American’s are embracing Over-the-top-TV – some figures

By | IPTV | One Comment

Americans are deserting their cable providers in droves. According to reports on BGR and Comscore:

  • 400,000 US homes left their cable supplier this year (including 169,000 from Time Warner Cable and 52,000 from DirecTV in the last quarter along and 176,000 customers who left Comcast since the start of 2012)
  • 1m cancelled their cable service in 2011
  • Estimates are that the 2008-2012 total will be 3.58m

The population of the US is 311m with around 120m housesholds, so 3.6m homes cutting the chord is around 3% of the total.

The shift to OTT television has well and truly started and it isn’t surprising that in Hulu and Netflix we have two large companies in this space already.

The main use case for connected TVs has to be open access to content

By | IPTV | 5 Comments

Connected TVs are looking like they will be big business next year and I have just read a report on the subject from Colin Donald of FutureScape.  I was struck by the following stat:

A September 2010 survey conducted in the UK for Intel found almost half (45%) of individuals use social networking services such as Twitter and Facebook to discuss a programme while it is being shown.

I didn’t take part in the survey, but I am one of the 45% – my ‘tweeting whilst watching’ activity is restricted to Chelsea football games, but it is now an integral part of my viewing experience when I’m watching alone.

The obvious question to ask is: ‘if people are already using social media whilst watching TV then what do they gain from having their TVs connected?’

It is probably always going to be easier to use a ‘second screen device’ to connect to social media than the TV, which might have other people watching it, has to deal with screen-in-screen or pop-up display options and has limited input via a necessarily inexpensive remote control.  The implementation of Twitter on my Sony Bravia via Yahoo’s connected TV software is almost impossible to use – the set up process was so painful that my first and only tweet through my TV was to say that it would be my last.

The other use cases for connected TVs beyond access to long tail content are researching the shows being watched and shopping online.  I think both of these are also better done via a smartphone or laptop.

So that leaves access to long tail content as the only really strong use case for connected TVs, which in turn implies that an open approach has to make sense because walled gardens mean restricted content catalogues.  Open web access might limit cable company’s and TV manufacturers ability to monetise the content we consume on their devices and over their services, but to me that is the natural order of things.

Finally, I’m of the opinion that building connected TVs for people who don’t have second screens already doesn’t make much sense as people who are digitally savvy enough to be wanting to use Twitter or Facebook, research programmes or shop whilst they watch will have smartphones or laptops already.

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Netflix launches $7.99 unlimited online service, spends more online than offline

By | IPTV, TV, Video | No Comments

Netflix is at what might be looked back on as a watershed moment in the company’s history.  On Monday they announced a $7.99 all you can eat download service for movies and television and according to the New York Times they are expecting that the cost of streaming movies will pass the cost of shipping DVDs for the first time this holiday season.

Of perhaps equal significance at the industry level, for the first time cable television subscriptions have fallen for two quarters in a row.  Welcome to over the top television.

On the back of this the stock market has sent Netflix’s shares up fourfold since January, and the company is now valued at $10bn.

The studios are now (of course) waking up to the power of streaming video and want in on the action, either via charging Netflix more for their content or by launching their own services.

Here in Europe the market is a little way behind, but we are catching up, and as of earlier this month movies from our portfolio company Lovefilm is now on the PS3.

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Amazon launches DVD and stream bundle – how long before the DVD gets dropped?

By | Content, IPTV | 12 Comments

This is on NewTeeVee: just launched a promotion dubbed Disc+ On Demand that may well be the start to the industry’s first major multi-platform retail experience. Customers who buy select movies on DVD or Blu-ray will be offered the chance to instantly watch their purchase through Amazon’s Video On Demand service.

One of the biggest downers to any ecommerce buying experience is waiting for the goods to turn up and with this move Amazon eliminates that problem and delivers instant gratification so it easy to see why this makes sense, and might even help maintain DVD pricing in the short term (they are describing the VOD part as a “gift with purchase”).

Looking forward, if this offering takes off the implication is that people will be watching their films over the internet before the physical copy turns up at their houses.  From there it is a small step to ditching the DVD and just taking the stream.

We are seeing in the music industry that having music available everywhere is more important than owning it and I expect we will see something similar in movies and then books.

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Online video stats – long form content is doing well

By | Content, Google, IPTV, TV, Video | 10 Comments

Novermber 2008 data just out from Comscore and reported by NewTeeVee and Broadstuff, amongst others, shows that in the US online video consumption was up 34% from Nov 07-Nov 08 at 12.7bn video views.  The number of unique viewers grew at only 6% to 98m – roughly flat as a percentage of the US internet population.  The November Comscore 2007 data is here.

To my mind these are decent, but not fantastic growth figures (although Google’s increase in market share from 31% to 40% by share of videos is impressive).

More interesting is that hidden in these stats is evidednce that consumption of long form content is starting to grow quickly.  The following leapt out for me:

  • Hulu came from nowhere in November 2007 to sixth in the rankings in November 2008
  • The length of the average video rose from to 2.8 to 3.1 minutes
  • It looks like Hulu drove most of the increase as the average length of their videos was 11.9 minutes

As long form professionally produced video starts to go mainstream other ancillliary opportunities will open up – most notably around search and discovery.

Regulator rules that Kangaroo will restrict competition

By | IPTV, PCTV, Video | No Comments

Tim Bradshaw has a good article in the FT today describing the regulators ruling that Project Kangaroo as currently envisaged will restrict competition in the provision of TV online in the UK.

The issue is that ITV, Channel 4 and Channel 5, the owners of the Kangaroo joint venture, control too much of the UKs television production and allowing them to collaborate on distribution would make it too difficult for other online video services to compete.

Read the FT article for the details of how it works and proposed ways through this impasse, but the interesting thing for me is that this ruling should help people break from the old broadcast paradigm.  Kangaroo is in many ways trying to recreate the old world when search and discovery was limited to flicking through the channels or buying a newspaper.

The potential of the internet is to offer radically new forms of search and discovery – starting with a simple search box that allows you to search by programme name through to socially driven recommendations and editors playlists.  I think this ruling will help get us there.

Ashley Highfield leaves Project Kangaroo

By | IPTV, Video | 2 Comments

Ashley Highfield, recruited four months ago from the BBC to run Project Kangaroo announced yesterday he was leaving to join Microsoft.  For those that don’t know Kangaroo is a collaboration between the UK terrestrial broadcasters to bring an online video service to market – a UK Hulu if you like.

Microsoft are doing some interesting things at the moment, including some interesting cloud initiatives I am hearing about at LibraryHouse Mediatech as I write, but I doubt they could offer much to Ashley that would compare favourably with running a successful Project Kangaroo.

The key word here is successful, and there is an interesting qoute from Ashley in the FT this morning:

If for any reason Kangaroo didn’t happen I’d be kicking myself for ever that I didn’t take the Microsoft job.

That says to me he has severe doubts that it will happen.

And I say that in spite of the other Ashley quote saying it was the pull of the Microsoft job rather than anything at Kangaroo which made his mind up.

Collaborations between media companies have a mixed history, as the success of Hulu and the failure of Spiral Frog demonstrate.  Kangaroo has been mired in regulatory problems for a while and this news makes it more likely that it is Spiral Frog they will be emulating.

This is a big deal for the future of video in these Fair Isles.  As a consumer this is unequivocally bad news – it will simply be longer before content comes online.  As an investor it leaves open the big opportunity to be the company that everyone goes to to get their video, but it pushes out the opportunity for ancilliary services like an online EPG.

Creative destruction in the digital value chain

By | Business models, Content, Entrepreneurs, IPTV, Music, Venture Capital | 10 Comments

I’ve blogged this before with respect to music, but I have been struck again today by the thought that in the digital world many media industries will simply be much smaller than they have been before.

You can argue this from the price side – the wide availability of illegal free copies of music and TV/films (and soon books) means consumers will only pay so much for a legitimate copy.

And also from the cost side – in the internet era the cost of distribution is zero, so whereas previously the industry had to make a margin on the costs of physical production, transport and retail distribution of media that is no longer necessary.  Whole swathes of middle men and production and logistics companies are simply no longer required.  The internet also dramatically reduces the cost of finding and test marketing new content – it is no longer necessary to employ armies of scouts looking for new bands/movies/talent/art when artists can publicise themselves for free to a certain level using social media and production companies can simply pick off the ones that have already proven a degree of popularity and help take them to the next level.

For consumers and the world economy at large this is all great news.  New efficiencies have been unleashed reducing the price we have to pay for digital media and increasing global productivity generally.

For existing players in the relevant industries it creates pain and dislocation, as well as opportunity.  For many traditional media businesses the choice is to embrace the new order or face the risk of extinction.  The difficulty of course comes in deciding how aggressively to cannibalise your main business.  That is particularly difficult when there is a large chance that the ‘new’ business will only be a fraction of the size of the one it is replacing.  Worse, you can envisage scenarios where the profits you cannibalise are greater than the discounted value of all the future profits you hope to replace them with.

Small wonder then, that traditional businesses are usually reluctant to adopt cannibalisation strategies.  Even if there was unanimous agreement around the board on how the new world will look (which is unlikely) there would be legitimate disagreement on how aggressively to transition the company.  This is doubly true when there are lots of tools you can use to slow the pace at which the market moves from old to new – e.g. copyright law.

The old media companies that are most caught up in this dilemma are record labels, broadcasters and publishers and their distribution channels.  These are therefore promising areas for startups. 

Sling joins the web TV game

By | IPTV, PCTV, TV, Video | 2 Comments

SlingMedia, creators of hardware/software service which allows you to stream your home television signal to an internet conncected device anywhere – e.g. you could watch your Sky Premiership matches on your laptop when you are on holiday, are now moving into the video streaming portal game.  I.e. they will be competing directly with Hulu, and presumably over here with Kangaroo and iPlayer.

I picked this up from Techcrunch.

The significance of this is that here we have another company betting that streaming direct from the web with no hardware component will be the way forward (and it is a hardware company making this bet).

The failure of BT Vision

By | IPTV, PCTV, TV, Video | 4 Comments

Back in May last year I wrote a post wondering if BT would get the retail proposition for BT Vision right.  An article in the Sunday Times yesterday suggests I was right to pose the question and offers interesting insight into the challenge for classic IPTV plays.

First off the data:

There is great debate around BT Vision, the company’s TV offering that pairs
video-on-demand with Freeview, a work in progress. It has enlisted only
282,000 subscribers so far, despite having the largest UK broadband base of

Then the debate – should BT turn itself into a media company?

According to the Sunday Times article BT has weighed up a bid for premiership football rights, which would make BT Vision a ‘must have’.  This is the strategy that worked for Sky, and which Setanta is deploying now.  I think that if you are charging £30 per month for a service it is really hard to build traction unless you have some sort of unique hook like that.

But it is really hard for BT Vision with its 282k subs to compete with Sky and its c10m subs when it comes to acquiring content.  Setanta has been slowly building brand over the last couple of years and now this season is making a more overt bid against Sky by removing the pay per match option for Setanta customers – and they have experienced some backlash as a result.  Their experience shows how hard it is for new entrants to compete with established broadcasters at their own game.

Much better to find a way to make something on top of their content services – be it an EPG style service with recommendations or new innovations in place shifting or time shifting.