World's First Terrestrial 3D TV Service Starts in Italy

The world's first terrestrial 3D TV service officially went live last week, following a successful trial by Italian broadcaster Mediaset.

The service, known as 3VOD, runs on Motive's Bestv set top box, offers subscribers the ability to view films from a selection of around 50 films. It was originally offered as a limited trial to subscribers from late last year.

Previously 3D TV was limited to high-bandwidth pay-tv on satellite and cable platforms. The problem with 3D TV is its very large filesizes—with two images per frame, films are literally twice the size of 2D shows.

What 3VOD does is to trickle the movie file to the Bestv set-top box throughout the day and night. The box stores the film on its hard drive. Trickling small amounts of data allows the broadcaster to extract the maximum value out of any under-used bandwidth. Typically broadcasters transmit up to seven TV channels in what is known as a “multiplex”.

Although it describes itself as video on demand, 3VOD is not a conventional VoD service like the U.S. Netflix. Instead users are able to watch from a limited set of choices. Unlike true VoD services where the files are stored on a remote server and streamed in real-time to the user, 3VOD stores the files locally on a set top box.

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Analysts open '11 CES by addressing content and security issues facing manufacturers and developers in Internet-connectable CE

Parks Associates wrapped up the fifth-annual CONNECTIONS™ Summit at CES, the first day of 2011 International CES, by addressing the key issues facing CE manufacturers and solutions developers in 2011. The first session, "Analyst Roundtable: The Connected Home Is Here," which broke all previous attendee records, examined key trends and areas of concern, including how Internet-connectable TV devices can avoid the same underwhelming reception that plagued 3DTV after its big splash at CES 2010.

Parks Associates’ recent research finds that – the apps vs. open-browser debate notwithstanding – connected TV manufacturers will find market success with specific content application offerings, particularly premium video-on-demand (movies and TV shows), photo-viewing, social network feeds, streaming music service, customizable widgets, and gaming applications.

With sales of Microsoft Kinects exceeding the company's expectations, and multiple gesture-recognition products debuting at CES, how consumers interact with the television will also be radically changing starting in 2011.

Although online video and applications are major drivers for the rise of connected devices, other areas of focus for CE and service providers in 2011 will be backup, content protection and redundancy, and a greater emphasis on device security. This sets the stage for appliance- and cloud-based storage as well as device security and related features:

• According to Parks Associates, about one-third of U.S. broadband households (32%) are backing up content on at least a monthly basis.

• The firm's recent survey Consumer Demand for Technical Support Services found 20% of consumers are “highly concerned” about losing documents and other digital content because of technical issues, theft, or other catastrophic issues.

• Security concerns are moving into the mobile realm, where U.S. consumers are showing increasing demand for remote protection services for mobile and portable devices. This finding indicates 2011 will be a good year for companies such as Lookout, which provides location and lockdown services for smartphones.

Comcast Testing Internet TV Service

Comcast Corp. is testing a new service that knits together television and the Internet, as the U.S. cable giant goes after rivals that threaten to undermine its business.

Users can watch and search a smattering of Web video through their televisions and search across live, on-demand and recorded programming.

The service, known to participants as "Spectrum" and internally as "Xcalibur," doesn't let participants freely browse the Web, though they do have some basic connections to social networks to comment on television shows, the people familiar with the matter said.

While the test is small, it marks a significant step in the efforts of the largest TV distributor in the U.S. to adapt to the rise of Internet programming and the cohort of devices—such as Roku boxes and Apple TV—that make it easier and more convenient to watch.

Those efforts, including forays from giants like Google Inc., Microsoft Corp., and Apple Inc., haven't displaced traditional TV so far. Cable companies are quick to point out that the new players may struggle to manage the costs of delivering massive amounts of content without the infrastructure cable operators have. But they are emerging as stronger competitors as they procure more content and strike partnerships with video brands like Netflix Inc.

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BlackArrow and Fox Cable Networks Partner on Dynamic Advertising Trial for Video on Demand

BlackArrow, a leading worldwide provider of advanced advertising solutions for New Television platforms, announced it has partnered with Fox Cable Networks to trial the BlackArrow Advanced Advertising System across the video-on-demand (VoD) content of FX, National Geographic Channel and SPEED.

With the BlackArrow system, Fox Cable Networks is testing the ability to deliver addressable advertising to viewers in multiple cable markets. Fox Cable Networks is utilizing the BlackArrow Sales Suite to customize on-demand campaigns based on factors such as viewer demographics and viewing behaviors, as well as specific content on its three networks.

The Fox Cable Networks trial is using the sophisticated capabilities within the BlackArrow Sales Suite. Among the key features essential in the execution of this trial are tools that leverage content information and anonymous subscriber data for audience addressability; manage business arrangements between networks and cable distributors, and modules to optimize avails using BlackArrow’s Placement Opportunity Information Service (POIS).

For more information, visit http://www.blackarrow.tv.

Wal-Mart agrees to buy video company, Vudu

According to a New York Times article on Monday, Wal-Mart has agreed to buy Vudu, a movie service Silicon Valley start-up.

Vudu competes directly with the video-on-demand services of the cable companies, but they Vudu has tried to stand out from competitors with its large selection of HD movies, user friendly interface and social media integration via Facebook, Twitter, Flickr and Pandora.

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Decreasing Piracy in the Modern Digital Environment

At the upcoming CONNECTIONS Europe event in Amsterdam, I will be taking part in the "Digital Furnace: Residential Gateways and Set-Top Boxes" paneldiscussion, which will explore the increasingly popular 'home hub' experience.This is an especially critical topic for the industry right now as it considers hardware developments, environmental factors, applications, and features as well as content delivery and protection.

Currently, consumer demand for media-rich home entertainment services is driving innovation and new revenue opportunities in the set-top box industry. Next generation set-top boxes will integrate video content from multiple signal sources such as broadcast television, premium video-on-demand and Internet-based services. They will also provide value-added capabilities like time-shifting and enabling content to be distributed to a variety of viewing devices including multi-room TV networks, personal computers, portable media players, and other mobile devices.

Yet this level of source variety and content portability is inherently more susceptible to piracy attacks, which dramatically increases the complexity of security requirements. Set-top boxes, their associated conditional access systems and digital rights management technologies are under constant threat from device tampering, software security breaches and hacker attacks that can significantly impact the reputation and bottom line for both set-top box manufacturers and operators.

How do manufacturers and operators alike achieve sustainable security in the set-top box ecosystem thus preparing their devices to safely deliver high-value premium content to global consumers?

If the manufacturers get it right, they can fight against attacks, while creating a profitable business model.

The “Digital Furnace: Residential Gateways and Set-Top Boxes” panel discussion will take place at CONNECTIONS Europe, Amsterdam on Wednesday 4th November, 2009 at 11.45 a.m. CET.

By Andrew Wajs, CTO, Irdeto

World’s First End-to-End TV Solution with 3D User Interface Ready for Deployment on IP-Hybrid Networks

The world’s first end-to-end, 3D TV solution is the result of a partnership between Orca Interactive, SoftAtHome and Viaccess to develop a unique, end-to-end 3D TV experience for the digital home. It enables service providers to accelerate time to market to deliver a new TV offering with a 3D HD user interface on broadcast, IPTV or hybrid networks (DVB-S/C/T+IP).

The user interface is one of the key battlefields for service providers to maximize customer retention and increase VOD and services revenues. In order to help service providers meet this challenge, the partners set out to bring to market the first, fully integrated and ready-to-deploy TV solution for the next generation TV user experience. This unique end-to-end solution blends the core IPTV components: Orca’s service delivery platform including the COMPASS groundbreaking content discovery solution; premium set-top-box from Pace; SoftAtHome’s operating platform; and card and cardless conditional access from Viaccess.

In addition to the 3D HD user interface, the solution gives Service Providers a complete solution to quickly deploy live TV, VoD, PVR, personalization and DLNA content sharing functionality with optimal performance and content protection. It leverages the standard Open Graphics Libraries API combined with hardware accelerators to deliver high performance HD 3D experience. The solution is on display at IBC on the booths of different partners: Orca Interactive (2.B40), Pace (1.B19), SoftAtHome (Hotel Okura Amsterdam), Viaccess (1.A51), Broadcom (5.A10), Bluestreak Technology (IP 613) and httv (1.C93).

Verimatrix and Envivio Extend Adaptive Rate Streaming Beyond the iPhone

Verimatrix, setting the standard in content security technologies that enhance the value of pay-TV networks, and Envivio, Inc. announced a collaborative solution that enables pay-TV operators to use Apple's HTTP adaptive bitrate streaming technology for the iPhone to deliver IPTV and over the top (OTT) content that scales effectively across mobile devices, PCs and other client types. The solution pairs Envivio's 4Caster C4 three screens encoder/transcoder with the Verimatrix Video Content Authority System (VCAS) to create a unified headend that delivers protected standard (SD) and high definition (HD) content over unmanaged networks to any Internet-connected consumer playback device.

Introduced as a component of Apple OS 3.0 for the iPhone, adaptive bitrate streaming delivers smooth audio and video streams using Internet-standard HTTP protocols. The technology supports automatic adaptation to available network types and automatically switches to the optimal bitrate for a smooth quality playback experience. Envivio 4Caster C4 enables its deployment by ingesting analog or digital sources and then encoding and encrypting the content for delivery at multiple bitrates to multiple devices. In this solution, the 4Caster C4 is integrated with Verimatrix VCAS, which provides for key management, user authentication and unified right managements. The combination enables pay-TV operators to create unique service offerings for multi-screen delivery. Furthermore, live and video-on-demand (VOD) content can be delivered using the same protocols with easy incorporation of targeted advertising segments.

For the full press release, click here.

Is the Fancast Store a Mistake?

In the age of online entertainment, consumers get virtually unlimited choice of content and unlimited means to entertain themselves. They can stream their favorite episode of Lost from ABC.com, watch full-length movies on Hulu or even download episodes of shows like the The Office from NBCDirect and they can do it all for free.

These choices offer consumers unprecedented amount of control over their entertainment experience, which is bad news for incumbent content aggregators: cable, satellite and IPTV companies. The incumbents have to create a way to deliver increasingly-sophisticated entertainment to consumers for free.

Amy Banse, the president of Comcast Interactive Media, alluded to some of thesechallenges during her keynote at the Parks Associates CONNECTIONS™ event in July (http://parksassociates.com/events/connections/2008/attendees/materials.htm).

Comcast is a great example of an incumbent provider working hard at establishing new entertainment avenues for consumers. In 2006, it launched Ziddio, a user-generated portal similar to YouTube. It followed up with FearNET.com, a horror movie and community site. In 2008, it launched Fancast, a video aggregation and streaming site.

Not all its experiments have been a success. In August, Ziddio has closed its doors (or shut down its servers) for good. FearNET, on the other hand, is alive and growing. In 2007, Comcast expanded it onto the video-on-demand (VoD) platform. This is a critical step for Comcast, as it is trying to build a holistic consumer experience, linking TV, internet and mobile into one.

Comcast’s latest foray into the digital media distribution is the launch of it’s Fancast store in September of 2008. Using the store, any broadband customer in the US can download from over 3,000 titles. Comcast plans to expand the library to 10,000 by the end of 2008. With the new store, users will have an option to buy or rent the video and download it to their PC at prices comparable to Amazons: $10-15 to buy and $4 to rent.

This latest expansion makes me pause to think about what Comcast is trying to accomplish. Have they not learned from iTunes, Hulu and Veoh? What about Netflix and Walmart, who got their own bruises trying to set up digital distribution?

Without a doubt, Comcast will face many of the same challenges as distributors listed above, however, in Comcast’s case, there are significant benefits that would make this strategy worth the risk and give Comcast a chance to succeed. Let’s take a look at each in greater detail. First, let’s consider the challenges:

• Unfavorable economics. Same argument as applied to Hulu and Veoh and Joost applies to Comcast: content owners keep the bulk of the video advertising revenue. Although Comcast did not comment on the revenue arrangements, it did admit that content owners sell ads in the videos featured on Fancast, which usually means that content owner retains 70-90% of the revenue. With the launch of the Fancast store, Comcast acquires an additional revenue source: consumer purchase and rental fees, however, it is also likely that content owners keep the bulk of those.

• Digital rights ruin consumer experience. Content owners manage media rights very carefully, to ensure revenue maximization. This would hinder the delivery of the holistic consumer experience mentioned above. For example, a movie, or a TV episode may be available on Fancast site, but not available on VoD. Additionally, content owners are adamant about protecting their content with the Digital Rights Management (DRM) software. Fancast is no exception, using Windows Media DRM. DRM further restricts how viewers can enjoy video, for example, consumers can only watch video on a PC, not a Mac, mobile device or a TV. Such limitations also interfere with “for pay” business models outlined above. Rather than downloading a heavily-protected video file that can only be watched on a PC, consumers will opt to buy (or rent) a DVD, which can be watched on TV or PC and now even on a mobile device as some DVDs include digital versions.

• Competition will hinder success. Online video field is extremely hot with many hands reaching for very little revenue. From the broadcast networks to the device manufacturers, companies like ABC, NBC, Apple, and Microsoft are all striving to deliver the next generation of the consumer entertainment experience. Standing out in this crowd will require an exceptional product with clear differentiation.

There are, however, opportunities for Comcast in pursuing this strategy:

• Content owners crave secure, multi-platform distribution. As consumers increasingly engage in concurrent media consumption and ad avoidance, the effectiveness of advertising in media decreases. Advertising revenues pose the bulk of revenue for many content owners and they want to ensure that if effectiveness of one channel, such as TV, diminishes, they have another channel, such as internet to supplant it with. Service providers such as Comcast make very good partners for media companies, potentially yielding better revenue splits and more lenient distribution rights.

According to Alix Cottrell, general manager of Fancast, this is the route that Comcast intends to follow. Current plans will allow Comcast customers with VoD or DVR to either copy online content into their VoD folder or have it recorded on their DVR (if the show is only available on linear TV). Comcast plans to implement this service within 12 months. In the next 24-48 months, Fancast also plans to launch a mobile component. Initially, consumers will still have to download content to PC and then port it to a mobile device. If the Clearwire partnership is successful, however, Comcast may also launch a direct-to-device service on par with at&t’s Mediaflo or Verizon’s VCAST. Finally, thePlatform, Comcast’s video delivery arm, has recently acquired Chirp, a social application developer, suggesting that Comcast is gearing to dramatically expand social features of its Fancast service.

• Can build biggest libraries. As a media aggregator and distributor, it is easier for Comcast (and most service providers) to build large video libraries. It can leverage its linear distribution relationships to secure content from many providers. It is also not bound by the media ownership regulations that restrict some of the other aggregators. For example, Hulu still doesn’t have ABC’s and CBS’ content in its libraries and it likely never will. Even if the ideological differences between partners get resolved, media ownership regulations will preclude Hulu from adding more content partners.

So does Comcast’s launch of the Fancast store make sense? Will the store succeed? I think it’s safe to say that it does and it will. Of course it is important to keep in mind that success will NOT be measured by revenue or profitability of an individual property like Fancast. Fancast will, however, condition consumers to seek video online and will also build stronger links in consumers’ minds between internet video and traditional TV. As content owners relax their rights requirements, Comcast will be in the position to deliver the holistic consumer experience, which envelops consumers in content (and advertising) regardless of where they are or which device they are using. That service may even be compelling enough for consumers to consider opening their wallets!

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Written by Anton Denissov, Research Analyst, 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™.