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BT

Status of online video market – green shoots are visible

By | BT, IPTV, PCTV, TV, Venture Capital, Video | No Comments

Web TV

Apple yesterday announced an overhaul of it’s online video strategy, and provided some interesting data along the way. This market (consumption via the web of the same long-form professionally produced content that we watch on broadcast TV) is one that is big and obviously coming and as such has a lot of people positioning themselves early for a big slice. The highest profile are traditional telcos like BT and well funded startups like Joost.

My best guess as to how the future will pan out is slightly different from all of these guys. I think we will evolve to a world where TV programmes are mostly available from the websites of the companies that produce them, and that we will find them via aggregators and dedicated TV search and discovery engines (e.g. TIOTI). These discovery engines will combine social elements (e.g. your friends watched this programme), celebrity recommendations (Clarkson‘s top car programmes, or even Clarkson’s Friday night choices) with more straight forward vertical search. Note that this means the end of linear channel programming as we know it today. I think the delivery mechanism will be a direct network link from the PC to the TV. Note that there is no set-top box in this setup.

I have blogged these points at more length here and here.
So, to the green shoots. I have previously wondered whether the companies who control traditional TV distribution would allow premium content to be made legally available over the web – based on what Jobs said yesterday, it is starting to look like that concern is going away. As with most things the trend begins in one corner of an industry, and in this case it is films. Apple have apparently sold 7m films over the web. That is a lot less than they had wanted, but it is still a good start.

As Jobs pointed out, the other key to unlocking this market is getting the bridge from the computer to the TV sorted out, and that is still largely in the future. I’m talking my own book here, but as mentioned above I think the answer will come from solutions like those of our portfolio company DisplayLink which make the TV (or any display) a n IP point on the network which can be linked to via standard networking technologies, and pretty soon wireless will be able to provide sufficient quality. That solution is at odds with Apple TV.

The other green shoots I see in this market are the number of programmes available on a pay per download basis. I’ve got no stats here, but anecdotally the number is increasing very rapidly.

BT going down partnership route

By | BT, Innovation | No Comments

I have just found my notes from an event I attended a couple of weeks ago where Mike Carr, head of the BT research lab was presenting.

First he said:

1% of global telco research is done by the 3,500 researches at BT’s lab at Astral Park.

At this point I was thinking, OK – quite a lot of research, but no big surprise to hear BT banging their own drum.

Then he said:

Therefore 99% of innovation is elsewhere and BT absoulutely need to partner to harness that innovation

He went on to say that BT is now a service company and they have teams of scouts around the world looking for technology and innovation they can harness. A bit like a football team!

Great to hear BT say that. Historically they have suffered a bit from a “not invented here” culture – if they can shake that it will be good for all of us.

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More on open versus closed or IPTV v broadband TV

By | BT, Microsoft, PCTV, TV, Venice Project, Video | 4 Comments

WebTV

It was interesting to read on Vecosys yesterday the rumour that BT is struggling technically with it’s IPTV play BT Vision.  The problem it seems is Microsoft’s IPTV platform which isn’t “performing or scaling”.

I have heard separately that BT has been talking with alternative PCTV platform Joost and I trust Sam and his links to BT – so whilst this is far from fact my guess is that there are some worried people at BT Vision right now.

This doesn’t surprise me.

BT Vision is a fully integrated service from content through ISP, to set top box and television.  The only choices the consumer has is what PC she uses and what sort of television she wants.  (More detail about the BT Vision service and some of my earlier thoughts about broadband TV here.)

This closed approach mirrors the existing PayTV value chain but swaps satellite or cable for broadband.  This is what I am calling IPTV.

The reason I am not surprised that BT is having difficulty is that end to end service provision is an extremely complex undertaking.  As a service provider you have to get everything right.  That means all your technology and network decisions and your choices of content to make available on the platform.  A small example of how this can go wrong is that BT Vision doesn’t support Mac – maybe a big deal or maybe not depending on PR and early adopter crowds, but an example of the sort of decision that has to be taken and that can go wrong.

It is interesting that BT are struggling technically, because to my mind it is the content choices that are the real difficulty. If you believe we are heading to a long tail world then it is difficult to see a single service provider striking enough deals to make much of that long tail of content available.

The alternative to this closed IPTV world is an open broadband TV world.

When I think about truly open broadband TV I mean a service that you subscribe to from a website.  Simple as that – no forward integration to a set top box and no upstream integration with content providers.  In my mind there is little doubt that over the medium to long term truly open services will prevail.

The short term picture is more complicated though – as I have written before in the short term the fat head of content is likely to stay with integrated TV services – be it via satellite, cable, or IPTV.  But as I explained above I expect these services will struggle to satisfy demand for long tail content – and I think this might undermine their long term success.

High profile services like Joost (as the Venice Project has been renamed) and Bablegum are not open in this sense either.  They are more open than closed IPTV services like BT Vision because there is no downstream integration from the PC – but as far as I can tell they are walled gardens with respect to content.

Walled garden plays can be very lucrative for a period of time (look at AOL) but ultimately open plays will win out (take another look at AOL).

Broadband television – not as big as I had thought???

By | BT, HDTV, IPTV, PCTV, Social networks, Venice Project, Video | 9 Comments

WebTV 

 

By broadband television I mean TV delivered into the home via the broadband pipe.  It might be watched on the big set in the living room, on an iPod, on a laptop, or just about anywhere but it comes into the house via the internet.

 

The thoughts below are about open services like The Venice Project – i.e. those which deliver content to your broadband connection point and leave the rest to you.  They don’t apply to fully integrated closed services where the service provider provides a set top box and controls the end to end delivery of the service much, as Sky does today (in fact the only difference with Sky would be routing the signal through your broadband connection and maybe your PC instead of via satellite).

 

Reading this morning about the planned broadband TV service from Babel Networks in the FT (no link due to DRM restrictions) it dawned on me that recommendations of the ‘people who like what you like also like this’ type and other ‘social networking’ features might not be much of a differentiator.

 

There is nothing new in these ideas any more, and I would expect to see them in just about every service.  For sure they will be in Babelgum – the Babel Networks service.  Quality of execution of these ideas will vary, of course, but I wonder if the differences will be marginal in the context of the overall service.

 

The three key areas on which services will compete are:

  • Content
  • Quality of video experience (I am thinking primarily start speed and smoothness of stream here, not picture quality)
  • User interface (covers ease of use, convenience, and social networking features)

A lot of well funded companies are going after this market and they will all have experts in each of the areas above.  I am wondering if they will end up in similar places with regard to quality of video experience and user interface, but whether there will be big differences in terms of content.

 

To my mind there are two reasons why people will switch bother with broadband TV (beyond watching the odd YouTube clip) – new content and/or much reduced cost.

 

It seems unlikely to me that anyone is going to pay top dollar to acquire rights to premium content and then make them available very cheaply on the web.  The only logic for doing that would be if you believed it would massively increase the audience, and I don’t see that happening.

 

So our favourite content will remain locked into existing structures (for legal consumption anyway) and we will have to keep them live, and keep paying our subs.  By existing structures I mean end to end service provision from satellite companies, cable companies and their ilk – a new provider like BT might make a dent here, but the overall value chain won’t change much.

 

Therefore – if this train of thought is valid – we are left with non-premium content as the driver for people using open broadband TV systems – i.e. the long tail of professionally produced content or UGC.

 

And that means open platforms with video uploaded by producer and/or consumer – central control of the catalogue of available content will never get there.

 

This starts to sound like YouTube or DailyMotion but with an improved delivery infrastructure and a more developed revenue model.

 

I have arrived here at a much smaller vision than I had been anticipating previously for this sector – but I’m struggling to see premium content getting much traction via this channel shortly.

 

The other possibility of, course, is that TV on the web goes the way of music and becomes all about illegal peer to peer file sharing.

 

FYI – Babelgum from Babel Networks sounds almost exactly like The Venice Project.  They have a peer to peer delivery capability for a full screen video service and plan to launch in March.  The founder is Silvio Scaglia – founder of Fastweb – so he knows a thing or two about internet services.

If you doubted there was a revolution……….

By | BT, Entrepreneurs, IPTV, PCTV, TV | 2 Comments

People are adopting new communications technologies at an incredible pace.  Much faster than even the vendors thought they would.

BT announced yesterday that it would sign-up it’s 10 millionth broadband customer this week. Taking it to 30 times the number they had in June 2002 and double the target they set five years ago.  The UK is world leading now by some measures in terms of broadband penetration thanks in large part to good work from the regulator (there are now 200 broadband service providers) but the same trend is in evidence across the developed world.

In a similar vein Sky announced yesterday that it had passed 2m sales for Sky+ and was well ahead of plan for it’s target to have 25% of Sky subscribers owning a Sky+ box by 2010.  (Sky+ is a TIVO-like service from Sky that is fully integrated into their satellite distribution system.)

The conclusion here is clear – we are in a period of very rapid change.

The good news is that both these services are quite primitive. 

BT’s ADSL is a massive step up on narrowband dial up we had previously, but is still 50 to 1 contended across 2MB for most of us.  21CN could/should be another step up and is promising to come live with 24MB in Jan 2008 (although I’m not holding my breath).  This sort of step up will enable lots of things, for example video over broadband is not really a consumer ready service at the moment.  (Related interesting news yesterday was that cable’s share of new broadband sign ups has shrunk to 11%.)

Similarly with Sky+ – a great service that transformed my viewing habits (I have barely watched a live programme since) but it is still a million miles from an open video on demand system that allows free access to content (call it IPTV, PCTV or broadband TV) – so once again the revolution has barely started.

I have talked a lot about TV and video here, but that will be just one area of many.

All of which is great news for entrepreneurs and VCs alike.

BTVision announce Premiership football on IPTV

By | BT, IPTV, PCTV | One Comment

Great announcement this – for grabbing headlines anyway.

Looking deeper – they only have the games that Setanta have rights to, so they are missing a large proportion of the season, including the critical 4pm Sunday game. So subscribing to this wouldn’t let me cancel my Sky subscription.

Individual pay per view for all games or a Chelsea season ticket package – now that would let me ditch Sky and the £50 per month I pay them.

Or at least it would if my broadband was a bit better.

BTVision and a look at how close we are to tomorrows webTV world

By | Aggregators, BT, IPTV, PCTV | 8 Comments

WebTV 

This week BT announced the launch of BT Vision, their new IPTV service.  There are lots of details on RadioandTelly but in summary you get:

  • A set top box which supports Freeview (UK free to air digital terrestrial TV service)
  • Set top box incorporates PVR which can hold 80 hours programming
  • Electronic programming guide which combines 14 day TV schedule and defined range of downloadable on demand content (sports, films, music etc.)
  • Access to BT Podshow (BT site which has licensed content and some UGC on it, but is v. careful with respect to copyright)

This is a first step towards the future vision I have been talking about, it gets TV’s connected to the internet, but open web access is going to be the killer app.  IMHO that is going to be the thing which motivates people to move.  Huge content libraries are interesting, but I’m not suffering for lack of choice at the moment, the thing I am missing is being able to go looking for stuff that interests me.

Open web access is also the enabler for mass adoption of aggregators and filters like TIOTI.  The likes of TIOTI can get off to a good start with early adopters and people who watch TV on their PC’s, but as pointed out by the Beeb balancing your laptop on your knee can only take you so far.

(As an aside reports on the BBC website are now suggesting that TV piracy is rampant on the web.  And the good news for UK plc is that we have a lead here!  Apparently we account for 10-25% of all TV piracy – not bad for a little island.  And all because we love American soaps.

It is worth noting though that more and more stuff is being made available legally according to Paul Pod of TIOTI.)

Other services available in the UK today (Telewest Teleport, CinemaNow and Homechoice) are all similar in that they only make their pre-defined libraries available.

These services all control the EPG as well – so whilst in theory it wouldn’t be difficult to open up web access to do so they would need to rebuild their user interface – which I understand is a tricky business.

On the subject of interfaces – I learnt of a new company today, Miniweb who are building a standards play around managing the internet-set top box-TV connection and user interface.  Seems interesting, but you know my thoughts on set top boxes – no more use than a chocolate teapot in a true webTV world.

Another important enabler that is having an impact today is the combination of improving compression codecs and improving bandwidth.

As I come to the end of this (rambling) post I realise I have been thinking about this back to front.  We won’t suddenly switch to open webTV because someone like BT makes it available in easy pre-packaged form.  It will start from the bottom up – like Napster created iTunes.  So the interesting data to look for is TV shows downloaded from the web.