For RSS Followers

DTC has recently updated its website which has rendered the old RSS feed for The Weekly Riff  useless. Sorry for the inconvenience, and please update your RSS feeds accordingly.

The new website is: 
http://www.dtcreports.com/weeklyriff/

And the new RSS feed to follow is:
http://www.dtcreports.com/weeklyriff/?feed=rss2

Have U.S. Blu-ray Hardware Sales Reach Top of Bell Curve?

Monday April 15, 2013 – Stewart Wolpin

Even as the streaming home video revolution continues to widen, Blu-ray software and hardware sales continue to hold their own.

According to DTC estimates, worldwide Blu-ray hardware sales rose 14% last year, will rise 13% this year and 12% next year. On the software side, DTC projects worldwide packaged media sales grew 43% in 2012, and will grow 32% this year and 29% next year.

But in North America – or at least in the U.S. – 2013 will be the last year in which Blu-ray hardware sales show positive growth. Or, it could be the first year Blu-ray will register the oxymoronic negative growth in the U.S.

In the last couple of weeks, I've had conversations with executives from Samsung, the worldwide Blu-ray hardware sales leader, Panasonic and LG, the numbers 3 and/or 4 Blu-ray deck sellers, depending on what month it is. When asked about Blu-ray sales, all hemmed and hawed Ralph Kramden style – not exactly the reaction one would expect if all things Blu-ray were as rosy as they appear to be worldwide.

Dave Das, Samsung's VP for home entertainment products, allowed that the Blu-ray hardware market in the U.S. was "starting to stabilize," and that unit sales "seemed to have peaked and are already declining." Das is hoping for, at best, flat Blu-ray hardware sales in the U.S. this year, but his current forecasts say there'll be a 3% dip in Blu-ray units by the time the ball drops in Times Square next Dec. 31.

Tim Alessi, LG's new product honcho, was a bit more politically circumspect about negatively projecting this year's Blu-ray hardware sales, estimating small growth but allowing that sales could easily swing in the wrong direction. But his body language didn't exactly exude confidence.

Panasonic's estimates for U.S. hardware sales presented at a recent press event also are officially flat for the first time.

Without saying so, it would seem first quarter Blu-ray hardware sales weren't as robust as these companies would have liked, a downward trend that may be accelerating as streaming becomes more ubiquitous in the U.S.

Soft disc sales

While Blu-ray unit growth/decline seems to be teetering on the sales fence in the U.S., U.S. Blu-ray disc sales growth have already begun to decline, indicating soft demand for software.

For instance, DTC projects packaged media sales in North America declining compared to the rest of the world, steadily dropping from a commanding 48% in 2011 to just 39% this year and 36% next year. By 2017, North American share of pre-packaged media sales is forecast by DTC to drop to 24%, behind both Europe and Asia/Pacific.

In the U.S. market specifically, DEG (Digital Entertainment Group) recently reported revenue from disc sales declined 5.5% from 2011 to 2012, revenue from brick-and-mortar disc rental slid nearly 24% and revenue from subscription disc rentals (i.e. Netflix) dropped a whopping 28%.

Meanwhile, revenue from what DEG calls "electronic sell-through" (EST) leapt 34.6% while subscription streaming jumped a massive 46% last year.

Sexier streamers?

Obviously, streaming media and streaming media devices – dedicated media streamers, videogame consoles and smart TVs – are eating into physical media sales and, by extension, sales of Blu-ray decks.

What's odd about this pessimism surrounding Blu-ray hardware sales is that more than three-quarters of the Blu-ray players sold by the major brands are "smart" decks, packed with media streaming services such as Netflix, Vudu, Hulu, et al.

While Blu-ray hardware marketers know their wares present a high value proposition compared to dedicated streamers, it doesn't appear they've gotten that message out to consumers. Both smart TVs and media streamers seem to be perceived as sexier products, easier to sell than old lady disc players.

Blu-ray hardware and media sales are likely to continue to grow worldwide, albeit less robustly as in years past. But it's clear that Blu-ray sales have reached the top of the bell curve in the U.S. market.

Japan’s TV Empires Have Fallen. Will They Rise Again?

Tuesday April 9, 2013 - Greg Scoblete

All great empires fall, undone by a familiar pattern of hubris, over expansion, internal decay, strategic blunders and the rise of mightier competitors. The consumer electronics industry is littered with its own empires and while their fall doesn't involve pillaging and Earth-salting (at least, not yet), their ebb and flow does remind us of the geopolitical empires of old – with a twist. For unlike ancient empires that succumb to history, electronics empires can come back from ruin.

The most prominent example, of course, is Apple, which stumbled to near irrelevancy only to be rejuvenated by the return of its founder.

Today, all eyes are on the Japanese TV titans Sony and Panasonic. From a position of unrivaled strength in the 1980s and 1990s, these two empires have been crumbling. Fast. The TV divisions of both are bleeding red ink profusely, hampered by an unfavorable exchange rate, a sharp drop in domestic demand, and the surging success of South Korean rivals Samsung and LG. Sony lost 80 billion yen on TVs in 2012, curbing its sales forecast by two million units. It has suffered losses in its TV business for four straight years.

Panasonic, which placed a huge and ultimately losing bet on plasma technology, has fared no better with the company CEO musing openly about dumping its TV business as a “last resort.” 

Yet both firms have insisted that their TV divisions will rebound. Unlike other Japanese competitors such as Mitsubishi and Hitachi, who have shuttered production in Japan and curbed investment in TV technology, both Sony and Panasonic remain committed.

The question is: are they throwing good money after bad or do these once powerful empires have an opportunity to rise again?

There’s reason for, at a minimum, some guarded optimism. For one, the Japanese central bank has embarked on an aggressive move to devalue the Yen, which would make Japanese products more price-competitive with Chinese and South Korean rivals. Second, the TV market is nearing another upgrade cycle with the coming of OLED and 4K/Ultra HD technology.

Both Panasonic and Sony are investing heavily in OLED and 4K display technology and the consumer TV market, while sagging, could be rejuvenated as prices for these displays drop into consumer-friendly territory (likely in 2015 and 2016) and more 4K content trickles onto the market.

Of course, Samsung and LG see this OLED/4K wave coming as well and has been also been ramping up their investment and research into these technologies. Their powerful market positions clearly give them a leg-up as the new technology wave reaches the shore. Still, the transition from HD to 4K and from LED to OLED cracks open a new, and perhaps final, window for once mighty empires to reclaim some lost territory.

Is Pay TV on the Verge of a Shakeup?

Monday April 1, 2013 – Greg Scoblete

In the Abelian sandpile, grains of sand are piled up on each other until the pile reaches a critical state, i.e. the point at which any subsequent grain can cause the entire structure to collapse. In this model, one tiny grain drop can cause a huge cascade out of all proportion to the original size of the disturbance because the sand pile had reached a dangerous threshold of latent instability.

Could something similar be happening to the pay TV industry? Can a drip-drip of news amount to the piling of sand on a structure that is about to, not collapse, but be fundamentally reorganized?

Consider:

• Last week HBO's chief executive Richard Plepler indicated that he saw a possible future in which HBO Go is disaggregated from a cable TV subscription and is instead bundled, for an extra $10 or $15 a month, with a broadband Internet subscription. Of course, Plepler hastened to insist that HBO "had the right model" at least for the time being, but the fact that he floated the idea at all when previously HBO execs had pooh-poohed the idea, seems significant.

• Also last week, the Wall Street Journal reported that Verizon was looking to tie the fees it pays to content holders based on how many people actually viewed their content. The idea, Verizon said, was to "stabilize retail prices" for consumers.

•  In late February, Cablevision announced a lawsuit against Viacom for bundling MTV and Nickelodeon with small channels such as Palladia and TR3s and, in effect, forcing customers to pay for content they don't watch. Cablevision's competitors, including DirecTV, Time Warner Cable and Charter, reportedly "rallied behind Cablevision" when the suit was announced, according to the New York Times.

What stitches these announcements, these grains of sand, together is the growing universe of streaming video services. Just this week, it was rumored that the wildly popular music streaming service Spotify would be jumping into the video streaming market. Intel is reportedly close to unveiling its own virtual cable service. Oh, and YouTube now has one billion monthly visitors.

While these online alternatives haven't led to a rash of cord cutting, they're clearly creating a sense of, not panic per-se, but concern about the trajectory of consumer video consumption habits. Pay TV providers and content owners alike may not have hit upon a new formula for the streaming age, but it's clear there's a lot of movement afoot to find one.

As the HBO and Cablevision news indicates, there are two possible ways the sand pile can tip. First, content owners can cut out the pay TV provider middleman and stream directly to consumers over the Internet. But it's a risky ploy, particularly if pay TV providers respond by dropping those channels and throttling consumer bandwidth. The second, and more plausible, scenario is a proliferation of more bundles. No pay TV provider wants to go fully a la carte, but competitive pressure from streaming services is likely to open the door to a greater diversity of channel groupings, including lower-priced tiers to sway would-be cord cutters.

Suffice it to say, the sand pile is teetering.

DVB-T2 At a Glance

Tuesday, March 26, 2013 – Jing Sui

How do broadcasters keep up with the rapid-fire changes in media delivery?  Many are adopting or rolling out the next generation of the most widely adopted digital terrestrial TV (DTT) standard – DVB-T.  The DVB-T2 standard has established itself as the most efficient DTT standard, which greatly improves power consumption and spectrum use.  Broadcasters will need more ammunition in their arsenals than improved efficiency to keep up with demand for delivery at any time on any device. That, however is a different topic that we periodically address here.

Thanks to more frequent analogue switch-offs and increasing spectrum scarcity, DVB-T2  is being widely slated for next-generation broadcast transmissions with the ability to provide a minimum 30% in increased capacity over DVB-T. The standard was first published in 2009, and the update, T2-Lite for mobile and portable reception, was added in 2011. In countries where DVB-T services already exist, DVB-T and DVB-T2 services are likely to co-exist for a long period of time. As a contrast, in countries that have not yet deployed DTT services, many will leap directly to DVB-T2 instead of first deploying DVB-T. (The exception is Latin America where most countries have followed in the footsteps of Brazil by adopting the ISDB-T standard).

Many countries have already implemented the DVB-T2 standard. A number of European countries such as Italy, Sweden, and Finland launched DVB-T2 services during 2010 and 2011. UK is the first country to deploy DVB-T2 and it’s being used to sell HD OTA programming. Outside of Europe, Nigeria, Kenya, Serbia and many more countries, are expected to follow soon. DVB-T2 trials are also currently taking place all over the globe; more and more countries are considering DVB-T2 services.

Time Warner Embraces Roku and STB Makers Shudder

Monday March 18, 2013 – Greg Scoblete

Last week, Roku, maker of the eponymous media player, announced its third generation set-top box. Aside from its redesigned menu, faster processor and new, headphone-packing remote control, the Roku 3 contained something potentially significant: an app from Time Warner Cable (TWC).

The app enables over 300 channels of live Time Warner programming to be streamed over the Internet to Roku-connected TVs. There's no video-on-demand yet, but TWC says it's coming. Roku owners will have to be existing TWC subscribers using the company's broadband modem to enjoy access. It is the first time the company is allowing its cable lineup to be accessed on a third party connected device, though it does offer live TV streaming on Apple's iOS and Android mobile platforms.

Of course, there are restrictions. You have to be at home to use the app (so no HBO Go password swapping allowed) and you need to be an existing subscriber within TWC's service footprint. But there are benefits, too. The Time Warner video stream gets prioritized – it's not riding over the top like Netflix – so the video quality is high and buffering issues should be minimized, if not killed outright. The user interface is also remarkably better than the grid-style display that greets many of TWC's cable subscribers.

For secondary TVs, the Roku box is effectively a true set-top box killer (at least "traditional" boxes offered directly by service providers) – and herein lies its significance. While many traditional box makers have put their hopes in gateway/client devices to power them through another wave of growth, low-cost retail boxes like the Roku represent a real threat, since they effectively serve as a "thin client" themselves. Throw in a network DVR, and there's little reason for service providers (or consumers) to invest in an expensive gateway at all.

Time Warner's decision to hop aboard the Roku raises other interesting questions about the future of traditional pay TV networks. Today, only subscribers in TWC's service footprint can access the app, yet the Roku box is sold nationally. It's not a stretch to imagine Time Warner offering its content to Roku customers beyond its service area, even if it couldn't guarantee the same quality as it does to its current subscribers. Other TV providers, like Verizon, Dish and others, could follow suit. Live cable TV (with an emphasis on sports and local news) simply becomes another app, like Netflix, competing for attention.

And that raises another, thornier issue for Time Warner: net neutrality. Current net neutrality guidelines prohibit internet service providers from discriminating among different content providers. By prioritizing the video delivery of its own video streaming service, Time Warner is clearly flouting those guidelines. Netflix has already complained publicly about similar behavior from Comcast. Yet without such prioritization, it won't be possible to guarantee the quality of service necessary for the Roku to truly serve as a set-top box replacement.

If the traditional set-top box hopes to stave off this threat, their best hope may not rest with innovative new products, but with the FCC.

Digital Imaging Industry Deploys Parachutes

Monday March 11, 2013 – Stewart Wolpin

It's rare for a mature product category on the downhill slide of the bell curve to cough up not one but two new savior gadgets within a relatively short time frame. But that's exactly what has happened in the digital imaging business.

Smartphones clearly have become the go-to digital imaging solution for most consumers. Even at the recent presidential inauguration balls, it was clear from the coverage that most of the formally attired attendees were capturing the once (well, twice)-in-a-lifetime historic moment with their phone cameras.

If these smart and well-heeled folks decide smartphones are "good enough" for moments-of-your-life preservation, what hope does the industry have of maintaining any on-going sales integrity?

As sales of both point-and-shoot digicams and camcorders plummet faster than Felix Baumgartner, sales of compact system cameras (CSCs) and wearable actions cams seem to be acting as the category's parachutes.

The question is whether either or both new products will prove to be a long-term solution for what ails the industry. Or, to illogically conclude our parachute metaphor, if CSCs and action cams can provide the digital imaging industry with a soft landing.

Yes and no, IMHO.

Blowing smoke?

Most of our market research compadres are understandably bullish about the future of CSC, with 2013 sales expected to represent around 6-10 percent of all digital camera sales worldwide, depending on who you ask.

But digital camera makers we spoke to at CES enthusiastically reported CSC sales beyond their expectations. Admittedly, this enthusiasm may have been smoke blowing for the benefit of a journalist, but from the genuine glow of glee these product managers exuded when talking about CSC sales it didn't seem so.

In the past year or so, Canon, Fuji, Nikon, Samsung, Sony and even Polaroid have entered the CSC fray with their own proprietary CSC systems, intro'ing models with even smaller camera bodies than the Micro Four Thirds CSCs originated by Panasonic and Olympus four years ago. And all unveiled new advanced models at CES or afterward due to hit stores this month and next.

All these new CSC camera makers are drooling at the higher margins these shrunken upscale imagers produce. Even the most conservative forecasts see CSC sales catching up to D-SLRs in three years or less.

Sure, CSC sales volume will never approach those of point-and-shoot models a few years back, but that's not necessarily a bad thing. CSC makers will be happy to be rid of their loss-leader point-and-shoots, leaving the low-end feature phone owning market to supermarket camera vendors such as Vivitar and GE.

By 2016, CSC body and lens kits could drop below $300 without an appreciable loss in margins (thanks to increased manufacturing economy-of-scale efficiencies). Combined with trimmer distribution, camera makers could maintain a semblance of historic digital camera revenue levels sans the distribution and support headaches of high-volume/low-margin point-and shoot models.

It's easy to see a future 5-10 years hence in which CSCs represent a plurality of digital camera sales.

What the fashionable X-treme sporter is wearing

Camcorder sales numbers are a greater wreck than the Titanic. With the virtual disappearance of the Flip camera – after all, why spend $150 on a standalone slab-shaped HD camcorder when your smartphone has an equal or better video recorder built in? – camcorder unit sales collapsed, dropping around 25 percent in each of the last three years in the U.S., according to CEA.

The lone pillar propping up the camcorder category is the new small and lightweight "wearable" action cams that mount on helmets or handlebars. GoPro's Hero3 has been the top selling camcorder on multiple Amazon sites worldwide since it came out last fall, for instance. And wearable models from Contour, Liquid Image and Ion also have proven increasingly popular; some industry wags estimate action cams represent around 20-25 percent of camcorder sales.

Just as they took notice of the Flip phenomena, mainstream camcorder makers have taken notice; JVC was the first ski-jumper with its Adixxion wearable cam, followed by Sony with its two cleverly-named Action Cam mountable models (one with Wi-Fi, one without) and Panasonic's A100. No doubt there's more action cam action to come.

But with its limited demographic – extreme sporters – just how sustainable is the action cam business?

Flip cams had a far-wider constituency (everyone) and yet proved to be merely the Pet Rock of camcorders. Action cams have a much smaller, yet admittedly more dedicated, user base. As a result, action cam sales may be more sustainable than Flip cams, but certainly not in the same numbers.

With a limited purchasing public, the action cam niche may not support the number of me-too makers the currently exciting category may attract.

Whether or not the CSC/action cam parachutes prevent an eventual total crash of the digital imaging market remains to be seen. 

No Mad Dash to MPEG-Dash

Monday March 4, 2013 – Greg Scoblete

On March 31, the DASH Industry Forum will release its final guidelines for the MPEG-DASH standard (now dubbed DASH-264). It is a culmination of several years of effort to unify the industry around a single standard for adaptive bit rate streaming: i.e., the practice of dynamically adjusting the video quality of streamed content to mobile devices to account for bandwidth constraints.

DASH aims to unify three disparate adaptive bit rate technologies (Microsoft's Smooth Streaming, Adobe's HTTP Dynamic Streaming and Apple's HTTP Live Streaming or HLS) into a single standard to further drive adoption of streaming video. Yet as of now, only Microsoft and Adobe have endorsed the standard. While Apple has contributed some technology to the DASH standard, it has yet to endorse the final implementation.

This, needless to say, is a major blow.

While Apple's mobile dominance has come under increasing pressure from Android and a resurgent Microsoft, it still dominates the tablet market and will likely maintain a preeminent position for several years yet. A study from video monetization firm FreeWheel indicated that Apple's iOS accounted for 60 percent of mobile video views (Android trailed with 32 percent). Any streaming video standard that does not incorporate Apple is leaving an unacceptably huge swath of the market untouched.

Apple's reluctance to endorse DASH hasn't stopped encoder manufacturers from rallying around the standard, or hailing its inevitability, but it has dimmed some of the optimism that the standard would deliver on its promise of simplifying an operator's life.

Indeed, at CES 2013 enthusiasm for DASH was far more muted than it was at NAB just several months earlier. Rather than an inevitable convergence of disparate standards, some industry players believe that DASH and Apple's HLS may co-exist. This will naturally frustrate equipment and chip makers, who will have to build in support for both standards. It will frustrate content creators and distributors to, as they grapple with multiple formats.

It also raises questions about how Apple uses its dominant market share position. As Michael Vitale observed, the late Steve Jobs relentlessly bashed Adobe for the proprietary nature of Flash while patting himself on the back for embracing open web standards such as HTML5, CSS and JavaScript. Yet by withholding support for DASH in favor of the proprietary HLS, Apple is mirroring the same strategy it complained to Adobe about.

Apple hypocrisy aside, even a slower trot to DASH is unlikely to curb the momentum for multi-screen video delivery. Much like the mobile ecosystem market itself, it's just likely to be more fragmented than many would like.   

Gaming Everywhere, But Don’t You Want Them At Home?

Monday February 25, 2016 – Shelby Cunningham

It’s still a little early to know if Sony has something else up its sleeve, but after the PS4 announcement I feel like Sony isn’t meeting the competition head on. The Xbox 360 has been the PS3’s primary competitor, and the Xbox 360 has dominated the living room in terms of gaming and Internet video streaming, as well as being able to be used as a pay TV STB in some instances. Sony logged success with its streaming services too but Microsoft has been more aggressive and successful at taking over the living room for gaming and video streaming.

Microsoft hasn’t even officially announced the next generation Xbox yet and we have already heard significant rumors about focus on TV integration, use as a pay TV STB, DVR, and Internet streaming, as well as traditional gaming of course. We have seen the official PS4 announcement that promises a new controller and the integration of cloud gaming for backward compatibility. In addition Sony wants to focus on “gaming everywhere.”

With the announcement of the PS4, why does it appear that Sony has shifted visions with this new “gaming everywhere” focus? Similar to the familiar “TV everywhere” system and movement, Sony wants to bring gaming wherever the gamer may happen to be. This is an interesting concept for consoles, which in years past have sought to bring the gamer into the living room and tried to convince him or her to use the console for more than just gaming (to use it for all kinds of entertainment in fact).

Why build a sophisticated piece of hardware to plop into a living room and then send the gamer out into the world?  Why not just allow them to update their PS3s and other Sony hardware devices, making use of the recently acquired Gaikai cloud gaming capabilities?

Not emphasizing a “media center” aspect of the new system appears to be a change in strategy, or at least, messaging.

To be fair, many people will appreciate the focus on gaming, but I believe a wider audience will not be available down the road for this device unless it offers more than games. 

Can BB10 and WP8 impact Android/iOS smartphone dominance?

Tuesday February 19, 2013 – Stewart Wolpin

Republicans/Democrats. VHS/Beta. Team Jacob/Team Edward (ask your kids). And, of course Android/iOS.

Most folks, especially technology folks, like a simple choice, one or the other (the Xbox/PlayStation/Nintendo ménage à trois a notable exception). All of which makes the recent rumblings of competition in the smartphone space so fascinating.

According to recent figures from a number of sources, Google and Apple are battling over nearly 90 percent of the smartphone market. But two wannabees – one a former king looking to reclaim its crown, the other a potential usurper – are fighting an uphill battle. As in the real world, however, third-party and even fourth-party candidates don't stand much of a chance.

Take Windows Phone 8, please – at least that's what Microsoft is pleading. But despite having a critically lauded interface (personally, I think it far superior to Android for novice smartphone users), Microsoft's smartphone share actually shrank in the holiday shopping Q4 last year, from 3.6 percent to 2.9 percent.

Microsoft's problems

Any increased consumer adoption of Windows Phone 8 faces four major hurdles.

One, being the soft acceptance of the Windows 8 desktop OS. Microsoft clearly hoped the creation of an end-to-end OS ecosystem a la Apple would lead to broader WP8 market share. But according to Net Applications, uptake of Windows 8 didn't even reach Windows Vista's levels.

Two is Microsoft's demographic marketing approach. Ads from Nokia, especially for its Lumia 920, for instance, are aimed at perhaps the most loyal user group in tech history – iPhone owners. iPhone is an OS you switch to, not from.

No, the soft underbelly of the smartphone market is Android, whose users rarely take anywhere near full advantage of the often overly complex OS and whose users lack a parallel desktop version. Given the open nature of the OS, Android owners are far less emotionally and technologically invested in the Google ecosystem than Apple acolytes are, which means it should be easier to lure Android owners to switch to the friendlier WP8 platform.

Even lower-hanging fruit for Microsoft are feature phone owners susceptible to compelling reasons to jump on the smartphone bandwagon.

Colorful WP8 handsets – and low pricing (Verizon is offering the wonderful Nokia Lumia 822 for free on contract) – are clearly designed to target non-smartphone owners. But Microsoft's marketing seems to completely ignore this non-smartphone owning constituency.

Three is a lack of enterprise adoption. Since Microsoft is targeting lower-end consumers, WP8 has gained no corporate traction. Without some sort of management mandate, there's no forced foundational user base.

Finally there's Microsoft's smartphone party arrival tardiness. For most consumers, the market has already made up its mind – Apple or Android. No matter how clean, efficient and innovative WP8 is, the OS is perceived as an interloper, a Johnny-come-lately and especially a gamble. Why invest, consumers ponder, in an ecosystem that might not be around in a year or two?

Given this last hurdle, WP8 future – or lack thereof – may result in a case of self-fulfilling prophecy.

BlackBerry's problems

BlackBerry's task is more daunting than WP8 because of its fall from its once lofty smartphone market perch.

Less than three years ago, BlackBerry lorded over the smartphone world. Even after iPhone had been available for two years, BlackBerry still maintained a significantly larger share of the smartphone market over iPhone.

But now, BlackBerry's share of the smartphone market is minuscule in comparison (ouch), and still falling fast (oucher).

What doomed BlackBerry wasn't iPhone or even Android or even its own failure to develop a compelling touchscreen alternative – it was the iPad.

Realizing its error in ignoring the enterprise market when it unveiled the iPhone, Apple carefully laid the foundation for corporate adoption of the iPad. iPad then served as a Trojan Horse for executive acceptance of iPhone and iOS.

What has followed in the last two years is an exodus more shocking than the Hebrews from Egypt. Company after company, government agency after government agency, have abandoned BlackBerry for Apple, with several high profile switches awkwardly announced (for BlackBerry) in the days after the introduction of BlackBerry 10 and the Z10 handsets on January 30.

Worse were two very public BB10 burps. First came the death of New York Magazine's Z10 review unit and subsequent tongue-in-cheek eulogy. Then, there was a tweet by newly-minted BlackBerry creative director Alicia Keys – reportedly from an iPhone. Keys awkwardly asserted her Twitter account had been hacked and that she's been using her Z10 exclusively in 2013, but the mainstream media may have missed (or not believed) this subtlety.

The BlackBerry Z10 is a fine device, despite the death of New York Magazine's review unit, and BB10 represents some solid OS steps forward. But neither is likely enough to cause a reverse migration – it's sort of like leaving a second spouse to go back to your first just because s/he's had plastic surgery and gotten a better job.

While the Z10 and BB10 may help stabilize BlackBerry's bleeding, it may be a case of too much, too late. The damage to BlackBerry's tainted corporate reputation may be too much to overcome. Combined with Microsoft's WP8 seeming failure, it seems Apple and Android will uneasily maintain their smartphone market dominance.

Pay TV's Future: Curation, Not a la Carte

Monday February 11, 2013 – Greg Scoblete

"I bought a bourgeois house in the Hollywood hills, with a trunk-load of hundred thousand dollar bills. Man came by to hook up my cable TV, we settled in for the night my baby and me. We switched ’round and ’round ’til half-past dawn. There was fifty-seven channels and nothin’ on." - Bruce Springsteen

When the Boss sang "57 Channels (And Nothin' On)" the year was 1992. Fast forward to today and Springsteen's channel-surfing woes would be much, much worse.

This over-abundance of content has naturally led to a lot of frustration. On the consumer side, there's the sense that the majority of their cable bill goes to pay for channels they don't watch. For pay TV providers it creates a complicated user experience that manifests itself in an impenetrable grid/program guide that everyone agrees is cumbersome in an age of visually rich user interfaces.

One solution that's frequently bandied about is "unbundling" or "a la carte." Rather than group channels together into various service tiers, pay TV operators could, the theory goes, simply let consumers pick, chose and pay for only the channels they're interested in seeing. In practice a la carte simply isn't feasible given today's market structure. While it's true that sports packages consume a disproportionate share of an operator's programming costs, smaller, niche channels may struggle to stay viable when their reach shrinks, as it naturally would in any unbundling scheme.

But there is a new, alternative future coming into view, and that is "curation." Rather than sift through an endless channel guide, pay TV operators will present their customers with a selection of content that they believe is of interest, using recommendation algorithms in the same way that Netflix is able to surface shows you may enjoy. They will also enable greater customization. At CES, the cloud-based user interface firm ActiveVideo showed off technology that would allow pay TV subscribers to create customized channel clusters based on themes (sports, science, etc.) with live video thumbnails for each channel grouping.

Cisco also stressed content personalization during its CES press conference. Their new "Snowflake" interface, which will be rolled out to service providers as part of Cisco's Videoscape Unity package, combines multiple content sources -- pay TV channels, video-on-demand, YouTube, social networks -- into an experience that can be personalized to each member of the home. The same content recommendation algorithms that Netflix and Amazon use to such great effect are being ported over to cable and IPTV providers to deliver this personalized experience.

In the curated future, you'll still subscribe to hundreds of channels, but you'll only see those that you're interested in. You will have, in effect, the illusion of a la carte, if not the trimmed bill that should accompany it.

Looking ahead, it's also possible that this curated approach will suck more wind out of Apple's (still opaque) TV plans. Aside from Siri integration and an elegant display, the big hope underpinning an Apple foray into TV is the notion that they will be able to force an a la carte approach on pay TV providers. If consumers are getting something close to the a la carte experience from their pay TV providers, they'll be less tempted to jump ship for a "virtual MSOs." At least, that's the theory.

Optical Illusion

Monday February 4, 2013 – Maya Jasmin

So another CES has come and gone and in the past few weeks my colleagues have so eloquently highlighted what stood out on the showroom floor, and any extensions of that floor – i.e. hotel rooms, lunch tables, or cramped corners in the press room – that showcased the next big (or little) idea. And I must admit, as a relative newbie to the show I was starry eyed and intrigued by all the gadgets, from the robot that rode a bike to the beautiful and lifelike 8K HDTV display (with a picture so crisp I shamefully admit that I thought it was a mural when I passed by). But after the show was said and done it was those products that are no longer drooled over or blogged about that danced around in my head.

With connected TVs, phones, tablets, and gaming systems being the stars of the show, what about the less glamorous products that are no longer under the spotlight, such as DVD and Blu-ray Disc players?  Despite reports of near death, DTC forecasts significant shipments for the next five years and likely beyond within the DVD and Blu-ray Disc market. Even in the face of decline, prerecorded DVD and Blu-ray disc shipments are expected to hover above the annual 4.5 billion mark as far out as 2017. And even though Blu-ray doesn’t come close to rivaling its DVD predecessor in shipment volume or longevity, it continues to pump life into the market. Player shipments are expected to experience nominal growth over the next five years with 128 million units shipping in 2013 and 140 million in 2017 on the strength of Blu-ray Disc players. Taking into account PCs and video game systems, DVD and Blu-ray Disc devices are expected to ship over 400 million units annually through 2017.

Even with Internet-delivered and DVR-archived content eating into the market, packaged media continues to hold on to a large portion of the video delivery market with significant growth in select geographies. The days of prolific growth are long gone and most surely will never return for the shiny disc. But to write the packaged media obituary is premature and to ignore it altogether is to miss one of the most significant revenue streams in the video entertainment industry.

For more information on DTC’s Video Optical Disc market forecasts, you can go here to see a table of contents for our Video Optical Disc: Devices and Media report. 

Digital Camera Schizophrenia

Monday January 28, 2013 – Stewart Wolpin

At the recently concluded CES, every major digital camera maker expanded the number of their point-and-shoot SKUs endowed with Wi-Fi. Many product managers told me all their point-and-shoot SKUs would include Wi-Fi in just a couple of years.

This connected feature addition is obviously a reaction to the termite-like affect smartphones are having on the digital imaging business.

About 687 million smartphones and tablets (a majority include cameras) were shipped worldwide in 2012, and DTC predicts there will be 1.5 billion shipped in 2017.

DTC estimates fewer than 135 million digital cameras were shipped worldwide in 2012, projected to drop to below 100 million by 2015.

Particularly vulnerable are point-and-shoot models, shipments of which DTC expects to drop from 94 million this year to just 66 million by 2017.

This sales deterioration could easily speed up; in the U.S., as smartphones plummet in price, smartphone owners are expected to top 60 percent of all mobile phones by mid-year.

To compensate for this digital camera collapse, camera makers have turned in force to higher-margin compact system models, a tactic which seems to have staunched their overall sales and revenue hemorrhages.

On the point-and-shoot end, however, manufacturers are flummoxed on how to compete against enhanced smartphone camera capabilities. This year, all top-line smartphone models are expected to offer 12 or 13 MP images, resolution expected to become the new normal, with more advanced camera-like face-recognition, zoom, HDR and editing features.

Hence the expanded number of connected cameras. Camera makers figure adding smartphone-like Internet connectivity, or even models with the Android OS, will help their point-and-shoot models compete against smartphones.

Except in most cases, digital camera Wi-Fi does not necessarily provide a link to the Internet for instant sharing. Instead, camera Wi-Fi provides a direct Wi-Fi link to a smartphone, to which photos can be automatically transferred and from which can then be shared.

But this is a Catch-22 point-and-shoot Wi-Fi inclusion strategy.

A point-and-shoot camera with Wi-Fi would only appeal to the owner of a smartphone. Except a smartphone owner already owns a camera with Wi-Fi – their smartphone, which takes photos that are "good enough." Or, a standalone digital camera doesn't take photos that are vastly superior enough to warrant carrying around an extra device and performing an extra step for sharing snaps.

Conversely, Wi-Fi in a digital camera would be largely useless to the largest population of potential point-and-shoot purchasers – feature phone owners.

So what will happen to the digital camera business? Mainstream makers may decide to completely abandon the low-end of the point-and-shoot market to drug-store brands such as Vivitar and Polaroid and concentrate instead on the more lucrative CSC product. While overall digital unit sales would continue to drop, profitability would at least stabilize.

At CES, a TV Disconnect

Monday January 21, 2013 – Greg Scoblete

The Consumer Electronics Show isn't known for producing cognitive dissonance (sore feet are another story). But walking the show floor and keeping half an eye and ear tuned to the media frenzy that follows in its wake, it wasn't hard to find it in abundance -- at least around television.

Take what was arguably the show's biggest trend: the emergence of 4K (aka Ultra HD) televisions. From the established TV leaders like Samsung, LG and Panasonic to newcomers to the North American market such as Hisense, enormous 4K TVs dominated the show floor. Sure, they're priced for the one percent (Sony's, for instance, will set you back a cool $12,000), but TV manufacturers are clearly banking on 4K to generate another upgrade cycle now that 3D TV has stalled out. 

Yet when it came to pay TV providers and the companies, like Cisco and Akamai, tasked with actually delivering video content to the home, 4K was not on anyone's lips. In fact, the discussion wasn't about how to ram higher quality video into the home but how to shrink down and disperse existing HD video to multiple, lower resolution, mobile screens.

Dish's big CES news, for instance, was the addition of its Sling transcoding technology to the Hopper DVR, allowing subscribers to access live TV and DVR content on mobile devices away from home. Cisco's introduction of Videoscape Unity -- the next iteration of its video delivery infrastructure and service platform -- focused exclusively on personalized content and "second screen" functions.

If 4K is the next big thing, in other words, someone forgot to tell some of the key players.

There were several exceptions, of course. Broadcom announced its first ever chip to support the HEVC/H.265 codec -- compression technology deemed essential for 4K broadcasts. European satellite firm Eutelsat also unveiled its first "demo" channel broadcasting 4K content.

Yet it was evident that the immediate future of TV has nothing to do with huge, ultra-crisp displays but how to incorporate those tiny, less-than-optimal LCDs on smartphones and tablets into the viewing experience. 

CES Coming-Out Party for UHD

Monday January 14, 2013 – Stewart Wolpin

"What did you see that was cool?" is the per usual post-CES question posed to show-goers by both fellow show-goers making sure they didn't miss anything (I missed the female body painting at the iWare booth, for instance) and by non-attendees who apparently haven't read any of the terabytes of online coverage.

The question usually implies what cool gadgets one has seen. After all, this week at CES there will be 20,000 new gizmos unveiled, both on the show floor and at satellite events and in off-campus hotel rooms.

But the "cool" things at CES may not be new products but the emergence of two disruptive trends:

• large screen ultra-high definition (UHD) 4K TVs

• connected – everything

Neither of these trends are necessarily new. Major TV makers have been exhibiting UHDs for the last couple of years as prototypes. At last year's IFA, every major TV brand exhibited some variation of 84-inch or larger 4K or 8K set.

But at this year's CES, the TV expectation was the fulfillment of last year's OLED promises by LG and Samsung. (Only LG was specific about specifics – March, $12,000, starting in Korea.) Both Panasonic and Sony surprised show-goers with "oh, yeah?" "world's biggest" (by an inch) 56-inch OLED models, and both LG and Samsung claimed "world's first" status for their curved OLED displays (the purpose of which escapes me) but none noted any intention to actually manufacturer and sell either.

As a result, the OLED thunder was stolen by the proliferation of slightly more definitive 4K UHD plans.

LG, Sony, Toshiba and even Vizio not only unveiled 3840 x 2160 pixel 4K 3D LED smart UHD models, they unveiled them in three sizes; LG and Sony in 55, 65 and 84 inches, Toshiba in 58, 65 and 84 inches and Vizio (using panels from Sharp, which ironically did not announce any definitive UHD plans of its own, just its own 70-inch UHD prototype) in 55, 65 and 70 inches. Samsung plans on selling just one UHD SKU, a "world's largest" 85-incher, although they exhibited a 110-inch model.

All have said they'd start selling their UHDs in the spring – and with each exhibiting UHDs in different sizes, it's a more believable claim than those made for OLED.

True, the 84-inch UHD models will run in the pricy $20,000-$25,000 neighborhood. But the smaller models may not be any more expensive than the first round of flat panel 720p HDTVs back in the late 1990s, which experienced healthy sales from the same "look what I have!" crowd likely to be attracted to 4K now that everyone has a 60-inch flat screen. Vizio swore it would offer its UHD at more friendly prices.

Perhaps given the price competition now devouring the current 1080p world, it shouldn't be surprising to see manufacturers drooling at the prospect of higher-margin UHDs.

On Sunday, CEA analysts projected UHD sales would reach 23,000 in the United States this year, 1.5 million by 2016. Considering the start these sets will get this year from a variety of brands, these projections may be spectacularly low.

To me, what I saw at CES was the shocking coming-out party for UHD.

Next time, I'll discuss the CES coming out party of universal gadget connectivity.