HGI PUTS ENERGY SAVING ON THE AGENDA

The Home Gateway Initiative (HGI) has announced that it will be working towards a set of specifications that will outline energy saving solutions for the home gateway. Representatives of the industry body’s worldwide member companies will gather at HGI’s 13th quarterly meeting, in Florence, Italy, where the topic will be high on the agenda.

The HGI will be basing its specifications on the EU Code of Conduct on Energy Consumption of Broadband Equipment, which sets out the basic principles to be followed by all parties involved in broadband equipment, operating in the European Community, in respect of energy efficient equipment. As usual, the HGI will be working closely with Standard Developing Organizations, including ITU-T and ETSI (TISPAN and AT-TM), who are already working on this important item.

The HGI has several objectives that will be addressed during the meeting. Top of the agenda is for the HGI to determine the requirements for an energy efficient home gateway; to establish service modes; mapping the ‘service modes’ into ‘operation modes’ and estimating the actual realistic energy consumption corresponding to these modes; and expanding on the EU Code of Conduct for home gateway specific functions.

The HGI was founded and launched by nine telecom operators (Belgacom, BT, Deutsche Telekom, France Telecom, KPN, TeliaSonera, NTT, Telefonica and Telecom Italia) in 2004, and now has members from five continents, representing the entire spectrum of actors in the broadband home arena. The main tasks of the HGI are to establish home gateway-related technical and interoperability specifications and provide input to standardisation bodies.

Representing HGI at the CONNECTIONS(TM) Conference, Milan Erbes will be speaking on the SOLUTIONS FOR BROADBAND PROVIDERS panel on Thursday, June 26th at 2:15 PM. Other confirmed speakers for this panel include: Yoav Tzruya, CMO, Exent Technologies and David Haadsma, President and CEO, Bsecure Technologies.

Continua Health Alliance provides insight into next generation of digital health at CONNECTIONS™

Parks Associates and CEA® announced that Continua Health Alliance will host a free pre-show session at CONNECTIONS™ on June 24. The Continua Health Alliance is a non-profit, open-industry coalition of the finest healthcare and technology companies joining together in collaboration to improve the quality of personal healthcare by establishing a system of interoperable personal health solutions that fosters independence, empowers individuals and provides the opportunity for truly personalized health & wellness management.

The Continua session “The next generation of personal telehealth is here!” will explore the alliance’s three use cases – chronic disease management, aging independently, and health & fitness – and explain how Continua is utilizing standards to ensure interoperability as it opens new opportunities in digital health solutions and services.

During CONNECTIONS™, Wang will moderate the panel “Digital Technology for Managing Health and Wellness,” which features Parks Associates’ digital-health research and speakers from Texas Instruments, 4HomeMedia, Philips Home Healthcare Solutions, Kaiser Foundation Hospitals, and the Intel Digital Health Group.

Aging Gracefully at Home...Technology Can Help!

by Harry Wang, Research Analyst, Parks Associates

The aging population is now a global concern. Even in developing countries like China and India, dramatic improvements in living standards and advances in medical technology have led to a growing senior population. According to the World Health Organization (WHO), by 2030, more than 973 million people worldwide will be 65 and older, up from 420 million in 2000. The percentage of population 65 years and older will rise from 15.5% to 24.3% in Europe, 12.6% to 20.3% in the U.S., and 6% to 12% in Asia during the same period. An aging population is usually accompanied by rising incidence of chronic diseases and soaring demand for healthcare resources, putting extra pressure on many nations’ already overburdened healthcare systems.

Healthcare reform is underway in many countries in order to cope with these challenges. Most emphasize prevention over intervention as a means to delay the onset of chronic conditions. But an indispensable component of any healthcare reform should include the reconsideration of resource allocation for different types of population subsets. For years, the industry has focused healthcare on institutions: doctor’s offices, hospitals, or outpatient surgical centers. With the coming of preventive care, a new place becomes qualified: a patient’s home. Many studies have shown that home care not only saves money but also gives patients a sense of security and comfort.

Patients’ homes have been quickly modernized these days, thanks to new-generation technologies that provide fast and secure communication and diagnostic tools and reliable access to a wealth of information. Home care is based on the premise that patients can use these tools to access a variety of healthcare resources without leaving the house. With these new technologies, patients can communicate with doctors through e-mail or live video conferencing, and they can self-monitor vital signs and let physicians access these data remotely to make diagnosis and provide treatment advice. For frail seniors, medical and motion sensors can be set up in the home to inform caregivers of daily living and health conditions. This technology-laden home care system, if widely deployed, could relieve the resource crunch on many hospitals and medical centers and allow these institutions to focus instead on patients with acute needs or in severe conditions. Home care will complement institutional care without jeopardizing the quality of care that the patients receive and optimize resource utilization for the entire healthcare system.

This transition will run its course over many years. For one thing, systematic shifts require behavioral changes from all parties involved. In our healthcare system, from doctors to patients, it will take a long time to assimilate new behaviors. Technology can expedite this process but can’t transform it overnight. At the same time, awareness and acceptance are predicated on fast dissemination of scientific evidence of clinical efficacy and financial savings, a task made easy through the Internet.

Parks Associates projects that by 2012 in the U.S., 16 million senior citizens and 17 million baby boomers could benefit from technology-assisted home care services offered through big companies such as Philips and Boston Scientific as well as start-ups like Dovetail Health and VitelCare. Even broadband service providers can leverage their customer reach to offer home health services on top of their existing entertainment and home security service tiers. The market is wide open and calls for innovative solutions and smart marketing to help our aging population live wholesomely at home.

This article was published for the 2008 CONNECTIONS™ Conference Industry Insights, the official publication of CONNECTIONS™.

INTAMAC AND DSC TYCO PARTNER TO DELIVER NEW WEB BASED INTERACTIVE SERVICE

Toronto, Canada and Northampton, UK 12 May 2008 - Intamac Systems has announced a distribution agreement with DSC that will see the launch of their new web based interactive services into the North American market. The new services will be launched on the DSC stand at the International Fire and Security Exhibition in Birmingham today.

As part of the agreement, Northampton-based Intamac has built a new support platform in Toronto. This will now be used to provide monitoring and messaging services to DSC’s customers and to support the launch of a range of innovative new security products and video solutions to their dealer and central station network. This move will position the DSC and Intamac as the leaders in the interactive service market and broadband enabled products.

The Intamac platform will allow DSC to offer new IP video and security solutions to their dealer network. In addition, the platform will provide customers with web interfaces through which they can manage their clients and offer them a range of new interactive services. In addition to the benefits of a home monitoring service designed to provide timely information with video of any unexpected entry or event, consumers can remotely manage and monitor routine events in real-time that occur within the home every day.

Consumers can customise their home monitoring service to be alerted via phone, e-mail or text message to monitor events such as: children coming home safely for school; the activities of tradespeople, cleaners, nannies, au pairs or elderly relatives; alerts from water and smoke detectors. The platform also provides for the future growth with remote management and control of domestic heating and electrical systems and the devices attached to them.

“The Intamac platform allows us to offer our partners innovative new services that will help grow their business and excite the consumer” comments David Grinstead, VP Sales. “We are working to leverage the benefits of broadband and working to make it simple for our dealer network to adapt and exploit IP video and monitoring solutions.”

Kevin Meagher, CEO of Intamac adds “Our platform will allow DSC to deploy exciting new value added services at attractive price points as well as simplifying the task of installation and support. We are binging new levels of intelligence to the home and making home monitoring a must-have service. We are delighted to be working with DSC, a global leader in security products to realise the potential of this growing market.”

Behavioral Targeting and Consumer Privacy: New Media's Paradox

by Harry Wang, Research Analyst, Parks Associates

Contextual targeting is widely used in both the offline and online advertising worlds. But the wild-card nature of behavioral targeting could revolutionize how marketers interact with their target audience in an online world. Behavioral targeting is based on a proven assumption that the Web pages people visit and where they go from those pages indicate at least a presumptive interest in products related to the page topics. For example, repeat visits to a Web page featuring reviews for camcorders, coupled with subsequent Web visits to major electronic retailers, clearly indicates at least a curiosity about camcorders. If this type of data is combined with other Web traffic such as visits to baby portrait services, baby travel kits, and vacation packages, the marketer can be quite confident that this particular user plans to buy a camcorder to film a baby, perhaps during an upcoming trip. As a result, advertisers not only have in-depth knowledge of the customer but also can purchase ads along this user’s future “Web trail,” instead of serving ads only to camcorder-related Websites. Some publishers find behavioral-based targeting very useful for selling undervalued ad inventory.

For instance, The Wall Street Journal reported that in the past, NBC Universal Inc.’s iVillage found it difficult to sell ads next to its astrology section because few products and brands correlate directly with astrology. But “by identifying a particular consumer [through behavior targeting] and delivering an ad tied to his or her interests, that same ad spot is worth a lot more,” said Peter Naylor, senior vice president of digital media sales for NBC Universal.

Technology vendors have been trying for years to translate online behaviors and consumption habits into predictable product and service needs so that advertisers can deliver the appropriate marketing messages at the right moment and on the right Web pages. Over the last two years, their work has finally caught the attention of advertisers and publishers. Ultimately, contextual and behavioral targeting should and will be integrated to give advertisers the most reliable information about their audience’s interest and their surfing patterns. This level of granularity is a marketer’s dream but can easily trigger privacy concerns if the issue is poorly handled. Facebook’s original ad-targeting policies caused such a stir that the company eventually had to backtrack to pacify its users. Advocacy groups have already called on the federal and state governments to tighten privacy regulations in light of this and many other events that they say have given them grave concern over online properties’ ability to protect Web users’ privacy. Currently, the debate over privacy protection is centered on how advertisers use personal identifiers and whether behavioral targeting should be “opt-in” versus “opt-out.” (“Opt-in” means that consumers must give explicit permission; otherwise, advertisers/publishers cannot track consumer behaviors online. “Opt-out” is just the opposite: advertisers/publishers can track consumer behaviors online unless consumers explicitly notify advertisers to “opt-out.”) Marketers are leaning toward “opt-out” and argue that this policy is consistent with precedent set by anti-spam policies. Consumer privacy groups, however, are pressing for “opt-in,” and many want the creation of a “Do-Not-Track” list that allows consumers to opt out completely of all behavioral profiling and targeting. Marketers are lobbying hard against such a list for fear of a similar devastating effect that the “Do-Not-Call” list had on the telemarketing industry. They also point out that audience targeting differs from telemarketing because better targeting feeds consumers with the most relevant information that helps them make informed decisions.

This debate will continue until technology vendors and the business community come up with privacy guidelines for behavioral targeting to assure consumers and their privacy right advocacy groups. Technology providers can shore up support if they not only give their promise in writing but also design a data-scrambling mechanism that makes it difficult for anyone to extract personal information from an online behavioral database. Such a mechanism also needs to be independently verified for its intended use. The advertising industry might have to cough up additional funds to cover these extra efforts, but as the old saying goes, “No pain, no gain.” It is the only way for the advertising industry to move beyond this controversy and pursue a growing new media advertising market, which is expected to hit $12.6 billion in 2012.

This article was published for the 2008 CONNECTIONS™ Conference Industry Insights, the official publication of CONNECTIONS™.

Start-ups show the latest innovations at CONNECTIONS™: The Digital Living Conference & Showcase

Parks Associates and CEA® announced the Emerging Technology Pavilion at CONNECTIONS™, which will showcase a variety of new and innovative digital lifestyle technologies and services during the conference. The Pavilion, in the Showcase area, features the companies Celeno Communications, Devicescape, Green Plug, and ZeeVee.

“The Emerging Technology Pavilion will showcase a few of the latest products and services advancing these converging markets,” said Kurt Scherf, Vice President & Principal Analyst, Parks Associates. “Every established product we use now was developed through the proper alignment of creativity, market demand, and finances. The Emerging Technology Pavilion presents the innovations of today to see how they will fit with the needs of tomorrow.”

Executives from Celeno Communications, Devicescape, Green Plug, and ZeeVee will pitch their unique digital living solutions during a special lunch session on Thursday, June 26, in the showcase area.

A later afternoon session “Investing in Connectivity’s Future: VCs and New Opportunities” features leading venture capitalists providing insight on investment trends in this market space, with participants including InterWest Partners, Granite Ventures, Tellus Venture Associates, Trinity Ventures, and Scale Venture Partners.

SupportSoft Acquires YourTechOnline.com Inc., Enhancing Consumer Business

SupportSoft, Inc. a provider of software and services that make technology work, announced the acquisition of YourTechOnline.com Inc., an award-winning provider of premium technology services. SupportSoft's consumer business brings industry-leading technology, merchandizing and marketing expertise and skilled service delivery agents to the growing remote technology support industry. YourTechOnline's proven ability to deliver high-quality customer experiences with North American work-from-home agents will bolster SupportSoft's best-in-class remote technology support experience.

The Company's solutions reduce technology support costs, improve customer satisfaction and enable new revenue streams for companies reaching 50 million users worldwide. The Company also provides Instant Technology Relief® to consumers and small businesses through a series of channel partners and http://www.support.com/.

Anthony Rodio, EVP, Worldwide Operations of support.com will be speaking at the CONNECTIONS Conference this June.

Other confirmed speakers for CUSTOMER SUPPORT: Metcalfe’s Law or Murphy’s Law? Customer Support for the Digital Home panel include: Timo Auer, VP, TV, Content & Digital Home, TeliaSonera Group; Martin DeBono, VP, Sales and Business Development, Pure Networks; Gil Eyal, CEO, Enure Networks ; Fred King, VP, Sales and Marketing, PlumChoice; and Singu Srinivas, President, HiWired.

AMX Cuts Ribbon on NYC Showroom

AMX has opened a 4,600-square-foot combination showroom and training facility in a skyscraper overlooking New York City’s Times Square that is designed to showcase the breadth of its products to residential and commercial integrators and their clients.

The AMX New York Showroom’s purpose is to expose AMX to end users, its sales channel and people connected to the installation discipline, such as architects, interior designers and consultants in a venue that’s far better than a dealer’s office. Each area of the room is numbered, suggesting a sequential tour, and labeled with a brief description of product applications. For example, at Station 10, the “Amenities Solutions” area, browsers can find a working AMX in-wall touchpanel that is one of the products being used in both the condominiums and hotel rooms of New York’s renowned and newly renovated Plaza Hotel.

Michael Peveler, VP, Corporate Development, AMX will speak at CONNECTIONS US. Michael will be speaking on June 25th at 1:30 PM on the session, HOME SYSTEMS: From Controls to Entertainment & Security – Trends and Opportunities.

Other confirmed speakers on this session include: Doug Fikse, CEO, On-Q/Legrand; Kevin Meagher, CEO, Intamac Systems; Tony Shakib, CEO & President, Zensys; Will West, CEO, Control4; and Bill Ablondi, Director, Home Systems Research, Parks Associates.

High-End A/V: Moving to the Masses

by Bill Ablondi, Director, Home Systems Research, Parks Associates

Technology advancements, widespread adoption of broadband Internet access, and consumer desire for enhanced entertainment experiences will drive current high-end entertainment capabilities into mainstream markets.

What is a high-end entertainment system? That question can be answered in a variety of ways. We found that out as we started research for our High-end Entertainment Systems: Analysis and Forecasts market report at the end of 2007. For some people, “high-end” meant systems bought at a specialty retailer, e.g., Bang & Olufsen, Tweeter, or Ultimate Electronics. For others, price determines a high-end entertainment system — $5,000, $10,000, or more for a TV with a 5.1 surround-sound system. On the other hand, audiophiles think of a critical listening room equipped with Krell components and B&W loudspeakers when asked about high-end entertainment. For our report we settled on the following: home theaters and audio systems that are typically installed professionally as opposed to purchased at retail or online and set up by users.

Parks Associates has been conducting research of home systems integrators/installers for over six years in order to understand what people with large budgets want and don’t want. Customers of the home systems integration channel are spending an average of $12,000 to have audio systems installed, $25,000 for home theater installations, and $30,000 or more for whole-house control systems. Clearly they are upper-income households, or they wouldn’t be able to afford these systems. Why does Parks Associates track consumers in this rarified market stratum? This high-end market is a leading indicator of products, services, and capabilities that will succeed in mainstream consumer markets when prices, packaging, and delivery methods match what typical consumers can afford.

Plummeting flat-screen TV prices are a good example of how technology advancements are bringing high-end products to mainstream markets, enticing millions of households to pitch their tube and hang a plasma or LCD TV on the wall. Once the screen is on the wall, adding a multichannel sound system with surround-sound speakers is a natural progression. The next step is a storage system for music, videos, and family pictures, a.k.a. a media server. Finally, once all of this is in place, how about a system for distributing audio and video content to other rooms in the house? How can anyone resist?

As installed home theaters and multiroom audio systems become more affordable, a broader market of consumers at lower income/wealth levels will open up. This trend is evident as we look over results from numerous Parks Associates’ consumer surveys. Ownership of all forms of entertainment systems is extensive, and intentions to purchase larger (40+ inches) flat-panel TVs and multiroom audio systems are high. Parks Associates’ Digital Media Habits II (3Q/07) study revealed that more than 20% of broadband households in the U.S. planned to purchase a flat-screen TV within 12 months and 66% intend to buy one 40 inches in diameter or larger. With this research in mind, we see a natural evolution in the high-end A/V market as systems become more affordable and accessible to a larger base of customers.

As mentioned, the vast majority of current high-end A/V customers are wealthy … they have to be in order to afford the systems. In addition, most installed entertainment systems are currently sold into the new-home construction market or into homes going through a major renovation. This mix will change as wireless, power line, and other “no-new-wires” technologies gain more traction in the market, particularly among home systems integrators who are influential in determining which products and technologies are incorporated in the systems they install.

Most single-family homes in the U.S. are detached units owned by those living in them. However, there are 300,000-350,000 living units built in multiple dwelling units (MDUs) annually added to approximately 18 million existing rental units. This market is sizeable and one that can be better addressed by “no-new-wires” approaches for a couple of reasons. People will be able to take their entertainment systems with them when they move, and those living in units where they can’t open the walls will have an alternative.

Parks Associates’ research of broadband households in its Global Digital Living™ II survey reveals that broadband households are significantly more interested in enhanced TV features, including video-on demand, high-definition channels, and digital video recording (DVR) capability, than are households without broadband access. In addition, younger broadband households have high DVR penetration (50% of those 25-34) compared with older households. These results point to a high propensity for broadband households to upgrade their entertainment systems when they can afford them.

Further in the future (2015-2020), not only will the capabilities of high-end entertainment systems become more affordable to the top 10-15% of households by income level, but they will also become relatively easy to set up by consumers. Parks Associates’ definition of high-end entertainment systems (installed systems) will need to change. The situation is comparable to that of mainframe computers. The capabilities once confined to water-cooled computers in large glass rooms are now in slender laptop PCs we can carry anywhere. Technology changes the market … and our definitions.

This article was published for the 2008 CONNECTIONS™ Conference Industry Insights, the official publication of CONNECTIONS™.

CONNECTIONS™ pre-show events address trends, solutions, and opportunities in digital content and device management

CONNECTIONS™ announced two pre-show events, taking place June 24, 2008, bringing expert analysis on business strategies and consumer and industry trends in digital living as well as the opportunities and challenges of device management in the digital home.

Business Cases in Digital Living, a strategic workshop from Parks Associates, and Device Management Summit: Low Cost Device Deployment & User Support, from TM Forum, will be held in conjunction with CONNECTIONS™: The Digital Living Conference and Showcase.

According to Parks Associates, almost 33 million U.S. households will have broadband services 10 Mbps or higher by 2012. These connections create opportunities for multiple industries, a key topic for Business Cases in Digital Living. At this seminar, Parks Associates analysts provide strategic recommendations regarding digital home services and consumer purchase decisions. The seminar also features a special session with executives from Icron Technologies, SyncTV, AwoX, PacketVideo, and Allegro.

Device Management Summit, hosted by TM Forum, covers the entire device-management value chain, including manufacturers, integrators, consultants, executives, and service, technology, and application providers. The agenda features discussion on optimizing end-to-end device management and the latest efforts to solve device-based management issues.

This summit features speakers from TM Forum, Device Management Forum, Coxhead Consulting, Cisco Systems, Peak8 Solutions, DSL Forum, Home Gateway Initiative, OSGi Alliance, and Telcordia.

Cisco CIO, Rebecca Jacoby to Share Vision of Next-Generation Customer Experience at CONNECTIONS™

Parks Associates and CEA® today welcomed Rebecca Jacoby, Sr. VP & CIO, Cisco Systems, Inc., who will deliver the opening keynote at CONNECTIONS™: The Digital Living Conference and Showcase on June 25, 2008.

Ms. Jacoby will present “The Next Generation Customer Experience: a CIO’s Perspective” at 10:00 a.m. on June 25. Today’s business environment requires a transformation in the way we bring together the business and technology architectures. She will discuss the new opportunities inherent in new technologies that will aid in the acceleration of this transformation. The keys to success include the ability to deliver productivity, an improved experience, and expansive growth.

“Total U.S. consumer spending for home technical support services will reach nearly $1 billion by the end of 2011,” said Kurt Scherf, vice president and principal analyst, Parks Associates. “This is a critical growth area for the digital living markets, and with the benefit of Rebecca Jacoby's leadership vision, CONNECTIONS™ will explore in depth the issues relevant to this sector.”

Additional CONNECTIONS™ sessions on this topic include:
• Metcalfe’s Law or Murphy’s Law? Customer Support for the Digital Home
• Customer Experience Management Success Stories for Digital Lifestyle End User Support, hosted by Peak8 Solutions

Orb First to Enable Live TV on iPhone

Finally iPhone Users Can Enjoy TV, Internet TV, and Webcams...With another demonstration of the power and flexibility of the Orb architecture, Orb Networks, announced the world’s first way to stream live TV to the iPhone and iPod touch.

For the first time, iPhone users can enjoy the immediacy of live sporting events and fast-breaking news on their phone. Learn More...

Orb Networks is an award-winning developer of software and services that unlock the digital media stored on personal computers. Orb gives consumers secure, free, instant, and everywhere-access to everything from their TV and music to photos and video on virtually any web-enabled device. The company's partners and affiliates include, amongst others, AOL Winamp, AMD, and Creative Labs. Orb Networks is a privately held company in Emeryville, Calif.

Hervé Utheza, VP and General Manager, TV Properties of ORB Networks, will speak at CONNECTIONS US. Hervé will be speaking on June 26th at 2:15 PM on the session, PLACE SHIFTING +CONTENT STORAGE: Moving the Value of the Network Upstream.

Other confirmed speakers on this session include: Quartics; Tara Maitra, Vice President, General Manager of Programming of TiVo, Inc.; and Scot Zarkiewicz, CEO of SingleClick Systems.

Online Storage and Backup Add Value to Broadband Service Provider Offerings

How can broadband service providers keep customers and make money? Online storage and back-up services!

"Enabling Solutions for a Rich Broadband Experience" examines the global broadband market and analyzes the drivers, demand, deployments, and critical enabling technologies for broadband value-added services. According to the report, providers will see $188 million in subscription revenue by 2012 if they provide these value-added services.

Online storage and backup services will spur revenue generation and customer retention over the next five years for U.S. service providers, bringing in more than 1.5 million subscribers, according to Parks Associates’ Enabling Solutions for a Rich Broadband Experience. “Online storage and backup services are great customer retention tools and upgrade incentives,” said Yuanzhe (Michael) Cai, Director, Broadband and Gaming, Parks Associates. “They fit with broadband service providers’ strategic advantages, complementing existing trust and billing relationships, network ownership, and guaranteed quality of service.”

The report recommends that as broadband service providers reposition themselves as experience providers, they should introduce a variety of value-added services to strengthen customer relationships, increase ARPU, and showcase the benefits of high speed. Such value-added services include broadband entertainment, management and support, and control and monitoring services.

“Service providers need to offer a portfolio of new offerings to create meaningful revenue growth,” said James Kuai, Research Analyst, Parks Associates. “BSPs need to experiment with different services and white-label solution providers.”

Michael Cai will discuss broadband service strategies in the session Solutions for Broadband Providers: Carriers as “Experience Providers at the CONNECTIONS™ conference, June 24-26.

All Eyes on the TV: What Will Define the Next Generation of Services?

by Kurt Scherf, VP & Principal Analyst, Parks Associates

The Evolution of TV: No Longer Just “Lay Back”!

For years, the tried-and-true television experience was very much the “lay-back” experience. Before cable and satellite services grew in significance, viewers had four main channel options. Even after the Fox Network was launched in 1986 and subscriptions to multichannel offerings became the norm, the model remained the same –viewers tuned in at specified times to watch a particular show based on a predetermined schedule. In other words, it was television on somebody else’s terms.

With the rise of digital video recorders, alternative content available through the Internet, and fierce competition among different television providers, control over when – and even more dramatically what – to watch is very much in the consumer’s hands. As the television audience becomes increasingly fragmented, consumers demand more in terms of the content choices they are offered and the overall value of their television service. More importantly, the value of entertainment services is not measured by one facet (such as the number of channels) but by providers’ success at offering blended services to their customers. In initial stages, this blending will include bundled services, in which one company provides voice, video, and data services (generally over one type of fixed-line connection), typically at a discount. However, the longer-term offerings will include actual convergence in offerings, in which end-user devices and home networks facilitate the delivery of services in new ways.

Television Gets Smarter: Stages of Evolution

As new entrants seek to attract and retain customers for broadband, television, and communications services, we see significant opportunity for a host of new services and applications to drive new revenue and serve as competitive differentiators. Television service, in particular, will transition from a relatively basic offering of several hundred channels and some interactive features such as video-on-demand to a fully interactive and distributed service that reflects key digital lifestyle attributes, such as home connectivity, a blending of services, and an emphasis on holistic applications, including home management, safety, and health.

Three stages of television’s evolution to a more personal and interactive medium are highlighted in the figure below. At the present time, the major markets in North America, Europe, and Asia-Pacific sit mostly between the near-term and mid-term opportunities. The basic services are in place, and the scene is set for some dramatic changes to video services in the next few years.

Development Path for Advanced TV Features

Efforts in the near-term stage will emphasize a more personalized television experience, with a key focus on DVR functionalities, home networking (linking the PC to the set-top box), an enhanced level of information (through informational widgets), and rethinking the user interface. We are not expecting a wholesale evolution of the electronic program guide (EPG) during this phase; however, program guides will incorporate more advanced (32-bit) graphics to help sell additional services such as premium VoD movies (by displaying easier-to-read title boxes).

The second phase of advanced TV services deployment will rely more on two-way communication to provide even more Internet-like content. Companies will incorporate place-shifting features (such as those embodied today in what Sling Media or Orb Networks can offer) into television services, which will allow consumers to stream recorded content from a DVR and play it on any Internet-connected device. Social media enhancements will offer features like channel and/or program recommendations that come to viewers from a circle of friends and "virtual water coolers," where viewers can see the top-viewed shows for any given night or week.

The last stage of development will include more advanced entertainment and communications convergence. Providers will enable videoconferencing at the TV, and there will be applications tied to t-commerce (allowing consumers to order products directly from an advertisement using a remote control). We also expect to see features such as home monitoring and health (i.e., Web conferencing to check on an elderly relative). Community features will allow for a more customized information service related to local information (updates on city government and school events; allowing subscribers to connect to each other on Craig’s List or Angie’s List).

Are consumers ready for these features? As service providers seek to differentiate and add value to their services, the additional investments necessary to create these advanced features have come with significant questions. Telco/IPTV providers in particular have come under scrutiny for their investments in deep fiber technologies and their deployment of television and bundled services, but after some initial skepticism from Wall Street, these efforts are being seen in a more favorable light as subscriber numbers have increased.

Now that the basic offerings are in the field, the focus has returned to the consumer. As television services expand beyond “me too” offerings, do consumers see value in these additional features – interactivity, more programming, greater personalization, higher-quality content, etc.? Our data (most recently from Digital Media Habits II) indicate that premium video-on-demand services will be a key differentiator, followed by the ability to enjoy music and user-generated content (such as photos) on the TV.

This article was published for the 2008 CONNECTIONS™ Conference Industry Insights, the official publication of CONNECTIONS™.