge in silent 3D movies. Don't remember a single 3D silent movie, not even Love? Probably because – and this will begin to sound repetitive – the producers concentrated more on the 3D and less on the plots. Movie goers soon tired of the 3D novelty, which was soon replaced by a new novelty – talking pictures.

Exactly 30 years later you could get "A lion in your lap...A lover in your arms!" in the first full-length sound 3D film Bwana Devil. Like The Power of Love, Bwana was a box office bonanza and, like The Power of Love, prompted producers to try again to promote 3D movies.

This time around, the 3D projection technology was better than in the 1920s. But once again, 3D production overwhelmed plot and acting, with one critic summarizing the 3D failure of the era – actually, of all-time – by asking "What do you want? A good picture, or a lion in your lap?" Like the first wave of 3D, the novelty soon wore off, replaced by a new novelty – widescreen movies.

Flash forward exactly another 30 years (is repeating self-delusion on a 30-year clock?) to 1982, when a new 3D attack was initiated by Friday the 13th Part III, perhaps more fondly remembered (so to speak) as the film in which Jason first dons the now iconic hockey mask.

For a third time, producers had better 3D projection technology. But like the first two 3D waves, (stop me if this sounds familiar) Hollywood insisted on producing bad 3D movies (Jaws 3-D and Amityville 3-D anyone?), and the novelty soon wore off, again, replaced by a new novelty, again – space adventures with digital special effects.

Fourth time around

Flash forward again – all together now – 30 years later (plus one and ruining the whole sequence, thanks, Robert Rodriquez) to 2003, and Spy Kids 3-D: Game Over, which kicked off our current 3D craze.

Once again, producers were tempted by new digital projection technologies. And, once again, audiences were faced with bad 3D movies. And, as before, the 3D novelty is being replaced by a new novelty – streaming movies at home on big screen HDTVs.

Was it the eerie 30-year separation between each of Hollywood's previous 3D adventures that dulled studio memories? No, what Hollywood thought was different this time was digital home video and HDTV. With Blu-ray and new 3D HDTV-at-home technologies, Hollywood figured consumers could and would duplicate the in-theater 3D experience in their homes.

I'll wait until you stop laughing. Or crying.

But, maybe this time they're right, kind of. This fourth 3D vogue already has survived longer than the previous three flings, and will survive in theaters at least for another year. The savior of today's 3D, James "Avatar" Cameron, will release Titanic 3D in theaters on the 100th anniversary of the great liner's sinking next April.

Hollywood has until then to figure out how to make good movies that also happen to be in 3D (unlikely), or for the kids in the white coats to perfect glasses-free 3D (highly unlikely).

But, hey, the Cleveland Indians are in first place. Anything is possible.

This TV has Internet widgets and (shhh!) 3D

Fortunately, TV and Blu-ray makers are a resilient bunch. Most of them have demoted 3D from the leadoff selling point of their wares to less prominent placement behind Internet connectivity and widget features.

And since 3D technology makes for higher quality TVs, and all but the entry level Blu-ray models from the major brands will include 3D capabilities.

As a result, consumers will continue to buy 3D TVs and 3D Blu-ray players, even if they never buy a single 3D movie, now or (let's synchronize our 3D watches) in 2032.

Source: DTC

3D HDTV, When the Glasses Came Off

Tuesday May 31, 2011 - Greg Scoblete

In most years, the consumer electronics replacement cycle is driven by incremental improvements. More megapixels here, larger displays there. Occasionally this cycle is punctuated by a bona-fide breakthrough that transforms the market: what the iPod did for portable music, the Flip did for camcorders, the iPad did for tablet computers or what high definition did for the television market. It was clear that consumer electronics manufacturers were hoping for a similar breakout for 3D HDTV - a breakout that, to date at least, just hasn't materialized.

One need only walk the floor at the CES and NAB shows to understand that 3D HDTV hasn't lived up to the considerable hype surrounding it. At CES, vendors spent half as much time explaining why 3D HDTV hadn't failed than boasting about the technology itself - and if you have to explain to people why a product isn't a failure, it's probably a failure. At NAB, exhibitors without a huge monetary stake in the outcome didn't think much of 3D video. Broadcasters were leery of the expense and technological hurdles associated with 3D in light of a perceived lack of consumer enthusiasm.

There is no shortage of reasons for 3D's flat reception: there's the glasses of course. No one likes to wear them, especially heavy ones and most especially heavy expensive ones that need a battery. Not everyone can even properly view 3D images, some people (like yours truly) get motion sickness in the process and there are evenconcerns that 3D viewing can impair children's depth perception. If ever there was a kiss of death, it's stoking parental fears about product safety. And, as DTC's own Stewart Wolpin documented, retailers haven't exactly done a bang-up job selling 3D either.

But I think there's something else at work. I think consumers caught wind of the game. Consumers understand the replacement cycle, whereby electronics manufacturers quickly set about making new products "obsolete" by piling on new features in an effort to entice consumers to fork over more money. Heck, Best Buy even poked fun of it in a recent ad campaign. But it's one thing to have new technology eclipsed by better technology. It's quite another to have something of dubious benefit paraded before your eyes as the Next Big Thing. Consumers may be willingly led along with incremental feature enhancements, but they don't want to feel like marks.

That's not to say 3D HDTV market has already failed. In fact, it appears that 3D capability is going to be incorporated into an ever-larger assortment of TVs - whether consumers want it or not. The adoption curve, therefore, will grow. Think of it as an update to Henry Ford's famous maxim about customers having any color car they like so long as it's black. The 21st century edition: you can have any TV you like, so long as it's 3D.