Conviva State of Streaming Content Discovery

Survey of 2502 in US, June 2021:

• Total >3000 streaming services in US, UK, EU
• Media time spent:
• 39.4% traditional media
• 12.1% digital audio
• 9.7% digital video, 12.4% connected devices (video)
• 8.8% social media
• 17.6% other digital
• Top sources for content discovery:
• by chance 38%
• ad on TV 34%, radio/podcast ad 10%, paper/mag ad 10%
• recommended 30%, recommendations engine 28%, friends talking 27%, service recommendation email 10%, 
• cast member interview on TV 14%
• review 21%
• social media ad 20%, friends on social media 20%, recommendation on social media 18%, post on social media 16%, celebrity on social media 10%
• Social media penetration: Facebook 83%, YouTube 68%, Instagram 52%, Twitter 34%, Snapchat 31%, TikTok 31%, LinkedIn 23%, Twitch 12%
• Streaming video penetration among high social media users:
• Netflix 93%, Prime Video 78%, YouTube 76%
• Disney+ 69%, Hulu 61%, HBO Max 59%
• Apple TV+ 39%, Peacock 38%, Roku 37%, Discovery+ 35%, ESPN+ 34%, Paramount+ 31%
• Pluto TV 28%, Google TV 28%, Tubi 28%, Crackl 24%
• IMDb TV 14%
• Generation Z favorite entertainment activity: video games 26%, music 14%, browsing 12%, social media 11%, TV/movies 10%

What next for satellite DTH service providers?

The telecoms sector is embracing the triple play, but broadband is emerging as the new line rental. Services can be added in a variety of ways:

• Managed services (fixed/mobile voice, SMS/MMS, TV/VOD).
• OTT (partnering with the likes of Netflix).
• Operator OTT (using new technologies such as NFV, SDN, WebRTC, HTML5).

What is there left to do for managed services companies without infrastructure, i.e. satellite TV operators such as M7 Group? They can still be resellers, but if they want more control, there are still some options left.

First, remember that they have one strength (a strong TV portfolio, lots of HD) and two weaknesses (no VOD, no BB).

Here are some options:

• Add broadband:
• Become an unbundler on FTTH (or a wholesale customer of an independent unbundler).
• Partner with an MNO for rural areas, using outdoor LTE antennas (see Cyfrowy Polsat).
• Add VOD:
• Add interactive TV and VOD using HbbTV.
• Add VOD through a Netflix-partnership.
• Add VOD using the new Smart LNB technology.
• Remain focused on TV/video:
• Launch an OTT service (like BSkyB, Sky Deutschland, ONO, etc.).
• Focus on the wholesale market to service resellers, OTT providers, cable headends etc.

UPDATE: the second VOD option requires broadband access and so a hybrid STB, just like TV Vlaanderen (part of M7 Group) is now launching.

More on access and services

Telecoms is moving away from its 4 traditional silos: fixed voice, broadband, TV and mobile. A more compelling way of looking at it now is (see previous post):

• Two enablers:
• Devices (portable and non-portable)
• Access (fixed and mobile)
• Two classes of services:
• Communication (voice/video calls, text/IM/chat, M2M)
• Entertainment (TV/catch-up/VOD, gaming)

And thus:

• This could be the basis for new regulation.
• The distinction between managed (traditional voice, SMS, TV) and OTT services is becoming less meaningful. Net neutrality is used to create OTT competition to managed services. The call (mostly from the fiber community) to create new and compelling services ('killer app for FTTH') seems quite ridiculous, considering the innovation going on in the OTT space. And as witnessed by the thousands of apps available on smartphones. Not to mention that it is the world upside down: we are not looking for new services to justify the roll-out of NGA networks; we are rolling-out NGA networks to keep ahead of demand (c.q. commoditise bandwidth, put an end to throttling, remove bandwidth as an artificially scarce resource) and especially because of the implied opex savings.
• A distinction between telco and cableco no longer makes sense.
• Access:
• Each of these markets are very competitive, except access. Unless it no longer makes sense to distinguish between fixed and mobile. LTE allows mobile operators to offer fixed-line replacement services, WiFi allows fixed operators to launch quasi-mobile services. Governments could consider to allocate lots of spectrum for unlincensed use to make sure that technologies such as WiFi increase competition.
• The access market is core for telecom operators. It creates subscriber ownership and generates fat margins (whatever the operators claim). Operators are now throwing in free services to attract/keep broadband subscribers e.g.:
• KPN: free access to Spotify Premium.
• BT: free access to BT Sports.
• Communication is traditionally voice and SMS. A third leg is M2M, e.g. DT's usage-based insurance (mobile) and home automation such as AT&T Digital Life (fixed). The commonality between these services appears to be: sensors.
• The 'entertainment' market is still developing. It consists of video (live TV, catch-up TV, VOD) and gaming. Will there be a third leg?

The new dichotomy of connectivity and services

Technological innovation, competition and regulation shape the telecoms sector. The entry of OTT providers has one the one hand been more of the same, but on the other hand it is causing big changes. If we take a step back to see how the sector changed over the past two decades or so, this is what appears to be going
on.

First, let's look at what we have to work with:

• Telecoms is a privatised free market.
• Regulation consists of defining markets, ascribing significant market power and applying remedies (on the wholesale or retail level).
• There are two infrastructures (in most countries to at least some extent): copper (nationwide) and coaxial (regional).
• Telecoms is a scale business. The entry barrier (capex, licenses) is very high. It has a tendency towards a monopoly, duopoly or oligopoly.

In the old days, the wider telecoms market was about traditional managed services (voice, SMS, TV). There was a somewhat artificial distinction between line rental (basic charge, fixed) and a usage-based fees. Competition was inter infrastructure (copper vs. coaxial) of intra infrastructure (unbundling, reselling). A three-layer model (passive, active, managed services) could be applied. The incumbent telco was regulated, the local cable company (lacking nationwide coverage) was not. When services such as CS and CSP rose, a rebalancing in the voice market started to happen: as usage fees went down, line rental charges went up.

Today, a fourth layer is added: IP, enabling OTT services (VoIP, IM, unmanaged IPTV). Unbundling appears to be too expensive for most challengers, but OTT brings a new form of competition, at least in the services space. Infrastructure-based competition is reduced to copper (upgraded to fiber) vs. coaxial (HFC). A rebalancing is going on, as traditional managed services are being replaced by non-managed OTT services. The new distinction is between service revenues (dropping) and connectivity. Limited infrastructure competition may lead to rising connectivity prices. Especially when the infrastructure players not only see services revenues dropping, but at the same time investments must be made in NGA networks (FTTH, LTE, WiFi). Hence, they are asking for a regulatory holiday to first roll out the NGA and accept regulation at a later stage.

In the services domain, net neutrality rules are designed to protect the OTT players in order to create a higher level of competition. Looked at it this way, other regulation is no longer needed.

That leaves lots of questions regarding connectivity:

• Is two enough in fixed-line competition (copper, coaxial)? In mobile, is three enough?
• Is LTE a fixed-line replacement? Is WiFi a mobile replacement?
• Is infrastructure a natural monopoly? Is it really a utility, such as water, gas, sewer, electricity?
• Is structural separation the answer? Is regulatory symmetry needed, i.e. structural separation of cablecos as well?

Connected TV boosted by IFA

Short overview of recent (IFA) developments around 'Next-generation TV', which encompasses:

• Connected TV, hybrid TV;
• Multiscreen, second screen, companion screen;
• TV everywhere, place shifting;
• Social TV, companion screen, interactivity;
• Personalisation, targeted ads, t-commerce.

(A comprehensive primer is available here.)

The easy conclusions:

• OTT TV is finding serious adoption.
• Second scree is rising.
• Standardisation may help.
• The software and hardware market is highly fragmented. Product development at break-neck speed.
• True interactivity (beyond VOD and pausing live TV) must be complicated to develop (and sell).
• Content deals are difficult to negotiate.

Trend #1: Operators launching OTT TV

• Vectra, the #2 MSO in Poland, uses the Xbox 360.
• Grande Communications, a Texas-based MSO, uses the TiVo Premiere.
• ONO (Spain) will launch its TiVo-based solution in October.
• TCT in Wyoming is using the Entone solution.
• Waoo!, a fiber-based provider in Denmark, uses RGB.
• Mobistar in Belgium added VOD.
• Numericable (France) launched an in-home developed service.
• Vodafone Iceland is launching with Espial, Amino and SecureMedia.
• DirecTV (DSB) allows anyone out of reach of its satellites (i.e. non-subscribers) to watch NFL games over broadband

Trend #2: Second screen

• ANT launched Galio Move, which streams content from the STB over WiFi to any other screen in the home.
• KPN launched something just like it: iTV Online.

Trend #3: Interactivity

• Miso is providing DirecTV with a Social TV solution that synchronises iPhone content with what is being watched on TV, as long as both connect to the same WiFi network.
• MTV has a similar service, the WatchWith app, also for iPhone (and iPad, computer). Technology from Rogue Paper.
• Ensequence and Zeitera partnered to synchronise TV content with a companion screen, for all sorts of applications: social networking, voting, behind-the-scenes content, coupon services, product placement, content discovery.

Trend #4: Standardisation

• 3-D active shutter technology: an initiative from Panasonic and XpanD, followed by a long list of manufacturers. Toshiba keeps making noise about glasses-free 3-D.
• The CEA wants to move to the 21:9 aspect ratio.
• HD is rapidly becoming the de facto 'standard', but 4K and now 8K are on the horizon (2020?).
• HbbTV is finding some adoption lately, mainly from German, French and Spanish broadcasters and manufacturers.
• Philips, LG, Loewe and Sharp partnered to standardise app development for multi-platform Smart TV apps.

Trend #5: Connected devices up, broadcast down

• Parks, Strategy Analytics, iSuppli: penetration of connected CE devices is up.
• Ericsson ConsumerLab: share of broadcast TV is down.
• IMS: OTT revenues will go up.

Trend #6: Product development:

• TV: Sharp, Apple (rumor), Vestel,
• STB: Joysee Technology, Pace, CreNova Technology, Hama,
• DVR: EchoStar,
• Media streamer: Netgear, Philips, Philips Soundbar, Syabas/PopBox, Toshiba,
• Tablet: Vizio, 
• Middleware: NetUP, httv, Google TV coming to Europe, Pace, STM, ALi + Cubiware,
• SoC: Trident,
• EPG, remote control: Microsoft's TeleBing in Japan, ThinkOptics,
• DRM: NDS,
• Widgets/apps: Opera,
• Gesture-based control: eyeSight, 

Trend #7: Content deals

• Samsung: HBO Go in the US, MTG's Viaplay in Scandinavia
• Sony: Bandeirantes in Latin America, NFL in the US.
• Sony, Samsung, Philips, Toshiba: INA
• Onkyo: Spotify
• Roku: Epix, Funspot
• Panasonic: FetchTV portal
• Wyplay: YouTube

MPJC: no visionaries

Last Thursday was the annual Mediapark Jaarcongres (MPJC) of the public broadcasting sector in the Netherlands. Not quite as interesting as last year's edition, but well worthwhile. No real visionaries, apart from the 4K contribution, but that was done last year as well. Here are a few common themes.

Trends

It was all about:

- Smartphones, tablets, touch screen, swiping

- Connected TV, TV everywhere, second screen

- Social media and social TV

- Consumer is in control

i.e. nothing really new.

Hybrid TV

UPC and others pointed out that there still is very little true integration of broadcast and broadband, despite all the connected TVs. We have come to the same conclusion (report available at 50% discount for readers of this blog), which is well worth stating explicitly, because the term 'interactivity' is used much to easily for functions that aren't really worth it. Such as pausing live TV - nothing more than a very basic feature exploring the two-way connection of an 'interactive' TV. There is still a lot to be done.

Kevin Slavin

Excellent talk from Kevin Slavin of Starling TV and Area/Code about the role of the audience. From the laffbox (LFN: laugh from nowhere - check out this) to Facebook/Twitter, parasocial relationships, the audience becoming a character (see Brand Fiction Factory), a character as the audience and finally Everyware (... is where the laughter comes from): social media replace the laugh track.

Twitters problems: hashtags are not unified; there are simply too many tweets.

RTL, Sanoma

Both are pusuing a strategy of 'follow the consumer' - not surprising.

Sanoma NL (revenues: EUR 500m) took some effort defending its takeover of SBS (3 TV channels, program guide) for EUR 1.2bn (shared with Talpa). The problem is not so much SBS's current underperformance (that's simply due to a 'cycle'), the real problem is that this is essentially a change of control where the acquirer has no clue how to run a TV company. Talpa (TV productions) is included in the deal, taking a 33% share, but they don't know how to run a company like SBS either. Which is why they will have a very hard time realising synergies.

UPC

Solid statements: Google lacks a unifying UI across all devices; social TV is still embryonic. No news on the Horizon box (see page 5 of this journal: trial coming to the Netherlands in July, commercial launch September).

Glashart Media (Reggefiber)

Reggefiber has ~700k homes passed and ~200k homes activated (for more details on the Dutch FTTH market: our FTTH NL 2011 report will be out next week - here is last years' edition). Glashart Media services 130k TV homes, of which 45k use interactive services.

Its claimed USPs: picture and sound quality; number of channels; EPG (providing access to apps); 3-D ready; content (local TV, VOD, catch-up TV, Eredivisie Live). OTT services are drawn into the managed services domain, while providing open access to all content parties (0900-TV).

2010 Was the year of 'fix the basics', 2011 is the year of 'boost the base'. A new box will be launched, allowing 3 TV sets to be connected and with a 250 GB hard disk optional. They also want to experiment with a kind of prepaid card, giving access to certain content for a limited time. Intriguing plan: an off-footprint break-out is coming, i.e. Glashart Media providing TV services outside the Reggefiber footprint.

NOS

Launch of the new site m.nos.nl/video.

NLbuzz

Some stats on Eredivisie Live: 550k subscribers, 1m unique visitors/month, 1.5m views/month, 300k live streams/year. A new site will be launched at the end of June 2011, relying completely on adaptive streaming. It will offer a single-sign-on (across devices). They see an interest in niche content, such a waterpolotv.nl (just 30k active sportsmen, but no fewer than 28-30k views per video).

TNO/Waag Society

Wonderful demo of 4K, which is predicted to come to market in 2011. What it claims to be is an even sharper image, creating the illusion of 'really being part of it'. But 4K also offer a more dynamic picture and a much better opportunity to zoom in. Japan expects 8K by 2020. SD (720x576) implies 0.4 megapixels, HD (1920/1080) implies 2 mp, 4K (4096x2160) goes to 8.8 mp and 8K to 33 mp. And then you can combine 4K (or 8K) with 3-D. Bandwidth consequences are apparent.

Public Broadcasting

The day started off with the PO (public broadcasting) commenting on government plans to reduce support by EUR 127m. This number is supported by a recent BCG report. Broadcasters (essentially production companies) will be forced to merge to reduce the field to 8 players, from 21 currently. (According to the PO, this will supply only 30% of the targeted savings and the plans will force 20% lay-offs.)

Are operators going to hit a wall?

Mobile operators like to complain to regulators over the threats posed by net neutrality and over-the-top service providers. Some even go as far as to say: if you go down this road, mobile service revenues will decline by 33% over the next five years relative to 2010.

What they are essentially saying is this: We are in a car, going really fast, but down the road is a wall and we're going to hit it.

It's easy to suggest what can save them: you have a driving wheel, you can easily drive around the wall. And what's more: walls on roads are characteristic of any market. It's part of doing business. Get used to it. Or as Bob Lefsetz puts it in his latest newsletter: Android shows Apple is vulnerable. And if it stays in place, Google search is vulnerable. You've got to reinvent yourself every day. Or get left behind.

Operator points of view on net neutrality

We have made an analysis of net neutrality here, but a closer look at the operator's point of views may add some insights. There are (at least) four arguments put forward by operators who wish to be more flexible in managing their networks, to which we respond below:

1. It's my network, I can do what I like with it.

Fundamentally a good point, but at odds with Net Neutrality. Legislation and regulation are the price of doing business in the telecoms sector. Internet access is a fundamental human right. When anyone buys internet access, he has the right to access the entire internet, not just some sort of walled garden. Access to the entire internet cannot be restricted to more expensive bundles/packages, because that would create a digital divide. It's also about innovation: not only do we want consumers to access the entire internet, we also want innovative companies to be able to access the entire internet population. Without that, they wouldn't be able to come off the ground and fly.

2. We must be protected from those disruptive OTT forces.

Not a very good point. Companies don't live forever, it's a survival of the fittest. Companies need to adapt constantly, or else they will go out of business sooner or later.

3. Our profits are not excessive and we need to invest a lot.

The first part is a good point. Even if tariffs are high, it must be kept in mind that other elements of the service are sometimes free, such as the handset and customer support. On the second part, implying that costs will rise above revenues, we believe that there is not really a problem:

• Tellabs: 'End of profit' (study, 2011), assuming that flat fees are kept in place.
• Ericsson: 'Busting the myth of the scissor effect' (Business Review #2 2010).
• NSN: '... it is possible to provide up to 5 GB of data per month for every existing voice subscriber by using HSPA and LTE radios in existing sites. (...) Monthly network capex + opex can be kept below 3 EUR per subscriber ...' (Mobile broadband with HSPA and LTE, 2010)

4. We will raise our prices.

We fail to see why this is a problem in the first place. Go right ahead - competition will hopefully limit price increases. More generally, the market seems to be moving to a pricing structure that is very much like the way we pay for fixed broadband: tiered pricing based on speed, volume (caps), QoE, VAS.

The UBB deception

Or: how the incumbents' solution is in search of a problem.

Hat-tip to Benoit.

Connected TV 2011 Conference, April 27, Utrecht

Our Connected TV 2011 conference is taking shape. Here is the latest speaker line-up, with some buzz words for what they will be speaking about:

Content, DRM, standards:

• DLA Piper: DECE/UltraViolet
• NPO: HbbTV
• Chello DMC
• Irdeto: ActiveCloak for Media
• Reggefiber

End-to-end (back-office) systems:

• Nokia Siemens Networks: Ubiquity Multiscreen TV Platform
• Alcatel-Lucent: Mediaroom
• Cisco: Videoscape

Client-side solutions:

• Amino: Freedom, tier 1 euro telco
• Technicolor: MediaEncore
• Intel: Groveland
• Aprico

Real-world cases:

• Oregan: Onyx, Telefonica
• Philips: Net TV
• Wyplay: SFR, Vodafone Spain
• Vodafone Spain

Where there's a cap, there's no competition

AT&T plans usage caps from May 2, 2011 for its DSL and U-verse subs: 150 or 250 GB/month, and an overage fee of 20c per GB. Similar policies are installed by Canadian ISPs (but with much more expensive overage fees), whereas BT is abolishing caps/FUP.

Dave Burstein was quick to point out that installing caps has little to do with cost (see previous post: The Incumbents' solution is in search of a problem). So which are the true reasons?

• Make an extra buck. There's nothing wrong with that, except that AT&T is not being fair about why they are doing this.
• Fight OTT. This write-up reveals that IPTV (U-verse) usage does not count toward the cap. By installing a cap, users may be led to think twice before using Netflix or Google TV. If you are used to leaving the TV on all day, this turns into a real problem.
• Insufficient competition. In a competitive market, there would be little room for installing caps just to make an extra buck (see above). Put bluntly: caps prove that competition is insufficient.

The Incumbents' solution is in search of a problem

Deutsche Telekom, France Télécom, Telecom Italia and Telefónica (hereafter The Incumbents) have issued a report called ‘A Viable Future Model for the Internet’. It reflects their well known stance on the “they are using my pipes for free” case, but it also offers a thorough review of options for how the Internet could be financed. O, and it was published by A.T. Kearney (which I hope earned a little bit less than 25 million Ozzie dollars for this report). While being a thorough report and an interesting read, there are some passages that we have a problem with. For inquires you can try to mail to incumbents@kearney.com.

First of all, here are the ‘structural problems’ that are perceived by The Incumbents:

• ISPs (called Retail Connectivity Providers in the report) have not been able to monetize traffic growth. They are the victims of the very popular flat rate Internet. There is a disconnect between traffic growth and revenue growth. “… for growth to continue, the next few years must see a realignment of who captures the value and who funds investment in the Internet value chain” (page 1, a nice twist to Ed Whitacre’s above quote). It is also stated that “video traffic , much of it free to the end user” (page 1), while the end user pays a lot of money to his ISP.
• OTT providers (called Online Service Providers in the report), who hardly contribute to the cost of the network, are not incentivized to use the Internet efficiently.
• Network congestion is inevitable.

Second, the four possible remedies proposed:

1. Raise retail prices.
2. Introduce a data-conveyance charge for OTT providers.
3. Enhanced quality services over the public Internet.
4. Enhanced quality services based on bilateral agreements.

It becomes immediately clear from the above how The Incumbents position themselves in this issue. Fundamentally, they look upon OTT providers as publishers who have found an extremely cheap distribution platform, while The Incumbents pay for the networks. At the same time, OTT providers earn insane margins. The report also stands up for rights owners and speaks out against piracy, implicitly linking heavy usage to illegal file-sharing.

As the report discusses option #1, it finds an important objection against usage-based tariffs: “the problem is that end users often do not have full control or awareness of the actual traffic they are downloading. Software updates tend to download in the background automatically; animated adverts are not actively requested …” (page 26). This we agree with. Also, the writers think that price increases are not achievable, due to competition, and if they were, penetration and the uptake of new services could be negatively affected. This, we do not agree with.

As to option #2, the proposed charges are EUR 0.05 per GB for fixed and EUR 3.03 per GB for mobile networks. It is suggested that OTT providers could simply “… adjust their commercial models to cover the higher costs – doing so for example, with higher advertising fees or subscriptions ” (page 30). This is of course totally unrealistic: getting rid of the flat fee issue simply by pushing it to Google, saying that they should raise their rates. Check out Benoit’s post to see how this can’t work (or would they have their charges off by mistake by a factor of 10 or 100?).

Options 3 and 4 are about creating ‘Internet fast lanes’, or a ‘two-class Internet’, which has all sorts of net neutrality implications – which we do not need to replicate here.

Here are a few problems we have with the report:

• The report is based on the assumption that congestion is inevitable. However, despite incredible growth, congestion hasn’t really been an issue yet. In other words, the solutions provided are in search of a problem. As Telegeography shows us periodically, capacity investments are ongoing and often outpace traffic growth. Also, the report appears to be sloppy in many places about which part of the Internet it focuses on: is it the long haul, the middle mile, backhaul or the access network?
• A big deal is made out of using ‘the network’ efficiently, but if we are not mistaken, it becomes clear in just one place what this actually means: “Free video sites in general may find the conveyance charges are a strong incentive to develop more efficient traffic delivery (better compression techniques)”. So, one crucial and ‘structural problem’ is just about compression? Also, it seems entirely unconvincing that OTT providers would not care about compression.
• The report fails to show that the linear value chain (figure 3) needs repair. In fact, it has served the Internet very well, with traffic flowing from left to right and money in the other direction. We also wonder why the Sony or the Philips analogy is not addressed, which so neatly nails the problem with solution #2 (above). (It must be acknowledged that the nature of OTT service provision weakens the analogy, because in the electricity world, there is no analogue to the OTT provider.) One could say that it is The Incumbents’ good right to try making OTT providers pay, but it would be at odds with how the Internet is organized today. Further, they could use their market power to bully these charges onto OTT providers, but that would appear to be sheer abuse of market power.
• OTT providers (aggregators, not producers) pay a lot to distribute the content to servers all over the world.
• OTT providers are described as the ones generating traffic ('traffic senders'), completely ignoring the fact that it is the end user who is in fact requesting the traffic. Put differently, without OTT providers, nobody would need a broadband connection in the first place. The Incumbents owe their entire (very lucrative) broadband income stream to the OTT providers.
• Investors know that looking at margins alone doesn’t provide the whole picture. Some sectors are characterized by high margins, others by low margins. It depends on the nature of the business, which involves volumes as well.
• The Incumbents are ignoring a minor detail: risk. For the non-investors: risk has nothing to do with our everyday-life use of the word; in investment theory, risk is about the standard deviation of returns. Just that, nothing more. Now take a look at Apple’s revenue growth and compare that to the extremely stable revenue profile of network operators. Remember further that The Incumbents are vertically integrated, with completely different risk/return profiles for the different layers (passive, active, services). Which is why there is increasing focus among newcomers on just one of the layers. OTT providers are no exception, even though they (Google in particular) do have extensive network assets.
• If ISPs lack pricing power, sooner or later the market will sort this out. Many ISPs would be bound to go out of business. The fact that they don’t proves that broadband is still a high-margin (!) business. If ISPs complain about a disconnect between traffic growth and revenue growth, their natural response should be to raise prices, not turn around and look to the other end of the vale chain to extract money from.

Intel's hybrid STB customers racing for a pre-Holiday launch

Google TV is out on a Logitech box and a Sony TV and Blu-ray player. In an information alert, In-Stat's Gerry Kaufhold mentions video quality issues (frame rate, no support for WMV or DTS, limited storage) and content blocking (ABC, NBC, CBS, others).

Content seems to be the least of their problems. The other issues are much deeper, could involve memory leaks, and are probably behind the ongoing delays that have plagued both Boxee (slated for November 10) and Yuixx (which is aiming for a pre-Holiday launch as well) - and most other Intel customers.

The race is still on, especially among the dozen (?) or so Intel customers, to get a hybrid STB out onto the market beyond a prototype or demonstration. And it's not just the software, it's DRM, content, distribution and a bunch of licenses (Dolby, DTS, etc.) as well that need to be taken care of.

Check out our coverage of OTT. Free commentaries (updated April 20, 2011):

Connected TV brings new competitor for operators: CE manufacturers (April 20, 2011)

Hollywood struggles with broadcast rights and the iPad (April 4, 2011)

Amazon takes Lovefilm out of DECE, launches own cloud service (March 29, 2011)

Entertain Sat: Deutsche Telekom and SES Astra's clever cooperation (March 1, 2011)

Broadcast TV resurgent, but OTT players add a little extra (February 25, 2011)

Vodafone Germany's hybrid STB offers little to distinguish it (February 17, 2011)

Ziggo feels the heat and looks to spark up connected TV (February 3, 2011)

Connected TV puts network operators to work (January 21, 2011)

Microsoft, Google, Nokia Siemens trail the Connected TV market at CES

French govt should ask why Sony hasn't contributed to the cost of the electricity network

Google TV frustrated by Hollywood

TiVo transforms iPad into 2nd screen with a remote control

Google TV takes on the couch potato

BBC can enforce Net Neutrality through sheer market power

Belgacom takes new steps in expanding IPTV services

Is KPN planning its own version of UPC's Horizon box?

Nimbuzz versus Skype, Google versus ABC

Network pressure from Netflix shows success of OTT video

YTL, Sezmi bring quad-play with OTT over Wimax in Malaysia

Cisco's umi and Logitech's Revue: two new connected devices

Google TV marks important step with content deals

Battle starts for OTT market

Apple's iTV heats up competition on OTT market

Your.TV: waiting for DRM, content and distribution deals

Intel looks to break open connected TV market

ltra-Violet: the virtual successor to Blu-ray

Google optimises YouTube for mobile and TV

Can Google, Apple and Philips beat UPC and Telstra?

Google, Sony and Intel enter the living room

Time's running out for operators that want to profit from OTT

Metrological develops strong position on OTT market

Google targets operator market again with TV plans

Qualcomm hints at multi-function media gateway

Convergence expands to the TV

Liberty Global hints at consolidation, OTT box

Who's going to bring OTT content to the TV?

Apple poses threat to cable sector

And a series of Research Briefs:

Defining Connected TV

Three reasons for operators to launch OTT services

Google TV: lots to offer

OTT: distribution as a scenario for operators

Connected TV allows operators to benefit from OTT content

And the Global Connected TV 2011 report:

Global Connected TV 2011

FTTH and LTE help increase focus on wholesale

Three weeks of holidays create a truck load of catching up to do. Results, LTE, MVNO, FTTH, VoIP, WiMAX - every possible new item crossed our mail boxes. They can best be categorised at the next higher level: Corporate, NGN, Wholesale and OTT.

Corporate:

• Results: incumbents (KPN, DT, BT, Telefonica, Belgacom, FT, Bell Aliant), mobile (Sprint), cablecos (Liberty Global, Telenet, Ziggo, Virgin Media, ONO, Comcast).
• Financing: Reggefiber got its desired EUR 130m loan from the EIB.
• IPO: Skype's $100m plan.
• M&A: possible buyers (Telefonica, PT, Vodafone, FT, TI) and sellers (PT, TI, Vodafone).

NGN:

• FTTH: lots of deployments announced (inclusing China and India).
• NBNs and NBPs: Australia expands coverage plans to 93%, New Zealand receives 15 bids, the US awards another round of funds.
• LTE: several deployments announced.
• 4G: Clearwire moving closer to switching from WiMAX to LTE and the WiMAX2 standard gets ready for a 2012 launch.
• 1 Gbps: several MSO and telcos are now going beyond 100 Mbps, while ever more are eying 1 Gbps as the new frontier for bandwidth.

Wholesale:

• Structural separation: proposal from Telecom NZ in order to be able to bid for the Crown Fibre plan.
• MVNO: KPN reports success with foreign MVNO operations (2G, 3G); Econet plans launch on the Everything Everywhere network (3G); Best Buy will do the same on the Clearwire network (WiMAX); Airspan is LightSquared's first wholesale customer (LTE); Tele2 NL started offering CATV on the networks of Ziggo and UPC (analogue TV); Chile considers a wholesale-only network (mobile and digital TV).
• BT was not allowed to raise wholesale prices to help stem the pension fund deficit.

OTT:

• Apps: Google ended the development of Google Wave and acquired Slide; Samsung announced a developer contest.
• Net neutrality: Google and Verizon struck an agreement.
• Hybrid TV: Apple was rumoured to rework Apple TV into iTV, Cox partnered with TiVo and the Virgin UK/TiVo partnership added Cisco.

Conclusions:

• The focus in the sector is shifting to Wholesale and OTT; FTTH and LTE are ongoing; wholesale is established as an important new business.
• M&A is focused on emerging markets, esp. Latam.
• Many incumbent telcos are still assembling global empires in order to be able to show growth. KPN is continuing on the wholesale path for growth.
• A telecoms network can be looked at as a vital piece of national infrastructure. If structurally separated, its cash flows can be seen as a vital element of the governments budget (incl. retirement funding).
• Cablecos are outperforming telcos. If you split the business three ways, it becomes clear why. 1. Connectivity (access): Docsis 3 outperforms xDSL and provides cable with a growth engine. Utility rates are close to 80% in the Netherlands, still much higher than FTTH's. 2. Communication: a nice add-on for growth and loyalty, hitting incumbent telcos in their hearts. 3. VAS (incl. content): here cable is the incumbent and benefits from a considerable head-start on multiple fronts (network, digital services, content deals). The foremost risks include FTTH and non-linear TV/hybrid TV/OTT.
• NGNs (FTTH, LTE) are exploring their advantages: 1. Maximum symmetrical bandwidth. 2. Lowest opex, highest score on the green scale. 3. Options for open access and wholesale.
• OTT is a complex and uncertain field, but hybrid TV seems to be a promising direction.

Final conclusion: while areas such as Latam may provide telcos with some more growth, wholesaling (open access) appears to be the way to maximise the value of a network. FTTH and LTE carry the lowest possible technology risk. OTT is a promising but complex development.

Australian NBN trials apps for FTTH

The Australian NBN is trialing applications to run over the new network in NSW. Finally stuff other than Internet access requiring OA FTTH! Here's what they will ofer 40 trial homes in the Parkbruidge Estate. Teleworking seems to be missing; the services being trialed can definitely be expanded; but smart metering - who buys that?

• Smart metering (with Integral Energy). "Allow families and business to track their energy consumption in real time and adjust energy use accordingly". This is the one application that nobody has been able to convince me about (see next post).
• Touch screen communication (by Smart Services Cooperative Research Centre and Consult Point). Basically e-health/e-care. For elderly and young children.
• Virtual world learning environment (by Smart Services CRC and NSW Department of Education and Training): An e-learning app.
• HD Internet TV (by NICTA and Opticomm). Basically a hybrid STB. You can wonder why they do not partner with Google TV or another existing player in the connected TV/hybrid TV/OTT market.

Google TV: what will the UI look like?

Connected TV, OTT content, hybrid STBs: success is largely dependent on the UI. According to this article, the Xbox is going 'Minority Report'. And in this article, Yahoo! talks about the UI for Yahoo! TV.

In theory, it's a mixture of a lare range of building blocks:

• Remote control, keyboard, mouse
• (Multi-)touch screen
• Camera, gesture-based control
• Menus, search
• Recommendation engines, social media
• Personalisation
• Widgets, widget channels, app stores
• Accelerometer, gyroscope, GPS
• Voice control
• ??

Google TV is keeping all its options open, for the moment. Read more about is over here.

Intel's new CE4100: re-invent the TV

Intel demonstrated a new media box integrating broadcast and broadband at the Intel Developer Forum in Beijing. It was developed by Intel's CE group. The user interface looks great: a remote control plus on-screen widgets in a Media Wheel (DVR access), a Media Wall (recorded and personal content) and a Channel Wheel (linear broadcast content via broadcast and broadband). The CE4100 is more powerful than the CE3100, allowing you to see so many thumbnails plus great response times.

Integrated operators should be prohibited to provide VAS

Some traditional network operators claim that open access (unbundling or WBA) is not necessary to establish competition, since subscribers are free to choose any over-the-top service they like. Sounds crazy, buy maybe it can be made to work.

The familiar 3 layer model (passive, active, services) can be extended by splitting the lowest and the highest levels:

• Layer 0: trenches, ducts, PoPs
• Layer 1: fiber
• Layer 2: equipment
• Layer 3: access services
• Layer 4: value-added over-the-top (OTT) services

Both at the lower end and at the higher end, this raises problems: natural monopoly and net neutrality, respectively.

Few people will maintain that multiple fiber networks can be laid in a financially viable way. You don't want to build a complete network for a 50% (or even 33%) maximum penetration. Hence, the natural monopoly.

Also, few people see OTT as a viable model for competition. They want open access at layer 1, 2 or 3. The trouble is: the network owner competes with the OTT players, but has all the goodies (billing relation, presence and location information). OTT players have one big asset only: brand name. Hence the net neutrality issue.

Suppose the natural monopoly would lead to a single vertically integrated network, with competition played out only at the OTT layer, then net neutrality issues can be resolved by prohibiting the network operator of providing any value-added services (VAS) - just basic Internet access, which is not a VAS but a basic access service (although business providers usually describe it as a VAS). In other words, a monopoly operator should be prohibited to provide any broadcast, video or voice services. Or spin-off the services devision; not Internet access, but just the VAS and content services.

Google's three-screen strategy coming together

In January, I wrote about Google's inevitable TV strategy here and here. Today the New York Times reports on plans involving Intel (SoC), Sony (TV, STB), Logitech (remote control) and Dish (test).

For widgets, either Yahoo! or Metrological could be contracted. Yahoo! seems an unlikely Google partner, after the Microsoft search deal.

OTT: Cable (broadband) friend or foe

Great line-up: Intel and Yahoo!, plus a number of box makers: TiVo, Roku ('several hundred thousand'), Boxee ('330,000 users'), Sezmi and others.

TVOT09: Over The Top to the Living Room: With or Without Cable? - Large Panel Discusses from Tracy Swedlow on Vimeo.