Future of TV: One Investor's View

At some point, "over the top" video distribution is going to be a bigger financial force in the television business, but it won't happen as fast as many believe, simply because the amounts of business revenue at stake are so enormous. As hard as attackers will try, access to quality content still will be a key issue, as content owners will not be in a hurry to jeopardize their current revenue streams.

"Over the top" options will continue to proliferate, and device manufacturers will attempt to create ecosystems around their products to entice content owners to buy in. But it will take time to create the scale content owners will want to see before making adjustments in content relationships.

Also, existing distributors, such as cable companies, know exactly what is at stake and will work furiously to enable online video in ways that complement, rather than compete with, their current offerings.

Virtually all the contestants in the ecosystem will be looking at ways to "move up the stack" in terms of providing more value. Many of those attempts will fail.

Software and applications are not core competencies for many of the ecosystem providers, and that ultimately will limit the success of "up the stack" efforts.

Almost by definition, the real combat will take place over second and tertiary screens, rather than the large TV screen. Tablet PCs and smartphones will provide key examples, even though game consoles and other devices using the TV display also will fight for attention.

Perhaps the key issue is the future of content bundling. Nearly all the technology developments will create alternatives to the multichannel TV subscription. Perhaps an analogy can be glimpsed in the music business, where the "bundled" album or CD lost favor compared to purchases of discrete songs.

Also, the trend in video entertainment over the past several decades has been a shift away from linear formats and towards on-demand consumption. Digital methods are only the latest examples of a trend that began with the videocassette recorder.

Television originally was designed for a mass audience in a single country. But global content and its ability to develop a “niche” global audience now is a new trend. Think of about the rise of Japanese Anime, Spanish Novelas, Korean Drama or the rise of Bollywood entertainment from India. It’s not a mass, mainstream audience but I would argue that it’s “global torso” content that will be meaningful at scale. Websites like ViiKii, which have been launched to create realtime translations of shows by fan-subbers, have huge followings already. And I’m sure that this is what popularized the SlingBox in the first place. British, India & Pakistani ex-pats on a global scale want to watch cricket.

NetFlix might be winning the battle for distribution of movie content online. Linear television remains much more fluid. One app to watch is YouTube, which might graduate from user-generated video to a distribution mechanism for "linear" professionally-created video as well. Potential audience size always matters, and YouTube is aggregating an enormous potential audience.

That same argument goes for gaming consoles, which now represent an installed base of U.S. devices numbering about 60 million terminals. The issue is not simply the game console's ability to deliver online video, but the role gaming might ultimately play in building audiences for gaming-plus-TV experiences.

Content discovery will be important as well. In a universe of content, it is hard to find "the good stuff." In part, that is why some believe "social TV" is a growth area. People talk about video and movies they like. That will help with the "discovery" problem.

Another unknown is the way narratives are crafted. Hollywood is the master of the long-form story.Whether that will be the only, or even dominant narrative in the future is open to question.

What happens when content production & distribution is easy to professionally produce and distribute at mass low-cost scale? Will we still have predictable story lines? Or can we develop more fragmented content to meet the needs of fragmented audiences and interest groups?

What happens in a world where content producers have a direct relationship with the audience and can involve the audience directly in story creation? Or maybe even as wacky as involving the audience in the story itself?

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Carrier Ethernet Demand Strong in Several Verticals

Carrier Ethernet services are best suited today for organizations with less-dynamic networking environments and very-high port bandwidth (dynamic bandwidth allocation), a very dumb edge and very low latency—essentially emulating LAN operating characteristics.

That tends to mean carrier Ethernet service ideal for connecting advanced, distributed data centers and converged cloud-based applications globally.

Companies that will drive Ethernet WAN services growth post-2010 will be heavily dependent on transporting huge amounts of data and converged traffic including real-time/live high-definition video, and/or will be computing-intensive businesses using a less dynamic or “fixed” network architecture. These companies typically fall into specific industy verticals.

Higher education, including universities, university research centers, online education/distance learning and vocational training, is among the lead candidates.

Media and entertainment companies have been lead adopters as well.

Health care also is an area where increasing use of telepresence and telemedicine has the potential to drive exponential bandwidth growth and carrier Ethernet purchases.
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Finally, the U.S. federal government tends to have needs for telepresence, collaboration, high-performance computing and data center access as well. These include the need to link numerous national (or international) sites, small communities, and eventually even geographically remote sites (and mobile and remote workers) while maintaining secure network connections.

Those verticals will not be the only logical candidates for further adoption of carrier Ethernet services, but will disproportionately represent top prospects.

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AT&T lays out SIP peering architecture

AT&T now is talking about its architecture and business plans for its SIP peering exchanges. While a company spokesperson wouldn’t discuss how far along the company was in discussions with other tier-one carriers, HD Voice News believes AT&T is much further along than the firm has indicated in public.

The peering capability is potentially important because it represents a chance to create new revenue and business relationships between carriers using the exchanges.

Some think that "peering" necessarily means "settlement-free" peering, but that is not always the case. For tier-one carriers, peering replaces the existing interconnection methods and possibly could enable new business relationships.

Among the obvious potential changes are "settlement-free" arrangements between some carriers with equivalent originating and terminating traffic, as well as "transit" style arrangements for carriers with smaller amounts of terminating traffic.

The SIP exchanges would enable high-definition and multimedia services as well. Aside from new revenue opportunities created by the ability to interconnect end-to-end IP services, the exchanges should reduce the costs of interconnection.

Smaller carriers will note the use of an "IP" interconnection business model. Big carriers will peer, possibly on a settlement-free basis, while smaller carriers might pay the equivalent of IP transit fees to interconnect.

http://hdvoicenews.com/2010/10/18/from-iit-voip-conference-expo-att-sip-transport-powerpoint-slides/

AT&T lays out SIP peering architecture – HD Voice News

Social Media in Asia Pacific is Different

While Asia's biggest economies have been slow to embrace the global social communities of Facebook, Yahoo and Twitter, many countries in the region have followed the adoption patterns of Europe and the United States, says Gartner.

The most avid social networkers are in the Philippines, where Facebook is the country's most visited Internet site.

Twitter also is one global platform that does cross cultural boundaries more readily than the major social platforms due to its adaptability to local cultures, languages and its ubiquitous availability on mobile devices. Indonesia, for example, has seen strong growth in microblogging and in mid-2010 became the country recording the highest penetration of Twitter users as a proportion of Internet users worldwide.

The Philippines and Singapore also joined Indonesia in the top 10 countries with the highest penetration of Twitter worldwide, ranked sixth and ninth respectively.

Gartner Says Social Media in Asia Pacific is Developing in Different Directions to the U.S. and Europe

U.S. businesses say email more important than social networking

With the caveat that the environment is changing, a Gartner survey finds businesses consider email the most important messaging channel, rated nearly a "7" on a seven-point scale.

Web-conferencing scored near a "six" and instant messaging scored a "five." Social networking was ranked as a "four."

When asked how important social networking might be over the next couple of years, that position garnered a "five" ranking.

U.S. businesses say email more important than social networking - Social Marketing

First Impressions of Google TV

Here's what Danny Sullivan, Search Engine Land editor in chief, has to say about getting, setting up and using Google TV. Some people recommend waiting for "version two," and this might be a case where that is wise.

It isn't so much that setup is so onerous, but one might question some elements of the user interface, such as the user log-in (what happens when different members of a family want to watch their favorite stuff, not dad's?), or the design of the remote control. Lack of Hulu content seems a bigger issue.

Short of replacing your TV display and buying a new Sony TV, you can buy a Sony Blu-ray player or Logitech Revue set-top box (pre-order only at this point).

At some point in the future, you should also be able to order Dish TV with a Google TV-powered DVR. But that’s not even pre-order option, right now.

Life With Google TV: My First Day Review & Impressions

Sprint Nextel Working on Multimode Base Stations

Sprint Nextel Corp. is working on a new "Swiss army knife" style base station platform, code named "Project Leapfrog."

The new base stations are designed to support multiple air interfaces, allowing Sprint Nextel to reduce the number of base stations (cell sites) it operates from 66,000 to about 46,000, in part by consolidating formerly-separate equipment to support multiple air interfaces, and possibly by boosting signal range as well.

Sprint is said to believe the changes might cost $2.5 billion, but would save money over time through reduced operating expense and lower roaming fees paid to other carriers.

Sprint is said to want a base station platform that can support CDMA, 3G EV-DO, WiMax and possibly Long Term Evolution (LTE) in the future. Note that there is no mention of iDEN. That suggests iDEN is not a part of Sprint Nextel's long-term future.

Light Reading Mobile - 4G/LTE - 4G World: Sprint Ready to Play 'Leapfrog'

Expand Your 3G Network: Verizon Wireless 3G Network Extender Now Available

Verizon Wireless now is selling its "Verizon Wireless 3G Network Extender" femtocell, boosting 3G signal reception locally for both voice and data, and supporting as many as six Verizon Wireless devices.

The typical application is to boost signal strength within a home.

Customers can use My Verizon (www.verizonwireless.com/myverizon) to set up a list of preferred users who will have access to their Network Extender. Customers do not need to update their plans or add minutes and will incur no additional monthly charges for using the Verizon Wireless 3G Network Extender.

The Verizon Wireless 3G Network Extender replaces the original "Verizon Wireless Network Extender," which was introduced in 2009. The Verizon Wireless 3G Network Extender can be purchased online at www.verizonwireless.com or by calling 1-800-256-4646. The price is $249.99 plus local taxes.

Expand Your 3G Network: Verizon Wireless 3G Network Extender Now Available

Starbucks Digital Network: First Look - PCWorld

Starbucks has launched its content-rich digital network, the Starbucks Digital Network in stores across America.

The network, which is full of exclusive content, is only available in Starbucks Coffee shops, and was developed with Yahoo. Apparently the idea is that if Starbucks can woo consumers with free Wi-Fi access and exclusive, free content (including full e-books, films, and newspapers), they'll spend more time at the shops.

Not a bad theory. We'll have to see how it works out.

Starbucks Digital Network: First Look - PCWorld

Netflix Streaming-Only Subscriptions Could Come This Year

Netflix offers a streaming-only service in Canada and is testing a similar service for the United States market.

Assuming the results of the test turn out as expected, Netflix could begin offering the service in the U.S. market later in 2010.

Netflix: Streaming-Only Subscriptions Could Come This Year | Peter Kafka | MediaMemo | AllThingsD

Netflix bets on online streaming

Video rental and streaming service Netflix paid about $115 million in its most recent quarter to acquire new content for its online streaming video library after its quarterly profit jumped by about 27 percent year-over-year last quarter.

The $115 million payout this quarter was more than ten times greater than the $10 million it paid in the same quarter last year.

Netflix also paid out $66 million last quarter to acquire additional content for online streaming. About one fifth of Netflix’s operating revenue last quarter was used to acquire new streaming content.

Netflix bets on online streaming, shells out $115M for content | VentureBeat

New MacBook Air

Clearwire Shows 90 Mbps LTE

Clearwire Chief Commercial Officer Mike Sievert says Clearwire has tested Long Term Evolution during a recent test in Phoenix and achieved peak download speeds of 90 Mbps. Of course, that is on a network with zero users, and used a 20 MHz by 20 MHz channel.

Verizon is using 10 MHz by 10 MHz channels. More bandwidth enables faster speeds. Up to a point, speed is a nice marketing platform. Every carrier wants to advertise that it has the "fastest" network. But few customers actually buy the top-rated service any service provider sells.

Higher bandwidth is helpful when a single connection is shared by multiple users, as single fixed-line connections are shared by all members of a family or all workers at a single business location. A similar advantage would accrue to a wireless user sharing a single connection by Wi-Fi with multiple devices or users.

But there are very few applications a single user can interact with today that actually require 50 Mbps to 100 Mbps connections. In truth, such "hero" bandwidths are more a marketing gambit than something most people can use productively.

Clearwire details results of initial LTE testing

"Back to the Mac" or "Forward to the Mobiles"?

Software and synchronization might be key values for Apple as it launches the "App Store for Macs" with apps that sync with iPads and iPhones. In doing so, Apple is trying to maximize the value consumers get from buying more than one Apple device.

Most other competing firms are going to find that feature tough to match, even when they try.

Five Takeaways From Apple's "Back To The Mac" Event

LTE Capex About to Take Off

Between now and the end of 2014, the spend on Long Term Evolution (access networks and packet core) will rise fourteen-fold, from $320 million to $4.5 billion, and the EU will account for between 35 and 40 percent of the global total.

After 2014, as emerging economies start to roll out LTE more widely, the EU percentage of the total market will fall, but its spending will continue to rise for the rest of the decade.

Yankee Group :: Research Report