The Weekly Riff: Technically Not a Blog

STB Market Continues Healthy Growth But How Long Can it Last?

Wed, 08 Sep 2010 08:06:00 -0700

Wednesday September 8, 2010 – Antonette Goroch

2010 has shown steady growth in STB shipments so far this year, indicating that shipments from the four main platforms (Digital Cable, DTH satellite (and subsequent references), DTT and IPTV) will surpass those seen in 2009, rising from 210 million to 214 million by year end. Indeed, STB shipments have proven to be recession proof in the past several years, showing gains while some other consumer electronics have faltered, but just how far can it go? DTC’s recent look at the markets indicates many of the factors that have been driving this surge will soon cool, putting more pressure than ever on manufacturers to push features and trim costs to preserve both market share and margins.

Several factors have been pushing shipments to new heights over the past couple of years. DTH continues to be responsible for the most substantial gains, fueled by new FTA launches worldwide, massive subscriber growth in India, as well as an increasing uptake of HD/advanced services in more mature systems worldwide, helping to fuel replacement units. Digital cable, meanwhile, continued to see gains from accelerating Chinese system deployments, as well as DTA (digital to analog) adapters in the U.S market. IPTV also saw gains, benefiting from both continued subscriber growth, particularly in the U.S., and a healthy upgrade trend.

DTC expects much of this activity to slow across the board, with shipments peaking by 2011 as new subscriber/FTA growth worldwide wanes in key markets like China, India and Eastern Europe across platforms, and more mature systems see cyclical contractions in their replacement cycles.

Source: DTC

What Does A Hulu IPO Mean For Internet Video?

Mon, 30 Aug 2010 11:33:00 -0700

Monday August 30, 2010

If Hulu goes public later this year it will mark the first pure play Internet video service to reach the public market. Yes, it’s a milestone for the up and coming delivery of TV services over the Internet but how much impact will it really have?

Of course an infusion of capital (assuming a successful IPO) is always welcome. Cash talks but it doesn’t always delver the entire package especially when you have to convince content owners that a heavy bet on Internet delivery won’t cannibalize their lucrative deals with traditional pay TV providers. Hulu, of course, is owned by content owners, which allows them to test out this new delivery pipeline while keeping a bubble of protection around current business models. Cash can buy more marketing and more time to experiment with different business models and new technology, but it won’t necessarily buy the coveted content (or favorable release windows) to drive consumers to the service.

Assuming Hulu can put together desirable content and release windows, it still has to convince consumers to pay to view the content. If it and other Internet video providers don’t deliver the fundamentals (desirable content, reliable quality, convenient access, and content portability), a big sack of IPO cash won’t turn it into a pay-service success. Aside: DTC doesn’t subscribe to the notion that consumers won’t pay for content on the Internet just because they’re used to having it for free. It will take some heavy lifting to reset attitudes but if the above fundamentals are met and consumers see the value, they’ll buy online programming just like they bought cable pay TV packages when they could watch for free.

So are cable, satellite and telco pay TV providers quaking at the prospect of a flood of public-market capital pouring into dedicated Internet video service providers? Probably not. Despite the frequent “news stories” written about consumers dumping their cable and satellite providers to graze unfettered on the Internet, the reality doesn’t bear that out. Just last week, a New York Times/CBS News poll (reported in the New York Times) found that 88% of respondents pay for traditional pay TV services and only 15% said they had considered replacing pay TV services with Internet video services. “Stickin’ it to the cable Man” may seem appealing, but the truth is traditional pay TV, at least for now, provides the most variety, highest quality and the most convenience.

Is 3D the Future or a Gimmick?

Mon, 23 Aug 2010 12:38:00 -0700

Monday August 23, 2010 – Stewart Wolpin

Yes, there are serious companies involved and, yes, there is serious money invested by both content creators and hardware makers, but it's difficult to shake what Comedy Central's faux pundit Stephen Colbert would call the truthiness of 3D. In other words, despite what objective reality might seem to indicate, 3D in the home doesn't feel as if it has the inevitability of past transformative format shifts such as color, high-definition, content digitalization, widescreen and surround sound a decade before each became technology ecosystem sine qua nons.

For instance, despite the popularity of 3D in the movie theater, 3D HDTV sales won't even account for 10% of total TV sales in the U.S., even by the most optimistic forecasts. A recent Kakau.com survey revealed 70% of Japanese consumers are uninterested in purchasing 3D HDTVs.

In today's technological world, a format as radical as 3D must penetrate into multiple levels of technologies, products and content to create an encompassing and seamless ecosystem. This multi-level 3D evolutionary ecosystem has been slow to develop thus far.

A movement in the glacial evolution of the 3D ecosystem was on display at an appropriate venue earlier this week, the Museum of Natural History in Manhattan, where Fuji showed off its second generation dual-lens 3D digital still camera, the W3, the follow-up to the relatively unheralded year-old W1.

While the W3 includes several improvements – a 3.5-inch screen vs. a 2.7-inch display on the W1, 720p 3D/2D AVI video capture, three simultaneous 2D shooting modes (separate/different 2D images captured by each lens), and a $100 price drop to $500 – the biggest difference is the 3D environment.

Since Fuji unveiled the W1 last September, three HDTV makers – Panasonic, Samsung and Sony – have all launched high-profile 3D HDTVs, two camcorder makers, Panasonic and DXG, have announced 3D camcorders, and last month Sony announced two single-lens 3D digital cameras. With a better-prepared market foundation, Fuji's Night at the Museum event signals the company will be a lot more aggressive promoting the W3 and, by extension, further promoting the long-term viability of 3D.

Yet 3D still doesn't feel like the legitimate future of video, especially since this is our third brush with 3D, once in the 1950s and again in the 1970s. As the old – and oft mangled – saying goes, fool me once shame on you, fool me thrice…

Many in the video hardware business and in 3D glasses-wary living rooms are similarly 3D cynical. Yes, three TV heavyweights are in the 3D fight – but where are LG, Vizio, Toshiba, Sharp, et al? Perhaps some of these 3D holdouts will unveil 3D HDTVs at next month's CEDIA Expo – but maybe not. On the camera/camcorder side, where are Canon, Nikon, Flip, Kodak and 3D HDTV maker Samsung? Computer heavyweights such as Microsoft, HP, Dell and Apple – vocal and nearly obstructive during HDTV's formative stages – are shockingly 3D mute.

In addition to the inconvenient necessity of $100-plus 3D glasses, content is a contentious 3D issue. Everyone is waiting for the 800-pound 3D content gorilla to burst into the room – Avatar on Blu-ray. James Cameron's blue blockbuster is due to be re-released into theaters on 27 August, and the 3D Blu-ray likely won't appear until next year, a delay which likely frustrates 3D HDTV and Blu-ray hardware makers.

But the release of one 3D Blu-ray won't ignite a critical mass of consumers to make the expensive re-investment toward a 3D living room, especially so soon after the digital transition and especially especially in this economy. It's also hard to conceive serious Oscar-worthy dramas being produced in 3D – the technology is seen as intrusive and distractive to plot and character development and so far more conducive to explosive action flicks and animation, all of which means 3D won't become the dominant cinematic technology trend the way widescreen and surround sound were. Gaming had thus far has not been the 3D Trojan Horse many have predicted. And anyone who has watched sports in 3D knows simultaneous fast-moving player/ball action makes eye focusing far more difficult and often eye-achingly painful.

Fuji's new 3D camera is fun to use and may even sell well enough to boost the company's imaging profile even without a pervasive 3D landscape. But without a radical shift in technology, it feels as if 3D in the home will prove nothing more than an evolutionary dead end.

U.S. IPTV: How Big Can It Get?

Mon, 16 Aug 2010 11:16:00 -0700

Monday August 16, 2010 – Antonette Goroch

In the early days of telco-delivered IPTV, the saturated U.S. pay TV market (nearly 90 million households) was viewed as the potential Achilles heel for the new class of pay services. To convince U.S. pay TV subscribers to switch from satellite or cable, telcos would have to entice customers with the lower fees and high-tech extras to elbow their way into a viable business.

With the two largest U.S. IPTV operators now nearing a combined 6 million subscribers, the question is no longer can telco IPTV survive, but just how big can it get? AT&T and Verizon have so far beaten these odds, continuing to gain subscribers, as incumbent pay TV operators, both DTH satellite and cable, struggle to hold on to theirs.

In theory, U.S. IPTV could still have tremendous growth ahead of it, with the potential to reach as many as 15 million to 20 million households. Since DirecTV’s 1994 launch, DTH satellite subscribers have grown to more than 32 million as of 2009, by chipping away at analog cable subscribers and growing the pay TV base overall. While the number of analog cable subscribers is decreasing quickly, especially with cable operators’ recent moves to upgrade networks to all-digital through cheap digital-to-analog converters, there were still nearly 20 million analog cable subscribers as of 2009 that could choose IPTV as their upgrade to digital pay TV. Further, the seamless integration of TV service with voice and Internet offers pay TV services an incentive to switch for packages that can enable advanced, “TV Everywhere” services.

The telcos certainly have the need to push their IPTV services. Both AT&T and Verizon reported declines in their core voice customers for June 2010, but saw gains for both TV subscribers and their average revenue per subscriber. This is strong impetus for the two to continue deploying TV across their voice networks and adding services such as 3D, VOD and mobile access to programming. Only time will tell just how big IPTV in the U.S. will get, but it’s clearly here to stay.

How Apple Could Dominate the HDTV Business

Mon, 09 Aug 2010 08:34:00 -0700

Monday August 9, 2010 – Stewart Wolpin

There have been two undisputed 800-pound gorillas in the consumer electronics business over the last century, both perhaps not coincidentally led by genius/seer/founder: RCA and David Sarnoff until the mid 1970s, then Sony and Akio Morita until a few years ago.

As Sony's dominance has waned, Apple and Steve Jobs ascended to the CE throne. Two months ago, Apple passed Microsoft as the world's most valuable technology company, and is poised to pass Exxon Mobile as the most valuable company in the U.S.

While Apple and Jobs dominate most current gadget conversations, it's hard to think of the company as an RCA or a Sony. Why? First, Apple is conspicuously absent from CES. Second, Apple doesn't make what has been technology's marquee product – televisions. At least not yet.

There have been rumblings that Apple may be contemplating a full bore move into the living room. As usual, Steve Jobs' timing would be perfect.

iPod, iPhone and the iPad were raging successes because Apple capitalized on the pent-up potential of bleeding edge technologies and the pent-up desires of consumers anticipating the consumer product exploitation of these bleeding edge technologies.

HDTVs have just about reached this unfulfilled potential level. Widgets give consumers Web-lite access, but you have to add nearly every other advanced capability – optical disc drive (Blu-ray/DVD), DVR, video game, video streaming, PC-based media syncing, et al – via an increasing number of HDMI-connected set-top boxes. The TV is trying to morph into a smart box, but TVs are made by historically dumb box makers.

Apple brings to the TV party what it brought to the portable media player, the cellphone and the tablet PC businesses: nearly seamless content, functionality and user interface integration. No current TV maker has this wherewithal.

What would an Apple HDTV – iTV? – look and act like? It would likely be a cross between a dumbed-down iMac and a souped-up iPad. Physically, an Apple HDTV could be an all-in-one unit and likely include a slot-load Blu-ray player (even though not even the latest iMacs include a Blu-ray drive), a high-capacity DVR/hard drive with TiVo-like programming capability or even cloud program storage, a Web cam for FaceTime or Skype video chatting, and WiFi connectivity, along with a fully merged PC/TV jackpack, SD card slot and USB jacks.

On the software side, an Apple HDTV would likely run a customized, largely invisible version of iOS 4, with tiled multi-window/multi-program viewing, iPhone and iPad app compatibility (that's nearly 300,000 "widgets"), an EPG-equipped iTunes to access streaming and downloadable content and to sync PC-based content (perhaps with a Pandora-like streaming music service), and, of course, game and remote control via iPhone/iPod/iPad.

Apple would bring more than relatively simple function integration, though. An Apple-programmed iTV could let you remotely program or view programs without a Slingbox, or transfer DVR recorded programs onto an iPad/iPhone/iPod Touch as AT&T U-verse customers can already do. Maybe you'd even be able to check email and surf the Web via a real TV-based browser, and connect a printer for hard copy TV-based shopping receipts or photos.

With iTunes and access to sites such as Hulu, many consumers might more seriously contemplate cutting the cable cord.

One quivers at the possibilities.

What's the iTV hold-up? Certainly not distribution. Apple has carefully built retail relationships with Best Buy (and, therefore, the in-store Magnolias would be perfect iTV showcases), Wal-Mart and radio Shack, along with its high-profile stores.

Apple's concern may be about profit margin. HDTV is a price-sensitive commodity business. An Apple HDTV would likely carry a hefty premium (albeit an easily defendable one), so the company would likely not be aiming at mass market domination.

But millions would likely happily pay.

Apple, of course, doesn't need to be in the HDTV business. And given what's happened in the mobile phone business, it's debatable whether or not TVs are today's marquee technology product. But that's a topic for another day.

PC Update

Mon, 02 Aug 2010 10:05:00 -0700

Monday August 2, 2010 – Maya Jasmin

In conjunction with the bounce back of the PC market, there is a noticeable shift away from traditional desktop and laptop PCs with video optical disc drives to newer less expensive netbook and tablet PCs.

A growing number of global shipments are comprised of netbook and tablet PC units which DTC expects to see phenomenal growth within the next 5 years. DTC estimates that 14% of all PC shipments in 2009 were netbooks and tablet PCs yielding 42.6 million units, and expects that number to steadily climb with 162 million of these units shipping in 2015 accounting for 40% of the global market.

Source: DTC

The estimated surge in sales is in part because the PC market was affected much less severely than anticipated by the recent global economic downturn and is expected to bounce back nicely in 2010 experiencing an impressive recovery. DTC estimates that nearly 304 million PCs shipped globally in 2009, with nearly 350 million and 405 million units expected to ship in 2010 and 2015 respectively.

Video Optical Disc PCs although expected to experience robust shipments throughout the forecast period will not experience the growth that netbook and tablet PCs will. After a notable rebound between 2009 and 2010 in which shipments are expected to reflect 12% growth, shipments will remain flat at best throughout the remainder of the forecast period. DTC estimates that roughly 213 million units shipped in 2009 and expects shipments of nearly 239 million units by year end 2010 and 243 million units in 2015. The forecasted erosion of video optical disc PCs reflects the increasing rate in which consumers view video programming through their internet connections as opposed to playing back a DVD or Blu-ray disc.

Cable Says Goodbye to FireWire

Mon, 26 Jul 2010 15:51:00 -0700

Monday July 26, 2010 – Antonette Goroch

Now that the FCC has lifted the 1394 mandate for cable), operators may want to wait on popping the champagne corks as the “broadband happy” FCC plans to mandate an IP interface that would open the door to more over-the-top (OTT) programming. After five years of forced inclusion, cable operators in the U.S. will no longer need to have FireWire (IEEE 1394) interfaces in their HD STBs.

The implications of this are likely two fold. First, the pace of cable HD expansion in the U.S. is likely to quicken as cable operators further deploy HD STBs. Although there has already been considerable momentum in cable HD for some time, this will only hasten that trend as operators will now be able to lower the basic bill of materials for their HD STBs by a significant margin.

The second implication is slightly less clear. In place of the 1394 requirement, the FCC is now mandating that HD STBs have IP connection capability instead—facilitating the same goals of interoperability and networking with a more accepted market standard. This is certain to fuel the wave of OTT content providers that have already made their way to the SSTB, threatening to upset existing pay TV business models and value chains. So while cable operators are throwing off one challenge to their business (a useless, government imposed cost), they may be now facing a far greater one—addressing a radical shift in their role as a content aggregator and gatekeeper.

Source: DTC

In 2005, the FCC mandated that all HD STBs must have the 1394 interface, with the intent of spurring greater networking and interoperability capabilities in next generation devices through standardization. Over that time, while cable operators have for the most part complied, the marketplace decided overwhelmingly against 1394 as a next generation interface. With few CE devices making use of 1394, the interface has remained largely unused, becoming a pointless expense for cable operators more interested than ever in cutting costs. Indeed, cable operators in all other world markets dropped the interface years ago, as did other pay TV platforms, opting for HDMI only for HD interface.

Digital Camera: R.I.P.?

Mon, 19 Jul 2010 13:37:00 -0700

Monday July 19, 2010 – Stewart Wolpin

As my wife and I prepared to go out on the 4th of July, she asked if I was bringing along a digital camera. "Why?" I asked. "I have my iPhone 4, which will be fine for the outdoor pictures we'll be taking."

I have a feeling we won't be the only family making the decision to leave our point-and-shoot digital camera or camcorder at home in the coming months and years. Suddenly, 5 megapixels is becoming a baseline for cellcams and 720p for cell video recorders on the next generation of superphones such as the iPhone 4, the Sprint HTC EVO, the varying HTC Incredible, and, this week, the Motorola Droid X from Verizon and the first of four Samsung Galaxy S models, the Captivate for AT&T.

It's not that a cellcam, regardless of how many megapixels manufacturers mash into them, are better than a standalone digital camera. They're not, not by a long shot, although the imaging technology in the iPhone 4 is a major step forward, especially with the front-facing camera for self-portraits that, I found on the 4th of July, is perfect for couples and scenery. But the qualitative image difference between a standalone digital camera and a cellcam, especially for outdoor daylight photos, isn't as stark as it used to be. And, if history has taught us anything about consumer behavior, it’s that convenience is the single highest determining factor for technology adoption. And as my personal experience attests, if we can get away with carrying one less piece of technological bric-a-brac, we will.

In the next few years, sales for both point-and-shoot digital cameras and camcorders such as the Flip, could plummet as fast as personal navigation devices have in the face of cell phones including equal-to or better-than navigation apps.

Digital cameras are the most vulnerable short term to the cellcam effect. Despite constant improvement and lower prices, shipments of digital cameras are expected to fall 5% percent in 2010 and 10% in 2011. Cellcams offer one major advantage over higher-quality digital cameras: the ability to immediately send just-snapped photos to friends, family and Facebook.

Source: DTC

Long term, Flip and other sub-$200 pocketcams are even more cell phone replaceable. The qualitative difference between footage from a (relatively) cheap pocketcam and a 720p cell video recorder are minimal. Since you're carrying your cell phone anyway, wouldn't you rather leave home one piece of redundant gear? Of course you would, and so likely will a lot of people.

DTC projects shipments of MPEG-4 AVC camcorders to rise in the next few years, from just under 6 million units in 2010 to almost 9 million units in 2011, due to the transition from high-end units to low-cost flash media units. This growth is sure to be adversely affected by the growing number of superphones with 720p video capture capabilities.

It’s undeniable that better cameras/camcorders in superphones will have an impact on the single-use device sales, but keep in mind that superphones will only represent a small set of the overall mobile phone market for the near term. Stay tuned.

Mobile Devices Dominate the MPEG-4 AVC Market

Mon, 12 Jul 2010 14:15:00 -0700

Monday July 11, 2010

The MPEG-4 AVC codec may be improving compression for digital video devices such as set-top boxes (STBs) and Blu-ray Disc devices, but the number of mobile devices compatible with MPEG-4 AVC far outweighs those more traditional digital video products.

Many consumers now expect their portable devices to provide high-quality video and most mobile devices are using the latest MPEG open standard to meet that expectation. In short, the latest MPEG codec has done a lot of the heavy lifting required to spread the analog-to-digital transition to the red-hot portable device category.

Source: DTC

For a more in-depth data on the use of the MPEG-4 AVC codec, DTC’s latest MPEG-4 AVC reports are now available. Follow the link for more information and detailed tables of content.

Meet Your New Gaming Standard

Tue, 06 Jul 2010 09:41:00 -0700

Tuesday July 6, 2010 – Shelby Cunningham

After playing some of the new PS3 games in 3D at E3 I am convinced that video games will do a lot more than TV content to encourage the sale and use of 3D TVs. For me at least, 3D requires some sort of interaction beyond leaning back and watching a TV to captivate me and keep my attention. Game play produces an intense and concentrated interaction where you forget you’re wearing glasses or forget the need to check Twitter. As long as viewing 3D on a TV requires glasses, the laser-focused activities that naturally discourage multitasking are likely to deliver the best 3D experience.

The gaming community is a leader in providing source devices and material for new stereoscopic 3D TV sets. The PS3 has already received its first firmware update that supports 3D games. Microsoft has remained silent about whether the Xbox 360 will support 3D except for saying that it is capable of doing so. During the EA press conference at E3, however, the makers of Crysis 2 may have “outed” Microsoft by saying that the game will be the first 3D game to play on multiple consoles in stereoscopic 3D. The current Wii won’t handle 3D or receive any updates to do so, but Nintendo says it is considering 3D for the next generation Wii depending on sales of new 3D TVs. Despite its conservative approach to the 3D console market, Nintendo is no 3D slacker, however, as it demonstrated a working prototype handheld 3D gaming device (3DS) that requires no glasses.

3D gaming will definitely take some getting used to, and supposedly you won’t be able to play the 3D games as long as a regular game due to suggested 3D viewing lengths, but I don’t think that will stop hardcore gamers.

Judging by the stable of veteran game makers with valuable content franchises developing 3D games, whether for the PS3 or the new Nintendo 3DS, industry players are betting on 3D with development dollars. I’m betting that TV makers can count on the game industry to deliver sales from hardcore gamers buying 3D TVs.

And once those hardcore gamers buy the 3D TV set, will there be time left over for them to watch a 3D movie or sports event? You’ll have to ask them once they take off the 3D glasses.

VOD Services: Economic Engine or Just the New Face of Pay TV?

Mon, 28 Jun 2010 09:41:00 -0700

Monday June 28, 2010 – Antonette Goroch

For many years VOD services were heralded as a robust new revenue stream for pay TV operators seeking to expand average revenues per subscriber. Indeed, ten years ago VOD was deemed the “economic engine of the new cable era”, a new technological innovation that would triple anemic pay-per-view buy rates. There’s no doubt that VOD has swept pay TV like a tidal wave, but just how much of an economic engine it is remains an open question.

Availability and consumption of video on demand has grown exponentially over the past two years. Pay TV operators across platforms have sought to use it as a way to beef up service offerings, upgrade cable STBs and retain subscribers in heavily competitive markets. But rather than being transactional based, as its predecessor PPV was, it has largely been available without a per-view transaction fee. Instead it’s included in subscription tiers. In a recent roundtable, several cable MSOs agreed that subscription-based VOD makes up the vast majority of VOD content. Canadian MSO, Rogers Communications, put hard numbers to this and noted that though its annual subscription revenue was more than $1.8 billion, transactional VOD was a mere $100 million, less than 5%.

This paradigm is unlikely to change, and far more likely to intensify. This is because the huge influx of VOD availability reflects a changing pattern of video consumption -- one that doesn’t include per-view fees and a new revenue stream for operators. Consumers expect large libraries of diverse content, available when and where they choose. Envisioning VOD as a separate revenue stream in this context actually makes it a competitive disadvantage, rather than an asset, because it places a premium on what consumers are coming to expect as the norm for viewing. While VOD has certainly proven to be as revolutionary as forecast, it hasn’t lived up to its promise as a significant new revenue stream. In this competitive pay and free TV environment, where many consumers now simply access their PVRs to watch TV off the “time grid,” the ability to access previously aired programs is regarded as a standard feature.

Digital Video PC Peripheral Shipments

Mon, 21 Jun 2010 09:40:00 -0700

Monday June 21, 2010 - Shelby Cunningham

These days more people are using their PCs to watch and create video, which is upping the demand for PC makers to include video-friendly and capable cards, tuners and drives in their PCs. And as more PCs come ready for people to watch video straight out of the box, less video peripherals are being shipped for aftermarket retail sales.

Retail PC video optical disc drive shipments are dropping rapidly because most desktop and laptop PCs come equipped with DVD drives. Retail PC video optical disc drives were still turning in respectable shipment numbers in 2009 with 62 million units shipped, but are forecasted to decline going down to only 34 million units in 2012. The only PC video peripheral with any growth are PC DTV tuners, which will see shipments of almost 12 million in 2012, up from 6 million in 2008. PC DTV tuner shipments will continue to grow slowly for a while, but retail graphics cards and video optical disc drives will continue their downward fall.

Source: DTC

Where's the Avatar 3D Blu-ray?!

Mon, 14 Jun 2010 09:40:00 -0700

Monday June 14, 2010 – Stewart Wolpin

If I were a geek or a nerd (and I'm both), I would be selling my blood and other bodily fluids, cashing in every bit of loose change around the house and maxing out my weary credit cards to get myself a 3D HDTV and a 3D Blu-ray player so I could drool overAvatar at home on 3D Blu-ray. And I'll bet millions of other blue-painted geeks and nerds would be tramping down to Best Buy and other big box retailers to do the same.

One problem. There's no 3D Blu-ray version of Avatar. And from a marketing point of view, I can't for the life of me figure out why.

Panasonic has been flaunting its relationship with James Cameron for nearly two years. At the 2009 and 2010 CES, Panasonic played video of Cameron extolling the virtues of 3D and how he valued his relationship with the company. Observers would have bet their farms (okay, I would have bet my farm, if I owned one) that Panasonic would start selling its 3D Blu-ray and 3D HDTVs to coincide with the home video release of the 3D Blu-ray of Avatar.

But sans a 3D Blu-ray Avatar, I'm guessing no one will sell as many 3D HDTVs or 3D Blu-ray decks this year as they could have.

It's hard to fault Fox Home Video for holding back a 3D version of Avatar. The 2D version sold 6.7 million units in its first four days of release, 2.7 million on Blu-ray, both records, and both versions remain among the top five sellers six weeks after its April 22 release. And Fox seems quite satisfied with this bounteously blue status quo. In fact, it'll dip a second time when it releases a special edition DVD and Blu-ray in November. A 3D version, which can now stand for the growing infamous home video third dip, hasn't even been scheduled and likely won't be out until sometime next year.

But this long-term thinking is paradoxically short-sighted. Avatar is the 3D killer app and could create a market for triple dips for all of Fox's other titles. Authoring tools can create 3D versions of nearly any film, much like colorization (I'm not saying they should, I'm just saying they could), plus you immediately open a fertile home market for all the current 3D films about to be released theatrically.

Instead, by waiting until 2011 for a 3D Blu-ray Avatar, Fox pushes back 3D Blu-ray sales potential not only for themselves but other suddenly 3D-happy studios and hardware makers, and leaves us Na'vi lovers disconnected from the 3D Tree of Souls. Well done, Fox!

It's clear Panasonic doesn't quite have the Unobtanium, metaphorically speaking, to get Fox to release a 3D version ofAvatar to support the 3D hardware launch. One reason I've heard for Fox's delay is that 3D authoring tools aren't up to snuff. I find that hard to believe. First, earlier this year Cameron was quoted as saying he believed a 3D Blu-ray version would be out in the fall. He must have felt it was totally doable, but was quickly contradicted by the suits at Fox. Second, it's hard to believe Cameron and crew are picker than Pixar, which already has released Up on 3D Blu-ray.

More likely, Fox is being conservative (what a shock), waiting for a critical mass of 3D HDTVs and 3D Blu-ray players to be sold in order to ensure the 3D Avatar makes as big a noise as the 2D versions, or at least doesn't land with a dull sales thud. But this creates the old chicken-egg game of chicken that hardware makers and content providers have been playing since the VCR first came out in 1976. You put out hardware first. No, you put out content first. Hardware first. Content first.

Ironically, Fox was the first studio to support home video in 1977 when it released 50 titles on tape, leading off withM*A*S*H. In fact, about a year later, Fox bought the duplication company, Magnetic Video, as the foundation to create Fox Home Video and helped launch the home video revolution.

Like the fictional RDA Corporation in Avatar didn't remember the sins of their forefathers in their rape-of-the-land encounters with indigenous peoples, apparently the folks at Fox have forgotten how they once helped create a new profit center for hardware makers, themselves and the other studios.

In the meantime, geeks and nerds like us will be blue until we can get blue in 3D next year.

Dried up ATSC STB Market? Don’t look for it to blow away yet

Mon, 07 Jun 2010 09:39:00 -0700

Monday June 7, 2010 – Myra Moore

Now that the U.S. analog terrestrial TV shut off is a distant memory, conventional wisdom suggests that the market for ATSC set-top boxes (STBs) will dry up. After all, DTC’s research shows that an estimated 21.6 million ATSC STBs shipped in 2009 (more than 15 million were digital-to-analog converter boxes) and we anticipate shipments will plummet to about 8.2 million this year.

The U.S. DtA converter-box market was an anomaly – an almost-forced purchase (backed up with a government subsidy) to accommodate a one-time event. In other words, it made possible a weird and meteoric growth spike that would leave any statistician scratching his head. In the future, digital terrestrial TV receivers found in STBs will mostly be coupled with other receiver types, such as IPTV or satellite. The 8.2 million ATSC STBs forecasted to ship this year will be made up mostly of hybrid STBs – DTH satellite and IPTV with hybrid ATSC/IPTV boxes are anticipated to account for the most growth in 2011. If there is a growth area for DTT STBs, it is as added receivers in over-the-top boxes designed to bring in video programming from select web sites.

Coupling local and national over-the-air programming with Internet-delivered programming makes an Internet STB purchase more appealing, especially if the OTA programming comes without a fee.

STB suppliers clearly aren’t going to sustain their businesses by selling single-purpose converter boxes in ATSC-adopting countries about to shut off their analog transmissions. With the U.S. shut off complete (with the exception of low-power TV stations), only Canada, South Korea, Mexico, El Salvador, and Honduras remain. Canada is scheduled for 2011 and South Korea in 2013 with the remaining countries with much later shut-off dates planned. The rest of the world that has adopted a transmission standard has adopted the DVB-T or ISDB-T standards.

STB shipments may not fly as high they did during the U.S. analog shut off, but that doesn’t mean that they don’t’ have a future.

Source: DTC

Dawn of a New Era for U.S. Satellite Ops Requires New Thinking

Tue, 01 Jun 2010 09:37:00 -0700

Tuesday June 1, 2010 – Antonette Goroch

Though both EchoStar and DirecTV saw subscriber gains in 2009, both are forecasting slowdowns in new subscriber additions for 2010, driving home the point that DTH satellite as a pay TV platform in the U.S. is clearly established and mature. It’s been years since anyone called DirecTV Death Star, as it was nicknamed by nervous cable ops upon its launch in 1994, and both Dish Network and DirecTV now rank in the top five U.S. pay TV operators. Today they have become the old guard and are no longer the feisty new kid on the block.

This maturation signals a new era for DTH satellite operators in the U.S., requiring a new mindset. No longer can they rely on the low hanging fruit of dissatisfied cable customers to achieve exponential annual subscriber gains as they did throughout the nineties and into the early 2000s. Most likely to have made the “switch” to DTH satellite already have, and cable operators have worked hard to achieve parity through better service (remember the days of waiting for a cable installation that would come sometime between nine and five?), triple play offerings, HD, VOD and now 3D. Added to this, they—along with cable operators—face new competitive threats from both IPTV pay TV operators like AT&T and Verizon, and over the top providers like Netflix or VUDU.

Both operators have responded to this shift by focusing on increasing ARPUs on existing subs through such means as more premium offerings, HD and on demand, and their respective financials show success in this regard. Perhaps more promising in terms of growth is that both operators have increased their international efforts, seeking newer, less mature markets. DirecTV recently consolidated its Latin America efforts and has seen impressive subscriber gains in the last couple of years in Sky Latin America. EchoStar, meanwhile, aggressive as ever, has increased its international presence through joint ventures in Mexico and Taiwan over the last two years.

Even with such moves, it is unlikely that DTH satellite will ever again see the rapid gains it saw a decade ago. Today’s challenge lies far more in just holding the ground it has so successfully attained.

Checking in on the Optical Disc Market

Mon, 24 May 2010 09:35:00 -0700

Monday May 24, 2010

Pundits are fond of declaring death-by-Internet for physical media that play back movies and other popular video entertainment. There’s lots of access of Internet video programs on the desktop but most people want to see that directly on their TVs. Ironically, one of the most widely available ways to do that is with a Blu-ray Disc player with an Internet connection and a tie-in with a video internet site (such as YouTube, Netflix or VUDU).

Sony PlayStation 3 (more than 35 million shipped to date since the system’s release in November 2006) is probably the most prominent example of this three-feature ability in one device. Consumers can play a DVD or BD on the optical disc drive or they can watch a movie through their Netflix subscription. The industry prognosticators’ fondness of painting a black and white picture doesn’t quite fit in with this reality.

Declaring the disc dead is plain premature. The pre-recorded disc market is still shipping billions of DVDs around the world every year (over 5 billion shipped in 2009), and the Blu-ray market is about to rise up into the billions range in 2011 when it will ship 1.3 billion discs.

Why wouldn’t the latest crop of feature-rich Blu-ray players attract consumers who want access to Netflix, VUDU and YouTube and want to watch movies in the highest-definition available on the market. It seems like shelling out a few extra dollars for the full-featured BD players is a pretty reasonable value.

The rise in shipments of pre-recorded Blu-ray discs shows that people aren’t ditching their packaged media just yet. Instead, they’re buying Internet connected Blu-ray players to stream Netflix movies on, and at the same time they are still buying Blu-ray movies in disc form, fueling this still healthy market.

Source: DTC

For more information check out our Video Optical Disc, Devices and Media Report here:http://www.blogger.com/report_optdisc.aspx

The Great HDMI Cheat

Mon, 17 May 2010 09:34:00 -0700

Monday May 17, 2010 – Stewart Wolpin

If I were an A/V sales person, I would likely lose my job sometime this summer because I would try to talk customers out of buying an HDTV or A/V receiver (AVR).

And, quite frankly, every sales person with a conscience should follow me to the unemployment line.

Why? Because customers would be buying the AVR under false pretenses, believing they were getting a complete product.

They're not.

All new HDTVs and AVRs are (or should be) equipped with HDMI jacks supporting version 1.4a. Ostensibly, the 1.4 standard, adopted at the end of last year, enables the transport of 3D signals from the Blu-ray player through AVR to the HDTV. The spec was upgraded to 1.4a (and never has a lower case "a" been more important) at the end of February to support the cornucopia of broadcast 3D schemes.

HDMI 1.4a also includes three other benefits, aside from 3D support: Audio Return Channel (ARC), which enables AVRs to pass audio signals back from the HDTV through the HDMI to the amplifier (especially handy for Pandora or Rhapsody from a networked HDTV, or to more easily connect a soundbar), support for future 2K and 4K ultra HD standards, and, something called HDMI E C (Ethernet channel), the capability to pass Ethernet signals from HDMI 1.4 connected device to HDMI 1.4 connected device, which means all you need is one Ethernet connection to any of your HDMI 1.4 devices to bring Ethernet to ALL HDMI 1.4 connected devices.

The problem is, current HDMI 1.4a product supports only 3D and ARC. Chip sets included 2K/4K and HEC support are in production now, but I'm told by several AVR makers that they won't be complete until next year.

Which means all new HDMI 1.4a gear made and sold in the next 6-8 months will soon be obsolete.

Oh, cool your over-reacting, mock-indignitied jets, I hear you say. It's not that big of a deal.

Au contraire, my rationalizing friends. It's not you spending $3,000 on a new 3D home theater system, only to find out eight months from now that you're missing a critical piece no one bothered to tell you about.

What raises my dander is the lack of knowledge, not on the sales floor (we're all used to that bastion of misinformation serving as our industry's front lines), but among the actual makers of gear. In preparation for a large article I'm writing for a consumer magazine, I have interviewed several product managers, and I had to explain the differences between HDMI 1.3, HDMI 1.4 and HDMI 1.4a TO THEM.

I am depressed.

Will Google Have What It Takes to Succeed on the Set-top?

Mon, 10 May 2010 09:30:00 -0700

Monday May 10, 2010 – Antonette Goroch

The idea of getting TV content through an Internet STB is nothing new but Google’s plans for a TV platform gives the emerging trend a little more heft. It could also give the trend a lot more capital if Google is making a serious run at the TV. But will Google be able to transport its Internet hegemony into the home, or will this ultimately be yet another niche Internet TV product?

Google’s plan for an Internet STB is certainly not the only one out there. Indeed, the field of options is rather crowded for a category that ships only about a million units a year (and likely won’t ever get much bigger). Roku leads the pack with its Netflix box, followed by Apple TV and a handful of other CE manufacturers like Sony and LG. Ultimately, DTC believes that Internet TV platforms will get integrated into traditional STBs, hence our conservative forecasts for stand-alone digital content appliances (DCAs).

Although its reported partners, Sony and Intel, are making the first Google TV STBs, key to Google’s success will be its ability to proliferate its underlying platform into the many Internet connected devices now hitting the market. Already Google has indicated it intends to keep its platform an open one for developers, to facilitate iPhone-like apps that can add content and functionality without Apple’s proprietary limits. Further, it is reportedly working with satellite operator DISH Network on search/interface options for the pay TV context that could bring Internet like browsing to multichannel TV.

The details of the full initiative are pretty thin still, and those details are what will likely determine the platform’s ultimate success. But if Google is successful in establishing itself as a bridge between traditional pay TV content and “over the top” Internet content, the implications could be huge and shake things up for many established players across the value chain.

Source: DTC

U.S. Broadcast Mobile TV: The Experiment Begins

Mon, 03 May 2010 19:21:00 -0700

Monday May 3, 2010 – Myra Moore

One prominent argument against the success of U.S. broadcast mobile TV services goes something like this: Americans won’t embrace mobile TV because not many use public transportation, and that it is somehow culturally alien for Americans to watch TV on the go. It’s too soon to declare success or failure for broadcast mobile TV, but if it is ultimately unsuccessful, I doubt it will be for the oft-cited reasons above.

Assuming the primary use of mobile TV will be with public-transportation commuters seems short sighted. I can’t see why there won’t be some behind-the-wheel viewing (even if it’s illegal) of last night’s buzzer beater replay, or a local weather alert while sitting at the stop light. After all, being behind the wheel doesn’t stop a lot of people from texting (It may not be illegal in many places but it’s still a bad idea). And as for a cultural disconnect, watching TV is as American as apple pie. Even if folks aren’t watching while riding on public transportation, there’s standing in line, sitting on the sidelines, and surreptitious game watching at work. Don’t forget that the broadcast mobile TV market also addresses the “backseat” TV watching experience.

My money is on business models, content, handset integration, and quality of experience as the primary factors that will make or break the broadcast mobile TV market – not consumer rejection of the concept. The current mobile broadcast services – Flo services (handsets and backseat) and DTH satellite providers (DirecTV and Dish for backseat applications) – haven’t added up to much, but they only represent one business model and one type of content.

In the meantime, U.S. terrestrial broadcasters are about to weigh in with different business models and content with their initial experiments with mobile DTV, which is the mobile flavor coming out of the ATSC digital terrestrial TV standard. DTC’s recent research on available local broadcaster plans shows that there are more than 60 local TV stations that have aired a MDTV signal, or are purchasing equipment to test the system. This month’s OMVC Consumer Showcase being held in Washington, D.C. is a kind of coming out party for mobile TV from traditional TV broadcasters.

The Consumer Showcase is designed to give participating broadcasters (and the local TV broadcaster community at large) a read on how consumers will use the service and what they like and don’t like about it. What if they don’t like it? If so, I doubt it will be because they don’t want to watch TV while on the go.

NAB Goes OTT

Mon, 26 Apr 2010 19:23:00 -0700

Monday April 26, 2010 – Antonette Goroch

Over-the-Top (OTT) content, referring to content delivered to the TV over the Internet, exclusive of any pay TV content package was as hot a topic as was 3D at the recent NAB show and well it should have been. The trend is causing plenty of hand wringing and opportunity searching – a sure sign of big business shifts to come.

The trend was well illustrated with the current wave of Internet connected CE devices, such as TVs, STBs and virtually every other device with some connection to the television, on display on the show floor. Fear of piracy and lost revenues had previously kept content providers from allowing quality brands and shows outside the walled gardens of pay TV systems, but with the convergence of TV and Internet now a mainstream reality, attitudes are changing—and threatening those very same walled gardens with new competition.

Indeed, over the past year, major content providers, such as NBC Universal, Fox Broadcasting Co., CBS Corp., and ABC Inc. have shown themselves to be both willing and able to take advantage of OTT through sites such as Hulu and YouTube, as well as content hosted through their own sites via services such as Veoh Networks--pushing Internet video usage to new heights. Many in the industry are quick to brush this “threat” off, saying that OTT content isn’t an adequate replacement for multichannel pay TV packages in either breadth or quality of service.

But such pronouncements miss the point: The landscape for the delivery of television content is changing, and both business models and value chains will change along with it, like it or not.

There are a handful of pay TV operators rising to the challenge, seeking to forestall their own obsolescence through initiatives that integrate OTT as part of the pay TV experience. Examples include several European operators, such as BSkyB (DTH satellite) and Free Telecom (IPTV), who offer “catch up” TV and on-demand access via the Internet to subscribers.

Most of the mature multichannel markets are all ready fairly stagnant in terms of new subscribers, and even a small decrease in subscribership will be costly to pay TV operators already scrambling in a competitive multiplatform environment. It is likely that success will ultimately come to those who can see OTT as a competitive opportunity—not a threat.