Social Video and User-generated Content

Summary information from Day 2: CONNECTIONS™ May 2007, hosted in Santa Clara, CA

What will be the ultimate impact of the social video movement? This panel shares views and analysis of what Web 2.0 will really mean to the video space once the hype subsides.

Huan C. Le, Vice President, Business Development, Break.com
Fred McIntyre, Senior Vice President, AOL Video, AOL LLC
Matt Sanchez, CEO & Co-founder, VideoEgg, Inc.
Garrick Schmitt, Vice President and National Lead, User Experience, Avenue A Razorfish
Michelle Wu, CEO, MediaZone
Moderator: John Barrett, Director, Research, Parks Associates

Specific Questions to Address:

• How important is the consumers’ role in social video? Do they provide more than just a way for sites to by-pass copyright laws?
• Will advertisers pay top dollar for cheaply produced, user-generated content?
• Will advertising on user-generated content always be discounted against commercially produced content?
• How blurry will the line be between commercial and user-generated video?
• What will be the long-term impact of social video on the entertainment business?

The rise of video sharing has surpassed even the growth of social networking sites. Panelists discussed the role of the consumer in social video, the opportunities and challenges in monetizing social video, and the future evolutionary path of social video. John Barrett introduced the topic by discussing the types of content that users are viewing on video-sharing sites. There is a misconception that the bulk of videos being viewed on video-sharing sites are user generated. According to Parks Associates’ research, the most popular forms of content being viewed on video-sharing sites are professionally created — 76% of consumers surveyed watch Movie Previews, 75% watch TV Clips, and 72% watch Music Videos.

The panelists felt user-generated content will play a key role in consumer services moving forward. The current emphasis on content, however, will gradually transition to an emphasis on community. Moreover, the revenue potential of the space will eventually push players to resolve the digital rights management issues surrounding the use of commercial content in user-generated content.

Next-steps for Video: The Consumer’s in Charge!

Summary information from Day 2: CONNECTIONS™ May 2007, hosted in Santa Clara, CA

The role of video providers is evolving rapidly. This panel discusses emerging technologies and business models for video delivery through a variety of networks.

Mary Coller Albert, CMO, Movielink, Inc.
Mark Bowles, VP, Business Development and Corporate Marketing, Staccato Communications
Patrick Harr, President, Streamload
Keith Kocho, Founder, ExtendMedia, Inc.
Ed Lee, Vice President of Business Development, Akimbo
Jim Taylor, Chief of DVD Technology and General Manager, Advanced Technology Group, Sonic Solutions
Moderator: Kurt Scherf, Vice President, Principal Analyst, Parks Associates

Summary of this session:
Hollywood studios, television networks, and aggregators of user-generated video content have made significant strides (and news) in experimenting with Web-delivered video content. Kurt Scherf discussed these trends in his opening remarks, stressing the following points:

• The television networks have realized that the Web is a friend – and not a foe – in their efforts to build and retain primetime audiences. They have not experienced cannibalization from their regular audiences, and online content can supplement their ad revenues.
• Download-to-burn will be a key area to watch as Hollywood considers whether to take a full-fledged leap into digital distribution. This distribution method still keeps content on tangible and copy-protected DVDs but is more efficient for retailers and the studios.
• Parks Associates is watching key trends in this space, including convergence between Web video and social networking, mobile content as a complement to both traditional and Web video content, and the role of aggregators, including such TV-on-Internet companies as Brightcove and Joost.

The panel represented a broad spectrum of actors in the online video and value-added services space. Mary Coller Albert from Movielink discussed the continued push by the studios to embrace online distribution. Mark Bowles from Staccato Communications indicated that wireless personal-area networking solutions such as ultra-wideband will increase consumption of mobile video content. Patrick Harr at Streamload predicted that 70% of all data kept by consumers will be user-generated content, making storage an important issue. Keith Kocho from ExtendMedia indicated that the costs to deliver video over the Internet have dropped tremendously, fueling the growth of online distribution. Ed Lee at Akimbo said that they have been surprised by the lure of niche content, including anime and other culturally specific programming. Tim Hogan from Sonic Solutions stressed the importance of secure delivery of content. The panelists agreed that user interfaces will change radically as content and service providers deploy a wider array of video offerings.

Gaming Gets Connected

Summary information from Day 2: CONNECTIONS™ May 2007, hosted in Santa Clara, CA

This panel discusses new online gaming trends such as social/casual gaming, virtual worlds, game advertising, connected consoles, and their potential impact on the digital living industry.

Dr. Lars Buttler, CEO, Trion World Network, Inc.
Rick Howe, Executive VP, Sales & Marketing, Zodiac Interactive
Romain Nouzareth, Founder and CEO, Boonty
Julie Shumaker, Vice President, Worldwide Sales, Double Fusion, Inc.
John Welch, CEO, PlayFirst, Inc.
Moderator: Yuanzhe (Michael) Cai, Director, Broadband & Gaming, Parks Associates

Specific Questions to Address:

• What are some of the key trends in the connected gaming industry? How can we unleash the real potential of broadband gaming?
• What justifies the tremendous interest in game advertising? What are the remaining roadblocks?
• What lessons have we learnt from the launch of this new generation of consoles? What are the impacts of connected consoles? Will consoles aggregate even more wealth, or will gaming revenue begin to shift away to other platforms?
• Have the entry barriers to gaming industry been lowered? What are the indications to content providers, service providers, and device makers?
• What are the promises of avatar/virtual-world types of games? Are they just a fad?
• What’s Game 3.0? What keeps the industry excited?

Michael Cai began the panel by introducing some key industry trends and figures.

• Many new business models have emerged on the PC platform and now are migrating to other platforms, including microtransactions, in-game advertising, multiplayer gaming, and casual games.
• Middle-market gamers are becoming increasingly important because they will account for the near-future growth of the market.
• Social gaming is becoming the norm, and gamers are looking for community, not just content.
• Consoles are becoming connected consumer electronics, threatening STB and CE manufacturers.
• There are 60 million households with set-top boxes, yet the platform has not received much attention in the mainstream gaming industry.

Panelists added their own observations of the industry.

• Internet connectivity is empowering the gamer audience and game developers — there wouldn’t be a Diner Dash success if not for the Internet.
• Advertising is very important as “0” is the best consumer price point
• Dedicated consoles are going away, and this current cycle may as well be the last.
• Innovations first happen on the PC because the PC platform is an open garden.
• Gaming needs to fit in with the consumer lifestyle. Wii is teaching the industry an important lesson.
• Although game advertising is promising, there are several hurdles.

In terms of STB gaming, Zodiac believes the industry will become stronger as the platforms become more robust and industry standards such as OCAP takes shape. STBs can support games like Wii Sports, and unique and currently popular add-ons like guitars and dance mats are possible. Zodiac is also introducing free ad-supported games to the STB platform.

Game advertising, although promising, still faces a few challenges, according to Julie Shumaker from Double Fusion.

• Advertising needs an open economy to thrive. The current state of industry is unhealthy. Platforms are fragmented and advertisers are forced to negotiate with multiple ad-serving companies for the same game. The process of buying ads is not simple enough.
• There’s a lack of standards in ad formats and impression accounting.
• There’s also a lack of games that allow the advertisers to not intrude the gaming experience that gamers already paid $50 for.

Advertising with casual games is a different story. For instance, Zodiac has games with natural break points for advertisers. Double Fusion believes casual games are important for advertising, but advertisers can get those eyeballs elsewhere, such as Reader’s Digest and Oprah. Video games reach the hard-to-get 18-34 male audience and are where big CPMs come from.

Casual gaming is big business according to the panelists. Playfirst has sold more than 1.5 million units of Diner Dash online, with 70% of sales to female adult gamers and another 1.2 million units on mobile phones. QQ from Tencent in China has more than 28 million peak simultaneous users.

For the future, gaming will be a combination of pre-programmed content and always-on, on-demand, and live events. There are already live events in virtual worlds such as Second Life, and as the audience grows, it could be viable advertising platform. Madden NFL already set the record with more than 1 million guys playing online together, and that’s bigger than some cable TV networks.

Many new companies are coming to the gaming industry, such as service providers, PC companies, and media companies. TV companies are coming to Trion World to check out their technologies. One of HP’s top five server customer is a big online gaming company. Service providers also want to stay competitive with gaming service offerings.

Success Stories in the Connected Home

Summary information from Day 2: CONNECTIONS™ May 2007, hosted in Santa Clara, CA

Are we there yet? We've been talking about the connected home for more than two decades. It's evident from our research that there are few connected homes, but the landscape is changing. Widespread use broadband Internet access, familiarity with digital technologies, and technology market movers looking for the NEXT "next big thing" all add up to a market on the move. This panel will discuss what's working, why, and when the market will catch up with the technology.

Ken Fairbanks, VP Sales & Business Development, SmartLabs, Inc.
Doug Hartman, VP Global Sales, Corinex Communications Corp.
Kumu Puri, Global Managing Director, Consumer Electronics, Accenture
Robert Rodenbucher, Business Development Director, AwoX
Eric Smith, Chief Technical Officer, Control4
Moderator: Bill Ablondi, Director, Channel Research, Parks Associates

Specific Questions to Address:

• Which vendors have been successful in building sales of connected systems?
• Which manufacturers are the market movers that can spur adoption of control systems to the next level — GE, Honeywell, Cooper Electric, SquareD (Schneider), Leviton, Intel, Cisco, Microsoft?
• Have multiroom, distributed entertainment systems stimulated adoption of other control and management systems?
• What surprises have occurred as new solutions have made their way to market? What applications for the original solution were not considered?
• Where was success in the last 12 months, and where will new opportunities be in the next year?
• Most people are unaware of current capabilities of low-cost control systems. What are the most effective ways to build awareness?
• Luxury homes typically have a wide array of control and management systems installed. What lessons, if any, have been learned in the high-end market that translate into broader markets?
• Will higher energy costs drive adoption of home management systems?

This session began with a review of Accenture's research to understand what factors drive high performance in business. Three building blocks were discussed: 1) Market Focus and Position – deciding where and how to compete, 2) Distinctive Capabilities – doing business in a way that creates value, and 3) Performance Anatomy – developing a "winning mindset.” Ken Fairbanks explained how SmartLabs is organized into three groups to focus on product development, online sales, and technology licensing. Each group has a clear mission, yet all three work together synergistically. Eric Smith pointed to the seasoned executives in Control4 that have guided it to become one of the most popular control suites among electronic systems contractors.

The discussion moved to the importance of reliable technology as a key to success in these early stages of the connected home market. Doug Hartman pointed out how Best Buy chose its power line technology for the ConnectLife.Home package introduced at 2007 CES. Robert Rodenbucher explained that his company's modular architecture and internationalized user interface are the keys to its success in developing software and electronic products for license to consumer electronics manufacturers.

Triple-play Support: The View from the Home Network

Summary information from Day 2: CONNECTIONS™ May 2007, hosted in Santa Clara, CA

This panel addresses the role of residential gateways, advanced CPE, and service provisioning and networking maintenance tools in reducing support costs for the service provider and enhancing the bottom line.

Duncan Bees, Deputy Chairman of the HGI Quality of Service Working Group, PMC-Sierra, Inc. Wayne Davis, Technical Advisory Board, Peak8 Solutions
Richard Nesin, Vice President, Marketing, CopperGate Communications
Tushar Saxena, Director, Home Networking Technologies, Verizon Communications
Michael Stich, Director, Service Provider Strategic Marketing, Texas Instruments
Ofer Vilenski, CEO, Jungo Software Technologies
Moderator: Kurt Scherf, Vice President, Principal Analyst, Parks Associates


Panelists discussed the required features of an end-to-end broadband and in-home network ecosystem as managed by a service provider. Kurt Scherf introduced the topic by indicating Parks Associates’ research predicts service providers will manage upwards of 30% of the home networks, via smart residential gateways, deployed by year-end 2010. Scherf further indicated that if the industry is to provide sufficient support for advanced services, it must build solutions to address the following issues:

• CPE installation and configuration;
• Service provisioning;
• Diagnostics and monitoring;
• Remote support;
• Telephone support; and
• On-site support.

The panelists represented a diverse spectrum of companies involved in the end-to-end management of broadband and home network services. Wayne Davis, representing Peak8 Solutions, indicated that they are focused on solutions for both the customer as well as the help-desk agent. Rich Nesin at CopperGate discussed QoS monitoring that is made possible through home networking chipsets. Michael Stich at Texas Instruments discussed the company’s DSP-based monitoring and measurement solutions, notably PIQUA™. Ofer Vilenski from Jungo discussed the role of residential gateway software in monitoring, management, and easing service provisioning. Duncan Bees from PMC-Sierra discussed the Home Gateway Initiative (HGi) and its goal of helping service providers deploy more standardized management and provisioning solutions. Tushar Saxena from Verizon said that the service provider’s biggest challenges today are installing broadband and home networking services and platforms with minimal expense; ensuring interoperability between different customer premise equipment; and making troubleshooting more efficient.

Clearly, service providers face growing challenges as they take on the responsibility for deploying a growing number of converged services. Ofer Vilenski mentioned that customer support costs in the first year of a subscriber’s service to a triple-play service can often exceed the dollars spent on the home networking equipment. The panelists believe that there is no firm business model for monetizing support at present, fearing that a fee-based business model may alienate customers today. Instead, enhanced customer support could actually be a good differentiator for service providers to set themselves apart from their competitors.

LG and Samsung Phones Lead in Advanced Mobile Entertainment Features

LG and Samsung are the top mobile-phone brands in the U.S. for advanced entertainment features, leading competitors Motorola and Nokia in adoption of phones with support for mobile TV, music, and games, according to Parks Associates recent research.

Among owners of LG and Samsung phones, 12% and 11% reported having mobile TV features, respectively, compared with 8% of Motorola owners and 0% for Nokia owners. Among the four leading brands, Motorola ranks third overall, and Nokia lags significantly in advanced entertainment features. Only 6% of Nokia phones support purchase of music tracks, compared with 22% and 20% of LG and Samsung phones, respectively.

Primary Research of U.S. Home Builders Quantifies Value of Electronic Amenities in New Home Construction

Parks Associates and Hanley Wood’s DIGITAL HOME announce the 2007 edition of their highly successful Builder Insights, an ongoing project featuring an annual primary research study of U.S. home builders.

In Builder Insights 2006, Parks Associates and Hanley Wood determined that many U.S. home builders are currently offering electronic amenities in their homes. Further, despite a soft home building market, the market value of these systems reached $8.9 billion in 2005 and was on target to grow 5-6% in 2006.

Connection Research Announces Cooperation with Parks Associates

US-based market research firm Connection Research and Parks Associates today announced a cooperative agreement where Connection Research will sell Parks Associates’ research reports and studies in Australia.

Connection Research will be a reseller of all of Parks Associates’ products and services, including the full range of the company’s digital lifestyles, digital media habits, digital health and electronic gaming reports. The two companies have also agreed to cooperate on research activities and provide assistance to each other in developing cross-regional products.

For more information on Connection Research, please visit http://www.connectionresearch.com.au

Sprint Disconnecting Customers Because of Excessive Customer Service Calls

Sprint is choosing to disconnect a group of wireless customers for excessive calls to the customer service, citing that Sprint is unable to serve them adequately. To view the letter sent to customers, click here: http://news.com.com/2300-1036_3-6195014-1.html

Game Advertising Spending to exceed more than $2 Billion in 2012

Game advertising spending in the U.S. will grow from $370 million in 2006 to more than $2 billion in 2012, according to Electronic Gaming in the Digital Home: Game Advertising, a new report from Parks Associates. Over that time, game advertising will achieve a compound annual growth rate (CAGR) of 33%, much higher than that of other major advertising media, including TV, radio, print, and the Internet.


“Advertising in electronic games had an average monthly household expenditure of less than 50 cents in 2006, while broadcast TV was at $37, meaning advertisers are not using the gaming medium to its full potential,” said Yuanzhe (Michael) Cai, director of broadband and gaming, Parks Associates. “If executed correctly, game advertising can provide a win-win solution for advertisers, developers and publishers, console manufacturers, game portals, and gamers.”

Electronic Gaming in the Digital Home: Game Advertising paints a complete picture of the fledging game advertising industry. The report includes analysis and forecasts for different game advertising models and provides profiles of 26 key players in the game advertising industry and comprehensive consumer perspectives.

Carriers as "Experience Providers"

Summary information from Day 2: CONNECTIONS™ May 2007, hosted in Santa Clara, CA.

Carriers as "Experience Providers"

This panel addresses the new focus on consumer experiences with an examination of changing business models, enabling solutions for service providers, and fixed-mobile convergence trends.

Jay Deen, Vice President of Technology, Casero, Inc.
Kai Hackbarth, Requirements Chair, OSGi Alliance
Keith Higgins, VP, Marketing, Stoke, Inc.
Ellis Lindsay, Home Networking and Digital Lifestyle SME, Alcatel-Lucent
Kirk Munroe, Director, Product Management, Radialpoint
John Ulm, Fellow of the Technical Staff, Connected Home Solutions, Motorola, Inc.
Moderator: Yuanzhe (Michael) Cai, Director, Broadband & Gaming, Parks Associates

In 2006, U.S. broadband penetration reached 50% while bandwidth costs year over year have been plummeting. The next step is for service providers to move beyond selling raw bandwidth and start focusing on smart bandwidth and smart-home applications. They need to leverage the multiple screens they own and deliver cross-platform experiences based on convergence networks. The panel discussed this transition, including what’s happening and what’s to come. The panel also addressed the opportunities for hardware and software solution providers. For instance, a residential gateway is likely to be a key enabling platform for service providers. France Telecom has shipped more than 4 million LiveBoxes to date, and their success with the “unik” fixed-mobile convergence phone service is partially because of the large installed base of LiveBoxes.

Bundling is another megatrend in the carrier market. Cable MSOs are killing telcos in certain markets due to their triple-play success. Fifty percent of Comcast’s new broadband subscribers in Q1 2007 churned from telecom carriers. Consumers are likely to focus first on discounts and on-bill convenience but will eventually demand convergence features. Carriers need to make sure they educate consumers along the way.

Right now, the most successful VAS offerings on the broadband platform are still PC and home network security, although other services are gaining traction. According to Radialpoint, 15% of customers for their carrier clients buy security services from broadband carriers, and it has become a sizable revenue stream. The next step is to provide network-based backup, sharing, and community services. Exclusive content may also be a differentiator, and major carriers have begun investing heavily in content.

Another topic discussed was that consumers don’t always need to foot the bill for the services they receive. Carriers can become arbitrators between consumers and businesses to provide “validated bandwidth” in a similar way to restaurants validating parking for their patrons. However this requires carriers to know more about their subscribers and leverage that knowledge in order to deliver targeted advertisements relevant to consumers. Carriers have not monetized user information very well and have a long way to go before they can catch up with Google and other over-the-top providers. Over-the-top is definitely a threat, but quality will always be important – and carriers can provide that quality with their managed network. Carriers have also begun to use more white-label solutions instead of partnering with companies like Yahoo! and MSN for their Internet services.

IMS will be an important platform if the industry is to realize this vision of experience-based services. Carriers need to improve both the front and back ends of their platforms. Right now the technology is still at an early stage, but investment in the next few years will be significant. IMS will enable carriers to provision new services on the fly. Right now developers have demonstrated only limited applications, but IMS is like IP — it has unlimited potential. However, it will take many years for carriers to transition to the IMS platform. Having the ability to provide both wireless and wireless services will also be extremely important for large carriers. The cell phone will be the key for consumers to access other personalized services, and with more and more broadband-enabled cell phones on the market, broadband solution providers need to begin addressing this platform. Universal parental control and security will also be important. In the end, if carriers can make consumers’ lives easier and more comfortable, they’ll make money.