Netflix launches a set-top box

By | IPTV, PCTV, TV, Video | No Comments

Netflix has just launched a set-top box to help the migration of it’s 8.2m DVD rental subs to delivery via the web. This can only be sensible – clearly the DVD isn’t going to be with us forever. Plus the box is being well received – Wired say it is Just Shy of Totally Amazing.

That said, whilst it is a good move, it is also an interim one.

A quick look at the functionality of the box confirms this hypothesis. It’s raison d’etre is connecting the computer to the TV. Beyond that there isn’t much – it has some intelligence that queues up films you might want to watch to improve the viewing experience, but that is about all. I think it will work because it is cheap – $100 to buy and then $0 per month after that – arguably worth it for the benefit of immediately being able to watch movies you have selected on Netflix. Particularly given the unlimited Netflix DVD package extends to unlimited films via their box.

But, as I say, this will be an interim solution. Netflix already has web based video on demand
and once it becomes easy to connect the PC to the TV I would expect
people to use that service and not clutter up their living room by
having unnecessary hardware lying around.

This argument can be extended to set-top boxes generally. As I’ve said before, I don’t expect them to be a feature of the living room for much longer.

Joost and Babelgum struggling for content

By | IPTV, PCTV, Venice Project | 2 Comments

In a development that is perhaps not too surprising Joost and Babelgum are struggling with content acquisition.

Their responses are quite different though. Babelgum has created a €10m commissioning fund for original content and made it’s first investment, whilst Joost is retrenching from it’s global ambitions to focus on the US.

I have talked to a lot of people about how the TV value chain might look in the future and for me the most obvious structure to migrate to has just two players (at the highest level) – the content owners and aggregators who provide search and navigation functionality.

Note the absence of broadcasters. As per Anderson’s Long Tail argument I think these guys are products of a bygone era where limited distribution capacity shaped the industry.

That said, as well as managing distribution capacity broadcasters play a critical role in predicting demand and managing the customer relationship on behalf of content owners. I suspect that in the future the larger content owners will do that for themselves and the smaller guys will need to use local sales representatives in each geography.

This matches the way the web works today, and indeed I’m persuaded by the idea that TV programmes will one day be delivered in much the same way as websites. They are both forms of digital content, after all.

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.

Bebo making push into PCTV?

By | Consumer Internet, PCTV, Social networks, TV | No Comments

There is a lot of talk this morning about the deal that announced yesterday with the BBC, Sky, ITN, Channel 4 and others which will enable Bebo members to embed clips from the TV shows of these two companies into their profile pages.  Other broadcasters, and possibly music companies will follow soon.
In what could turn out to be a far-sighted move Bebo is allowing the broadcasters to control the advertising that appears in the clips and to retain 100% of the revenue (and rights).  I think this is a smart move – Bebo could have tried to insist on taking a cut in the revenues, but had it done so the move would have been less attractive to broadcasters, which would have meant less content being available, and therefore a worse offering for Bebo’s members.  Instead they have put the long term health of the community ahead of short term revenues – which will pay off in the long term.

But so far it is only clips.  The big play is for full length programmes and it will be interesting to see if Bebo takes this service in that direction.

For those that don’t know, Bebo is the UK’s largest social network and is third globally behind Myspace and Facebook.

VC 101 – get in at the beginning of a new market Part 2

By | Entrepreneurs, IPTV, PCTV, TV, Venture Capital | 2 Comments

A couple of weeks ago I explained how I love investing in companies that are at the start of a new market.  In that post I said the first thing you need to ask yourself is where the money for this new market is coming from.

The second thing you need to ask is why is it now that the money moving from the old market to the new? – breaking that down I would ask

  • what are the drivers?, and
  • where is the evidence?
  • are there any roadblocks?

At heart these are questions about timing.  Whilst the best way to make it big as a startup company is to dominate a new market, the easiest way to lose a ton of cash is to get there too early.  Timing is everything, and the corporate graveyards are littered with the corpses of companies that were ahead of their time.  Even that most infamous of dotcom screw ups,, was only trying to deliver the sort of retail experience that companies like Zafu are going for again today.

A quick example.

Broadband TV

The hypothesis is that TV will shift from being distributed over the air (terrestrial or satellite) and start entering our houses through a broadband connection – either cable or some variant of DSL.

I am excited about this opportunity because it should be able to deliver access to the long tail of content and cheaper access to mainstream content.  These are the drivers and IMHO they are both very powerful.
The evidence so far is a bit thin on the ground – and mostly comes from illegal file sharing.  The amount of activity on BitTorrent and other networks and the challenges (legal and technical) that people go through to get TV programmes on their computers tell me that one day there will be a market for a legal and easy to use service.   That said, there isn’t enough there to really be sure that the market is opening up today.  The hype around Joost and services like BT Vision also help in this regard.
Finally – the blockers – there are three main ones – digital rights, broadband access and home networking.  Until the networks start playing ball, broadband access improves and it gets easier to link PCs to televisions broadband TV will never hit the mainstream.  Today these are real issues, but there is clear movement on all three fronts.

All of which leaves me excited about the opportunity – but still a little bit nervous with regard to market timing.  This is about the time to be making investments in a sector.  If you wait until the evidence is clear and there are no blockers you will miss the boat.

TV is moving to the web at pace

By | PCTV, TV, Video | 2 Comments

Check out the numbers in this excerpt from a Commentisfree report on the Edinburgh television festival last weekend.

On the eve of the festival, with consummate timing, Ofcom released its Communications Market Report – a study that reads like a pre-recorded obituary of the television industry. In 338 pages of close-set type, Ofcom lays out how much, and how quickly, the media is changing. Every day, it reports, 542 hours of video are uploaded to YouTube, equivalent to 22 television channels broadcasting continuously. In addition, 3.74 million photographs are uploaded to Flickr, and 1,845 new articles are added to Wikipedia – equal to about 22 UK broadsheets’ worth.

In the words of Bob Dylan Times, they are a’changing

Social media to remove the need for linear programming

By | Content, IPTV, PCTV, Video | 8 Comments

Back in November when I wrote that Internet TV will mean the end for channels I could see clearly (in my own mind at least…) that arranging linear schedules of TV programmes was an accident of history – a product of the limited available spectrum for distributing video content and the high cost of local storage and processing.  Moreover channels add a layer of inefficiency to the business of finding programmes to watch that we could all do without – surfing through channels (the average US consumer now has 102 – remember Bruce Springstein….), remembering what time something is on, buying a machine to record it, etc. etc.

Making this kind of observation is all very well, but to predict the end of something you need to have a view on what will replace it and how the change will happen.  The ‘what will replace it’ bit is easy – picture an iTunes style interface with playlists recommended by your friends and favourite pundits will link you to websites where you can download or stream the music.  I’m guessing downloads to start with followed by streaming as high bandwidth networks become ubiquitous.

The ‘how it will happen’ is harder, and it wasn’t until last week when I was talking with IPTV startup Inuk that I started to get a picture of this.

Despite the inefficiencies I mentioned above (and in more detail in my previous post) people are pretty happy with the way TV works.  TV is a mature product and millions of people watch it – hours and hours of it in fact.  So any change isn’t going to be quick, and it isn’t going to be revolutionary.  Rather it needs to start with the existing paradigm of linear programming and move people in incremental steps to the new world.

The evolution I am glimpsing starts with people watching existing TV channels via a signal that comes through their computer.  The first step could be a presence application that lets you see which of your friends are watching the same programme.  Then comes chat.  Then comes friends putting links to new programmes in the IM window, or links to playlists they have enjoyed.

By this point the first place that people will go looking for inspiration when they want to watch TV is in the links and playlists their friends have provided, and at that point the demand for linear programming could start to drop off quickly.  The exception to this might be people who have the TV on all day as background – but in this case too I suspect clicking on a long playlist will produce a better experience than watching say BBC1, and with minimal extra effort.

There are lots of building blocks that need to be in place for this to work and lots of places you can go with recommendations (including the obvious but this is how I see the world ending up.

As a parting shot – one of the more important building blocks and one where I have yet to see a full answer is the next generation EPG.  The interface will need to be significantly more complicated than today and current remote controls may not cut it.  All thoughts here welcome.

Internet TV – will the networks cope?

By | IPTV, PCTV, TV, Video | No Comments

Last week in Internet TV – Unclear how it is going to work, I asked whether the P2P distribution model that Joost and Babelgum are based on will scale.  I was wondering whether their is sufficient network capacity to cope.

Now Sam is reporting on Vecosys that they won’t.  In Joost: three hours a month is all you get he quoted Read/Write web:

With an ever greater amount of video being consumed online, many
Internet users are in for a shock. There’s a dirty little secret in the
broadband industry: Internet Service Providers (ISPs) don’t have the
capacity to deliver the bandwidth that they claim to offer. One way
ISPs attempt to conceal this problem is to place a cap of say 1GB
per-month per user, something which is common in the UK for many of the
lower-cost broadband packages on the market. Considering that a mere
three hours viewing of Joost (the new online video service from the
founders of Skype — see our review) would all but use up this monthly
allowance, it’s clear that lots of Internet users aren’t invited to the

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Internet TV – Unclear how it is going to work

By | IPTV, PCTV, TV, Venture Capital | 13 Comments

If you read this blog regularly you will know I am very excited about how the internet will change the TV industry (most of the posts are here) – well this week I have found myself at a bit of a low point. It seems to me there are three basic models and I can see is problems with all of them (from the perspective of how we might make some money out of them).

  1. The large scale IPTV plays – from the likes of BT Vision – I think these guys have an important infrastructure role in matching content to network conditions and devices and maybe in billing, but I just can’t see them getting the retail side of things right. I hear that BT have hired a team of media folk to run the operation, so maybe I’m wrong here, but I haven’t seen anything so far which to dissuade me of this view, and I have seen a few things that worry me.The opportunity for startups here is selling infrastructure to the likes of BT (or VirginMedia etc.) – which is only interesting if you believe they will be successful.
  2. Pure internet plays going after the mainstream – Joost and Babelgum – these companies have done a great job at building profile and in the case of Joost getting a LOT of people on their pilot. A lot of smart people think these businesses will be successful and I’m sure they will be – to me the obvious questions are how they will get enough content onto the platform to tempt audiences away from the comfort of what they know and love and whether the P2P model will scale (this is such an obvious question that I’m sure there must be a good answer to it).Now that Joost has taken its investment I’m not sure there is much in the way of further opportunity for startups and VCs.
  3. Pure internet plays initially targeting niche audiences – SecondsOut and VingoTV are good examples. Loads of opportunity here for entrepreneurs and VCs alike and this is the area I’m intuitively drawn to – I like the way they aggregate global audiences for an offer that mainstream TV can’t deliver. The question I’m struggling with is how to think about these types of business scaling beyond their initial niche.

Answers on a postcard….

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Dangers of being newbie

By | IPTV, PCTV, TV | No Comments

Just read this in a Total Content and Media (hard copy) article about IPTV

“Problems arise when a telco enters a mature market with an immature product”

Spot on – IMHO it will take a radically better or cheaper product to pull subscribers away from their current TV providers.  Getting to a mature offering against that backdrop will be tough.

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