Friday, October 10, 2008

Daily Media: A Closer Look

Here is my second review of the Daily Media set-top box, United Content Distributors' main product. You can choose between reading the story below, clicking here to view the Google Docs original, or mail me for a PDF version.

Keep reading, if you want to know why I personally think this box, traditionally regarded as an element belonging to the fixed-line telecom world, should perhaps appeal to ... mobile operators most of all!

(Full disclosure: I have no personal interest in this company or product.)

Daily Media: A Closer Look

Last week I paid a visit to the UCD headquarters in Wijk en Aalburg, a small town in rural Holland. UCD, United Content Distributors, is the company behind the Daily Media set-top box (view our complete coverage here). It was very enlightning, all the more because 'yet another box' is a hard sell, not least because of the difficulty of explaining how and what it is in the first place.
The current state of the economy is not really helpful right now, but I am impressed by the capabilities of this box, its ease of use and its revolutionary business model. So, here is follow-up review, expanding on my first one. I really hope it will grab some attention, because I am convinced it can be a great tool for both users and potential partners with a strategy reaching beyond today's turmoil.

Personally, I am most intrigued by the possibility of UCD teaming up with a mobile operator. No quad play mumbo jumbo, but a move away from commodity access services. Anyway, here are my findings from my conversations with executives of the company. Read on!

1. What is Daily Media?

The shortest way of describing the box is to say that it is a media center for place-shifting internet (broadband) content from the PC to the TV. But there is much more to it. It would be served better by putting it this way: On the input side, the box combines broadcast TV with broadband internet content. In the process, it adds interactivity, targeted personalized advertising (please, no in-program stuff), a payment system and several (non-core) add-ons. It is controlled by a 'multi-apparatus' remote control and menus on the TV screen. It doesn't have a hard disk, but all sorts of hardware can very easily be connected (there are many output slots), including your hifi.
As to the broadband content: this consists of standard video stuff (like YouTube), and also includes pay-per-view VOD content from multiple sources and a range of narrowcasting channels (such as Rabo TV provided by AAA-rated Rabobank). Importantly, the highly popular VOD content Uitzendinggemist (catch-up TV, comparable to BBC iPlayer or Hulu), provided by Netherlands Public Broadcasting, is freely accessible as well as access (pay-per-view) to live (incl. sports) events. Further, broadband TV channels make up a total of some 500 available channels.

You can think of it as an hourglass, with Daily Media sitting in the center (thanks for making this picture, Thomas!):

2. How to bring it to market?

How does one get a box like Daily Media into the homes of millions of consumers, i.e. the target of the Wijk en Aalburg-based company? Not an easy task. It appears that UCD has made a number of smart decisions in paving the way for successful mass distribution:

  • The box is free to consumers.

  • From a content point of view, it really adds 'happiness' to the consumer's life. More content, no more trips to the video rental store, being able to pay-per-program instead of paying yearly subscriptions, etc.

  • It really is a plug & play tool and the menus are straightforward.

So far so good. I expect consumers will be quite happy to receive and utilize the Daily Media media center. However, that shifts the problem (i.e. the cost of the box) to any potential partner. Remember, UCD is the platform provider and others will have to carry the financial burden (the production cost for the box is approx. EUR 150).

I believe UCD has produced a great product that should enable many potential partners to find the budget for this strategic tool.

  • It is a great marketing tool for partners, especially for companies who have subscribers and feel the need for a churn-reducing or loyalty-stimulating tool. Markets are opening up to competion, which makes the availability of Daily Media very convenient. Think about it: there are a lot of companies out there who have subscribers, members or even just loyal customers: (health) insurance companies, utility companies, video stores, pizza delivery chains, car drivers associations (such as ANWB in the Netherlands, AA in the UK, or ADAC in Germany), newspaper and magazine publishers. Or even gas stations, grocery stores and other retailers (who all have their own loyalty programs). In the Netherlands, public broadcasting companies can be added to the list because they actually have members.

  • It allows existing video providers to enhance their product offering. UCD very carefully avoids becoming a competitor to your local cableco, satco, IPTV or DTT operator in case of retransmission (this story also contains an instructional video for hooking up your PC to your TV, but then of course you miss out on all the Daily Media fun).

  • It allows new entrants to add video to their existing bundle of services. I haven't mentioned mobile operators so far, but think of the trouble they are going through in becoming a LLU operator and trying to enter the IPTV market (such as Orange UK). Forget about all that. Broadband and broadcast TV are commodities, right? So why not leave that up to the consumer and position yourself at the next higher level in the value chain: inside the box, where you will get the chance to access a whole range of new revenue streams.

  • It allows content providers to establish a more or less direct relationship with consumers. This is possibly the most eye-popping characteristic of the box. The value chain is collapsed considerably and the payment system (a virtual wallet) allows consumers to directly access your content.

3. How is Daily Media different from other boxes?

The one feature that distinguishes Daily Media from competitors such as Sony, Apple, Sezmi, My Broadband TV and others is its business model: the box is free to consumers and UCD will only take a cut from the content it adds. It's a platform for sharing with all sorts of partners. It offers a payment system (through co-branded Visa-card provider LaSer Financial Services, which also brings potential partners to the table, most notably several 'tier 1' retailers in the Netherlands). Further, it uses a multi-server model; certain content is streamed from UCD's own datacenter, and most of the “partnered content” is streamed from their own servers.

4. What's new?

Several things were added to the Daily Media story, since my first review. In this sense, it reminds me of Sling Media and its Sling Box, which maintained a good level of innovation after the first product launch (see this story: "We need more companies like Sling Media.").

  • Preferred available bandwidth for a proper viewing experience is 1.5 Mb/s (previously 540 kb/s).

  • They built in a DTT tuner (just like I suggested, making the box a good fit for KPN's Digitenne offering, whose growth is leveling off (see results October 22) and could use another stimulus).

  • Several pilots have started (at OZB, the Rotterdam munifiber network; at Kabel Krimpen, a small MSO; and at a Van der Valk branch, a nationwide hotel group).

  • UCD has signed an agreement with LaSer (see above) to distribute multiple thousands of boxes, starting in the coming months. A similar agreement was reached with Holland’s largest video rental chain ERG to distribute (sell) Daily Media via their nationwide network of video stores (such as Videoland and Moviemax)

5. What's next?

Of course, lots of developments are in the “cooker” over in Wijk en Aalburg:

  • Premium (pay-per-view and subscription) broadband channels. I understand that UCD is aiming for very generous revenue sharing deals in this area.

  • A search engine, in combination with an EPG, for personalized media recommendations, built into the TV menus for an easier way of finding channels.

  • A virtual DVR, storing content on web-based servers, since the box has no hard disk (that rings a Cablevision bell).

  • Video calling.

  • Expanding the offering of games (including premium games).

  • Several add-ons, including a 'butler service' (already available on the internet: and Daily Care (which aims to be a 'switchboard', connecting all players in the national healthcare market).

  • Real-time energy metering through an on-screen display. Consumers can keep direct track of the actual level of energy consumption, at any given moment. Wouldn't that be a neat tool for your utility company, as they intend to make us consumers more and more energy conscious?

6. And more?

Daily Media is an intriguing product. I can see several other applications.

  • Hardware v. software. Daily Media is a hardware platform, but I can't see why it couldn't be a software platform. Such a transition could simplify the 'Invasion of the Living Room', even more than including a DTT tuner (see above). After all, bundling the platform into an existing set-top box would allow Daily Media to sail into the living room on the back of an existing cableco/boxco relationship. ActiveVideo Networks, seems to be just that, and forged a deal with Time Warner Cable to enter Hawaii.

  • Femtocell. If UCD succeeds in partnering with a mobile operator, the next step I would expect is the inclusion of a femtocell in the hardware. Femtocells offload traffic to the subscriber's broadband connection. Why not do some more piggybacking on the provider of the dumb pipe?

1 comment:

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