Posts for 'AppleTV'

1. Advertising business model gains further momentum

I saw '08 as a year in which the broadband ad model continued growing in importance as the paid model remained in the back seat, at least for now. I think that's pretty much been borne out. We've seen countless new video-oriented sites launch in '08. To be sure many of them are now scrambling to stay afloat in the current ad-crunched environment, and there will no doubt be a shakeout among these sites in '09. However, the basic premise, that users mainly expect free video, and that this is the way to grow adoption, is mostly conventional wisdom now.

The exception on the paid front continues to be iTunes, which announced in October that it has sold 200 million TV episode downloads to date. At $1.99 apiece, that would imply iTunes TV program downloads exceed all ad-supported video sites to date. The problem of course is once you get past iTunes things fall off quickly. Other entrants like Xbox Live, Amazon and Netflix are all making progress with paid approaches, but still the market is held back by at least 3 challenges: lack of mass broadband-to-the-TV connectivity, a robust incumbent DVD model, and limited online delivery rights. That means advertising is likely to dominate again in '09.

2. Brand marketers jump on broadband bandwagon

I expected that '08 would see more brands pursue direct-to-consumer broadband-centric campaigns. Sure enough, the year brought a variety of initiatives from a diverse range of companies like Shell, Nike, Ritz-Carlton, Lifestyles Condoms, Hellman's and many others.

What I didn't foresee was the more important emphasis that many brands would place on user-generated video contests. In '08 there were such contests from Baby Ruth, Dove, McDonald's, Klondike and many others. Coming up in early '09 is Doritos' splashy $1 million UGV Super Bowl contest, certain to put even more emphasis on these contests. I see no letup in '09.

3. Beijing Summer Olympics are a broadband blowout

I was very bullish on the opportunity for the '08 Summer Games to redefine how broadband coverage can add value to live sporting events. Anyone who experienced any of the Olympics online can certainly attest to the convenience broadband enabled (especially given the huge time zone difference to the U.S.), but without sacrificing any video quality. The staggering numbers certainly attested to their popularity.

Still, some analysts were chagrined by how little revenue the Olympics likely brought in for NBC. While I'm always in favor of optimizing revenues, I tried to take the longer view as I wrote here and here. The Olympics were a breakthrough technical and operational accomplishment which exposed millions of users to broadband's benefits. For now, that's sufficient reward.

4. 2008 is the "Year of the broadband presidential election"

With the '08 election already in full swing last December (remember the heated primaries?), broadband was already making its presence known. It only continued as the year and the election drama wore on. As I recently summarized, broadband was felt in many ways in this election cycle. President-elect Obama seems committed to continuing broadband's role with his weekly YouTube updates and behind-the-scenes clips. Still, as important as video was in the election, more important was the Internet's social media capabilities being harnessed for organizing and fundraising. Obama has set a high bar for future candidates to meet.

5. WGA Strike fuels broadband video proliferation

Here's one I overstated. Last December, I thought the WGA strike would accelerate interest in broadband as an alternative to traditional outlets. While it's fair to include initiatives like Joss Wheedon's Dr. Horrible and Strike.TV as directly resulting from the strike, the reality is that I believe there was very little embrace of broadband that can be traced directly to the strike (if I'm missing something here, please correct me). To be sure, lots of talent is dipping its toes into the broadband waters, but I think that's more attributable to the larger climate of interest, not the WGA strike specifically.

6. Broadband consumption remains on computers, but HD delivery proliferates

I suggested that "99.9% of users who start the year watching broadband video on their computers will end the year no closer to watching broadband video on their TVs." My guess is that's turned out to be right. If you totaled up all the Rokus, AppleTVs, Vudus, Xbox's accessing video and other broadband-to-the-TV devices, that would equal less than .1% of the 147 million U.S. Internet users who comScore says watched video online in October.

However, there are some positive signs of progress for '09. I've been particularly bullish on Netflix's recent moves (particularly with Xbox) and expect some other good efforts coming as well. It's unlikely that '09 will end with even 5% of the addressable broadband universe watching on their TVs, but even that would be a good start.

OK, that's it for '08. On Monday the focus turns to what to expect in '09.

What do you think? Post a comment now.

Have you received the email pitch from Blockbuster Online yet, to rent 25 movies and get the new 2Wire MediaPoint Digital Media Player "free?" I've received a couple already this week (see below), and after reviewing the offer and its details, and comparing it to other alternatives, my conclusion is that the new service has a tough climb ahead.

The new 2Wire box itself is in the same general family as other single-purpose boxes such as AppleTV, Vudu and Netflix's Roku. There are some differences among them in hard drive size, pricing, outputs and streaming vs. downloading orientation. But they all serve the same basic purpose: connecting you via your home broadband connection to one source of "walled garden" premium-quality video content.

VideoNuze readers know I've been quite skeptical of the standalone box model, especially when box prices start in the $200-300 range. There's no question there's an upscale, early adopter audience that will buy in, but mainstream consumers will be uninterested for all kinds of reasons including: financial considerations (especially in this economy), resistance to connecting another box in already crowded consoles, perceived technical complexity, strong existing substitutes (e.g. cheap ubiquitous DVD players) and indistinct value propositions.

My judgment is based on a pretty simple set of criteria I rely on to gauge a new product or service's likelihood of success: Does it offer meaningful new value (some combination of better price, quality or speed) with minimal adoption effort required? Can a large target audience for this new value be clearly defined, served and acquired in an economically-reasonable manner? Is this new value attainable without sacrificing meaningful benefits of existing alternatives?

Value: As explained below, for certain movies renters, the offer is valuable. It provides convenience at a relatively low financial commitment for the new device. But explaining these benefits just to the relevant target audience at an economic cost per acquisition is going to be nearly impossible. I'm dubious that even in-store promotions - which on the surface seem Blockbuster's strength - will work. First, there may be franchisee issues, as there were with previous "Total Access" promotions. And second, Blockbuster has closed so many stores in prime target neighborhoods - due to the rise of Netflix and other options eroding their business - that they'll be missing many prospects (example: in my upscale home town of Newton, MA there is not a single Blockbuster store left).

Audience: There's only one real target audience I can see for this offer, and it seems very narrow to me: low-volume renters of movies only, who are not iTunes users. Think about it - if you rent a lot of movies, you've likely been subscribing to Netflix for years (more so if you also rent TV shows). If you want to own your content instead of rent it, then you buy DVDs or maybe more recently have been buying digital version, most likely with iTunes primarily. If that's the case, then when it comes to watching on TV, you're going to buy an Apple TV (even then, few have done so to date), not a 2Wire MediaPoint. The eligible target audience left for Blockbuster/MediaPoint seems pretty slim.

Sacrificing existing benefits: Inevitably all digital distribution options need to be compared to the incumbent DVD format, which is remarkably strong (no wonder a billion units have been shipped to date). Against the DVD standard, Blockbuster/MediaPoint is inferior in a number of ways: limited viewing windows (the usual online limitations of 24 hour expiration after starting, and 30 day automatic file deletion), no portability to view rented movies on other TVs not connected to a MediaPoint, no TV shows available for rent, and at this point, smallish storage that only keeps up to 5 movies at a time.

What do you think? Post a comment now.

Two questions I like to ask when I speak to industry groups are, "Raise your hand if you'd be interested in 'cutting the cord' on your cable TV/satellite/telco video service and instead get your TV via broadband only?" and then, "Do you intend to actually cut your cord any time soon?" Invariably, lots of hands go up to the first question and virtually none to the second. (As an experiment, ask yourself these two questions.)

I thought of these questions over the weekend when I was catching up on some news items recently posted to VideoNuze. One, from the WSJ, "Turn On, Tune Out, Click Here" from Oct 3rd, offered a couple examples of individuals who have indeed cut the cord on cable and how their TV viewing has changed. My guess is that it wasn't easy to find actual cord-cutters to be profiled.

There are 2 key reasons for this. First it's very difficult to watch broadband video on your TV. There are special purpose boxes (e.g. AppleTV, Vudu, Roku, etc.), but these mainly give access to walled gardens of pre-selected content, that is always for pay. Other devices like Internet-enabled TVs, Xbox 360s and others offer more selection, but are not really mass adoption solutions. Some day most of us will have broadband to the TV; there are just too many companies, with far too much incentive, working on this. But in the short term, this number will remain small.

The second reason is programming availability. Potential cord-cutters must explicitly know that if they cut their cord they'll still be able to easily access their favorite programs. Broadcasters have wholeheartedly embraced online distribution, giving online access to nearly all their prime-time programs. While that's a positive step, the real issue is that cord-cutters would get only a smattering of their favorite cable programs. Since cable viewing is now at least 50% of all TV viewing (and becoming higher quality all the time, as evidenced by cable's recent Emmy success), this is a real problem.

To be sure, many of the biggest ad-supported cable networks (MTV, USA, Lifetime, Discovery) are now making full episodes of some of their programs available on their own web sites. But these sites are often a hodgepodge of programming, and there's no explanation offered for why some programs are available while others are not. For example, if you cut the cord and could no longer get Discovery Channel via cable/satellite/telco, you'd only find one program, "Smash Lab" available at Discovery.com. Not an appealing prospect for Discovery fans.

Then there's the problem of navigation and ease of access. Cutting the cord doesn't mean viewers don't want some type of aggregator to bring their favorite programming together in an easy-to-use experience. Yet full streaming episodes are almost never licensed to today's broadband aggregators. Cable networks are rightfully being cautious about offering full episodes online to aggregators not willing to pay standard carriage fees.

For example, even at Hulu, arguably the best aggregator of premium programming around, you can find Comedy Central's "The Daily Show" and "Colbert Report." But aside from a few current episodes from FX, SciFi and Fuel plus a couple delayed episodes from USA like "Monk" and "Psych," there's no top cable programming to be found.

As another data point, I checked the last few weeks of Nielsen's 20 top-rated cable programs and little of this programming is available online either. A key gap for cord-cutters would be sports. At a minimum, they'd be saying goodbye to the baseball playoffs (on TBS) and Monday Night football (on ESPN). In reality, sports is the strongest long-term firewall against broadband-only viewing as the economics of big league coverage all but mandate carriage fees from today's distributors to make sense.

Add it all up and while many may think it's attractive to go broadband only, I see this as a viable option for only a small percentage of mainstream viewers. Only when open broadband to the TV happens big time and if/when cable networks offer more selection will this change.

What do you think? Post a comment now.

I saw an early version of this product at the NAB Futures Summit last April (CNET's Brian Cooley brought one along) and for simplicity it's hard to beat. You download the Fanfare software (a snap), plug the device into your USB, download files, and then plug the device into its cradle, which is connected to your TV. What I haven't seen is the UI for the TV, so I can't comment on that.

Considering I witnessed my 8 year-old nephew figure out how to plug his digital camera into his TV to do slide shows, I'd expect Sansa TakeTV to appeal to a pretty wide audience of non-techies. And at $100 for the 4GB model (saves about 5 hours of video), it's a solid "stocking stuffer" for the upcoming holiday season.

Sansa TakeTV is another example of the limitless innovation underway to converge the PC/broadband video world with the TV world. To date most of the solutions here (except AppleTV and Xbox probably) have been pretty techie, requiring some degree of user intervention to marry the PC and the TV over the home wireless or wired network. It's safe to say that none of these devices has yet caught on.

Sansa TakeTV's issue is whether it can be anything more than a short term, low end solution. A lot of the answer is wrapped up whether USB Flash storage can scale up to inexpensively handle lots of video. For example, the low-end AppleTV holds 40 GB and costs $299, while the 16GB USB Flash drives I found online approach $200 alone, never mind the software and other component costs in the Sansa Take TV package. (see below).

However, if anyone's going to figure out how to make USB Flash storage competitive for video, it'll be SanDisk. In the meantime, there's nothing wrong with accepting Sansa Take TV for what it is - an easy-to-use, low end product for the masses to watch high-quality broadband video on their TVs.

It's funny how often I'll be talking to someone and they will casually start interchanging the terms "IPTV" and "broadband video/online video/Internet TV".

The fact that many people, including some that are actually well-informed, continue doing so is a reminder of how nascent these delivery platforms still are, and how common terms of use and understandings have yet to be established.

Yet it's important to clarify that there are differences and they do matter. While some of the backend IP transport technology is common between IPTV and broadband video, the front end technology, business models and content approaches are quite different.

In presentations I do, I distinguish that, to me at least, "IPTV" refers to the video rollouts now being pursued by large telcos (AT&T, etc.) here in the U.S. and internationally. These use IPTV-enabled set-top boxes which deliver video as IP packets right to the box, where they are converted to analog video to be visible to the viewer. IPTV set tops have more capabilities and features than traditional MPEG set-tops, and telcos are trying this as a point of differentiation.

However, at a fundamental level, receiving IPTV-based video service is akin to subscribing to traditional cable TV - there are still multi-channel tiers the consumer subscribes to. And IPTV is a closed "walled garden" paradigm - video only gets onto the box if a "carriage" deal has been signed with the service provider (AT&T, etc.). IPTV can be viewed as an evolutionary, next-gen technology upgrade to existing video distribution business models.

On the other hand, broadband video/online video/Internet TV (whatever term you prefer) is more of a revolutionary approach because it is an "open" model, just like the Internet itself. In the broadband world, there's no set-top box "control point" governing what's accessible by consumers. As with the Internet, anyone can post video, define a URL and quickly have video available to anyone with a broadband connection.

The catch is that today, displaying broadband-delivered video on a TV set is not straightforward, because most TVs are not connected to a broadband network. There are many solutions trying to solve this problem such as AppleTV, Microsoft Media Extender, Xbox, Internet-enabled TVs from Sony and others, networked TiVo boxes, etc. Each has its pros and cons, and while I believe eventually watching broadband video on your TV will be easy, that day is still some time off.