Digital TV: No Two Places Are Alike

Monday April 30, 2012 – Myra Moore

I recently participated in a Caribbean Telecommunications Union (CTU) meeting on spectrum management focused on the digital TV switchover.  Listening to regional broadcasters, regulatory officials, and engineers discuss the challenges of planning a digital TV ecosystem only reinforced the axiom that every place has its own DNA.

Not to get all “snow flakey” but no two places are alike. And when it comes to tallying up all the factors for a digital TV switchover, countries within the Caribbean region are as different as individual snowflakes even though (as far as I know) it’s never snowed there.

One of the CTU’s primary goals is to promote a unified approach to the regional digital TV switchover, which is never an easy task amongst separate nations.  Job number one is to coordinate spectrum use within the region and to ensure that all in-region countries/territories are informed of their neighbors’ DTT plans and potential interference issues are discussed. After that, there’s not a whole lot of uniformity as the geographic area is large, islands have different ties to other countries in Europe and North America, and existing  TV ecosystems are a mash up different transmission standards, types of pay TV providers, and regulations.

Just a handful of facts illustrating how important customization will be in individual locales:

• The islands are a mix of sovereign states and dependent territories. Even those that are sovereign nations have deep ties to European and North American countries that can have significant influence on the technology and policy decisions when building digital terrestrial TV systems. In short, European affiliated islands tend to consider systems similar to those in the U.K., the Netherlands, and France, while those associated with North America lean toward technologies implemented in the U.S.  This, however, is a generalization; other factors come in to play.

• Because the region is geographically closest to North, Central and upper South America, much of the existing analog TV infrastructure is based on the North American NTSC system. Thus, islands will have different mixtures of analog and digital TV systems that impact the sourcing of receivers.

• The region is demographically and linguistically diverse. With French, Dutch, English, Spanish, Creole (Haiti), and Papiamento official languages, the need for customization is even greater. The DTC Digital TV Transition Group is producing an analog-to-digital TV educational video for Curacao in Papiamento. This is an official language in three places in the world – Curacao, Aruba and Bonaire with a collective population of about 300,000 people.

• Demographic diversity contributes to varying rates of pay TV household penetration (as well as platforms from which services are delivered – MMDS systems are a part of the TV mix in addition to satellite, cable and IPTV).  Individual-island pay TV penetration can vary from barely measurable to 90%.  Thus, business models are going to vary significantly.

The need for customization only underscores the need for a top-level unified framework where, at the minimum, spectrum management is a harmonized effort. 

10 Things I Learned In Europe

Monday April 23, 2012 – Stewart Wolpin

As we have seen from the Grecian (and Irish and Portuguese) debt crisis, what happens outside the U.S. definitely doesn't stay outside the U.S. For this reason, what happens around the world consumer electronics-wise can't stay in outside the U.S., either.

For this reason, IFA, the premier European technology show held in Berlin each September, is becoming increasingly important even to U.S.-centric technology businesses. Not that we all have to go to Berlin (a beautiful, vibrant city, yet which one European described to me as "wounded"), but it's probably helpful to be aware of what's going on beyond our ocean bookends.

This past weekend I was in Dubrovnik, Croatia for an international press preview of this year's IFA, scheduled for August 31-September 5.

Most illuminating were statistical briefings from GfK and DisplaySearch. Here are 10 interesting PowerPoint tidbits.

1. Tech business is good. Sales of digital goods worldwide passed the trillion U.S. dollar mark for the first time in 2011 ($1,077US), and are expected to grow around 2% in 2012 to $1,102US – but just flat in most of the developed world (.3% up in Europe, down 2% in North America and down 6% in "developed" Asia).

2. In Asia, tech business is great. So where is the tech business growing? "Emerging" Asia (up 10% in 2012), South America (up 12%) and Middle East/Africa (up 13%). But Asia, developing or emerging, is the giant sales opportunity. Overall, retail sales in Asia comprise 35% of worldwide money spent on tech. Considering Asia contains 61% of the world's population, there's still plenty of room to sell. Within Asia, Southeast Asian digital sales are expected to grow 20% this year. So what are the big sellers in Asia?

3. Asia loves mobile phones. What a shock! Okay, here's something that may be. Seven Asian countries – Hong Kong, Singapore, Vietnam, Myanmar, Taiwan, South Korea and Taiwan – have mobile phone penetration rates of MORE than 100%; Hong Kong is approaching 200%. So nearly everyone in Hong Kong owns TWO mobile phones? One for business, one for personal is one reason; smartphones can't yet do mobile payments, but feature phones can is another. Despite their lack of digital wallet capabilities, smartphone sales in Asia will jump 69% in 2012 compared to 39% globally (which includes Asia). Which smartphones are Asians buying? Nearly two-thirds own Android models.

4. Digital camera sales are flat. Again, not a headline – but there's no sales growth because digicam sales are expected to dip 5% in Asia. Here's an interesting statistic: in smartphone-crazy Asia, 99% of all devices sold with an 8 MP imager or less are smartphones. And apparently gaming console sales are down in Asia as well as smartphones continue to subsume cameras, game players and other dedicated devices.

5. Americans love big screen smart HDTVs. Everyone else, not so much. Nearly 10% of Americans own an HDTV 50 inches or larger and 32% of Americans and Canadians own a smart TV; only 4.2 and 22% of Western Europeans and just 3.1% and 13% of Eastern Europeans have 50-inch or larger HDTVs and smart TVs, respectively. Of course, just because someone owns a smart TV doesn't mean it's actually connected to the Internet. Perhaps more interesting: we owned our old tube TVs for an average of 11 years; comparatively, we own our flat HDTVs for an average of just six years.

6. But no one will love OLED HDTVs. Samsung and LG made huge splashes at CES with supermodel skinny OLED HDTVs. But DisplaySearch's Paul Gray asserts OLED TV "is still a science project" (SLAM!) and just 50,000 OLED sets will be shipped this year, only five million in 2015. The research company also is pessimistic about the prospects of 4K HDTV.

7. Larger and larger slices of retail CE sales are conducted online. Once more, duh!, but do you know by how much? In the U.S., 19% of all CE sales are of the "click & mortar" or straight online variety, 15.5% in Europe and 15% in Korea. In Europe, online tech sales have grown by nearly 2% each year since 2008.

8. Asians call tablet PCs "webbooks." Maybe the word "tablet" doesn't translate well in various Asian languages. But if an Asian you're doing business with says "webbook," you'll know what they're talking about. The U.S. maintains its webbook/tablet dominance likely because iPad isn't as widely available outside the U.S. This year, 45 million of whatever-you-call-them will be sold in the U.S., more than the rest of the world combined. But tablet sales in Europe are expected to nearly treble this year; in Hong Kong, webbooks just surpassed sales of notebooks and have reached 71% of notebook sales in Singapore.

9. 1.1 billion Internet-connected devices with screens will be sold in 2012. This includes smartphones, tablets, notebook and laptop PCs, and smart HDTVs, and DOESN'T include Blu-ray players or appliances or any other Internet-connected device without a screen. Considering that that the iPhone, which really ignited the mobile Internet device craze (laptops with integrated Internet connectivity also is a recent phenomena), is only five years old, I find this an astounding statistic.

10. Language is the biggest roadblock of expanding technology into foreign markets. The North American market contains 458 million people who speak primarily three languages. But the 700 million people in Europe are spread across 45 countries and speak more than 100 languages, not including regional and local dialects. But at least European languages and culture are recognizable to us in the West, which is why Asia seems so, well, foreign. This lack of a common language for instruction manuals, onscreen menus, speech recognition, etc., is a huge roadblock to spreading digital technology.

And speaking for all us stupid omni-lingual Americans, it's one reason why the rest of the world seems such a scary place for business.

Latin America's Rising TV Tide

Monday April 16, 2012 – Greg Scoblete 

While the U.S. economy teeters nervously between a full-throated recovery and recessionary backsliding, Latin America has been enjoying more temperate economic climes and the region's pay TV providers are basking in the sun.

Satellite TV firm DirecTV's Latin American division had a blockbuster second quarter, adding roughly 590,000 subscribers, bringing its total subscriber count into the eight million range.

DirecTV Latin America now contributes a quarter of the company's total revenue and the company has big ambitions for its Latin American arm. On a conference call with analysts, DirecTV Latin America CEO Bruce Churchill said the goal was to double subscribers in five years (hitting 16 million) with annual revenue topping $10 billion. Warren Buffet, the dean of American investing, evidently likes what he sees: he's been gobbling up shares of DirecTV of late.

Satellite TV is well positioned to profit from the growing Latin American economies, particularly in Brazil and Colombia. Pay TV penetration is relatively low and the infrastructure for cable and IPTV services isn't robust yet, leaving satellite providers as often the only game in town.  Only 22% of Brazilian households have pay TV services and Brazil accounts for the largest chunk of DirecTV's Latin American business, with roughly 3.8 million subscribers. There appears to be plenty of headroom for further growth.

Pay TV provider Grupo Televisa has also enjoyed growth. The firm notched a growth rate of 23% for its pay TV revenues in the last quarter of 2011.

Then there's Sundaytv - a new Internet video-on-demand play from the web portal Terra available in Argentina, Brazil, Chile, Colombia, Mexico and Peru. After just three weeks, the service has accumulated 100,000 paying subscribers and half a million registered users.

Overall, Latin American pay TV penetration is estimated to be below 25%, whereas the U.S. is nearly topped out at over 90%. Even if the macro-economic climate reverses for a time, as it inevitably will, it's likely that the steady penetration of pay TV services in the region will continue and will rain down profits on those services well positioned to take advantage.

A Blu-ray Player By Any Other Name

Monday April 9, 2012 – Stewart Wolpin

What do you call a disc player that performs a varying of entertainment functions, but in which you rarely or ever play a disc?

Someday soon, Blu-ray player makers may be facing this nomenclature conundrum.

Blu-ray is already seated uncomfortably under the streaming sword of Damocles. Netflix, Hulu, Vudu, et al, all are threatening the DVD/Blu-ray home video hegemony. Even Netflix' foot-shooting (price increases, Qwikster, loss of Starz) has failed to staunch the lazy public's growing desire to pull content off the Internet rather than pulling a disc off a shelf.

And now, Hollywood studios seem to be trying to obviate the need for physical discs altogether with UltraViolet.

Last month, I excoriated the whole Wal-Mart/Vudu/UltraViolet idea. I just can't imagine a mass of consumers stomping into Wal-Mart to convert their DVDs into digital versions. (I guess we'll find out April 16, when the initiative begins.)

What makes far more sense is a disc-to-digital function on a Blu-ray player, the first of which was announced by Samsung last month. I suspect we'll see this feature on many new BD models introduced throughout the year.

Plus, I'm told PC software is being developed that would enable consumers to read their existing discs and activate UV digital copies for streaming or downloading access.

But it's UltraViolet-imbued Blu-ray titles that may prove to be Blu-ray's ultimate undoing.

Who needs a disc?

When a consumer buys an UV BD, they get a slip of paper with a 12-digit code. After the code is entered on the UltraViolet Web site (www.uvvu.com), up to six family members/friends can stream or download a digital UV copy to any portable device for free through the Flixster app for iOS or Android, or via the Vudu smart TV/BD/videogame console app.

There are 50 or so UltraViolet titles available now, with "hundreds" due by the end of this year according to UV execs I've spoken to. It's likely most new BD titles from all the major Hollywood studios, except Disney, as well as mini-major Lionsgate (the studio behind the Twilight and Hunger Games blockbusters, which look major to me) will be UV-enabled.

But taken to its logical extreme, you can see why we might never need the Blu-ray disc the code comes with. One day, consumers may simple buy a UV code, with an option to buy the disc if they're really retro.

I will extrapolate.

In the press flurry during the Wal-Mart-Vudu announcement, David Bishop, president of Sony Pictures Home Entertainment, noted UV wasn't "just about portable devices. You can watch your collection now on the TV."

After initially making fun on this assertion – if you have the disc, why would need the UV copy to watch at home? – it suddenly makes sense to me.

Rovi, the electronic program guide people, several cable companies including Comcast and Cox, and other TV infrastructure companies are UV Digital Entertainment Content Ecosystem (DECE) consortium partners. Why? Part of the UV roadmap is to incorporate a user's UV library into their cable EPG.

If a consumer could just dial up their video collection as easy as tuning in "Dancing With the Stars" instead of getting up, finding the DVD or Blu-ray jewel box, switching the TV's input to the appropriate HDMI connection, opening the BD player disc drawer, closing the disc drawer, finding the BD player remote control to hit play – well, which would you choose? They don't call us couch potatoes for nothing.

And if you could access your video library from your program guide, why do need to buy a physical disc to begin with? Why not just go online and buy the UV copy directly, with the Blu-ray disc an optional add-on?

The studios must be salivating at this prospect. They could dispose of the whole profit-eating physical disc warehouse/distribution/retail ecosystem, just like what's happening with e-books. Studios could charge the same price or a little less for the code as they do now for the disc and supercharge their profit margin.

But consumers would still need/want a Blu-ray player. It's cheaper than getting a smart TV to get the streaming options, plus all of us will still have non-UV DVDs or Blu-rays to play.

But given how quickly streaming content is becoming mainstream, one day we'll be using our Blu-ray player for all our home video content access needs – except to play a Blu-ray disc.

And if a Blu-ray player is rarely used to play a Blu-ray disc, do you still call it a Blu-ray player?

Discuss.

Can Terrestrial TV Go Over the Top?

Tuesday April 3, 2012 – Greg Scoblete

Terrestrial TV isn't the most exciting technology in the world, but it is one that enjoys broad government support. And with the increasing penetration of broadband Internet (both wired and wireless), perhaps some cyber cachet can finally rub off on over-the-air broadcasts.

A startup called Aereo has made a first pass at this, delivering terrestrial channels to users via the Internet. The service, launched only in New York initially, uses an array of small antennas to collect the over-the-air signals, which are then fed to consumers over the web. For $12 a month, consumers can access their live, terrestrial TV channels on any Internet-connected device, including tablets, media players, Smart TVs and phones. They can also use a "Cloud DVR" to record those live shows for later viewing.

It is an intriguing idea and, perhaps inevitably, one that immediately provoked a lawsuit from local New York stations claiming that copyright laws do not permit Aereo to retransmit (and profit from) their broadcasts without a license. Aereo countered that they are, in a sense, just making it easier for consumers to get OTA content. Rather than place an antenna on top of their roof, Aereo places that small antenna in their own array and feeds the signal to subscribers via the Internet. In a company blog post, the firm defended their service:

"Consumers are legally entitled to access broadcast television via an antenna and they are entitled to record television content for their personal use.  Innovations in technology over time, from digital signals to Digital Video Recorders (“DVRs”), have made access to television easier and better for consumers. Aereo provides technology that enables consumers to use their cloud DVR and their remote antenna to record and watch the broadcast television signal to which they are entitled anywhere they are, whether on a phone, a tablet, a television or a laptop."

The precedent doesn't exactly bode well for Aero. A similar gambit was attempted by ivi TV, which promised to send broadcast content over the Internet to subscribers for just $4.99 a month until it was slapped with an injunction and effectively shut down.

While the lawyers battle this one, the Aereo approach does highlight one intriguing possibility for over-the-air content to merge with over-the-top content (forming the mother of all acronyms: OTA OTT). Rather than attempt to install an antenna and mess with channel scanning, free-to-air broadcasts could be fed to consumers via an app on an internet-connected TV or set-top box. This not only provides broadcasters with a way to reach consumers on mobile devices but also adds value-added services like cloud DVRs to the mix. As broadband Internet and connected devices spread, the opportunity seems ripe (it could also potentially reap spectrum efficiency benefits as well).

The most obvious place for an OTA OTT service to start would be in the United Kingdom where a consortium of broadcasters has already teamed to promote Freeview - the UK's well-established terrestrial TV service. Today, Freeview TV is accessed via terrestrial tuners sold in TVs and set top boxes, but it's not hard to see an Aereo-style variant delivering Freeview TV to any Internet-connected device through an app. It won't make antenna salespeople happy, but those of us with a fear of heights would be grateful.