Who Ate the PPV Cake?

Tuesday September 27, 2011 – Jing Sui

The worldwide traditional digital pay TV market continues to grow despite a dragging economy and an increase of viewing of movies and TV programs on the Internet, and we expect to see continued growth as many traditional pay TV providers are increasing their use of the latest video compression technology -- MPEG-4 AVC -- on existing networks. While DTC estimates that subscribers to these pay TV systems will grow from about 142 million in 2011 to 354 million in 2015, sales of premium MPEG-4 AVC video on demand (VOD) content by traditional pay TV providers are estimated to be much lower. DTC projects only 27 million VOD units will be purchased in 2011, and just over 81 million units will sell in 2016 across all three platforms.

This imbalance exists, in part, because the percentage of VOD content purchased remains small in comparison to free VOD (free with subscription) content as the overwhelming majority of activity is taking place within existing basic or premium “all you can eat” subscription plans. Adding to the low sales numbers are the additional (and sometimes free) alternatives pay TV subscribers have when watching content on an on-demand basis with the proliferation of over-the-top (OTT) video services from providers such as Netflix and VUDU.

PPV and VOD have traditionally been a hard sell for pay TV operators, and the combination of free on-demand content, subscriber VOD, OTT TV and movies, and a dragging economy are all contributing to a lack of appetite for purchasing PPV/VOD titles.

A Bit Bubbly?

Monday September 19, 2011 – Greg Scoblete

A sustained period of low interest rates, a rash of tech-sector IPOs with soaring share prices, fawning media profiles of Silicon Valley entrepreneurs and venture capitalists - for many in the tech industry, it's déjà vu all over again.

I'm talking, of course, about a bubble. The last time the tech industry was in the grips of these dynamics was at the turn of the century, when the Internet was minting millionaires at an unseemly clip and Initial Public Offerings ran the Nasdaq up to a dizzying height. Today, the names have changed but the similarities are eerily familiar.

Or are they?

In truth, while many of the macro-economic conditions that gave rise to the Dot Com bubble are the same, the world has changed. For one, the Nasdaq is worth roughly half of what it was during the Dot Com era. If another bubble is forming, it may have considerably more headroom before it pops.

More importantly, the tech firms are different. As Daniel Hom of IPO Dashboards has observed, some of the big technology firms that have made their IPO or are nearing that point are actually (gasp) profitable and most are generating hundreds of millions in revenue. The business models, in other words, are already being subjected to a real world stress test and many are enduring. Companies like Facebook and LinkedIn have also been incorporated for longer than the ill-fated poster child of the Dot Com bust - Pets.com (which, we must all remember, burned through $300 million in investment capital in about two years before being put to sleep).

Finally, the Internet is more mature. There are roughly 10 times more people online today than there were 10 years ago and a slew of mobile devices and operating systems have created an entirely new eco-system of applications and opportunities for investment.

That said, the greatest delusion when analyzing any market is the assumption that "this time is different." Even if we're not in a tech bubble today, it's hard to imagine a prolonged period of low interest rates not producing some speculative mania somewhere. Indeed, while LinkedIn and Facebook may hum along profitably for many years to become, the explosive growth of venture capital-funded mobile apps certainly appears a bit, well, frothy.

Defining 'E-Reader'

Monday August 29, 2011 – Stewart Wolpin

You of course know a dolphin, even though it has fins and lives its entire life in the ocean, is a mammal – the suborder odontoceti, to be exact. But the similar-looking and similarly-toothed (well, not similar, exactly – there's a slight size and sharpness disparity) shark, however, is a fish, of the superorder selachimorpha.

Both lobsters and land-lubbing woodlice (aka "armadillo bug"), which would never be confused in the kitchen, nonetheless belong to the subphylum arthropoda – crustaceans.

And both the horse and the rhinoceros are dues-paying members of the eutheria infraclass and the order perissodactyla. I wonder if they have a bowling team?

Biological taxomic ranks – scientifically determining why one animal is different than another – may be something we in the gadget gazing business, with the exploding number of multi-use gadgets, ought to adopt.

Order evidentiary hearing

Classification-confusing Exhibit A is the iPad. For more than a year, we digital Darwins have been trying to figure out if the damned thing is of the computer class, the laptop superorder or a mutant deserving of its own family. We have to count iPads – but as what?

A second related classification accounting conundrum is the Nook Color and its e-book reader-cum-tablet ilk, such as the Kobo-powered Aluratek LIBRE Touch, the Gemei GM2000, the two Naxa Noodle Colors and the Barnes & Noble-compatible 7- and 9-inch Pandigital Novel color e-readers, likely to be joined by a similar Amazon Kindle e-reader-cum-tablet sometime later this year. And the Tribune Company is reportedly readying a newspaper-reader-cum-tablet.

Neither you nor I want to be keep typing "e-reader-cum-tablet" each time we have to talk about these e-reader-cum-tablets (and not just because it's too long, if you catch my drift). So, what are they?

There's the always popular walk-like-a-duck/quack-like-a-duck test; these…things…are equipped with a 7-inch touch LCD screen, run a version of Android, are equipped with Wi-Fi to surf the Web and check email.

That sounds like a tablet to me. And yet…

A dolphin looks and acts like a fish, but it's not; a rhino looks little like a horse unless you count unicorns; and, if you try and serve me a woodlouse when I ordered lobster, there's going to trouble (after my Mr. Creosote imitation, of course).

And what happens when we start getting e-ink color e-readers?

E-reader-cum-tablets aren't our only digital definition issue. With Blu-ray players increasingly adding streaming IP content, at what point do we start counting them as media streamers? Digital cameras and camcorders, both capable of shooting high-def video and multi-megapixel stills, are beginning to merge. When Mobile DTV broadcasting begins to launch in earnest, what multi-function devices with built-in tuners will be defined as portable TVs and which as multimedia devices?

Perhaps it's time we geeks created our own technology taxonomy system so we all know what what is and how to analyze them. Before someone on Top Chef serves up Woodlice Thermidor.

Media Streaming STBs: Finding their place in the world

Tuesday September 6, 2011 – Shelby Cunningham

Digital media streaming STBs have almost completed their mission in life, and can soon begin to die in peace.

These media streaming boxes were sent to us not only to introduce consumers to another pipeline from which to watch movies and TV programs on the TV but also to show (inadvertently) traditional pay TV service providers, and consumer electronics makers, why they need to incorporate internet streaming into their products.

But as discreet products, we forecast that this new product category is already on its way out. Just over 2 million MPEG-4 AVC media streaming boxes were estimated to have shipped in 2010, but that’s just a drop in the bucket compared to the hundreds of millions of MPEG-4 AVC devices that shipped in 2010. (MPEG-4 AVC is the most commonly used compression technology for internet video content intended to be viewed on television displays). In 2010, DTC estimates that 85 million MPEG-4 AVC STBs shipped, 32 million MPEG-4 AVC BD players shipped, 24 million MPEG-4 AVC video game consoles shipped, and 34 million MPEG-4 AVC IDTVs shipped.

There will still be a small place left in this world for these media streaming STBs, and that place will be the second bedroom (or guest room, or the study, etc.). A couple of suppliers will likely stick around and build a respectable niche market for dedicated media streaming boxes. It’s even likely that so-called “cord shavers” (pay TV subscribers who may supplement their main pay TV connection with streaming boxes on auxiliary TVs) will contribute to keeping a niche market afloat.

We’re not ready to write the obituary just yet. The other living room device makers and TV providers have to get a few things right first, including providing good, user-friendly interfaces and content partnerships. And though one day we’ll forget about the Rokus and Boxees that sat by our TVs in 2010 and 2011, the purpose they served in integrating streaming functions into STBs and other devices (in a consumer friendly way) will go down as big part of how TV got revolutionized in the 21^st century.