By Lyndsey Schaefer
The Hollywood IT Society will host two panels of prominent CIOs and CTOs representing the major Hollywood studios during its HITS morning program May 7 at Pepperdine University to discuss the strategic challenges for growth and profitability of the enterprise.
No other industry event brings together these cross-studio experts, whose invaluable perspectives and thought leadership help shape the future of the business.
With the abundance of digital technology, ubiquitous internet, social media and the decline of the physical medium, the role of information technology has vastly shifted its focus from technology to business. IT executives spanning the entertainment industry will discuss objectives, strategies and tactics that theyâve undertaken to transform their businesses and revitalize the industry. In addition, best practices for cost containment and effective development of software, hardware, infrastructure and network will be shared.
The CIO panel features John Herbert, Executive Vice President & Chief Information Officer, Fox Filmed Entertainment; Michael Keithley, Chief Information Officer, CAA; Theresa Miller, Chief Information Officer and Executive Vice President, Information Technology, Lionsgate and Scott Phelan, Group Information Officer, Warner Bros. Entertainment. The panel will be moderated by Leo Collins, Oracle Customer Advisor, Oracle.
Following the CIO panel, a discussion between key studio CTOs will address the progressing technology driving the studio ecosystem. Picking up where their panel at CES left off, studio Chief Technology Officers will debate how their work has evolved to meet the needs of delivering content to consumers, split between multiple screens. They will address the latest operational developments in cloud-based entertainment and theatrical distribution, as well as the ways that they are utilizing technology innovations to streamline efficiencies and continue building the backbone for various business units.
The CTO panel is comprised of Hanno Basse, Chief Technology Officer, Fox Filmed Entertainment; Chris Cookson, President, Technologies at Sony Pictures Entertainment; Justin Herz, Senior Vice President, Direct-to-Consumer, Warner Bros. Digital Distribution &Â General Manager, Warner Bros. Advanced Digital Services; Jaime Voris, Chief Technology Officer, The Walt Disney Studios; and Lincoln Wallen, Chief Technology Officer, Dreamworks Animation; and will be moderated by Guy Finley, Executive Director, MESA.
Donât miss these two important panels to gain invaluable insights into the minds of these studio leaders.
For more information or to register for HITS, go to www.hollywooditsociety.com/malibu-2013
By Paul Sweeting
Apart from the ongoing dispute over its legality, one of the biggest questions hanging over Aereo has been what it wants to be when it grows up. While that company claims, without citing numbers, that consumer response has been very positive, there is probably a limit to the number of consumers who will be willing to pay $12 a month to stream content they can watch without paying anything, raising the question of how much upside there can be for the hundreds of millions of dollars Aereo would need to build out a nationwide system.
Speaking at the paidContent Live conference on Wednesday, Aereo CEO Chet Kanojia put a little more flesh on his company’s long-term strategy for adding programming to Aereo’s service beyond the handful of broadcast channels available in any given market without falling into the trap of simply recreating the cable bundle with cable-like pricing.
First us is likely to be a free, or low-cost package of news channels, starting with Bloomberg TV, with which Aereo currently has a deal. Beyond that, Aereo is looking to add a subscription movie channel that would be offered as a premium channel at a cost to users of 50 cents to a $1 a month.
“The value proposition there is the ability to watch movies on your own time, so consumers are willing to pay for that,” Kanojia said.
Kanojia described the future of TV, and Aereo’s place in it, as one of “skinny live, and deep library.” There is a relatively small subset of programming, he said, such as sports and news, that is sufficiently time-sensitive that there is valuing in watching it live. Everything else, he suggested, can be accessed on-demand without sacrificing value.
Aereo’s goal, Kanojia said, is to create a subscription service that provides access to time-sensitive live programming at a low cost, with a few premium items such as movies, without forcing consumers to pay for the “bloat” of channels that are providing programming that could just as easily be accessed via Netflix, Hulu, or other on-demand platform at a lower cost.
“The last time I checked thereâs no need to haveÂ Desperate HousewivesÂ or theÂ Real Housewives of Orange CountyÂ running on four channels at the same time,” he said.
The goal, he said, is to provide 50% of the real value proposition of subscribing to cable — access to must-see live, linear content — at one-tenth the cost. Eventually, he added, Aereo’s real-time service might ended up being bundled with a broadband subscription as an alternative to cable or satellite.
Following last weekâs announcement that MESA (Media & Entertainment Services Alliance) is to launch a European affiliate, headed by experienced industry specialist, Jim Bottoms, MESA has today confirmed that it will be hosting a supply chain panel at next weekâs PEVE event in London.
Chaired by Guy Finley, Executive Director at MESA US, the panel will explore the increasing complexities associated with bringing digital entertainment content to the market in Europe. âWhile there is some commonality with the USA, the European supply chain has an additional raft of issues it needs to take care ofâ says Finley, âincluding all of the activities and processes based around localisationâ. Â Digital was meant to yield some major advantages compared to physical media production and distribution but is this the reality?Â âThat will be one of the key themes of the discussionâ adds Finley, who will be joined by Jonathan Jowitt of Dolby Content Solutions and Ben Schofield an independent consultant who has been closely involved with UltraViolet.
On the evening prior to the opening of PEVE, MESA Europe will be welcoming people to the pre-PEVE drinks party on the evening of Monday 15th April to be held at the Crazy Bear Bar, Covent Garden. âThis is the perfect time to launch MESA Europe and with so many MESA member companies gathering in London for the conference it seemed an ideal opportunity to host a launch partyâ said Bottoms.
As part of its sponsorship package MESA has negotiated a 10% discount for members registering for the event.Â (Quote âPEVE2013MESAâ when registering online.)
For further information about MESA Europe and to participate in any of its forthcoming events please contact: firstname.lastname@example.org
U.S.-based entertainment trade association MESA (Media & Entertainment Services Alliance) has announced the launch of a European affiliate headed by newly appointed Executive Director, and longstanding industry specialist, Jim Bottoms.
Formed nearly five years ago to support service providers involved in the creation, production and distribution of physical and digital media and entertainment, MESA also manages the association activities of the Content Delivery & Security Association (CDSA), the Hollywood IT Society (HITS) and the 2nd Screen Society (S3).Â Its newsletter, the M&E Daily is read by nearly 20,000 industry professionals and it proudly partners with other leading trade associations including DEG: the Digital Entertainment Group, NAB, CEA and DECE.
âMESA has grown rapidly and we are pleased to have someone who has the industry experience and respect of Jim Bottoms to lead our association into its next global phase,â says MESA Executive Director Guy Finley. âThis move is in direct response to member requests, reflecting the desire for improved local communication and collaboration in each of the individual European markets and a heightened need for trans-Atlantic networking.â
Bottoms, co-founder of the Futuresource consultancy firm, said he is âlooking forward to using my knowledge and experience to take a âhands-onâ approach in helping toÂ drive industry-wide initiatives through MESA Europe.
âNever has this been more important than it is today, with the whole entertainment ecosystem focused on creating viable business models for digital content delivery and/or prolonging the life of packaged media.â
According to Bottoms, MESA Europe will offer a series of events for European members throughout the year and will launch initiatives on behalf of the CDSA, HITS and S3 groups in Europe.
For further details on membership or participation in any forthcoming MESA activities please contact email@example.com.
By Lyndsey Schaefer
Sony Corporation of America today announced the launch of Sony Media Cloud Services, a new cloud-based collaboration and production service that will be previewed at next weekâs NAB Show in Las Vegas. The scalable cloud platform, CiSM (pronounced see), will provide studios, broadcasters, independent producers, marketing teams and other creative individuals a âone-cloudâ solution to collect, produce and archive high-value, high-definition content, allowing fast and secure collaboration on a global scale.
âEvery day, creative professionals around the world spend numerous hours and resources on non-creative tasks like moving and sharing content, figuring out how and where to store it, and getting the right assets to the right places and in the right hands,â says Naomi Climer, President, Sony Media Cloud Services. âSony understands these complex challenges, which is why we designed Ci as a functionally rich, scalable and secure, media-focused cloud platform that can enhance and streamline traditional production workflows to make it easier to collaborate more effectively and cost-efficiently.â
Ci has the potential to be a game changer for the industry, Climer says, because it helps bring multiple assets together in the cloud, and since it can be utilized by the whole industry, from creatives to producers and legal departments.
âWe see it at the forefront of the creative process,â Climer says.
Built from Sonyâs expertise in solving real-world production and post-production challenges, Ci has been designed with intuitive capabilities to analyze complex media and data to enable machine-assisted workflows. It features pay-as-you-go pricing, infinite scalability and application-based servicing, all from a secure browser-based user interface, to make it simple for users to assemble teams online, work on projects and access files from locations around the world. Applications available at launch include:
- Âˇ Ci MediaBox: Collects, organizes, previews, shares and archives every media type and size using studio-designed cloud storage solution suite
- Âˇ Ci VideoLog: Enables logging of frame-accurate events to prepare content for downstream opportunities, distribution and playout automation
- Âˇ Ci AudioSync: Utilizes analysis algorithms and audio pattern matching to reduce non-creative editing work time in content-preparation workflows
- Âˇ Ci FrameMatch: Analyzes media files to automatically identify differences and likenesses between two sets of video files
- Âˇ Ci ReviewApprove: Enables review, annotation and collaboration on media files across multiple locations in real time, simultaneously
Ci makes it easy to find content as it automatically creates technical metadata, and allows users to comment in real-time on whatâs stored in the cloud. Sony is leveraging Aspera Connect to give users the best experience possible, Climer says. Sony foresees Ci being used in many different departments, from marketing to have a place to easily review and discuss content of trailers and single shots to legal departments being able to address usage rights.
Ci is currently in beta production and is available within the U.S. and European markets, with plans for additional service capabilities to be launched within the year. Sony Media Cloud Services is headquartered on the Sony Pictures Studio lot in Culver City, Calif., with regional teams based in North America, Europe and Asia.
âCi MasterSuite is an innovative approach to delivering professional media applications. Sony’s cloud-based, service-oriented architecture makes it easy to integrate these tools into our workflow, and the browser-based user interface will enable our teams to access content and collaborate from anywhere on our network,â says Jeff Mayzurk, SVP, Studio Operations, NBCUniversal.
For more information and to preview Ci, visit the Sony booth at NAB, or go to www.sonymcs.com.
By Guy Finley, Executive Director, MESA
Saturday morning I woke to terrible news. Â I lost a mentor and friend who helped me achieve my childhood dreams — a man I first admired as an aspiring artist, who made incredible music with the most talented people in the industry, and who was always on the cutting edge of digital innovation. Phil Ramone had passed away.
As the shock wore off it occurred to me that not only was Phil a musical genius, he was also an innovator who dedicated himself to embracing new technologies and new business models while guiding artists to be their very best through the latest tools available during the evolving digital transition.
I worked closely with Phil in 1997 and 1998. Â He, Larry Rosen and Dave Grusin had formed a record label, N2K Encoded Music, that would pioneer digital delivery and embrace the Internet as media well before the other major labels. Â I was a kid playing drums in one of the hottest bands in New York City, looking for a deal and being courted by legendary record label executives. Â It was just before the invention of Napster so the music business was still basking in the financial glory of the disc. Â Phil was always a gentleman while courting us and gave myself and the band his personal assurance that he would work with us personally over the next 18 months to produce a record that we were all proud of on many levels (artistically, sonically, creatively, etc.) Â When we eventually signed, he didn’t disappoint. Â He listened. Â He cared. Â He innovated.
When we were doing some of our best work in the dingy studio apartment the singer and guitar played shared, he took the risk and had us pre-produce our album at home on the latest digital gear and instruments; nowadays this is commonplace for young artists and only costs a few hundred dollars in software but back then it was a considerable investment risk. Later, we spent more than a month in Sony Studios recording an album that included everything the band dreamed of – vintage guitars, fat drums, strings, horns, B3 and a cadre of incredible guest musicians. Â We also embraced the latest digital technologies in the production process and worked with other “kids” who would later become Grammy Award winning engineers and producers themselves. Â He mentored us all, made us feel very important and gave us our shot at the big time.
You will see in his obituary that he was a music prodigy and an engineer before producing albums by Paul Simon, Billy Joel, Frank Sinatra, Ray Charles, Barbra Streisand and many others, some of which ultimately defined the artist to their global fan base and the era’s popular music to its place and time. Â He was the “Pope of Pop” and had that special knack for picking songs or writing arrangements that would go on to sell hundreds of millions of records. Â But beyond the pure talent and musicality as an artist himself, there was a technical genius as well.
This was a man who was a constant innovator using the first digital tape decks in a professional studio environment, heard the first digital instruments/samples while consulting with the instrument manufacturers, brought artists “together” by laying down the first recordings over the Internet with musicians in remote studio environments, pioneered optical surround sound and championed the Compact Disc and Music DVD. Â His innovations were endless, all the while becoming a music industry legend who worked constantly through five decades on albums that he felt passionately about, with artists who were friends as well as business partners.
In the end, N2K turned their business model from traditional record label into online retailer by purchasing CD Now (Phil was prescient even when it came to the demise of the record label model). Â The company that invested so much in us let us simply walk away holding our master recordings. Fifteen years later I look back fondly on those heady days and Phil’s passing reminds me about the fun we had together making music and memories.
We were but a blip on his huge career but it meant so much to briefly travel in his orbit and embrace a legend.Â So, in case you are curious:
Album: Mini-King (self titled)
Producer: Phil Ramone
Mixed by: Elliot Scheiner
Engineer: Samuel Vaughan Merrick
Asst. Engineer: Ryan Hewitt
By Lyndsey Schaefer
Consumer Electronics Association president and CEO Gary Shapiro said Thursday the christening of the Ultra HD format showed that Hollywood and the electronics industry could work productively together to benefit both.
âWe saw an issue – what do we call this thing? â and we solved it,â Shapiro said at the Digital Entertainment Supply Chain Academy (ESDA) event in Los Angeles. âUltra HD will be huge â it will sell itself. The content will come, the screens are there. Iâm excited about it.â
Shapiro spoke during a morning keynote conversation with CE Daily managing editor Paul Gluckman, where he also discussed his new book âNinja Innovation.â
âBeing a ninja is solving problems as a team, creatively,â Shapiro explains. âThe book offers strategies for individuals and businesses â like learning from failure is a positive thing.â
Digital ESCA drew more than 200 executives spanning the home entertainment industry. Now in its eighth year, ESCAÂ Â focuses on driving efficiency and innovation in the home entertainment supply chain, including both physical media and digital formats.
This yearâs event also featured a technology spotlight from Intel, which focused on UltraViolet, the industry-wide effort to knit together physical and digital video platforms. Intel officials said the company was investing heavily in supporting the technology infrastructure for UltraViolet and is working closely with Walmart-owned VUDU to help bring the optimal UltraViolet experience to consumers.
âVUDU is working with Intel to make the user experience seamless,â Amit Balan, VUDUâs head of marketing said. âUsers donât care about standards and formats â they care about content.â
Mark Teitell, GM of the Digital Entertainment Content Ecosystem, which oversees UltraViolet, moderated a panel on preparing content for the digital marketplace.
Panelists discussed the importance of collaboration in developing metadata standards for digital content to help facilitate interoperability, highlighting the work of the Hollywood IT Society (HITS), the Entertainment Merchants Association (EMA) and the Digital Entertainment Group (DEG).
The afternoon keynote featured acclaimed sports journalist J.A. Adande, an-air personality and senior writer at ESPN.com, who shared his perspective on the changing dynamics of digital media. Adande described how the sports media landscape has changed with the advent of digital technology dramatically changed with the advents in technology. Adande himself, who covers the NBA for ESPN.com said that when covering games, he relies on two TVs as well as TweetDeck.
âTwitter has turned into the great American sports bar. You can stay home and have those same conversations,â Adande said. âOur ESPN.com studies have shown that usage picks up online as people are watching games at home in the evening. How can you use technology to gain an advantage? How can we use technology in our stories to get people to pay attention?â
Twenty-three years ago, while interning at the Los Angeles Times, Adande recalled, focus group showed that readers were more interested in a story if they read the quick summary at the beginning of the piece. Now, he said, he has to hook readers with just a single line of text to get them to click through.
âYou have to embrace technology even if it puts your brand at risk. Itâs better than not having anybody talk about your product at all,â Adande said. âTwitter is a way to extend my brand. You have to utilize the media.â
Gary Shapiro, President and CEO of the Consumer Electronics Association (CEA) and best-selling author, will join the home entertainment industry at the 9th annual ESCA Digital Conference at the Luxe Hotel on Sunset on March 28 in Los Angeles. Shapiro will be joined by Consumer Electronics Daily’s Managing EditorÂ Paul Gluckman in a keynote conversation, which will address CEA’s support of the UltraViolet format and the evolving digital entertainment market, as well as Shapiro’s own efforts to promote innovation in the United States.
As author of the new book, “Ninja Innovation,”Â and as head of the world’s largest technology trade show, International CES, Shapiro has worked with the world’s leading corporations to create polices and programs that have launched some of the world’s most revolutionary products.Â During his keynote he will discuss key strategies he has learned that have led businesses to record-breaking profits, while avoiding traps that could have led to crushing failures.
Shapiro’s ESCA Digital keynote conversation will be his first appearance in Hollywood since the announcement at International CES of a partnership with DEG for the promotion ofÂ UltraViolet, in which consumers purchasing an eligible connected TV orÂ Blu-ray Disc player will receive up to 10 free UltraViolet movies to kick start their collections.
“I put innovation at the pinnacle of economic performance because without it, we are idle,” Shapiro writes in his latest book.Â “With it, we achieve great success.”
Innovation will be the ongoing theme throughout the day at ESCA Digital, which will focus on workflows, standards and processes needed create the new digital home entertainment supply chain.Â Under the direction of conference chairs Richard Marty, VP, Emerging Platform Development and Marketing, Sony Pictures Home Entertainment; Mark Turner, Director, Content Relations, Dolby Laboratories; and Larry Wilk, VP of Operations and Strategy, The Walt Disney Studios, this year’s conference will discuss issues such as: the roadmap for the new digital entertainment industry, how to prepare content for market, the importance of the user experience, as well as offer key digital entertainment data from leading consultancies.
The event is being sponsored by Intel, Cinram, Dolby, EIDR, Rovi, Signiant, Testronic Labs, Akamai and Sony DADC.Â It is produced by DEG: the Digital Entertainment Group and MESA.
For more information and to register visit:Â www.entertainmentsupplychain.com
By Paul Sweeting
Newly introduced legislation to allow consumers to unlock their cell phones, prompted by a statement from the Obama Administration endorsing the idea, will likely get its first public airing on Capitol Hill Wednesday when the head of the U.S. Copyright Office Maria Pallante is scheduled to testify before the House Subcommittee on Courts, Intellectual Property and the Internet. The Copyright Office recently rejected calls to allow unlocking, which is currently prohibited by the Digital Millennium Copyright Act’s ban on circumventing digital locks, prompting the White Hose statement.
As I speculated here in a previous post, however, the debate over the DMCA’s ban on unlocking cell phones isn’t likely to remain confined to cell phones. The main purpose of Pallante’s testimony, in fact, is to discuss the Copyright Office’s recent recommendations for a broader overhaul of U.S. copyright law, including the DMCA. Thanks to the attention generated by the cell phone issue, the copyright overhaul agenda is now very much in play in Washington.
And what an agenda it is. In oral testimony posted to the subcommittee’s website in advance of the hearing, Pallante lays out a long list of suggested issues for Congress to tackle:
The list of issues is long: clarifying the scope of exclusive rights, revising exceptions and limitations for libraries and archives, addressing orphan works, accommodating persons who have print disabilities, providing guidance to educational institutions, exempting incidental copies in appropriate instances, updating enforcement provisions, providing guidance on statutory damages, reviewing the efficacy of the DMCA, assisting with small copyright claims, reforming the music marketplace, updating the framework for cable and satellite transmissions, encouraging new licensing regimes, and improving the systems of copyright registration and recordation.
An overhaul is necessary, Pallante will tell the committee, because current copyright law, including the DMCA, is increasingly out of step with technological change:Â
The law is showing the strain of its age and requires your attention. As many have noted, authors do not have effective protections, good faith businesses do not have clear roadmaps, courts do not have sufficient direction, and consumers and other private citizens are increasingly frustrated. The issues are numerous, complex, and interrelated, and they affect every part of the copyright ecosystem, including the public at large.
Pallante will also suggest that some more fundamental elements of current copyright law may also need to be reconsidered:
Congress also may need to apply fresh eyes to the next great copyright act to ensure that the copyright law remains relevant and functional. This may require some bold adjustments to the general framework. You may want to consider alleviating some of the pressure and gridlock brought about by the long copyright term â for example, by reverting works to the public domain after a period of life plus fifty years unless heirs or successors register their interests with the Copyright Office. And in compelling circumstances, you may wish to reverse the general principle of copyright law that copyright owners should grant prior approval for the reproduction and dissemination of their works â for example, by requiring copyright owners to object or âopt outâ in order to prevent certain uses, whether paid or unpaid, by educational institutions or libraries.
Nearly every issue touched on by Pallante has partisans on both sides, and any proposed revisions are certain to spark fierce controversy. The cell phone unlocking legislation, however, has broad, bi-partisan support on Capitol Hill, which means it’s likely to become a popular vehicle to try to slip more controversial reforms through Congress by attaching them to a fast-moving bill. That scramble begins Wednesday.
The Hollywood IT Society (HITS) has announced that its 3rd Annual Hollywood IT Summit will be held onÂ Tuesday,Â May 7th in the George Elkins Auditorium at the Malibu Campus of Pepperdine University. This annual meeting of senior-executives from all major studios and their creative and technology partners, is a seminal industry event for technology leaders in charge of the industry’s IT infrastructure and data.
Co-sponsored by Variety, HITS is programmed by the Hollywood IT Society (HITS) and its Advisory Board of CIOs, representing all the major studios.Â The Summit condenses all of the pressing issues and significant technology discussions into a one-day event with multiple tracks and break-out sessions.
This year’s program is under the direction of these industry CIOs: Steve Andujar, Executive Vice PresidentÂ & Chief Information Officer, Sony Pictures Entertainment; Gary Davis, Senior Vice President Operations & IT, Image Entertainment; John Herbert, Executive Vice President & Chief Information Officer, Fox Filmed Entertainment; Steve Lapinski, Chief Information Officer, Film & West Coast Television, NBCUniversal; Theresa Miller Chief Information Officer & Executive Vice President, Information Technology, Lionsgate; Beth Overhuls, Vice President, Business Systems Engineering, The Walt Disney Company; Scott Phelan, Group Information Officer, Warner Bros. Entertainment; Abe Wong, Chief Information Officer, Paramount Pictures
The primary areas of focus for this year’s HITS will include: studio case studies (best practices), digital distribution models and analysis, connectivity and real-time decision making, big data and analytics, self-service business discovery, and the exploration of innovative technologies driving business transformation.
“This Summit is the official centerpiece of the year-round series of HITS meetings, initiatives and activities, the Society conducts on behalf of its membership,” says HITS Executive Director and Conference Chairman Devendra Mishra.Â “IT is the lifeline for our new digital economy and, as such, the CIOs at the studios and their peers are responsible for making the high-value, high-return investments that assure our industryâs many stakeholders of an efficient, secure and sustainable digital transition.”
Here are this year’s session topics:
â˘Â CIO PANEL: Strategic Challenges for Enterprise Growth and Profitability
â˘ Transformational Challenges in the Digital World: The IT Enabler!
â˘Â InSourcing IT Services: Rebuilding the Competitive Edge
â˘ Unpacking the Data from Olympics 2012: Playing in the Sandbox!
â˘Â The Mashup of Technology Groups in the New Studio Operating Model
â˘Â KEYNOTE: How Does Data-Driven Decision Making Affect Performance?
â˘ Integrating Domestic and International Marketing
â˘ TheÂ Consumer Decision Journey: Putting Money âWhereâ and âWhenâ Your Customer Is!
â˘Â Mobile Devices: Delivering Content Ubiquitously!
â˘Â Metadata: The Rosetta Stone for Data Analytics
â˘Â KEYNOTE: Four Learning Curves That May Jostle Your 2013 Agenda
â˘Â Integrating the Cloud for Business Transformation
Visit www.hollywoodITsummit.com for more information about this yearâs event.
For program information contact: Devendra Mishra, Conference Chair at: (818) 224-1552, devendra@MESAlliance.org
For sponsorship information contact: Guy Finley, Executive Director, MESA at: (917) 513-5963, guy@MESAlliance.org
To learn more about the Hollywood IT Society click here
By Paul Sweeting
Efforts to crackdown on online piracy by taking legal action against individual web sites that facilitate it are often likened to a game of Whac-a-Mole — an endless and ultimately pointless exercise in chasing a moving target. But some intriguing evidence has emerged lately that at least some moles may be worth whacking.
According to a new study by researchers at Carnegie-Mellon University and Wellesley College, the shutdown of Megaupload and its affiliated site Megavideo last year led to an increase in the amount of legal online movie rentals and sales seen by the studios. The researchers looked at data from 12 countries, including the U.S., provided by two studios and found that online revenue was 6% to 10% higher since the shutdown than it would have been were Megaupload still in business.
“We conclude that shutting down Megaupload and Megavideo caused some customers to shift from cyberlocker-based piracy to purchasing or renting through legal digital channels,” the researchers said.
The data for the study were provided through Carnegie-Mellon’sÂ Initiative for Digital Entertainment Analytics, which receives funding from the MPAA, but neither the researchers nor the study itself were funded by the studios.Â
The Megaupload findings come on the heels of a separate report by the NPD Group, which found a significant worldwide decline in illegal online music sharing in 2012, both in terms of the total amount of file-sharing and the number of people engaged in the activity.
According to NPDâs âAnnual Music Study 2012,â 40% of consumers who had illegally downloaded music via peer-to-peer services in 2011 reported that they had stopped or downloaded less music from P2P networks in 2012.
The report attributed the decline primarily to the increased use of legal music streaming services. But it said some of the shift in behavior was also do to legal efforts to shut off access to illegal P2P networks like Limewire.
âIn recent years, we’ve seen less P2P activity, because the music industry has successfully used litigation to shut down Limewire and other services,” NPD’s senior VP of industry analysis Russ Crupnick said of the findings. “Many of those who continued to use P2P services reported poor experiences, due to rampant spyware and viruses on illegal P2P sites.â
More than two years after Limewire was shut down, nearly 20% of P2P users who reduced or stopped their P2P activity cited the fact that that their preferred service was closed, or that the services they used created issues with spyware and viruses, according to NPD.
While piracy continues to be a problem, and efforts to fight it through the legal system remain slow and frustrating, content owners may at last be able to point to some empirical evidence that it has some effect on overall rates of piracy.
The Obama Administration issued a statement Monday strongly endorsing consumers’ right to unlock their cell phones that could hold broad implications for the use of digital rights management in a wide range of applications.
The statement came in response to a petition posted on the White House website’s We The People page on January 24, in response to the Library of Congressâ decision not to renew the Digital Millennium Copyright Act exemption it granted three years ago that allowed cell phone users to circumvent Â the locks in order to switch their phones to a different wireless service once out of contract. The exemption had been granted under the DMCA’s triennial review process that allows the Librarian to grant limited exceptions to the law’s ban on circumventing access control technologies. Â The exemptions are not permanent, however, and must be reapplied for and renewed every three years.
The petition, started byÂ Sina Khanifar, drew over 114,000 signatures, well about the 50,000 needed to trigger a formal response from the White House. In this case, the Administration not only agreed with the petition, it went beyond its specific request to include the unlocking of tablets as well:
The White House agrees with the 114,000+ of you who believe that consumers should be able to unlock their cell phones without risking criminal or other penalties. In fact, we believe the same principle should also apply to tablets, which are increasingly similar to smart phones. And if you have paid for your mobile device, and aren’t bound by a service agreement or other obligation, you should be able to use it on another network. It’s common sense, crucial for protecting consumer choice, and important for ensuring we continue to have the vibrant, competitive wireless market that delivers innovative products and solid service to meet consumers’ needs.
By itself, the White House statement does not change the current status of cell phone locks. The law vests the power to approve the exemptions to the Library of Congress, which is an arm of the legislative branch, not of the executive branch. But the Administration said it “would support a range of approaches to addressing this issue, including narrow legislative fixes in the telecommunications space that make it clear: neither criminal law nor technological locks should prevent consumers from switching carriers when they are no longer bound by a service agreement or other obligation.”
Whether any effort at a legislative fix could really remain narrowly focused as the White House envisions, however, is far from certain. As the statement implicitly acknowledges — and as a separate statement by FCC chairman Julius Genachowski makes fairly explicit — the anti-circumvention provision of the DMCA, at least in the case of phone locks, drags copyright law into realms that have nothing to do with copyright, such as competition law and telecommunications policy.Â
According to Genachowski, “From a communications policy perspective, [the removal of the exemption] raises serious competition and innovation concerns, and for wireless consumers, it doesnât pass the common sense test.”
That’s an argument critics of the DMCA have been making for a long time. By restricting the movement of digital content between and across platforms, access control technology not only can limit consumers’ choice as to how to consume that content, it can limit the ability of distributors and retailers to compete among themselves.
Critics of the law are certain to seize on the White House statement as confirmation of their view. By putting the question in play, and by opening the door to legislative changes to the DMCA, the Administration, whether it meant to or not, may have opened a can of worms that will be hard to reseal.
Jargon Technologies announced the launch of JargonTalk 2.0, a cross-platform technology that enables advanced interactive applications which run on a multitude of devices. Building on the success of JargonTalk 1.0, this version offers streamlined integration, Blu-ray Discâ˘ update capabilities as well as synchronization with iTunesâ˘.
JargonTalk 1.0 enabled discovery and communication for devices across network, social media integration, and the use of network services. It was used in second screen apps for various high profile titles such as Warner Home Videoâs Happy Feet Two and Sherlock Holmes: A Game of Shadows, Sony Picture Home Entertainmentâs The Amazing Spider-ManÂŠ and Twentieth Century Foxâs Prometheus.
CEO Bhanu Srikanth states, “We are excited to report that JargonTalk 1.0 has delivered beyond our client’s expectations. During development of these applications, we came to realize the need for simplifying the Second Screen workflow further, to allow our clients more time in their creative cycles. JargonTalk 2.0 can be incorporated on any Blu-rayâ˘ disc quickly with minimal impact on existing code. The creative process for the apps can take place after the disc is shipped. This way our clients can have a staggered schedule and are not burdened with developing and releasing products on various platforms all at once.â
JargonTalk 2.0 also includes the functionality for providing updates to a Blu-rayâ˘ disc via smartphones and tablets, eliminating the need for expensive back-end infrastructure.
“The most exciting feature we have added is synchronizing with iTunesÂŽ, allowing our clients to build one Second Screen app that can sync with Blu-rayâ˘ and/or iTunesÂŽ. We are also targeting various other digital delivery methods so our clients can maximize the return on their investments in Second Screen,â added Srikanth.
Jargon is also bolstering their frameworks for iOS and Android platforms to enable rapid prototyping and development in response to the reduced timelines for Blu-rayâ˘ companion apps. The frameworks have been used in stand-alone apps such as Twentieth Century Foxâs Rio Coloring for the title Rio, Chipwrecked: Chipmunk Coloring for the title Alvin and the Chipmunks: Chipwrecked, Pirate Picasso for the title Ice Age: Continental Drift as well as second screen apps for Twentieth Century Foxâs Prometheus and Sony Picture Home Entertainmentâs The Amazing Spider-ManÂŠ Second Screen app.
By Paul Sweeting
Music streaming services like Pandora and Spotify may be yet to turn a profit but the streaming business is suddenly hot, at least for the record labels. According to a report in the Financial Times, Google is in talks with the labels about creating a new music streaming service for launch in the third quarter of this year. The service is expected to include both a paid tier and a free, ad-supported tier, and could come pre-installed on Google’s Nexus line of smartphones and tablets. The service could also be incorporated into the Android platform and made available on other mobile devices.
News of Google’s interest in music streaming comes as Apple appears to be taking steps to launch its own music streaming service as part of iOS. Reports that Apple was in talks with the labels about launching a Pandora-like music streaming service first surfaced last year.
The entry of Google and Apple into the business could come at a critical time for the record companies as they try to fend off efforts to roll back the licensing fees and performance royalties they receive for streaming rights. Pandora, the leading ad-supported streaming service in the U.S. has been pushing a bill in Congress to reduce the statutory royalties that internet radio services must pay to the labels. And according to a report on the technology web site The Verge, Spotify hasÂ begun pressing the labels for significant roll backs in its licensing fees as it seeks to renew its rights deals (as an on-demand service Spotify must negotiate for rights directly from the labels rather than relying on the compulsory license that covers internet radio services like Pandora).
Having two heavyweights like Google and Apple chasing those same rights could give the labels the leverage to hold the line against rate cuts.
The labels need to strike a careful balance, however. While having more and better-heeled buyers in the market for streaming rights should help keep prices up, letting prices get too high too fast could drive startups out of market. In the long run, it’s not in the labels’ interest to have the likes of Google and Apple control the music streaming business as Apple currently does the music download business.
Ultimately, the streaming rights deals struck over the next few months could go a long way toward shaping the long-term competitive landscape of the business.
By Paul Sweeting
Sony did not actually show a PlayStation 4 console at yesterday’s Future of PlayStation event in New York, or reveal the price or ship date, so the presentation could hardly be called complete. The fact that it said virtually nothing about any broader home entertainment strategy beyond gaming for the new console, therefore, may simply reflect a PR strategy to focus on gaming first before hyping its other capabilities, rather than the absence of broader plans for the console. But given the increasingly multi-front battle among platforms for supremacy in the living room, some indication of a broader home entertainment play for PS4 would not have been out of place.
Certainly elements of a more ambitious strategy are in place. As was clear from yesterday’s announcement, PlayStation 4 will be tightly integrated with Gaikai, the cloud gaming platform Sony acquired last year. Users will be able to sample, download and stream games, as well as share game play with friends by posting video to social networks using a “share” button on the PS4 controller. They’ll also be able to stream PS4 games to the Vita handheld player for remote gaming.
In principle, at least, Gaikai’s cloud platform should also be capable of enhancing other types of online media as well, such as streaming music and video services, making the PlayStation Network more competitive with Microsoft’s Xbox Live or Apple’s iTunes ecosystem. So far, however, Sony has not said when or if such enhanced functionality may be coming.
The first order of business of the Gaikai platform, in fact, beyond what was unveiled yesterday, will apparently be enabling interoperability between the non-backwards compatible PlayStation 4 and games created for PS 3, a critical capability if Sony hopes to induce PS3 owners to upgrade to the new console. That could well push back work on extending the capabilities of the Gaikai platform beyond games.
Sony also announced aÂ second-screen, PlayStation App for iOS and Android to enable enhanced game play and social networking on mobile devices. While reminiscent of Microsoft’s SmartGlass initiative, Sony has not yet indicated whether the PlayStation App can be leveraged for anything other than PS4 games, as SmatGlass can be.
Sony execs did give one brief nod to the PlayStation’s non-gaming capabilities at yesterday’s event, noting that the PS3 is the most popular device for accessing Netflix. Whether the PS4 can hold onto the mantle could depend on what we don’t yet know of Sony’s plans for it.
Special Edition of Industry’s Annual Supply Chain Event Announced for March 28 in LA
DEG and MESA have announced the return of their acclaimed annual event, ESCA, the Entertainment Supply Chain Academy, which for over eight years has advanced efficiencies in the distribution of entertainment media.Â From the DVD to Blu-ray Disc and now with our industry’s current digital transition, ESCA has always presented innovative ideas and home entertainment thought leadership.
ESCA Digital is scheduled for March 28 at the Luxe Hotel on Sunset Blvd. in Los Angeles.
This year the partnering associations have announced ESCA is going totally digital — coming at a time when new workflows, standards and processes need to be refined and developed.
Under the direction of the DEG and MESA Advisory Boards, this yearâs program will bring out operations and digital distribution executives representing all major studios, along with their tier one technology service provider partners.
The conference program features three distinct sessions addressing the broad scope of the digital supply chain, each introduced by DEG committee chairs:
Session One: Behind the Scenes
Introduction by DEG Media & Content Operations Chair Larry Wilk of the Walt Disney Studios
Session Two: Necessities for Market Launch in the Digital Space
Introduction by DEG Developing Platforms Chair Mark Turner of Dolby Laboratories
Session Three: The Evolving Digital Consumer Lifestyle and The Importance of the User Experience
Introduction by DEG UltraViolet Marketing Chair Rich Marty of Sony Pictures Home Entertainment
Here’s what’s being discussed:
Dissecting the Digital Supply Chain
Preparing Content for Market
By the Numbers: Digital Details
The Importance of User Experience
- Check in for regular speaker and program updates at: www.entertainmentsupplychain.com
- Click Here to Register
By Paul Sweeting
Apple has posted an intriguing new job listing on its web site for a Software Engineering Manager on the Apple TV team, which hints strongly that a new push behind the platform is coming:
The Apple TV team is looking for an experienced engineering manager to help deliver the next generation features for Apple TV. Bring your creative energy and engineering discipline, and help us bring the Apple experience to the Living Room [snip].
- Lead a team of engineers working on exciting new features and functionality
- Drive releases from initial concept to completion
– Work closely with cross functional teams, representing Apple TV across Apple
– Develop the engineering plan for upcoming projects
– Communicate status to key stakeholders and senior management
Alas for those expecting Apple to introduce an integrated TV set any day now, the job description would fit comfortably within the current, not-terribly disruptive Apple TV strategy built around existing set-topÂ streaming box.
So what about the “exciting new features and functionality”? One guess would be enhanced gaming capability, probably to be played in tandem with an iPad and perhaps using some sort of new controller. With the current generation game consoles showing their age, and the industry about to make the leap to the cloud, now would be the time for Apple to strike if it means to move beyond mobile gaming into more graphics-intensive in-home play.
Another area where Apple may be looking to add functionality is AirPlay, its technology for porting content wirelessly from an iOS mobile device to the Apple TV set-top. The race to provide enhanced communication and inter-operability among devices in the living room has heated up in recent months, and Apple risks falling behind Microsoft, as well as Netflix and YouTube. Building on and extending the functionality of AirPlay would be a logical avenue for Apple to pursue.
By Paul Sweeting
Mobile video exceeded 50% of the total data traffic generated by mobile devices for the first time in 2012, and will account for two-thirds of mobile data traffic by 2017, according to the latest Visual Networking Index report from Cisco.
Overall global mobile data traffic reached 885 petabytes per month (0.88 exabytes)Â in 2012, up 70% from 2011, and is projected to reach 11.2 exabytes Â per month by 2017. While the growth of tablets has led to a spike in mobile data consumption in the U.S. and Western Europe, on a global basis smartphones are still the dominant mobile device for accessing the Internet. Smartphones will account for 67.5% of mobile data traffic by 2017, according to Cisco, up from roughly 40% today.
One of the report’s most striking conclusions concerned the impact that tier-pricing plans have had on patterns of mobile data consumption. Cisco tracked data plans globablly over a three-year period and found that tiered plans grew from 4% of the total to 55% over that period. While the shift to tiered-pricing plans did not slow the overall growth in data consumption, it does appear to have contributed to a significant narrowing of the gap in consumption between the heaviest users and everyone else. In January 2010, the top 1% of users accounted from more than half of all mobile data traffic; by September 2012 that had dropped to 16%.
Similarly, the top 20 percent of the mobile data users generated 79Â percent of the monthly traffic in October 2011, but were down to 71 percent in September 2012.
The figures suggest that tiered-pricing plans, which are often aimed at constraining the heaviest users, are working as designed. The share of traffic accounted for by the top 1% of users is now lower on mobile networks than the 1:20 ratio that has held for fixed networks for several years.
Dijit, the company lead by CEO Jeremy Toeman which has developed second screen apps NextGuide and Dijit Remote TV, has announced the acquisition of GoMiso, Inc, developer of the Miso second screen app and its signature SideShows.
While this is an obvious continuation of the consolidation phase of the industry (see our research), what does it really mean for the ecosystem and the consumers? Â NextGuide was launched in the fall of 2012 and quickly iterated on its UI and UX, creating a powerful consumer second screen app that provided very strong Seamless, Discovery, and Social features–strong enough that we segmented it as a multi-function app. Â While Jeremy had discussed his roadmap for NextGuide in the Simple set of features to control the first screen, there had not been much attention paid to the Stimulating set of features that enhance the users experience while watching a show.
Essentially, consumers could use the app to find what they wanted to watch, launch it to the 2nd screen (and in some cases the 1st screen), and then leverage their social networks for sharing their view of that feature or to help them discover content.
Miso on the other hand was probably the first strong entrant into the Stimulating feature set, clearly being segmented in To Enhance category of apps. Â However, they did not consistently create the SideShow experiences for a wide range of shows, and as a result, user interest languished.
The challenges for Jeremy and team going forward seem straight forward:
- how do they maintain their hallmark quality approach to a great UI/UX while integrating the Stimulating set of features into what is already a great Discovery app?
- how do they create SideShow ubiquity the way some of their competitors (zeebox, ConnecTV, etc) have done with their synchronized companion experiences?
- do they integrate the apps entirely or still offer consumers more focused experiences as well?
- how do they monetize all of it?
By Paul Sweeting
A recently discovered FCC filing by Apple does not contain good news for those banking on a fully integrated iTV set in the near future. Instead, the filing describes a very minor refresh of the existing Apple TV set-top box, with no indication that any new functionality or features are being added.
The main differences between Apple 3,2, as the new model is referred to in the filings, and the current 3,1 version, according to those who have plowed through the filing and the new iOS firmware source code, are a new wireless chip –the sameÂ low-power dual-band 40nm Broadcom BCM4334 chip used in the iPhone 5 — and a new CPU –Â the same s5l8947x âA5xâ processor used in the latest iPads.
An Apple spokesperson issued the following statement about the filing:
We sometimes make component changes which require an updated model number for regulatory approval. The component changes we made don’t affect product features and Apple TV customers will continue to have the same great user experience.
One way to read the news is that Apple is hunkering down with the Apple TV set-top and has swapped out some chips in the manufacturing process to use components it is already buying in bulk for other products. It’s a cost-savings move, in other words, aimed at making the manufacturing and supply chain of the current Apple TV set-top a little more efficient.
That’s not the sort of move a company makes when it’s about to make a major strategic move in a product category.
By Steven Chester
Purchase of consumer media content is rapidly migrating from ownership of physical media (DVD/Blu-ray) to virtual media (files on disk/cloud storage, streaming media). This migration creates the opportunity for new business models which leverage technology innovations for centralized, cloud-based content packaging, storage, and distribution to provide significant benefits to content owners, distributors, retailers, and consumers. These benefits include lower distribution and production costs, simplified content workflows, enhanced security, faster title availability, and richer content management. This article will further describe the concept, and demonstrate how the Akamai Intelligent Platform is uniquely positioned to support it.
The media content distribution chain is in the midst of a strong market shift from physical media to online media consumption. IHS Screen Digest, a media focused research and consulting company, projects that U.S. online video views and transactions will exceed views and transactions of DVDs and Blu-ray Discs in 2012. 2012 unit growth of US online movie consumption is predicted to increase 143 percent over 2011, to 3.4B units, while sales and rentals of physical media (VHS, DVD, and Blu-ray) will fall over 7 percent, to 2.4B units. This trend will only continue, as Gartner research predicts that there will be more than 1 billion network-connected devices capable of consuming media by 2015.
The migration from physical to electronic consumer media (eMedia) promises many benefits to the entire distribution chain, from content producer to consumer. Overall costs can be reduced, content can be accelerated to market and consumers can realize the vision of anywhere/anytime viewing. However, there are a number of technical and business challenges to overcome in order to fully realize these benefits. In this article, we introduce the cloud-based âmedia warehouseâ concept, walk through the various challenges that eMedia distribution presents, and show how the media warehouse can be used to address each of them.
By Paul Sweeting
Netflix is partnering with YouTube to launch DIAL, a new app protocol that enables second-screen devices to discover first-screen devices on the same network and launch apps on them. Using DIAL-enabled second-screen apps, consumers will be able to browse the Netflix and YouTube libraries on their smartphones or tablets and then launch the video directly on a DIAL-enabled first-screen device, without first having to boot up the corresponding app on the TV or connected set-top and go through a multi-step process to pair the first and second-screen devices.
As explained on the DIAL website:
[S]uppose you discover a video on your mobile app and want to play it on your connected TV.
- LaunchÂ the apps menu on your TV with the normal remote control
- Navigate toÂ the TV app
- LaunchÂ the TV app
- Navigate to the pairing screen on TV app
- Launch and navigate to the pairing screen on Mobile app
- Input 9-digit pin on Mobile app.
- Tap theÂ Play on TVÂ button on the Mobile app
- LaunchÂ the Mobile app
- Tap theÂ Play on TVÂ buttonÂ on the mobile app
The goal with DIAL, which stands for Â DIscoveryÂ AndÂ Launch,Â is to provide consumers and developers Â with the same functionality as Apple’s AirPlay system, which enables iPhones and iPads to launch content via Apple TV, but using an open, non-proprietary protocol. Originally developed by YouTube-parent Google for Google TV, DIAL is now being rolled out separately and being made available to CE companies, whether or not those companies are also introducing Google TV-enabled devices. So far,Â Bang & Olufsen, Panasonic, LG, Sony, Philips, Samsung, Sharp, Toshiba, Vizio, and Western Digital have indicated plans to embed DIAL in connected devices slated for release this year.
“We realized in the fall of 2011 that we could create some potentially useful 2nd screen experiences,” Scott Mirer, director of product management at Netflix, explained to GigaOM earlier this week. “At about the same time, we learned that the YouTube team was interested in much the same thing â they had already started to do some work on 2nd screen use cases. And so we approached them on collaboratingâŚ We also felt that having two major video services define and promote DIAL would help get it more widely adopted as a common solution to a common problem, vs. taking a proprietary approach.”
The launch of DIAL comes as competition is heating up among platform developers to more closely integrate first- and second-screen devices and to turn mobile devices into content-acquisition portals for the TV. In addition to AirPlay and now DIAL, Microsoft is rolling out its SmartGlass protocol for syncing mobile devices with the Xbox 360 consoles. Microsoft also recently acquiredÂ id8 Group R2 Studios, a startup founded by Slingbox developer Blake Krikorian that owns patents on technology for displaying digital media on TV screens. Â Last week Krikorian was named corporate vice president of Microsoft’s Interactive Entertainment (i.e. Xbox) division.Â
Both Google and Apple had also been in the running to acquire R2 Studios, reflecting the importance leading connected platform providers are now placing on mobile-to-TV technology.
By Paul Sweeting
The Motion Picture Association of America and the U.S. Justice DepartmentÂ say they are still reviewing the details of the new encrypted online file-locker site Mega launched at an extravagant press conference yesterday in New Zealand by Kim Dotcom, the fugitive founder of MegaUpload. But one conclusion already seems clear: file encryption is poised to become the next major battleground in the ongoing struggle over online file-sharing.
Â MegaUpload was once among the most popular file-locker sites on the Internet. But it was shut down a year ago by the FBI, which alleged the site was being used to store and share pirated content. Dotcom, who was born Kim Schmitz, was arrested by U.S. and New Zealand authorities in an armed raid on his compound near Auckland and charged with criminal copyright infringement. Since then, the Justice Department has been trying to have him extradited to face trial in the U.S. But his extradition has been on hold for months while the New Zealand courts try to determine whether the raid on his house was lawful, and if not then what to do about it.Â
While that case remains pending, Dotcom and two partners are back, this time with a site that functions very much like the old MegaUpload but which automatically encrypts files as they’re uploaded by users, such that Mega has now knowledge of the file’s content. The system was essentially reversed engineered by lawyers from the Digital Millennium Copyright Act to try to shield Mega from liability or obligation for infringing material posted to the site.
Mega users choose their own password. That password is then used to generate the user’s login credentials when connecting with the service, as well as a unique encryption key used to encrypt a particular file. By design, Mega knows only the user’s login credentials, not the password used to generate them. Nor does it know the name of any file the user uploads, or have any way to access a decrypted version of any of those files, since both the file name and contents are encrypted using a unique key tied to the user’s password.
The ability to encrypt files online is not new, of course, and has been used by sophisticated copyright pirates for years. But it has required a certain amount of specialized knowledge. As Dotcom himself admitted at his press conference, however, the automated system employed by Mega “isÂ going to take encryption out to the mainstream.” Within a few hours of Mega’s launch, in fact, it had lined up over 500,000 registrants worldwide.
The mainstreaming of encryption will likely leave anti-piracy groups with little choice but to challenge the practice, whether in a new case against Dotcom or against some other operator.
The key legal issue will be whether Mega’s carefully engineered ignorance of what its users are posting to its servers really protects the operator from liability. In the past, courts have held that online service providers are only required to remove infringing material under the DMCA when provided with particular knowledge of a specific infringing file. Mere awareness that infringing material is available on a site has not been enough for courts hold the site’s operator liable for secondary copyright infringement.
There are limits to that protection in the law, however, where a site operator willfully turns a blind eye to blatantly infringing behavior. So far, courts have granted service providers a lot of latitude on the willful blindness standard, depsite efforts by copyright plaintiffs to invoke it. But no one has gone as far before as Mega seems to have gone in deliberately engineering their own blindness into the design of a service. At some point, it’s likely to be up to the courts to determine whether it has gone too far.
By Paul Sweeting
January has been a brutal month for Britain’s high-street media and entertainment retailers. In just the first 16 days, three major brick-and-mortar chains have either gone into administration (a form of corporate bankruptcy similar to Chapter 11 in the U.S.) ore shuttered their stores altogether, laying off thousands of employees in the process. A fourth retailer, supermarket chain Tesco, is lost its entertainment chief.
The first chain to fall was Jessops, the 78-year old photographic chain, which went into administration and closed 187 stores on January 9. One week later, the 92-year old HMV also called in the administrators, leaving the fate of its 238 stores worldwide uncertain.Â Â Two days after that, Blockbuster U.K. called in administrators to begin winding down the 528-store chain after its U.S. parent company, Dish Network, failed to find a buyer. Meanwhile, the former head of entertainment for Tesco, Rob Salter, stepped down after two years on the job.
While the particulars of bankruptcies vary, all the chains were being squeezed by the forces of shifting consumer behavior toward online shopping and digital entertainment, and a long, punishing recession that has battered British retail and business generally. According to research firm Conlumino, 73% of all music and video sales in the U.K. are now made online, compared to 6.5% a decade ago. The rapid growth of streaming services, from Pandora and Spotify to Netflix and LoveFilm has also undercut sales and rental of physical media, just as they have in the U.S.
British retail generally is also suffering a prolonged downturn as consumer spending has contracted since the global financial crisis in 2008. Unemployment in the country is expected to reach 8.3% this year, according to a forecast by the Organization of Economic Cooperation and Development, while the overall economy is only expected to squeak out growth of 0.9%, after falling 0.1% in 2012. Consumer spending has been further hurt by fiscal austerity measures adopted by the government, which the International Monetary Fund estimates will suck ÂŁ76 billion (U.S. $122 billion) out of the British economy by 2015, knocking 8% off GDP over that time.
The implosion of the M&E chains, meanwhile, has left disarray in its wake. The collapse of HMV has left suppliers wondering if they will ever collect on as much as ÂŁ40 million ($64 million)Â in outstanding receivables, while Universal Music also could get stiffed on leases it holds to some of the chain’s properties dating to Universal’s acquisition of EMI. The chain is also being accused of theft by members of Parliament for continuing to sellÂ gift cards and vouchers when it new bankruptcy was imminent and there was little chance customers would ever be able to redeem them.
Staffers at the 16 shuttered HMV stores in the Republic of Ireland have also staged a sit-in, demanding payment for wages owed and accrued time off and sick leave. HMV employed about 300 people in Ireland, and has about 4,000 staffers in its 223 U.K. stores. Blockbuster employs about 4,200 in Britain, while Jessops employed 1,370 before closing.
By Paul Sweeting
DISH Network’s new “Hopper with Sling” DVR has been at the center of controversy since CES, though not for anything Dish itself did or said. Instead, controversy arose when CBS Interactive, the parent company of tech news website CNET, intervened at the last minute to put the kibosh on plans by CNET editors to crown the Hopper with Sling with their Best of CES award due to the ongoing litigation between CBS and Dish over an earlier version of the Hopper, which can automatically skip over ads in recorded programs.
According to a report on The Verge, the order to kill the award came straight from the office of CSB CEO Leslie Moonves. The unusual move has now caused at least one CNET reporter to quit the website.
The controversy over the CNET award, however, should not distract from the broader significance of the Hopper with Sling. In addition to being able to record a full week’s worth of programming from the four major broadcast networks, the new DVR can stream those recordings to remote viewers over the Internet using Dish’s Slingbox technology, which is now baked into the Hopper. Recorded programs can also be transferred to an iPad for offline viewing.
That sort of place-shifting of recorded TV shows represents a new (and largely unlitigated) frontier in the realm of consumer recording rights. It’s also one that is likely to be critical in the future evolution of the digital living room.
The ability to place-shift self-recorded shows, whether by streaming or direct transfer to a portable device, will for the first time give consumers direct control over their mobile video options. Rather than relying on network-approved options like Hulu or the networks’ own web sites for remote access to shows, on terms set by the networks, consumers will be able to curate their own remote and mobile video choices by leveraging their existing investment in TV services.
Whether consumers have the legal right to that, of course, has not been definitively determined by the courts. Nor has the right of pay-TV service providers like Dish to provide subscribers with the means to do it.
Dish is not the only one thinking along those line, however. At the 2012 Cable Show in May, TiVo unveiled a new service in partnership with Apple that lets users stream recorded shows to their iPad or iPhone using a new set-top box similar to a Slingbox called TiVo Stream that attaches to a TiVo DVR. While the initiative at this point feels more like a proof-of-concept than a commercial roll out, the idea of leveraging consumers’ existing investment in TV service to create new types of services and a new user experience is almost certain to be at the heart of Apple’s long-term strategy for the digital living room.
Similarly, Microsoft is almost certainly thinking along those same lines for the Xbox. If reports that the next generation of Xbox console will include a TV tuner for easier integration with pay-TV services turn out to be true it would be a clear step in that direction. Adding DVR capability to a box with a tuner — whether implemented locally or, more likely, in the cloud, would be a relatively trivial step further.
The controversy over CNET and its CES awards will eventually fade. But the next battle over control of the TV viewing experience is just beginning. And place-shifting of recorded programs will be the battlefield.
By Paul Sweeting
With Ultra-HD TV sets costing $20,000 and up, 4K video is likely to remain out of reach to most consumers for some time yet. And it will still be a very heavy lift for cash-strapped CE companies to go from making a few $20,000 sets to fill a CES booth to anything like mass market production. But that doesn’t mean 4K will have no impact on the business in the near term.
As was evident from the comments at studio technology chiefs at CES, in fact, it’s clear that 4K images and high frame rates (48 – 60 fps) are already being entrenched in Hollywood work flows, from image capture on new movies to scanning the negatives in studio vaults to prepare for the next generations of consumer video formats and digital cinema. And as the use of 4K scanning and high frame rate image capture become more common they’re creating new challenges for the studios and their technology partners, from managing the terabytes of data produced daily by high frame rate, 4K production, to to long-term storage of the petabytes of data produced by 4K scanning of studio libraries.
âThere is actually a lot more information on 35mm film negatives than has ever made it to the screen because when you go from a negative to an inter-positive and then to a print you always had generational loss,â Sony Pictures chief technology officer Chris Cookson said. âWhen we scanned the negative for Laurence of Arabia in 4K we noticed that we got more detail than the inter-positive we got when we did the restoration. So in a sense, no one has ever really seen everything thatâs in that movie. So now we’re scanning everything from negatives to prepare for 4K. It has a lot more information than what was used as the reference standard for HDTV.â
How and where to store all that digitized information are becoming urgent questions, however. “The nut we as an industry really still need to crack is long term storage,” Fox CTO Hanno Basse said.
“The long term issue for the industry is how to make sure it will still be accessible 100 years from now,” Cookson added. “Before, with nitrate, you could separate the negatives and if you took care of them and stored them right you know they’re going to be there for another 150 years. You can still get at them and still use them.”
Digital formats, however, generally evolve over time, leaving data stored in an obsolete format of 10 or 20 years ago effectively unreadable today.
The front end of the digital pipeline is also increasingly problematic due to 4K productions, Warner CTO Darcy Antonellis noted. “We worked on this little project with Mr. Jackson,” she said, a reference to Peter Jackson’s The Hobbit, which was shot on video at 48 frames per second in 4K. “With high frame rate, there is a significant issue of data management.,” Antonellis said. “We’re talking about Petabytes of data from a single production. How do you move that around? How do you manage it? How will you even be able to find what you’re looking for in all that data?”
Transitioning to a 4K, high frame rate work flow is a significant challenge for the studios. But it also represents a significant opportunity for technology providers who can help them answer some of those questions.
By Paul Sweeting
Microsoft has acquired home automation and digital media startupÂ id8 Group R2 Studios for an undisclosed sum, according to the Wall Street Journal, beating out Apple and Google, both of which reportedly had also held talks with the company.
Better known as R2 Studios, the company was founded in 2011 by Blake Krikorian, the entrepreneur who brought the Slingbox to market and later sold that company to EchoStar Communications for $382 million. Â R2 released an Android app in 2011 that let users control their home security system and thermostat from a smartphone but since then it has been operating largely in stealth mode while developing technology for displaying and distributing digital media on TV screens. The company owns a small portfolio of potentially valuable patents related to controlling devices and interfaces, which were thought to be the main focus of the interest in the company from larger media technology firms. Those patents were included in the Microsoft acquisition, according to the Journal.
While R2 has not released any commercial products based on its digital media display patents, the technology would appear to be a natural fit with Microsoft’s evolving strategy for turning the Xbox game console into a general digital home and media hub. Late last year Microsoft launched SmartGlass, app-embedded technology that allows any mobile device, regardless of operating system, to communicate and sync with the Xbox 360. So far, Microsoft has positioned SmartGlass largely as a second-screen technology that can pull content from the Xbox and display it on a mobile screen. By making it easier to display digital media on TV screens, the R2 Studios technology might enable Xbox owners to use a mobile device as a primary screen for acquiring content that is then displayed on the TV, much as Apple TV owners can now do from their iPhones and iPads using Apple’s AirPlay technology.
If Microsoft is able to integrate R2 technology with SmartGlass, however, it might be able to expand the scope of search capability to any mobile device regardless of operating system.
Another capability enabled by R2 technology could also emerge with the next generation of Xbox console, which could be unveiled as soon as E3 in May. Â According to Wedbush Securities analyst Michael Pachter, the next-gen Xbox will likely include a TV tuner and will be able to communicate with any screen in the home. “If you have 10 TV sets, you’ll be able to pull 10 signals and send them to any TV,” Pachter said at the Digital Hollywood conference in October. R2 Studios’ technology for displaying and distributing content on TV screens would seem like a natural fit with that goal, whether as an enabling technology or as protection against potential claims against Microsoft based on the R2 patents.
Either way, R2 Studios’ technology is likely to be worth more integrated with Microsoft’s Xbox platform than standing alone.
By Paul Sweeting
Several TV manufacturers are expected to be showing off their 4K ultra-HD TV (UHDTV) prototypes next week at CES in Las Vegas, and at least a few, including Sony, LG and Toshiba, will be showing production models in their booths.
The surge in interest in the new format follows an industry agreement in August that defined two new standards for UHDTV corresponding roughly to 4K and 8K flavors. CEA also established a standard definition of the term “Ultra-HD” for use in marketing consumer electronics products, referring to displays withÂ at least eight million active pixels, including at least 3,840 horizontally and at least 2,160 vertically; an aspect ratio of at least 16 x 9; and at least one digital input capable of carrying and presenting native 4K format video from this input at full 3,840 x 2,160 resolution without up-conversion.
Don’t expect “Ultra HD” TVs to achieve mass-market sales levels anytime soon, however. Sony’s and LG’s 84-inch Ultra displays go for a cool $25,000 and $20,000 a piece, respectively, while Toshiba’s somewhat smaller set (55-inches) goes for $8,700. As of now, there is also virtually no native Ultra-HD content to watch on those pricey displays. NPD DisplaySearch currently projects that Ultras will account for only 2% of display sales in 2017.
The history of new CE formats, of course, is characterized by high-priced introductions followed by a fairly rapid decline in prices as manufacturing ramps up, component prices come down, sales volume increases and manufacturing yields improve. Standard HDTV displays that cost $4,800 as recently as 2005, for instance, can be had for just $560 today, according to DisplaySearch.Â So there is reason for optimism that UHDTV will follow a similar cost curve.
There is also reason for skepticism, however, and it has to do with the starkly different circumstances of the CE business today than in 2005. Several major manufacturers, including Sony, Panasonic, Toshiba and Sharp have posted substantial losses over the past two years, with much of the shortfall coming in the display business. Â Panasonic recently skipped a dividend payment for the first time since 1950 to conserve cash and its cost of borrowing to fund operations is skyrocketing.
Right now, UDHTV is essentially still in prototype. The few sets LG or Sony may be selling at $25,000 a piece are essentially bespoke items, like built-to-order sports cars. There is no real commercial UHDTV “market” as such. Getting from the prototype stage to commercial volumes, however, is going to take considerable investment — in improving manufacturing processes to achieve sustainable yields, in developing chips and software, in building production lines, in sourcing components and other costs, all before sets can start rolling off the lines at commercial volumes, let alone selling through.
Right now, it’s difficult to see where that investment is going to come from, at least where traditional CE makers are concerned. Many of them would probably prefer exiting the display business altogether at this point to investing in it if they could figure out how to get out without further losses or write-downs. If the investment needed to fully commercialize UHDTV is to come, it will probably have to come from somewhere outside the traditional CE business. Rather than starting out in huge 85-inch TV sets and then spreading to smaller display categories — the typical pattern for TV formats — Ultra displays may find their niche first in smaller form factors, like tablets or smartphones, where initial volumes can be bigger, and building out from their to larger configurations. But that sort of rollout is more likely to come from Apple or Google than from Panasonic or Sony.
So enjoy the giant Ultra-HD TVs you see on display at CES. It may be a while before we see many more.
By Paul Sweeting
Live TV streaming service Aereo remains locked in a pitched legal battle with broadcasters over the legality of its business but it could soon find itself fending off competition as well. Barring a Mayan apocalypse, startup NimbleTV today will roll out a limited betaÂ version of a new TV streaming service to 250 users in New York City. The company hopes to be ready for commercial rollout in the first half of 2013.
Like Aereo, NimbleTV captures live TV signals and streams them over the Internet to any device. Unlike Aereo, however, Nimble is not relying solely on free over-the-air broadcast signals. Instead, it plans to set up accounts with different pay-TV providers at its own facility and then, for a fee, stream those signals the subscribers.
Since Nimble will, in effect, be reselling pay-TV service to its users, NimbleTV is not a service designed to encourage cord-cutting. That doesn’t mean it won’t be controversial, however.
It’s not clear, for instance, that cable operators would have the rights to resell content they’ve licensed from the networks even if they were inclined to. Streaming rights are typically licensed separately from pay-TV carriage rights, and often to different parties. Nimble also plans to allow subscribers to shop for different pay-TV services beyond their own geographic markets. Thus, a Chicago Bears fan in New York could sign up for a package of content from a pay-TV service in Chicago and watch the local broadcast of the games. That would likely violate the terms of geographically specific rights deals.
Still, NimbleTV’s appearance on the sign is another sign of the pent-up entrepreneurial energy pressing against the established TV distribution system (see for instance this plea from Aereo CEO Chet Kanojia in a blog post yesterday).Â While rights owners and the incumbent distributors may be able to keep most that energy bottled up in court for now, as they’re trying to do with Aereo, the pressure it’s producing is not likely to go away anytime soon.
By Lyndsey Schaefer
Following the development and launch of unique proprietary technologies such as the Saffron Secure Player in 2012, multi-platform online video delivery company Saffron Digital will continue to help lead the innovation charge for the industry in 2013. Saffron’s online video platform is now fully UltraViolet compatible, so it can provide a range of solutions for the UltraViolet ecosystem.
Saffron Digital was also recently named the âBest Video Service Providerâ at the seventh annual Mobile Entertainment Awards in London. Saffron received this honor based on its outstanding work on launching the Video Pass application for Japanese telecoms company KDDI. Other criteria included its flexibility and multi-platform nature of customer solutions across the globe, consistent innovation and global reach. The award winners were decided by a judging panel of Mobile Entertainment executives from all sectors of the business.
âThe team at Saffron Digital is delighted to pick up the Mobile Entertainment award for âBest Video Service Providerâ for the fourth year in a row, especially as itâs voted on by our industry peers,â says Jason Keane, CEO, Saffron Digital. âIn this case for KDDI Video Pass, Japanâs fastest growing video service, we delivered a true multi-platform experience with a great blend of both local and Hollywood content.â
With more than seven yearsâ experience in multi-platform online video delivery, Saffron Digital is looking forward to further driving the pace of innovation in the industry in 2013 by further increasing its global reach, influence and presence in established and developing media markets worldwide. Saffron has a number of exciting new partnerships across various continents in the pipeline for early in the New Year.
The company also plans to continue to grow its presence and form new partnerships with major industry players around the world by utilizing its vast local market knowledge to tailor its product range to the bespoke needs of individual market trends.
For more information, visit www.saffrondigital.com.
By Paul Sweeting
Over-the-top and online video have diverted a lot of viewing away from traditional TV channels but up to now advertising dollars haven’t followed those eyeballs online in numbers commensurate with amount of viewing they represent. That could start to change in 2013, however, as Facebook rolls out a plan for inserting video ads into users’ news feeds.
One big reason TV ad budgets haven’t shifted online as rapidly as viewers have is that they lack an easy or obvious place to go. The bulk of online TV viewing, for instance, happens either on Netflix, which does not carry advertising, or on platforms like Hulu or YouTube, which much smaller ad loads than traditional TV. Other online outlets simply lack the scale necessary to attract TV ad buyers.
According to a report by AdAge, however, Facebook’s new online advertising strategy is explicitly targeting TV ad budgets, which the social network sees as ripe for the taking.
All of the executives interviewed view the new video ad product as a blatant attempt on Facebook’s part to wrest big ad dollars from TV budgets. Ad agencies have plenty of TV spots and increasingly want to extend their reach on the web. But TV-like inventory on the web is scarce, which is why ad rates at places such as Hulu are so high.
Adding video ads to Facebook would create a huge new trough of inventory created essentially from scratch. With Facebook’s scale, advertisers could target demographics as they do on TV as well as use the gross ratings point currency, which they use for TV.
Although Facebook has quietly been developing the new video ad plan for several months, many questions Â remain unanswered at this point, such as whether brands will be able to place ads against the entire universe of Facebook users or only against those who “like” the brand and their friends, according to AdAge. Also to be determined is whether video ads will begin playing automatically or only when clicked on.
Significantly, while Facebook plans to serve the video ads to both desktop and mobile users, it has been emphasizing the mobile version in its presentations to ad agencies. According to comScore, more than 50% of Facebook usage now happens on mobile devices. Up to now, however, the social network has derived almost no revenue from mobile platforms due to the lack of a suitable mobile ad product.
If the new video ad insertion plan pans out, in other words, it could achieve two critical goals for Facebook: tapping the huge pool of advertising dollars currently going to television; and solving its mobile monetization problem.
Whether Facebook users are prepared to sit through a lot of video ads is another question.
By Paul Sweeting
TV ratings service Nielsen has been aggressive lately in moving to stake a claim to the increasingly critical business of social TV metrics. Last month, Nielsen acquired Brooklyn, NY-based SocialGuide, a startup that “captures and organizes social buzz from Twitter in real time for everyÂ program aired across 232 of the most popular U.S. television channels including Spanish languageÂ channels,” according to the company’s web site. Yesterday, Nielsen followed that up with a deal with Twitter to create the “Nielsen Twitter TV Rating.”
Under the deal, Nielsen and Twitter “will deliver a syndicated-standard metric around the reach of the TV conversation on Twitter, slated for commercial availability at the start of the fall 2013 TV season,” according to a press release on the agreement.
The deal between Twitter and Nielsen is a blow to Bluefin Labs, Trendrr and other startups that have been trying build their own social TV ratings businesses on the back of Twitter chatter. Currently, Bluefin and Trendrr acquire Twitter data through third-party data providers. According to yesterday’s announcement, Twitter’s deal with Nielsen is “exclusive,” although it’s unclear exactly what that applies to. While it likely means any hopes Bluefin or Trendrr had of obtaining Twitter data directly are now dashed, they may still be able to get what they need through third-party providers.
On the other hand, Twitter has shown itself more than willing to crack down on users of its data if those uses conflict with the company’s own commercial efforts.
“The Nielsen Twitter TV Rating is a significant step forward for the industry, particularly as programmers develop increasingly captivating live TV and new second-screen experiences, and advertisers create integrated ad campaigns that combine paid and earned media,â Steve Hasker, President, Global Media Products and Advertiser Solutions at Nielsen said in a statement. “As a media measurement leader we recognize that Twitter is the preeminent source of real-time television engagement data.”
Together, the Twitter deal and the SocialGuide acquisition area measure of how critical social media platforms have become to the TV business, both for programmers and advertisers. The close timing of the two deals also suggests Nielsen is increasingly concerned that its long-standing franchise in the TV ratings game is threatened by the rise of social TV viewing and advertisers’ increasingly focus on less tangible factors such as viewer “engagement” with the content they’re sponsoring rather than simply how many people are watching.
“Twitter has become the world’sÂ digital water cooler, whereÂ conversations about TV happen in real time,” Twitter VO of media Chloe Sladden said. Â ”This effort reflects Nielsen’s foresight into the evolving nature of the TV viewing experience, and weâre looking forward to collaborating with Twitter ecosystem partners on this metric to help broadcasters and advertisers create truly social TV experiences.”
The focus of the social TV metrics battle is now likely to shift to Facebook, which controls the other major “firehose” of social media data marketers covet.
By Paul Sweeting
The technology press and Wall Street analysts who follow Apple have built a thriving cottage industry out of speculating on the timing and features of what they’re certain will be Apple’s imminent takeover of the TV business. Some, such as Piper Jaffray analyst Gene Munster, remain focused on an Apple TV set, while others offer more of an ecosystem-focused spin.
All should be taken with more than a grain of salt, since actual evidence of Apple’s plans are — typically for Apple — scarce. One new deep dive into Apple TV speculation is worth a read, however. In a long piece on AllThingsD today, Brightcove chairman and CEO Jeremy Allaire speculatesÂ about a possible new Apple TV device (and possible TV set) for Christmas 2013.
The actual timing and hardware details of such a rollout are not really important to Allaire’s argument. What makes it worth reading is hisÂ discussion of the two pillars of Apple’s likely strategy, which I find persuasive.
The first pillar is that Apple is likely to follow a TV script similar to its initial move into mobile phones:
With the iPhone, Apple created a simple âphoneâ application on top of existing telephony carrier infrastructure, improving the consumerâs user experience and creating an additional product sales opportunity for carriers. The company will take a similar approach to existing broadcast cable TV and, in so doing, put one or two major U.S. cable operators in the same privileged position that AT&T enjoyed following the iPhone launch. Around the world, cable TV distributors will battle for national sales and marketing rights for the Apple TV [snip].
Cable companies may initially resist supporting this offering, viewing their ability to cross-promote offerings in their guide and VOD menus, and the customer relationship in general, as their provenance. This would be as misguided as the mobile carriers were who thought they could control and customize the home screens, operating systems and bundled apps of mobile phones as a strategic advantage. Smart operators will understand their role as broadband and infrastructure providers, and will continue â for now â to be the primary packagers of broadcast content with its lucrative tolls for subscription programming. For all of the hope that Apple would help to blow up existing cable packaging, for now, the companyâs priority is to navigate and establish global partnerships with multi-system operators (MSOs) and multi-channel video programming distributors (MVPDs) to sell their new TV and TV companion devices.
My only quibble would be over how exclusive Apple will make the new devices to a particular cable operator. Unlike mobile phones, where a single carrier like AT&T could provide Apple with national scale, cable TV service is a patchwork due to geographically limited franchises. While exclusivity might be necessary initially to get operator buy-in, Apple will need to structure that exclusivity carefully (i.e. loosely) to ensure it can achieve national scale quickly.
Allaire’s broader point, however, is well-taken. Having been stiff-armed in its direct discussions with the networks about assembling its own subscription or a la carte package of channels, Apple’s best strategy is to focus on building its own user experience atop existing pay-TV services. Apple in fact appears to be well along in those discussions with cable operators.
Allaire’s other focus is on gaming, where he sees a critical opening for Apple.
Appleâs iOS is already the worldâs most important gaming platform in terms of new game content creation and the velocity and scale of consumer usage. With new gaming-friendly APIs for controllers and user input, complemented with local CPU, graphics and storage horsepower on the device itself, the new Apple TV is a deeply significant threat to Nintendo, Sony and Microsoft in the console market [snip].
Some have argued that Apple and iOS arenât for hardcore gamers â but tell that to the teenage boys playing Assassinâs Creed and Call of Duty on their iPhones and iPads. By owning the TV run-time, Apple TV will provide amazing development opportunities for the technical and creative elite and will bring a flood of innovative content creation from major game studios.
Allaire may be overstating the near-term threat to Microsoft, Sony and Nintendo, given their substantial installed bases, but he’s correct that games are the key to dominating the next-generation digital living room. He’s also correct that as gaming increasingly goes mobile, the market is moving in Apple’s direction.
I still wouldn’t bet the house on an Apple TV by next Christmas. But whenever it comes it will follow a path that includes integration with existing pay-TV services and a major push into gaming.
By Paul Sweeting
Amazon today released an Amazon Instant Video app for the iPhone and iPod touch adding potentially millions of new mobile devices to the platform. According to a new study by the Interactive Advertising Bureau, however, a lot of those devices will be staying home.
The IAB study found that 63% of the video viewed on mobile phones occurs at home, not on the go. The most popular spot for watching mobile phone video at home is in the bedroom, which accounted for 43% of mobile video views, followed by the living room, which racked up 35%.
The most frequently viewed genres in mobile video are:
- Music videos (45%)
- Movie trailers (42%)
- Tutorials/How-Toâs (41%)
- Funny short video clips (37%)
The IAB findings jibe with anecdotal data reported last year by Vevo, which found that if you’re watching one of its music videos on a mobile device, there’s a good chance you’re watching it in bed.
Why so much viewing at home on mobile devices? One explanation is that “mobile” video is still very dependent on WiFi access. The majority of mobile phones today are at least 3G-enabled, making them in principle suitable for streaming video over cellular networks. The fact that the overwhelming majority of viewing occurs at home, however, suggests consumers still find streaming over wireless to be a frustrating experience and are more likely to rely on home WiFi network attached to a wired broadband connection.
The IAB data did not include tablets, which are even more popular for watching video than are phones. Since almost 80% of tablets sold are WiFi-only, however, wireless streaming is not an option for most tablet owners so the data would not be comparable. The fact that so many 3G and 4G-capable phones still relyÂ predominantlyÂ on WiFi for streaming suggests wireless carriers still have work to do in improving mobile video delivery.
By Lyndsey Schaefer
âGenerations to come will scarcely believe that such a one as ever in flesh and blood walked upon this earth.â This sentiment of Albert Einstein about Gandhi truly describes Jeff Mirich, as he fought death like no other with an uncanny positive attitude where life always seemed normal.
âThe entertainment industry has lost a beacon of light in the world of business driven by technology,â says Devendra Mishra, Executive Director of the Hollywood IT Society (HITS). âJeff inspired one and all of us with his extraordinary character and personality. He was the epitome of life, love and family.Â He was a friend and mentor who will never be forgotten.â
The members of the HITS Advisory Board, comprised of the CIOs of the Hollywood studios, presented their unprecedented acknowledgment called the Variety âHIT Makerâ Award for IT Leadership in Hollywood to Jeff Mirich in March of this year. The award recognized his outstanding contributions as an IT Executive for advancing the entertainment industry through the deployment of information systems and technology.
Mirich, who was Senior Vice President for Advanced Technology Projects at Walt Disney Studios since October 2011 and formerly Senior Vice President and Chief Information Officer,Â has been a visionary and a relentless warrior driving collaboration among the studios and their service providers through supply chain standardization and establishing cross-studio shared-system platforms to increase efficiency and drive down operational costs. Jeff Mirich was the soul of the Hollywood IT Society (HITS).
He had been instrumental in providing business and technology systems that supported the film, music, live stage, production, post production, marketing and distribution business unit operations on a global scale. In the middle of the industryâs rapid transition to digital production and distribution processes, Mirich led Walt Disney Studios through this transition, focusing on expanding and enhancing their premiere family entertainment products, services, and content offerings and increasing global market presence and relevance through the use of innovative technology applications, creative tools, and new distribution platforms.
Mirich joined Disney in late 1997 as the CIO of Imagineering. Prior to joining Disney, Mirich enjoyed a 19-year career with Northrop Grumman Corporation, where he held managerial positions in information systems, engineering, manufacturing, business development, research and development, and mergers and acquisitions. During Mirichâs tenure at Northrop he led the development and implementation of their 3-D paperless computer aided design and manufacturing processes and helped spearhead industry and government engineering design practices and data interchange standards. Mirich had a Bachelorâs degree in Industrial Technology from California State University at Long Beach and a Masterâs degree in Management from the University of Redlands.
He regularly lectured at local universities on topics ranging from information technology to intellectual property management within the media and entertainment industry. He was a past board member on UCLA Anderson Schoolâs IS Associates and WINMEC University-Industry Partnership, USCâs ETC/IMF sponsorship group, HPâs Communications Media & Entertainment Board of Advisors, the CIO Leadership Network, Southern California CIO Executive Summit Governing Body, The Business Forum, The Hollywood IT Summit, and served on Sierra Ventureâs CIO Advisory Board. Mirich is survived by his wife Charlene and son Jeffrey Charles.
By Lyndsey Schaefer
Los Angeles — One year after Hollywoodâs epic battle with the technology industry over the Stop Online Piracy Act (SOPA) Motion Picture Association of America CEO Chris Dodd sought to strike a more constructive tone this week in discussing copyright protection and the relationship between the two industries.
Keynoting the Content Protection Summit here Thursday sponsored by Variety and CDSA Dodd declared that Hollywood and Silicon Valley have more in common than is often acknowledged. “Not only does Hollywood work closely with Silicon Valley to create and promote films,â Dodd said, âHollywood film and television creators are tech companies. They celebrate innovation through the world’s most cutting-edge content, and they embrace technology as imperative to the success of the creators in their community.”
Dodd stressed the importance of making it easy for consumers to access legal content, and rattled off a few examples of the more than 350 services offering legal ways to get content online, including 60 in the U.S. He also touted the actions of Google, who recently changed its algorithms to move illegal sites down on their search results, and to elevate legal sites.
Preventing online piracy remains MPAA chiefâs prime directive, however. Referring to the fight over SOPA and the Protect IP Act (PIPA) Dodd noted that he is nearing the end of his two-year cooling off period following his retirement from more than three decades in the U.S. Senate, and said he is looking forward to lobbying his former colleagues on industry issues in January.
âContent does not have a future without technology, and technology does not have a future without content,â he said.
Dodd also briefly mentioned the MPAAâs new Copyright Alert System, which was further detailed by Marianne Grant, Senior Vice President of the association. The Copyright Alert System (CAS) is a system aimed at educating Internet subscribers about digital copyright and the possible consequences of copyright violations through peer-to-peer networks.
Under the voluntary system, which is being adopted by the five largest Internet Service Providers (AT&T, Comcast, Cablevision, Time Warner Cable and Verizon), copyright owners be able to target individual web surfers whom they believe are engaged in illegal or infringing activity. Once identified by their IP address, the user will be sent a warning notice by the ISP explaining why their actions may be illegal and a violation of the ISPâs policies, and provide guidance on how to avoid receiving further alerts. The notices will also provide information on how to locate film, television and music content legally.
Grant described CAS as a pervasive education program rather than a pervasive punishment program. She said its final implementation activities are in progress, and that the MPAA is expecting a full launch in January.
During his afternoon keynote, General (Ret.) James Cartwright, Harold Brown Chair in Defense Policy Studies, Center for Strategic and International Studies, discussed how the Internet and cyberspace are now among the most challenging national security policies facing the United Sates and global community. He urged attendees to consider how the U.S. defines critical infrastructure, and how our approach of defense of intellectual property differs from the rest of the world.
In an afternoon panel, three studio executives discussed how content protection technology has evolved as new video formats have been introduced. Mitch Singer, Chief Digital Strategy Officer for Sony Pictures Entertainment, sketched ou the advances in copy protection as the industry has moved from DVD to Blu-ray Disc, and now to UltraViolet and 4K.
Jackie Hayes, Senior Vice President and Deputy General Counsel, Legal and Business Affairs, Warner Bros. Home Entertainment, said the transition from software-based to more hardware-based solutions has allowed more usage models to be enabled.
Separately, speakers also stressed the importance of CDSA and MPAA audits.
âWeâve come a really long way in this industry,â said Bob Eicholz, Senior Vice President of IT Architecture and Security, Deluxe. âCDSA and MPAA audits have done more for the industry than anything else. Once youâve come a long way, itâs not that hard to keep it going.â
For more coverage of the Content Protection Summit 2012, please check the following links:
MPAAâs Dodd: Entertainment, tech industries should join forces (Advanced Television)
MPAA â Entertainment and tech industry must join forces (Film Industry Network)
By Paul Sweeting
Anyone who has ever done a home energy audit knows that their cable or satellite set-top box or DVR is an energy hog. According to a study last year by the Energy Resources Defense Council (NRDC) the typical home set up, with one HD DVR and one HD set-top, consumes an average of 446 kilowatt hours per year of electricity, more than most refrigerators and more than twice as much as the average LDC TV the box is connected to.
Worse, two-thirds of that energy consumption occurs while the box is not in use. That’s because for most consumers, powering off their cable box is impractical. Most can only be fully powered off by unplugging them. Network connectivity is also lost when the box is powered off, and it can take up to several hours for the electronic program guide and other functionality to re-loaded and fully restored. A powered off DVR also can’t be used to record programs overnight or when the user is not home. As a result, most STBs are configured to remain connected and fully powered up at all times.
The cable industry and set-top box makers are now trying to address the problem. On Thursday, 15 pay-TV providers and STB makers unveiled a voluntary agreement to roll out a new box design and to update existing boxes to make them more energy efficient. The agreement was announced by the Consumer Electronics Assn., and the National Cable & Telecommunications Assn, which claim it will save U.S. consumers $1.5 billion annually in energy costs. The agreement was signed byÂ Comcast, DIRECTV, DISH Network, Time Warner Cable, Cox, Verizon, Charter, AT&T, Cablevision, Bright House Networks and CenturyLink, and manufacturers Cisco, Motorola, EchoStar Technologies and ARRIS.
According to the agreement:
At least 90 percent of all new set-top boxes purchased and deployed after 2013 will meet the U.S. Environmental Protection Agency (EPA) ENERGY STAR 3.0 efficiency levels. Based on market projections for set-top box deployments, this will result in residential electricity savings of $1.5 billion annually, as the agreement is fully realized.
- For immediate residential electricity savings, âlight sleepâ capabilities will be downloaded by cable operators to more than 10 million digital video recorders (DVRs) that are already in homes.
- In 2013, telco providers will offer light sleep capabilities, and satellite providers will include an âautomatic power downâ feature in 90 percent of set-top-boxes purchased and deployed.
- Energy efficient whole-home DVR solutions will be available as an alternative to multiple in-home DVRs for subscribers of satellite and some telco providers beginning in 2013.
- âDeep sleepâ functionality in next generation cable set-top boxes will be field tested and deployed if successful.
While applauding the industries’ attention to the issue, the NRDC nonetheless blasted the agreement as inadequate. “It’s good that cable and satellite companies recognize the need to provide consumers with set-top boxes that waste less energy. Â Unfortunately, their proposal is a far cry from what is needed to significantly decrease the $2 billion worth of electricity these devices waste each year,” NRDC senior scientist Noah Horowitz said in a statement. “The TV industry can and should implement new design features that incorporate power-saving technologies similar to those in todayâs smart phones, which sip rather than gulp power when not in use.”
CEA and NCTA defended the agreement as a work in progress, however. “Companies involved in the new Set-Top Box Energy Conservation Agreement will meet regularly to review and update energy efficiency measures, and to host ongoing discussions with the [Department of Energy] the [Environmental Protection Agency] and other interested government agencies and stakeholders on new technologies and equipment,” the groups said. “To create accountability and support transparency, the agreementâs terms include detailed processes for verification of set-top box performance in the field; annual public reporting on energy efficiency improvements; and posting of product power consumption information by each company for its customers.”
By Paul Sweeting
Among the many intriguing elements of Disney’s newly inked movie distribution deal with Netflix one of the more interesting to watch will be whether it affects the total viewership of Disney titles during the pay-TV window. I suspect it will.
Apart from relying on broadband rather than traditional cable plant for delivery, Netflix provides a markedly different and generally superior user experience than traditional pay-TV channels can offer. Unlike HBO, Showtime and Starz, Netflix does not need to shoehorn itself into the limited user interface provided by standard cable and satellite set-top boxes. Netflix’s UI is much more user-friendly and easier to navigate. And, because it’s web-based, it can incorporate sophisticated search, recommendation, and social media tools that cable networks simply can’t offer.
Netflix is also accessible from a wider variety of devices, from tablets and laptops, to game consoles and Blu-ray Disc players.
Netflix has already shown that it can significantly improve discovery and increase viewership of both movie and TV content outside the pay-TV window. There’s no reason to think it couldn’t or wouldn’t do the same for content within that window.
If that proves to be the case, it could hold significant implications both for content owners and for distributors operating in other windows, including those in the transactional video-on-demand and DVD/Blu-ray rental markets.
Higher rates of viewership could make movies more valuable during the pay-TV window — something studios who have not licensed their titles to web-based platforms like Netflix during that window will need to think about. For the time being, at least, Disney will Â also be providing viewers a better user experience than studios whose pay-TV rights are still controlled by HBO or Showtime.
An improved user experience in the pay-TV window could also ultimately shift some viewership from other windows into the new over-the-top subscription window, which could show up as lower revenue for distributors in other windows.
In short, ripple effects from the Disney/Netflix deal are likely to be felt throughout the movie distribution chain, not just in the pay-TV business.
I had the opportunity yesterday to share the stage with rockstar analysts Tom Adams (of IHS Screen Digest), Annie Arroyo of the NPD Group, and Larry Taman of GfK to discuss an industry outlook for home entrainment at the Forecast:Hollywood 2013 event presented by Variety and MESA today in LA. Â Some interesting data points shared during the presentations:
- UltraViolet now has 6m user accounts
- an estimated 30% of U.S. households have tried an OTT streaming service
- 31% of consumer households view their video entertainment on both physical and digital formats
- a substantial number of subscription streaming households (Netflix, Hulu, Amazon Prime) also purchase and rent content on eiher Amazon or iTunes
The real question in front of content creators in the home entertainment space today is how to maintain profitability. Â Video consumption has never been higher in the U.S. household, but it is the mix of consumption that is hurting Hollywood studios.
To read the full article click HERE
By Paul Sweeting
Cable and satellite operators have long complained about high programming costs, particularly when it comes to sports programming. But at the UBS Media and Communications Conference in New York this morning, Time Warner Cable CEO Glenn Britt went farther than most, threatening to drop networks whose carriage fees are out of proportion to their ratings performance.
“As our programming contracts come up for renewal, we’re going to take a hard look at each service,” Britt said. “Those services that cost too much relative to the viewership or value of those services, we’re going to drop them, or we may put them on a different tier.”
He went on to criticize network owners whom he said regard carriage on basic cable tiers as a “birthright,” regardless of their network’s popularity.
“In this business, because we sell a package, we’ve tried to be very comprehensive. Over the years, we’ve accumulated networks that hardly anybody watches. Some are trying to reach the same audience others who may do it better and be more successful,” Britt said. “But if you talk to the people who run these networks, they speak of it as a birthright….We are going to have a different conversation than we had five or six or ten years ago.”
With subscriber rolls falling, cable operators are finding it increasingly difficult to pass along higher programming costs to customers. As a result, the pay-TV ecosystem increasingly looks like a zero-sum game, in which higher carriage fees for the most popular networks begin to crowd smaller networks off basic tiers.
While some of those networks may be able to survive on premium cable tiers, others are likely to try to migrate to over-the-top platforms like Roku, Boxee, Xbox Live or as a branded channel under Netflix or Hulu. While the absence of carriage fees and the smaller reach of those platforms would mean lower revenue in the near term, online platforms also hold the promise of targeting viewers for precisely than traditional pay-TV platforms, presumably resulting in higher advertising CPMs.
In any case, the trend is likely to be a boon to over-the-top platforms, making them a more vital source of original programming rather than mere on-demand conduits for programming already available on cable.
By Paul Sweeting
More people buy Android devices than buy iOS devices but they don’t seem to do much with them. In a widely discussed blog post yesterday, Asymco analyst Horace Dediu highlighted the huge gap in mobile e-commerce traffic over the Thanksgiving weekend between the two platforms. Citing data from the IBM Digital Analytics Benchmark survey, Dediu noted that Android devices accounted for only 23 percent of mobile online traffic on Black Friday, compared with 74 percent for iOS, despite Android’s larger overall share of the device market.
Dediu offers a variety of possible explanations for the skew, noting in particular that tablets have become the go-to device for actually completing mobile online purchases, and Apple’s share of the tablet market is much larger than its share of the smartphone market. That comports with the conclusions of a separate study e-commerce solutions provider Monetate, which found the iPad to be the biggest factor in driving mobile e-commerce.
Whatever the reason, though, the huge usage gap between platforms holds potentially major implications for media companies and content distributors as they develop their mobile strategies. In effect, consumer platform preference is starting to look like a pretty good proxy for engagement generally, with iOS users being far more engaged with mobile content, commerce and functionality than are Android users.
Insofar as engagement is a crucial component to many online content monetization schemes, the data suggest that targeting iOS users will produce a much higher return on investment than targeting Android users (the impact of Blackberry and Windows mobile use is negligible at this point).
It would be useful to know whether similar difference in engagement can be found among users of non-mobile platforms, such as PlayStation vs. Xbox streaming or smart TVs vs. set-top boxes.
Today is Cyber Monday, when Americans are projected to spend $1.5 billion shopping online. That comes on top of the $1 billion they spent online on Black Friday, the more traditional kickoff to the holiday season. But this could be the last season when all those online orders get processed without appending sales tax to the total.
The Alliance For Mainstream Fairness, a group made up primarily of brick-and-mortar retailers, is taking advantage of the hoopla over Cyber Monday — the name was coined in 2005 by Shop.com to try to boost online commerce — to press Congress to approve sales taxes for online purchases.
“This should be the last holiday shopping season that Main Street businesses have to compete on a playing field that is not level,” Alison Joseph, a spokesperson for the group said in a statement. “Cyber Monday is just another opportunity for out-of-state, online-only retailers to exploit a government-sanctioned loophole that puts local businesses at a significant disadvantage over brick-and-mortar retailers. It is time for Congress to pass e-fairness legislation and require all retailers, online and on Main Street, to play by the same set of rules.”
Under current law, online retailers that do business across state lines are generally not required to collect or remit local sales taxes at the time of purchase. Technically, consumers who live in states that impose sales taxes are supposed to report their own online purchases on their state tax returns and to pay any taxes dues. But compliance is extremely low.
The Marketplace Fairness Act, introduced in the Senate earlier this year, would empower states to collect online sales taxes from out-of-state e-merchants. The bill would exempt small businesses earning less than $500,000 per year. Although the taxes would affect all product categories, it could have a dramatic effect on the competitive landscape for bigger ticket items such as consumer electronics and computers, where the savings from the lack of sales tax online are most significant.
While the bill saw little action in the recently concluded session of Congress, it has bi-partisan backing — a rarity in Washington these days. With many states strapped for cash due to the recession, even some anti-tax Republicans view collecting more sales taxes as preferable to raising income taxes. The bill has also gained the support of some large e-commerce players, notably Amazon, who see a national framework for sales taxes as preferable to a state-by-state approach. It also has the support of the National Retail Federation, which represents many large brick-and-mortar chains.
Supporters are urging Congress to act on the bill during the current lame-duck session. While that seems unlikely, given lawmakers’ all-consuming focus on the so-called fiscal cliff, the momentum behind the bill is building and could bring action early in the next session.
By Paul Sweeting
The spiraling cost of sports programming is already riling the pay-TV industry by driving up subscriber fees, but don’t expect any respite from the tension in the near term. On Tuesday, News Corp. announced it has acquired a 49% stake in YES Network that values the regional sports network at $3.4 billion.
Key to the News Corp. investment was a new deal between YES and the New York Yankees to give the network exclusive broadcast rights to Yankees’ games for the next 30 years. YES will pay the Yankees a whopping $350 million per year, a more than three-fold increase over the network’s expiring deal, with a 5% bump in the fee each year.
The massive deal is likely to have significant ripple effects throughout the industry. It’s new stake in YES will give News Corp., which already owns 20 regional sports networks around the country, still-greater leverage with cable and satellite providers as it seeks to launch a new. national all-sports network to compete with Disney’s ESPN.
ESPN is already the priciest network for pay-TV providers, garnering an average of $4.69 per subscriber per month in carriage fees, according to SNL Kagan. That doesn’t count the additional 40-50 cents per sub Disney is typically able to squeeze from providers for ESPN2, ESPN Classic it the various other brand extensions that ride the flagship’s negotiating coattails. A new national sports network from News Corp., while unlikely to fetch as much as ESPN right away, will nonetheless hit cable and satellite providers with significant new carriage fees, increasing what Time Warner CEO Jeff Bewkes referred to last week as the “sports tax” imposed on non-sports fans by the high cost of sports programming.
NBC Universal is also seeking to launch a national sports network and recently paid $800 million to grab U.S. rights to the English Premiere League away from News Corp.’s Fox Soccer Channel.
In the meantime, the ever-growing sports tax on non-sports fans will exert increasing pressure on Congress o the Federal Communications Commission to intervene, perhaps by forcing the industry to offer pricey sports programming on an ala carte basis.
By Paul Sweeting
Movies, video games and consumer electronics will be featured heavily in Black Friday sales this year. If there is a Black Friday this year, that is.
Walmart, the world’s largest retailer, released its Black Friday ad on Monday, which includes the Dark Knight Trilogy boxed set for $29.96 (Blu-ray), and the individual DVD and Blu-ray titlesÂ Brave, The Amazing Spider-ManÂ andÂ The Hunger Games, among many others, priced from $1.96 to $9.96 each. It also features an Xbox 360 4GB + SkyLanders Bundle for $149, a Nintendo 3D Starter Bundle for $194, a Wii Console for $89 and a long list of games for all three console platforms priced from $10 to $30 each. Walmart is also offering a online-only pre-Black Friday event all week.
Walmart is also facing the possibility of a significant disruption to its Black Friday plans, however, as Walmart employees around the country are threatening to strikeÂ over the Thanksgiving weekend over pay, benefits and what the employees claim are unfair working conditions. Workers and labor activists are vowing to picket in front of 1,000 Walmart stores nationwide, including on Black Friday.
Walmart has filed a complaint with the National Labor Relations Board against the United Food and Commercial Workers union, one of the groups seeking to organize Walmart employees, asking the agency to bar what the retailer claims would “unlawful disruptions to its business.”
Trouble for Walmart could be a boon for other retailers, however, many of which are also heavily featuring movies, games and CE in their Black Friday promotions.
Best Buy will offer a Toshiba Wi-Fi Blu-ray Disc player for $39.99 that includes Netflix, Pandora and Hulu Plus. It is also offering a group of 50 Blu-ray titles includingÂ Sherlock Holmes: A Game of ShadowsÂ andÂ Wrath of the TitansÂ for $3.99 each and another 110 more-recent Blu-ray releasesÂ for $7.99 each. Â A collectionÂ ofÂ 50 DVD titles, includingÂ Batman BeginsÂ andÂ The Social Network, are on sale for $1.99 each, and another 140 titlesÂ for $3.99 each.
Target is also offering deeply discounted Blu-ray Discs and DVDs, including sincludeÂ Sherlock Holmes: A Game of Shadows,Â The Lucky One,Â The Girl With the Dragon TattooÂ andÂ The Twilight Saga: EclipseÂ on DVD and Blu-ray for $4 each.Â Project XÂ is selling for $6 on DVD. More recent titles such as Â The Vow,Â The Pirates! Band of MisfitsÂ andÂ Prometheus, are available on Blu-ray and DVD from $10 each.
Amazon.com is also offering a wide selection of Blu-ray and DVD releases on Black Friday starting at $1.99. The online megastore also promises a number of “lightning sales” in popular categories, including games, on Cyber Monday.
Retailers have even more than usual riding on Black Friday sales this year. With consumer and media attention focused on the elections, as well as Hurricane Sandy, many toy and game makers delayed or postponed major releases for fear of being overshadowed. As a result, the holiday shopping rush is being compressed into fewer days this year, making the stakes on Black Friday higher than normal.
Many retailers, including Walmart, are planning to open early on Thanksgiving evening instead of waiting until early Friday morning to try to get a jump on the all-important holiday weekend. That’s bred resentment on the part of many retail workers, however, who could be forced to give up their regular Thanksgiving plans in order to report of work. The issue is among the bill of particulars raised by Walmart workers in their dispute with the retail chain, in fact.
Walmart and Target plans to open their doors at 9:00pm Thanksgiving night. Best Buy will open at midnight.
By Paul Sweeting
Time Warner-owned Turner Sports partnered with CBS back in 2010 to put up $10.8 billion over 14 years for TV and digital rights to the NCAA’s March Madness basketball tournament. But otherwise, Turner has been a middleweight in TV sports, not a heavyweight.
According to Time Warner CEO Jeff Bewkes, the heavyweights like ESPN and the broadcast networks that shell out for NFL rights are imposing a “tax” on the rest of the TV ecosystem.
Speaking at the Innovation Without Boarders event at the Paley Center for Media in New York Friday (highlights here) Bewkes warned that the spiraling cost of sports rights is putting strain on the current pay-TV business because those costs get passed on by the networks in the form of higher carriage or retransmission fees from cable and satellite providers, raising the price of TV service for everyone.
“Half of the population that doesn’t want sports is subsidizing the other half that does” Bewkes said, because the former are forced to buy expensive sports channels they donât want as part of their cable plans. At some point, he warned, that will force the industry to adopt the ala carte pricing model it has long resisted.
Bewkes is hardly the first person to make that observation. But it’s telling that the CEO of a major content creator and network owner like Time Warner would raise the red flag.
It’s a recognition that the real stress on the current pay-TV business model based on bundled program tiers is coming from within, rather than from outside, over-the-top competitors like Netflix or Hulu. The danger is that the high cost of a small number of networks, likely driven by sports rights, will turn the current dual-revenue stream business model into a zero-sum game, in which every dollar a cable operator must pay to carry ESPN is one it cannot afford to pay another programmer. When that happens, competing networks’ shared interest in keeping the bundle intact will start to splinter, done in not by Netflix but by the NFL.
By Paul Sweeting
With the U.S. Court of Appeals for the DC Circuit in Washington preparing to hear oral arguments over the Federal Communications Commission’s net neutrality rules, a group of technology companies and online service providers filed a friend-of-the-court brief Thursday urging the court to uphold the FCC’s open internet order. The group includes Netflix, Amazon, Google, DISH, Skype and others that are part of the Open Internet Coalition.
“Most of us have come to rely on the Internet to communicate, exchange ideas, engage in commerce, watch videos, and play games. The Internetâs openness, however, is not a given; it is at its most vulnerable at the gateâthe broadband access pipes that are controlled today by a handful of companies,” the group said in its brief. “The Nation sorely needs additional investment in broadband access to widen this gate. Such investment would be significantly hampered, however, if the current gatekeepers could lessen demand for the Internet experience by cherry-picking favorites among the immense Internet ecosystem.”
The case stems from an effort by the FCC to sanction Comcast in 2007 over the ISP’s alleged throttling of certain video-related data traffic on its network. At the time, however, the agency had no formal rules in place governing such practices. Comcast sued and the DC Circuit court (which hears most regulatory challenges) ruled the FCC lacked the legal authority to impose the sanctions.
The FCC responded by developing formal open internet rules under procedures that would give it the legal authority. The rules were approved by a closely divided commission in December 2010 and took effect last year. In July 2011, Verizon and MetroPCS sued the agency again, claiming the new rules still exceeded the FCC’s authority and harmed ISPs’ First Amendment rights to manage their own networks.
From the beginning, Netflix emerged as something of a poster-child for those supporting the FCC’s open internet rules. Net neutrality supporters feared that without such rules, broadband service providers that also provide video service, such as cable operators and Verizon FiOS, could block or degrade over-the-top services like Netflix that compete with the operator’s own pay-TV service.
The Open Internet Coalition was joined in support of the FCC’s position by several public interest groups and law professors, who signed onto a separate brief filed yesterday by the Center for Democracy and Technology. That brief took aim specifically at Verizon’s First Amendment claims, calling it “incorrect as a matter of law.”
Oral argument in the case has not yet been scheduled but is expected to happen in mid-2013.
By Paul Sweeting
Americans started showing signs of falling out of the habit of watching television in 2012. Total viewing time was down 2% in the first quarter of the year, and declined 1% in the second, the first time total viewing has posted sequential quarterly declines since Nielsen started tracking it. Viewing was up just under 1% in the third quarter, but would have been down but for the Summer Olympics in August. The fourth quarter is shaping up as another downer.
That decline in total viewership has started to show up in the ratings for individual shows and networks, as well. Through the first four weeks of the fall TV seasons, Fox has seen a 25% drop in viewers; CBS has seen a 12% drop; and ABC has seen an 11% decline.
Those declines have led to more urgent calls by the networks to shift the industry to a live-plus-7 standard (known as C7) for reporting ratings that would count both live viewing and time-shifted viewing via DVR up to seven days after a show’s initial airing. The current industry standard is live-plus-3 (C3). But with DVR penetration now at 46% of U.S. households the networks argue that time-shifting behavior has become so entrenched that C3 undercounts the number of people who watch their shows and, at least to some extent, see the commercials.
Even shifting to a C7 standard may not help, however. According to data compiled by Nielsen and the Wall Street Journal, C7 viewership is down nearly as much as live viewership. THrough the first four weeks of the season, Fox’s C7 viewership is down 25%, the same decline it has experience in live and C3 viewing. CBS was down 10%, while ABC was down 7%. Only NBC has seen its C7 viewership go up this TV season, by 14%.
The total number of viewers who watch a show within the seven-day window is larger than the number who watch it live, of course, so the networks would get credit for more gross ratings under a C7 standard. But the data bely the argument that total viewing is not declining but merely being time-shifted. Even accounting for time-shifting, viewership is down.
What to do? BTIG Research analyst Rich Greenfield argues the networks should forget about DVRs and the debate over how long to make the ratings window and embrace VOD. Especially so since he thinks most people really do skip the ads during DVR playback, regardless of what they say in surveys:
Watching live television is no longer top of mind and watching commercials is laughed at. Â Consumers have essentially been trained to avoid TV commercials,Â particularlyÂ given a heavy ad-load with no personalization/targeting.
- We realize all the studies show that consumers with DVRs still watch lots of commercials, but do you seriouslyÂ believeÂ any of that based on your own viewing behaviorÂ or anyone you know?
- Does anyone under the age of 25 even understand what it means to watch âliveâ outside of sports?
Instead of fighting over DVR viewing, Greenfield says the industry should essentially make all content available on demand, so it can be accessed by the growing number of connected devices people use to watch video, with fewer, but more targeted ads:
The problem is not âwhenâ people choose to watch particular content, it is that they are not watching advertising at all when they watch that programming.Â You can try boosting viewership via C7 or even C14, but the ads are simply not being watched.
- Trying to charge advertisers for ratings points that are not generating ad views is a non-starter.
What Should the Industry Do?Â Â The TV industry must find a way to put a dramatically larger percentage of content on-demand, with targeted advertising and a lower ad-load. Â Nobody will use a DVR if they can get to whatever they want, when they want it, where they want it, especially if the ad load is lighter and the ads relevant. Â The DVR has always been an ugly workaround for VOD, yet the pace of innovation related to on-demand programming (TV Everywhere with targeted advertising) has simply been far too slow and we are being kind.
If Greenfield had a TV show the network would probably cancel it.
By Paul Sweeting
The search for a better way to navigate among the growing thicket of channels and apps showing up on TVs continues. Google rolled out its bid to reinvent the TV interface Wednesday with an updated version of Google TV that adds voice-driven navigation. You can watch a demo here.
Voice-driven navigation isn’t new. Microsoft’s Xbox with Kinect already offers a version of it, and Samsung’s new line of TVs offers it as well. Many analysts anticipate the next version of Apple TV will incorporate Siri, the voice-driven personal assistant on the iPhone.
Google’s take is different from those, however, both simpler and more sophisticated. Unlike Microsoft, Google isn’t trying fully to replace the traditional D-pad remote control but to enhance its capability, going so far as to put a microphone for receiving voice commands in the hand-held remote itself. Google is betting that some tasks, like scrolling left/right or up/down, are still done more efficiently using your thumb than with voice or gesture, and leaves those tasks to manual control.
At the same time, the new voice recognition system leverages a lot of Google search technology. The system draws heavily on Google Now, Google’s personal assistant app for Android that pulls in an array of contextual information to anticipate what you’re looking for. Thus, Google TV will prompt you if your favorite team is playing and provides a direct link to the channel showing the game so you don’t have to go searching for it. The goal is eventually do display content much as Google Now display information cards to users.
Not a bad effort, but there is still plenty of room for experimentation to come up with a fool-proof, intuitive next-generation TV interface.
The new system will be available on Google TV-enabled LG sets.
By Paul Sweeting
Getting cancelled is a rite of passage for anyone trying to build a career in television. The same will be true even in the future of television, apparently.
AdAge reported Monday that YouTube is preparing its second round of investments in original programming for the video platform, as it tries toÂ catalyze the next generation of TV.Â But only about 30-40 percent of producers who got funded in the first round will get funded this time. The rest, as far as YouTube is concerned, are getting cancelled.
“We looked at viewership they’ve been able to achieve, the cost of the content, and from that we are able to determine the channels that are delivering the best return on our investment,” YouTube’s global head of content strategy Jamie Byrne told AdAge. Spoken like a true network exec.
The cancellation rate, in fact, almost exactly matches the track record for new TV shows. According to data compiled by ScreenRant, between 2009 and 2012, 65% of new TV series were cancelled within their first season, which is right in the middle of YouTube’s projected range. Here’s the breakdown:
Canceled New Series Network AveragesÂ (Overall)
3 Year Average â 65% Canceled
2009-2010 â 57% Canceled
2010-2011 â 69% Canceled
2011-2012 â 68% Canceled
% of New SeriesÂ ReceivingÂ a Second SeasonÂ (By Network)
1) ABC â 39%
2)Â Fox â 38%
3)CBS â 36%
4) The CW â 30%
5) NBC â 27%
By Paul Sweeting
Spotify is closing in a new $100 million financing round that values the streaming music service at just over $3 billion, according to the Wall Street Journal. While impressive for a company that is yet to turn a profit and can’t say exactly when it will, it’s below Spotify’s earlier goal of a $4 billion valuation.
What happened to the other billion? AllThingsD’s Peter Kafka blames Netflix:
Investors already know what a digital subscription business looks like at scale.
That would be Netflix,Â which has some 27 million subscribers at around $8 a month. Today,Â after Carl Icahn goosed it a bit, Netflix has a market cap of $4.3 billion.
Spotify says it has 4 million paying subscribers at around $10 a month. Bear in mind that if you value Spotify at $4 billion today, youâre really saying it will be worth three times that â $12 billion â in a few years, when it would presumably go public [snip].
So even at $3 billion, Spotify backers will need to work hard to explain why their digital subscription business is worth so much more than Netflix when it comes time to IPO.
I’d add another explanation, that affects both Netflix and Spotify. Both companies have built their businesses largely around a single use case: on-demand subscription streaming (Spotify also has a small advertising revenue stream). Use cases, for both music and video, are evolving, however, and consumer preferences for how they access content services are not settled.
Some device-centric platform providers, moreover, are pressing rights owners to let them offer content across multiple use cases and under multiple payment plans in an effort to monopolize consumer spending, as Amazon has done in video by offering pay-per-view rentals, electronic sell-through, subscription streaming and DVD sales (and subscription DVD rentals in the U.K. via LoveFilm). Microsoft is now doing the same in music with Xbox Music, which offers free ad-supported streaming, subscription streaming, paid downloads and streaming from cloud-based storage.
The question hanging over both Netflix’s and Spotify’s valuation is whether a standalone content service, based around a single use case, can compete effectively in a world likely to be dominated by broad, device-based content ecosystems.