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GigaOM Pro on Q3: Online Video Taking Steps Toward Maturity
It will come as no surprise to NewTeeVee readers that online video is no longer niche. During the last three months, eMarketer predicted that half the U.S. population will be watching online video by next year. Meanwhile, Pew found that more Internet users are watching video online than are participating in social networking. And, for the first time ever, fee-based video is expected to generate more annual revenues than ad-based video in 2009. The third-quarter wrap-up from GigaOM Pro, our sister market research service, shows some of the ways this mainstreaming of the market has impacted industry players.
TV Everywhere is, well, everywhere Fee-based video’s emergence as a viable business is positive news for the growing consortium of distributors pursuing fee-based solutions for delivering premium content online. The growing movement, coined “TV Everywhere,” is an effort to place premium online content behind a subscription wall. While the movement was initiated by the cable operators (specifically Time Warner Cable and Comcast), telcos and satellite operators are also now jumping onboard. Comcast was very active in the third quarter, building up its roster of content providers announcing partnerships with CBS, Starz, Discovery, HBO and Cinemax.
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This initiative could have serious implications for ad-based video sites such as Hulu. Hulu’s network owners are already exerting their influence on the company by imposing delayed windows on certain content and allowing just a limited number of episodes available at any given time. It is possible that the paid content revival may have significant implications for Hulu as it exists today.
Redbox and TiVo test limits in court In the video rental market, Redbox, the kiosk DVD rental company, continues to make waves. Hollywood has taken issue with its low-cost $1 rental fee, claiming that it hurts video rental and sales revenues. Therefore, some studios have decided to impose restrictions on when Redbox receives new releases, delaying them to the company by 30 to 45 days. Redbox is fighting back, filing lawsuits against offending studios, including 20th Century Fox, Universal and Warner Home Entertainment.
TiVo also spent the summer in court battling DVR patent infringement. The company has filed suit against Dish, as well as AT&T and Verizon. A decision on the Dish case released in early September awarded TiVo a total of $200 million, far below the company’s claimed damages of $1 billion.
The future of the set-top box The set-top box market continued to evolve in the third quarter as well. Brite-View introduced the low-cost CinemaCube set-top box, and Netgear released its Digital Entertainer Live, a scaled-down version of the Digital Entertainer Elite. Both of these products appear to be in reaction to the economic downturn and consumer demand for lower-cost products. Roku added more content to its set-top device, announcing partnerships with MLB.TV and blip.tv. However, Vudu’s efforts this quarter may be more telling for the future; the company is now bypassing the set-top box and integrating its service directly into the TV. The company had several new wins in the quarter, announcing its service will be included on Mitsubishi and LG TVs.
Despite the continuing difficult economic environment, the third quarter has been fairly positive for online video. Funding continues to flow into the market, with numerous financing deals being announced. Along with other factors, the funding environment indicates a growing interest in services that promote interactivity and the ability for users to deliver their content to any screen in their home. As online video has now reached a sizable portion of the mainstream audience, improving the user experience and access to content are becoming more critical business objectives for players throughout the space.
A more in-depth look at these trends and others is available in the latest Quarterly Wrap-ups in our five focus areas — NewNet, Mobile, Green IT, Connected Consumer, and Infrastructure. These quarterly reviews are available to GigaOM Pro subscribers, along with dozens of detailed research briefings and in-depth articles on specific topics in each of these areas. You can subscribe here.
Will Big Telcos Ever Go Over-the-Top?
Watching the big U.S. telcos, you’d think the only way to get into the telco video game is to invest obscene amounts of money on network build-outs. Verizon has dropped billions on its fiber-to-the-home network for FiOS, and AT&T, while being slightly more conservative with its fiber-to-the-node U-verse network, has also invested significant capital to enable video service delivery.
This approach differs drastically from IPTV leaders in Europe, where Free, Neuf Cegetel (a subsidiary of SFR) and BT Vision have taken more cost-effective ways to offer video services using existing infrastructure and innovative customer devices such as the Freebox. These players, particularly the French IPTV providers, have been able to garner significant market share using lower-cost video delivery solutions.
And now the winds of change may be blowing in the U.S. With the abundance of new technologies to enable low-cost online video, even Baby Bells such as Qwest may be reevaluating their options. In July, Qwest Chairman and CEO Ed Mueller said “We believe there is an over-the-top video strategy” for the company. In the same article, a company spokesperson said the telco had trialed OTT video services using a Roku set-top box. Read more of this story
Verizon FiOS’ Tweet TV — Not So Sweet
Being a FiOS subscriber, I was excited a week back when I’d heard the telco TV provider’s widget bazaar featuring Facebook and Twitter for the TV had gone live. As an analyst covering the migration of social media from the web to the mobile screen, I’ve long felt that the next destination for the Twitter train would be TV.
First impressions? The FiOS Facebook widget worked for me largely due to the ability to view friends’ photos, while the Twitter widget was hardly more than a public stream of tweets around TV shows.
With the Facebook widget and photo viewing, I was happy with the overall image quality. I was able to view pictures of friends and family easily, and had the option to view each image full-screen. While slightly pixelated, full screen images looked decent on my 42″ plasma.
Q2 Review: Cable Empire Strikes Back
Here at NewTeeVee, Liz and Chris — and the rest of the contributing writers — do their best to provide you with a daily glimpse into the big news and trends in the world of broadband video. But we know it can sometimes be hard to see the forest for the trees: TV Everywhere was clearly big news, but from the dozens of product launches and funding announcements, what’s worth revisiting? Over at GigaOM Pro, we’ve reviewed and compiled the important news and emerging trends of the last three months in our just published Q2 Connected Consumer Wrapup, our quarterly analysis for those who want to keep up on the latest in the world of online video.
On the whole, things are looking up for newteevee:
- Online video continues to find its way onto more and more devices. An increasing number of products are coming to market with an Internet connection built in. Connected-device sales (including TVs, set-top box, gaming consoles, etc.) are projected to approach 57 million units in 2009. This is an indication of the continuing march of online video into the living room, a concept that just a few short years ago was no more than a distant concept.
- Premium online video content provider Hulu expanded its ownership circle by one, as Hulu and Disney entered into a much-rumored partnership. Disney will be the third equity partner for Hulu, joining NBC Universal, News Corp. and Providence Equity Partners. Content from ABC, ABC Family, the Disney Channel and others will now be available on Hulu.
- Cable operators — sensing a threat — stepped up their game in second quarter to capitalize on the online video market. While most cable providers’ online video efforts have historically focused on availability, they are now shifting to authentication; specifically, the emphasis is beginning to shift from how to get premium content online to how the user will pay for it. Comcast and Time Warner are leading this charge in pursuing authentication programs called On-Demand Online and TV Everywhere, respectively.
- Despite the continuing difficult economic environment, the second quarter has been fairly positive for online video revenues and investment. There have been a host of funding initiatives, with the highest raise being awarded to Sugar, the online media network for women, which received $16 million in Series C funding from existing investor Sequoia Capital to expand its video offerings. Some — particularly Blockbuster which indicated that it might not be able to meet the lender conditions needed to complete financing deals — have had disappointing results that call into question their long-term viability. But, despite some casualties, the market appears to be embracing this new frontier in entertainment and the remainder of 2009 promises to offer further advancements in the availability, delivery and legal context of online video.
The full report is available to subscribers of GigaOM Pro here, along with Quarterly Wrap-ups in our other focus areas: Mobile, Green IT, and Infrastructure. GigaOM Pro subscribers get access these four Wrap-ups each quarter alongside dozens of detailed research briefings on specific topics, including online video, virtual worlds and the future of PayTV.
Macrovision Becomes Rovi, Steps Into Liquid
The company formerly known as Macrovision, in an effort to rebrand itself for the mashup world of social media, over-the-top video and pay TV, relaunched today as Rovi. The new company, whose shares will trade under the symbol ROVI on the Nasdaq, will attempt to tie together its string of acquisitions over the past few years and refashion itself as a one-stop software shop for on-screen guides in the new world of integrated media.
Macrovision was never a household name, but that’s probably a good thing given its legacy business in that pesky realm of copy protection. The company has been the biggest player in disc copy protection for DVDs, with its legacy ACP copy protection as well as some of its more recent efforts with RipGuard.
Consumers probably recognize its on-screen guides, however. Acquired through its acquisition of Gemstar-TV Guide, those on-screen grids which many of us scroll through to find and discover shows are in over 24 million homes. It also owns AMG, one of the leading providers of metadata to iTunes or others.
The New Company
But the company has seen the future, and its networked. To usher in this new age of connected media, Rovi has announced a new guide called Liquid. Targeted at makers of web-connected HDTVs and Blu-ray players, Liquid will allow companies to integrate pay-TV services through the traditional Gemstar grid guide, but includes modules for broadband video and personal content as well.
Intel and Yahoo Look to Widgetize the Living Room Web
This morning at the Intel Developer Forum, Intel and Yahoo announced a joint initiative to bring Internet widgets to TV. The two companies are teaming up in an effort they believe may help jump-start the nascent living-room-web market, which up to this point has seen a lot of products, but very little consumer adoption.
Perhaps the most interesting part of the announcement is the insistence by both companies that OEMs who sign up to put the widget channel (Intel’s name for the product) on their box must offer the consumer access to all of the widgets in the gallery. The gallery, which will be managed by Yahoo, will offer services by any company that uses the widget platform. Conceptually, it’s hard to get one’s mind around the concept of having a service provider set-top box that offers a whole host of widgets to stream third-party web services, but conceivably that’s a scenario that could be realized.
Japanese Teamwork Brings Web to TV
Here in the United States, we tend to navel gaze a bit when it comes to technology and new media, but other countries like Japan have been leading adoption of mobile content and advertising, gaming and new content models such as IPTV for some time. Sure, much of the push for new models of video consumption has been happening here in the States, with the likes of Google/YouTube, Apple/iTunes and Hulu. But while we’ve been discussing new set-top boxes from the likes of Roku, Japan has been quietly pushing networking connectivity and Internet content directly to the TV.
As you might expect, much of this push has come from the dominant consumer electronics sector. While most of us are aware of the push by Japanese CE vendors such as Sony and Nintendo to Wi-Fi enable their video games like the PSP and DS, a lesser-known trend has the been the widespread push to put Ethernet connectivity in TVs. Thanks in part to the Networked Digital Television efforts, many consumer electronics manufacturers for some time have been integrating connectivity to allow for software upgrades, Internet browsing and other connected TV services.
Many of the same TVs have also integrated web browsers. These browsers, first designed to comply with the Japanese ARIB standard for Broadcast Markup Language, have been integrated into most TVs that sell today in Japan. Companies like OpenTV have worked with Panasonic, while Japanese browser specialist ACCESS has also found some success with its BML compliant browser.
So, what are consumers watching on all these network-connected digital TVs equipped with browsers? Some manufacturers have been creating their own Internet portals for delivering web content to TVs, but in February 2007 six companies — Panasonic, Sony, Sony Communication Network, Toshiba, Sharp and Hitachi — banded together (with the prodding by the Japanese government) to create AcTVila. The typical AcTVila portal on a Japanese TV includes a variety of content such as weather (called e-weather), promotional info for TV programs, local news and merchant information. Read more of this story
Is Vudu the iPod of for-Pay Internet Video?
The Internet video download market has had a rough go of it lately. With Google (GOOG) bailing on its efforts to sell shows on Google Video, Blockbuster (BBI) buying Movielink for pocket change, and even Apple’s (AAPL) video business still accounting for only a smidgen of music sales two years after its launch, it’s a wonder that some pundits aren’t saying the future of Internet video is one that is going to be entirely ad-supported.
Call me crazy, but I think for-pay video on the Internet has a future as well. Sure, the majority of TV shows, user-generated content and all sorts of other video will mainly be paid for using ads, but there are some types of content for which consumers will pull out their credit cards. And I’m not just talking porn and Major League Baseball.
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