TDG Research

YouTube's "100 New Channels" Will Not Be a Top-Shelf Programming Game Changer

The Diffusion Group — Fri, 03 Feb 2012 16:21:00 GMT

YouTube's "100 New Channels" Will Not Be a Top-Shelf Programming Game Changer
Bill Niemeyer, Senior Analyst

There has been a recent wave of buzz about YouTube's "channelizing," a word used in comments last Tuesday by Google SVP Salar Kamangar at the AllThingsD Dive Into Media conference. Last October, there was a similar buzz wave regarding YouTube's light-on-details blog post about plans to expand its Channels offering over the next year. The press filled in a lot of the details, including an overall budget of $150 million and a target of 100 new channels from celebrities and TV production companies.

YouTube characterized the channels expansion as widening the range of choice for consumers and advertisers. My takeaway: it's a $150 million marketing and "convey to stock analysts YouTube is serious about moving upmarket" initiative; something that can be done by a company with a $190 billion market cap and $45 billion in cash and short term investments.

Industry insiders tell me YouTube is offering up to seven figures to celebrities and production companies to "go make some cool stuff." True, a few standout critical and financial successes will be created because of this. Some quality producers will get YouTube to pay for programming they would have done anyway, but the bulk of it will be neither watchable nor monetizeable. Such is the lesson the 12-year history of online video teaches us.

Of late, a new generation of online video production companies are getting funding, some helmed by TV-experienced execs. But this is not something new. There have been startups and shut downs of such companies since the boom/bust of the early 2000s. The best monetization strategy for online video production companies remains selling the company (e.g., Next New Networks being bought by YouTube last year).

The creation of these startups will happen whether YouTube drops $150 million into the production pool or not. While YouTube can be a big traffic generator, if I'm a "need an exit to satisfy my investors" online video company, I want to monetize traffic on my own URL. Only then can I avoid being buried in the still discovery-challenged "new" YouTube UI and I can keep viewers engaged with my programming and advertising.

Some people compare the current state of online video to 1980s cable (including me). While the analogy holds true on some level, it fails on others. For example, during the early days of cable networks, the TV competition consisted of three broadcast networks and some local independent stations. The competition for today's online video new entrants is 150 advertising-supported TV channels, plus premium channels, Netflix, Hulu, and eventually TV Everywhere. Online video is also challenged because PayTV operators have a $20 billion plus lockdown on the most-watched programming in the form of long-term cable network carriage contracts and, increasingly, broadcast TV retransmission deals.

More good news for online video execs: more and more incumbent cable networks are trending toward original content. Five years ago, AMC launched its first original series of substance, Mad Men. Even TV Land, which used to be "Old Rerun Land," has started to do original programming, as in the hit sitcom Hot In Cleveland.

I'm not saying the friction level makes it impossible to launch a new online/OTT video entrant. Quite the opposite: legitimate opportunities exist, but one must nail the business model and execute correctly (and that's never as easy as it sounds in business school). There's a lot more competition than there was for 1979's ESPN. And one more thing, quality of programming still matters...and thank goodness for that.

Hulu Plus Helps Prove TV Everywhere Value

The Diffusion Group — Fri, 03 Feb 2012 16:21:00 GMT

Hulu Plus Helps Prove TV Everywhere Value
Colin Dixon, Senior Partner, Advisory

This week Jason Kilar, Hulu's CEO, announced 2011 results on the company's blog. Although disappointed that revenue fell 16% short of the $500 million target, Kilar was upbeat about the company's financial performance, specifically the impressive revenue growth of 60% over 2010 results.

As well, Kilar announced the company now has 1.5 million subscribers to its Hulu Plus service. He also said that, by later this year, Hulu Plus subscriptions will account for more than half of Hulu's "overall business." Assuming the company achieves annual revenue of $500 million during that period, subscriptions would top 2.5 million.

In comparison with behemoths like Netflix and Comcast, of course, this may not sound like much. Yet it is a remarkable testament to the value of anytime, anywhere access to video content. And, yes, you can put a dollar amount on this value. For example, TDG's research from December 2011 found that 36% of broadband users would be willing to pay $5 or more extra each month for on-demand access to their PayTV subscription content on their net-connected devices. In other words, they would be willing to pay extra for a 'TV Everywhere' service much like the services today offered for free by PayTV operators. With content providers increasing operator retrans fees to cover 'TV Everywhere' distribution, you would think the operators would have no problem asking their subscribers for a few extra bucks each month to pay for anytime, anywhere service. But that has not happened, meaning the validity of this strategy has yet to be tested. Or has it?

Hulu Plus may indirectly provide the best test yet of the 'TV Everywhere' proposition. In essence, its 1.5 million subscribers are paying $8 a month for on-demand access to content that they have already paid for through their PayTV subscriptions (and, yes, the majority of them do have PayTV subscriptions.) In effect, they are paying an extra fee for convenience. These subscribers could have set their DVRs to record the shows and even skipped the ads while watching. Instead, they are choosing to watch through Hulu Plus and being forced to watch ads while so doing! A remarkable achievement indeed.

Watch Colin in this week's edition of The Kitchen Sync that focuses on the announcement from The Huffington Post and the presence of Bluray players in homes.

Also, listen to Will Richmond and Colin Dixon's audio podcast discussing YouTube and Hulu Plus.

Deconstructing Companion App Confusion

The Diffusion Group — Fri, 03 Feb 2012 16:20:00 GMT

Deconstructing Companion App Confusion
Andy Tarczon, Founding Partner

We've been doing a lot of examination of so-called "TV companion apps" for our new App-titudes research project. Given the rapid proliferation of such TV-related apps, it is a good time to step back, take a breath, and think about how best to organize and label different kinds of TV companion apps; all in the hope of creating a classification system that best suits the industry.

There are some important distinctions to be made when it comes to having a tablet, mobile device, or even a laptop involved in the TV viewing process; distinctions that revolve around how you interact with that device and the consequent TV behavior associated with that interaction. Let's think about three specific behaviors and use cases:

First off, there is good old-fashioned multitasking. Here, the viewer is simply using a second video-enabled device while the TV is on - for example, checking the local weather via The Weather Channel app on your iPad while watching a program on TV. The video function on the iPad may or may not be engaged during this activity, but that ends up being irrelevant as the two activities have no necessary relationship with one another. Such TV/second screen multitasking is quite common in today's household, which is not at all surprising given how good we've become at doing other things while watching TV (e.g., reading a newspaper or magazine while the TV is on).

Next, there is what we call true second screening, cases in which second-device apps are used to access content relevant to what you are viewing on TV; discuss that content with friends; and perhaps seek out more information about the actors or the show. In this case, the activities undertaken on the companion device are related to what you're watching on TV (e.g., apps like imdb and those "social TV" apps that seem to be reproducing like rabbits). Despite the fact that these types of TV companion apps use a second screen to enhance or augment the TV viewing experience, they are not integrated - at least not beyond the user's intention and ability to process the related information. These second-screen apps must then be distinguished from the third and more advanced category of companion apps: what TDG refers to as "simulscreening."

Simulscreening is the pinnacle of companion apps, where the app residing on the companion device is actually in sync with the content on the TV screen by virtue of not only the user's imagination but also due to a technological "connection" between the app and TV show. When many pundits refer to "second-screen apps," most are speaking of these simulscreening apps, which can range from the relatively simple to (soon-enough) the mind-bogglingly complex.

In terms of the simplest of simulscreening apps, think of time-synced apps like Fox's Bones Show Companion or Disney Second Screen; apps that provide specific show-related content that "unfolds" on the companion device while you are watching the TV program in real time). The companion device does not know you are actually watching, say, Bones, but the Bones app you opened is running in real time as if you are indeed watching the show.

When it comes to more sophisticated simulscreening apps, think of those that use automatic content recognition (ACR) technology to identify the TV program you are watching and "pull" specific content to the companion device. In this case, the companion device does "recognize" the show being watched (much like Shazam identifies the music you're listening to), thus opening the door for truly integrated, interactive and automated companion TV viewing experiences.

In the future, when thinking about TV companion apps, note that simple multitasking is not second screening; and that second screening is not simulscreening. The distinctions are important, especially given the pace at which new TV companion apps are appearing.

We said long ago that once the Internet made it to the TV, how we conceive of and experience TV viewing would change forever. This is indeed happening, which makes it even more important that, as these changes pour over us, we keep our terminology straight.

Thus ends today's grammar lesson. :)

SeaWell Networks Secures $5 Million in Series B Funding

The Diffusion Group — Tue, 31 Jan 2012 17:47:00 GMT

SeaWell Networks Secures $5 Million in Series B Funding
Business Wire | January 31, 2012

A Lost Word...

The Diffusion Group — Fri, 27 Jan 2012 18:57:00 GMT

A Lost Word...
Michael Greeson, Founding Partner, Research

I'm tasked with plucking the week's most interesting OTT-related stories for the "Recommended Reading" listing, as well as editing this rag. Such is my burden, one I enjoy and will on occasion use as a platform. Don't think of this as a "last word" column as much as a lost word or two that I'll tile up when the mood suits.

For this week, I nibbled on a couple themes.

Between October and December 2011, Apple sold 15.4 million iPads, more than total desktop PC sales during the same period. Pads now account for more than 17% of PC sales, so says IDC. New ultra-books are likely to cannibalize notebook and laptop sales, but pad sales are unlikely to soften. The platform speaks to a different set of needs, and in some cases to a very different user.

You likely recall the concept of "serial monogamy," and its recently introduced step-brother, "episodic infidelity." Those are on-demand behaviors as described by our resident on-demand addict, Andy Tarczon. Funny thing, these concepts are frequently employed by the wider press, which is all cool, of course, but just so you know....

We've long talked about "what if" Amazon wanted to play hardball in the OTT VoD space. Well, looks as if that hypothetical is about to wax real. The Prime-based VoD is woefully inadequate and Amazon knows it. Within short order, it will release a service that looks and smells much more like Netflix.

Apple TV is slowly evolving from a "hobby" to a modest success. In its fiscal 2011 that ended in September, the company sold close to three million Apple TV units. In the last three months of 2011, it sold 1.4 million units, 50% of its total fiscal 2011 sales. In other words, the sales curve is ramping up. No, we're not talking about iPhone-like sales, but Apple TV sales reflect on larger demand for other OTT solutions such as Roku and Boxee. That being said, any discussion about OTT as a full-fledge replacement for cable TV remains premature. As it stands today, no single OTT provider offers a service most consumers would consider a legitimate substitute for cable TV. This is not for a lack of trying; it's just that more often than not, the would-be TV operators are unwilling to pay the high costs to secure prime-time content. Absent that willingness, OTT will remain limited to catalogue or library content. Nothing wrong with that, but it's not replacement quality, is it?

As noted in "Recommended Reading" these are just a few of the headlines that caught my attention this week. Good reading to you and feel free to drop me a note.

Netflix's Q4 Results "Surprise" Wall Street. Surprise? Really?

The Diffusion Group — Fri, 27 Jan 2012 18:23:00 GMT

Netflix's Q4 Results "Surprise" Wall Street. Surprise? Really?
Bill Niemeyer, Senior Analyst

Netflix announced Q4 earnings results on Wednesday, reporting an increase in net unique U.S. subscribers of 610,000 (vs. Q3's loss of 810,000) and a quarter-over-quarter increase in both domestic revenue and profit. In response, the stock rose 22% on Thursday. Whether that is speculators' covering shorts (Netflix short interest was a whopping 21% of available shares) or just confidence in Netflix's future, a 22% single-day jump means a lot of investors were surprised.

I am surprised at the surprise. Certainly Netflix did its best to shoot itself in the foot multiple times last fall with the 60% price increase followed by Qwikster followed by "never mind on that Qwikster." But it was not a fatal or even crippling wound for this otherwise well-run company with a strong brand.

Netflix still offers consumers excellent value, even at the increased price. It certainly helps that Netflix has no serious competition in the OTT landscape. Even cable/telco IPTV VoD ranks a distant second to Netflix in usage. As I wrote in the OTT Monitor three weeks ago, Netflix streams generated 80% more hours of viewing in Q4 than did incumbent VoD.

Nonetheless, Netflix faces multiple challenges. Looming large is the widely noted increase in the costs of content licensing. Netflix faces ever-rising prices for its current class of content and it is trying to move upmarket by offering more recent hit movies and TV shows. And as Reed Hastings and his CFO wrote in the investor letter, TV Everywhere is the "biggest long term threat." Fortunately for Netflix, TV Everywhere is rolling out at a snail's pace, with the one notable exception being HBO GO (which TDG and Netflix consider the prime mover).

So towards calling the Netflix forecast, I would call it blue skies with a chance of storms. And remember, keep your firearms and feet very well separated.

Prices Up, Subscribers Down: Can Value Packages Save Cable?

The Diffusion Group — Fri, 27 Jan 2012 18:20:00 GMT

Prices Up, Subscribers Down: Can Value Packages Save Cable?
Colin Dixon, Senior Partner, Advisory

The PayTV industry in the U.S. continues to wrestle with the thorny issue of cost. Time Warner and Comcast were joined this week by Cox, which introduced a "value" tier of programming for its subscribers. The package includes local channels as well as some popular cable channels such as TNT and USA and costs $35 a month. Missing from all the value packages are sports channels such as ESPN and Fox Sports, identified by the operators as among the biggest drivers of price increases.

Cable operators are introducing these stripped-down packages in an effort to stem the tide of people leaving the service. To illustrate how dire the situation has become for operators, Time Warner Cable announced the loss of another 190,000 TV subscribers in the fourth quarter of 2011. That brings total losses for the year to 453,000 subscribers, or nearly 4%.

Remarkably, TWC's residential video revenue remained flat despite a substantial decrease in subscribers. How did the company manage this trick? By raising prices, of course. It was not the only PayTV operator to do this. Variety reported this week that cable rates increased between 3-4% last year; this at a time when consumers have seen little or no increase in their salaries for two years or more. According to TDG's research, PayTV operators have been raising rates well ahead of salary increases and 1-2% a year above the inflation rate for nearly 10 years.

Will the industry's move to introduce low cost packages slow subscriber losses? Perhaps. But if customers are seeking better value, DISH Network's America package costs $35 a month and includes ESPN. However, despite having a great value based package DISH has also been struggling with subscriber losses.

Will the industry be able to continue to raise rates at the pace seen in previous years without losing many more subscribers? This seems unlikely given the continuing pressure on middle- and working-class consumers in the U.S. today.

Finally, with every day that passes it grows easier to gain access to an ever-expanding array of quality OTT content at the television. Just this week, Boxee announced the addition of an over-the-air tuner to its Internet STB. This single $180 box blends local channels with a host of OTT services such as Netflix and Vudu. One thing is certain: as cable continues to raise rates, OTT solutions become an increasingly viable option for the harried PayTV subscriber.

Watch more of Colin's thoughts on cable and OTT services in this week's edition of The Kitchen Sync.

Also, listen to Will Richmond and Colin Dixon's audio podcast discussing Netflix.

Lessons for OTT From Super Bowl TV Advertising

The Diffusion Group — Fri, 20 Jan 2012 20:34:00 GMT

Bill Niemeyer, Senior Analyst

January 20, 2012

It's only two weeks or so away from the Super Bowl (XLVIXXVXLXV I believe) and only two weeks or so until the San Francisco 49ers are crowned Champions of the National Football League. Yes, New York/Baltimore/New England fans, I did say that.

On this portentous occasion, I have chosen to speak to the lessons OTT players should take away from the upcoming blitz of Super Bowl ads.

Advertisers are willing to spend $3.5 million for a 30-second spot (as reported by NBC) in part because reach and scale still matters to big brand advertisers. The Super Bowl delivers that in truckloads. The multiple players in the OTT landscape must defragment the creative development, buying, and trafficking of advertising to present such scale to advertisers. Consumer electronics makers should especially take note of this.
Super Bowl ad campaigns now include social media components as a matter of course. Social media should be a big advantage for OTT platforms because they can do a much better job integrating it than legacy multichannel TV operator platforms.
TV promos are considered vital in how networks market their shows to viewers. That's why networks always run a lot of promos in the Super Bowl even though they could be selling those spots at $3 million plus. OTT solutions should recognize the special requirements of networks for running promos. Specifically, targeting could have tremendous value for network promos.
Great creative does matter. While they all can't be home runs like the humor and brand recall success of last year's VW "Darth Vader" Super Bowl ad, producing engaging ads will help drive advertiser objectives. OTT offers creative agency staff a much more powerful toolbox than TV - make it easy for them to access the capabilities and the payoff will likely be some amazing work.
Remember most of all that the Super Bowl is an outlier event. Kantar Media released a report this week on Super Bowl TV spend over the last 10 years. It estimates the total national ad spend in the game in 2011 was $228 million; not bad money for one football game but I estimate it's only about 0.5% of total national network TV ad spend in 2011. It's the day in/day out run of all network TV advertising that generates the $40 billion plus from national broadcast/cable network ad spend. OTT advertising platforms need to make it easy for media buying agencies to do high volume ad buying, trafficking, and reporting day in/day out.

While OTT platforms offer many unique advantages to video advertising, it is critical that they recognize and emulate those things that TV advertising does best.

And one final note.... Go Niners!

Does YouTube Really Dominate Online Video?

The Diffusion Group — Fri, 20 Jan 2012 20:08:00 GMT

Colin Dixon, Senior Partner, Advisory

January 20, 2012

This week comScore released its U.S. online video rankings for December 2011. Based on this data, several news outlets reported that Google/YouTube maintained dominance in online video. Indeed, as measured by comScore, Google sites dominate in all three categories listed: total unique viewers, videos streamed, and minutes per viewer. For example, the second ranked site, VEVO, had one third the viewers and videos streamed as Google and only 14% of the minutes viewed.

But is this the whole story?

Netflix is notably absent from the top ten U.S. online video sites. As luck would have it, Netflix released some viewing figures recently (as reported in OTT Monitor two weeks ago.) How does the company stack up in comScore rankings? Netflix reported streaming two billion hours of video in Q4 of last year. Assuming the company has around 20 million streaming customers, each customer streamed about an hour a day of video. That's equivalent to around 1,900 minutes in December. Google sites delivered only 472 minutes per viewer in that period. So in terms of engagement, Netflix should be at the top of the list.

Second, assuming the average video length delivered by Netflix was 30 minutes (which is conservative) then the company delivered around 1.3 billion streams in December compared to Google's 21 billion. However, VEVO, the second ranked site, streamed only 0.8B videos. Therefore, in terms of videos streamed Netflix should rank number two.

On the face of it, Netflix lags the other top ten video sites in terms of number of unique viewers: 20 million versus tenth ranked Turner's 27 million. However, several members of a subscribing household likely use Netflix, thus the number of unique viewers is significantly greater. Assuming the number of people per home in the U.S. is 2.6, that would put Netflix at well over 50 million viewers and in a virtual tie with the second place site, VEVO.

So why isn't Netflix in the comScore rankings? Netflix self-reported numbers are not independently verified. Should you believe the Netflix numbers? Our survey data correlates pretty closely with the numbers given by Netflix. For example, we found early in 2011 that the average streamer was watching 5.5 hours a week. It is not inconceivable that usage has grown to seven hours a week since then.

As you read comScore's online video rankings in the coming months, keep in mind the list is not definitive. In fact, it likely will omit some of the most important players in online video today.

HDTV buyers 50 percent more likely to buy net-capable set compared to 3-D set, says TDG

The Diffusion Group — Tue, 17 Jan 2012 16:23:00 GMT

HDTV buyers 50 percent more likely to buy net-capable set compared to 3-D set, says TDG
Broadcast Engineering | January 17, 2012

Ultraviolet Makes Incremental Progress

The Diffusion Group — Fri, 13 Jan 2012 19:35:00 GMT

Colin Dixon, Senior Partner, Advisory

January 13, 2012

For the UltraViolet standard to really take off with consumers, every device they might want to watch movies and shows on needs to support the format. Unfortunately, there was a distinct lack of devices at CES 2012 sporting an UltraViolet logo. Disappointing though this may be, two announcements do indicate the standard is making progress.

Technicolor announced a new media application for connected devices called M-GO. The thrust of the announcement is focused around helping consumers organize their increasingly complex media lives. But buried in the demonstration at CES was good news for UltraViolet.

First, the M-GO client supports playback of UltraViolet content. As well, there is cloud component to M-GO that allows consumers to store their UV movies in a so-called "digital locker." This means that when M-GO comes to market in spring 2012, consumers will be able to access their UV movies from any device supporting the M-GO client. Versions of the client will be available on Intel Ultrabook PCs and both Samsung and Vizio TVs.

Neustar Media*, one of the original partners providing digital locker and play-out support for UltraViolet, announced it is now providing a turn-key digital movie store solution. Using the Neustar product, any company wishing to sell UV titles can quickly launch their own branded movie market. This means any content provider, not just the big Hollywood studios, can deliver their content leveraging the UV cloud digital lockers and have their content available through UV compatible device.

Neustar also announced that consumers will be able to take their existing DVD collections and store them in the cloud-based UltraViolet digital locker. To do this, all the consumer will need is a DVD-equipped PC. The company will make available PC software that will convert any DVD placed into the drive into UltraViolet format and transfer it to the consumer's personal digital locker in the cloud. Pretty cool. It might also help jump start the standard as every consumer now has a reason to use it; to get portability for all their movies.

The two announcements are good news for UltraViolet, which suffered a number of black eyes upon release in 2011. Coupled with Amazon's announcement this week that the company will sell UV movies, the standard has had a much brighter start in 2012. However, we are still a long way away from the standard being universally embraced, thus further stalling consumer uptake of digital movies.

[*The author has a family member who works for Neustar.]

CES from a Safe Distance: Automated Content Recognition Rises Above the Noise

The Diffusion Group — Fri, 13 Jan 2012 19:28:00 GMT

Bill Niemeyer, Senior Analyst

January 13, 2012

I've been monitoring CES this week from the safety of my bunker some 500 miles away. While the event always creates lots of noise, I haven't noticed much in the way of real 'news' this year. This is not to say that the advancement of OTT has slowed. Quite the contrary. If anything, CES has reinforced that fact that OTT is continuing to accelerate, as increasingly robust connected television capabilities are becoming standard fare (and not just in TVs). Again this shouldn't be 'news' to anyone; it's but the evolution of a landscape shift that is already well underway.

One key takeaway from CES that has floated above the noise pertains to Automated Content Recognition (ACR) for TV and video platforms. CES saw announcements from a number of ACR vendors including Audible Magic, Civolution, Gracenote, and Zeitera.

What is ACR? It's a variety of technologies that allow a device or service to recognize automatically a specific piece of content and synchronize to it within seconds. ACR can be based on audio/video watermarking or fingerprinting (i.e., cloud-based pattern matching used by mobile music app services like Shazam). Let your cell phone hear a brief bit of a song and Shazam will tell you what it is and even provide synchronized lyrics.

How can ACR be used in OTT? It can synchronize interactive experiences for programs - whether viewed live or time-shifted - as well as advertising or e-commerce apps. Distinct from watermarking, which requires insertion in the content, fingerprinting can be done completely outside the realm of content providers, networks, and PayTV operators. That said, developing third-party synced apps without infringing on copyrights could be tricky.

With ACR, literally "the possibilities are endless" (to use a trite phrase). It's a powerful tool that needs to be put in the hands of creatives to realize fully its artistic potential, as well as clever business-side types to see how much "extended revenue" it can create.

Smart TVs Move to the Fore

The Diffusion Group — Fri, 13 Jan 2012 19:26:00 GMT

Colin Dixon, Senior Partner, Advisory

January 13, 2012

During 2011, TV manufacturers invested a fortune in time and money to improve their smart TVs; developing new software and hardware features to improve both functionality and usability. CES 2012 provided convincing evidence that these efforts are beginning to pay off.

Unified search was a theme picked up by LG and Panasonic, with both companies introducing features that allow viewers to search for content across the various OTT video services supported by the platform. In particular, this feature allows users to more easily compare prices for a movie or show across multiple services. LG went one step better by allowing the consumer to use voice to execute this search. I tested the functionality and it was quite accurate even on the noisy show floor (though I did have to be trained how to say "The Wire" correctly for it to be recognized - I have an English accent, if you didn't know).

TV OEMs were also sporting new advertising features in their "Smart Hub" portals. Most vocal amongst the manufacturers was Samsung, the world's top TV manufacturer. Samsung announced its AdHub, a platform for delivering ads across all of the company's Smart TVs. The system supports 3D, video, and interactive advertising. Panasonic and LG also exhibited the ability to advertise in the Smart Hub portals.

As well, manufacturers have been polishing the Smart TV interfaces. LG, in particular, has made significant changes to its Smart Hub portal. The interface is reminiscent of the 'window pane' approach recently introduced on Xbox 360 and Windows Mobile phones. I found the interface much easier to use than the previous version. As well, Panasonic made some incremental improvements to its portal, allowing customers to switch from the current 'stacked tier' view to a flatter pane view, which allows multiple panes to be viewed at the same time. Samsung, however, appeared to have made no changes to its Smart TV interface. It remains somewhat cluttered and slow in comparison to the competition.

Google TV was on display at two manufacturer booths: Sony and LG. Sony was the original partner with Google for the ill-fated 1.0 version of the TV operating system. The company decided to stay with Google for the 2.0 release and several sets were shown on the Sony booth. LG also had two Google TV models on display. However, with the LG TVs, viewers can choose between a Google or LG interface. Although both are based on Google TV 2.0, the LG interface looks very much like other LG Smart TVs and will run apps from the LG app store. The Google interface looks like any other Google TV device and includes access to Android apps.

It has been widely reported that Samsung has joined the Google TV alliance and would be releasing a TV sometime this year. I questioned Samsung staff about this and they strongly denied that Samsung has agreed to any such deal. What is clear from these conversations is that the companies have been talking but that no agreement has been finalized.

All of this activity could pay dividends for the manufacturers. According to our latest research, 78% of new TV buyers are to varying degrees likely to buy a smart TV. In other words, just as consumers are warming to the idea of net-connected TVs, it seems manufacturers are warming up their smart TV offerings.

3D losing out to connected TV

The Diffusion Group — Fri, 13 Jan 2012 16:31:00 GMT

3D losing out to connected TV
Rapid TV News | Joseph O'Halloran | January 13, 2012

TDG: New HDTV Buyers 50% More Likely to Buy Net-Capable Sets Over 3D

The Diffusion Group — Wed, 11 Jan 2012 18:05:00 GMT

January 11, 2012 (FRISCO, TX) - According to new research from TDG, 56% of broadband households are to varying degrees likely to purchase a new TV in the next six months. TDG expects that close to 25% of broadband households will indeed buy a new HDTV in the next six months, which equates to at least 20 million new purchases during this time period—and that’s just among broadband households. This is good news for TV OEMs, no doubt. The question for many at CES is how many of these sets will be “smart” TVs—TVs that feature native Internet connectivity and can support a host of OEM or secondary “connected TV” applications—and how many will be 3D. Both instances represent higher-end purchases, thus greater revenue per set....(read more)

Third of pay-TV subs to take up TV Everywhere by 2016

The Diffusion Group — Wed, 11 Jan 2012 16:39:00 GMT

Third of pay-TV subs to take up TV Everywhere by 2016
Rapid TV News | Joseph O'Halloran | January 11, 2012

@ CES: More TV Everywhere at IP&TV World Forum

The Diffusion Group — Wed, 11 Jan 2012 16:37:00 GMT

@ CES: More TV Everywhere at IP&TV World Forum
CED Magazine | Mike Robuck | January 11, 2012

TDG: A Third of PayTV Subscribers to Use ‘TV Everywhere’ Services by 2016

The Diffusion Group — Mon, 09 Jan 2012 20:03:00 GMT

TDG: A Third of PayTV Subscribers to Use ‘TV Everywhere’ Services by 2016

January 10, 2012 (FRISCO, TEXAS) – To defend against the encroachment of over-the-top (OTT) broadband video services like Netflix and Hulu Plus, incumbent PayTV operators are launching so-called ‘TV Everywhere’ or ‘TVE’ services. These services allow residential PayTV subscribers to access many of the same channels they enjoy at home on their net-connected devices, wherever they may be.

According to TDG’s latest analysis, by 2016 more than 30 million households will use operator-provided TVE services to access their favorite video programs on their net-connected devices.

“The logic is straightforward,” notes Colin Dixon, TDG Senior Partner and author of the new report. “If consumers can access their PayTV services on their PCs, pads, and mobile phones, they should be less likely to use competitive services like Netflix or Hulu and thus less likely to ‘cut the cord.’”

Will this strategy work? Perhaps, argues Dixon. “Though having 30 million households actively using TVE services by 2016 is not insignificant, by that same time OTT video services will be used by nearly 90 million U.S. households. That’s the reality that PayTV operators are facing.”

In regards to TVE market dynamics, a few major content providers will choose to go it alone and sell direct-to-consumer (that is, without operator sanction), while some operators will attempt to extend existing carriage agreements to cover net-connected devices (that is, without content provider sanction). In most cases, the middle road will be most fertile, meaning content providers may be able to frame the end-user experience but operators will provide a branded, authenticated “gateway” through which consumers access the content. In other words, if a consumer does not subscribe to the content through a PayTV operator, TVE access will not permitted.

For these reasons, Dixon expects that Operator or “Op-TVE” services will dominate this market space. Though Content Provider or “Con-TVE” services will play a role in the early market, they will quickly be absorbed by Op-TVE services.

According to Dixon, this multi-screen, multi-source paradigm will gain traction over the next few years, due primarily to a shift in viewing models, from a “...content-centric model - where the viewer seeks to find the content - to a viewer-centric model - where the content seeks to find the viewer.” In this quantum video universe, multiple sources appear on the TV screen and on-demand availability matters more than the source of content.

TDG’s latest report, TV Everywhere Update, 2012, is now available for purchase. The report offers a detailed analysis of the various vendors and operators active in the U.S. ‘TV Everywhere’ space, as well as a discussion of key market drivers and inhibitors, and annual forecasts of household use through 2016. For more information about this new report, please contact our Research Services Team at 469-287-8050.

Simple.TV Launches DVR for the Connected TV World

The Diffusion Group — Mon, 09 Jan 2012 16:56:00 GMT

Simple.TV Launches DVR for the Connected TV World
PRNewswire | January 9, 2012

Congressional Action on White Spaces

The Diffusion Group — Fri, 06 Jan 2012 15:18:00 GMT

Phil Leigh, Contributing Analyst

January 6, 2012

Increasingly consumers expect that the devices they buy will connect to the Internet wherever they may be - in the home or on the go. They are no more concerned with the underlying delivery technology than is a child watching cartoons on television. However, they do have expectations that such connections (1) be available over a wide region, (2) connect easily, (3) stay reliably connected, (4) be fast enough to display video, (5) be available at reasonable cost, and (6) typically be priced at a flat monthly rate.

In regard to all but the first expectation, technologies developed for licensed-exempt spectrum - mainly Wi-Fi and Bluetooth - do a better job than those used in licensed cellular networks. As well, both the electronics industry and the FCC recognize that innovations in licensed-exempt technologies will become increasingly competitive with cellular networks in terms of addressing the first expectation: providing connectivity across vast regions versus just "local" or "personal" spaces. One example of such innovation is the use of TV-band white spaces to provide "Super Wi-Fi" blanket coverage zones with diameters measured in kilometers instead of the mere meters typical of conventional Wi-Fi.

Unfortunately, a bill passed by the U.S. House of Representatives in December 2011 suggests that most House members fail to appreciate the advantages of unlicensed spectrum. Though the bill authorizes the FCC to permit TV stations to voluntarily auction their spectrum, it does not allow the Commission to reserve any of this frequency for non-licensed use.

Without licensed-exempt spectrum, however, Wi-Fi and Bluetooth would not exist, meaning new platforms that leverage unlicensed spectrum (think iPads) would instead require either (a) a hard-wired connection to their home network, or (b) a subscription to a mobile wireless broadband service. In other words, access to unlicensed wireless spectrum is at the very heart of connected device usage models. Should such access be eliminated or restricted, computer industry growth would stall as the device utility stagnates.

Although spectrum traditionally used by Wi-Fi remains available, it does not have some of the favorable propagation characteristics of TV-band white spaces. Home wireless LANs that use both conventional Wi-Fi spectrum and white space bands will be better able to connect wireless devices in hard-to-reach rooms typically remote from the Wi-Fi access point. Thus, restraining the use of white space adversely affects the future capabilities of wireless LANs.

The majority of House members claim to be driven by free market principles. Yet they apparently fail to comprehend that unlicensed spectrum is a competitive marketplace whereas licensed spectrum is an uncompetitive one.

Within the next two years, TDG expects to see a number of over-the-top (OTT) TV services come to market that are capable of competing head-to-head with incumbent PayTV offerings. These services will offer consumers greater flexibility when it comes to deciding which channels they subscribe to and pay for - and most of them will offer an ESPN-free option.

While licensed carriers admittedly compete with one another, they are few in number. Their spectrum is theirs and theirs only; within which no one else can compete. In contrast, any vendor can freely market an innovative device that uses licensed-exempt frequencies; meaning success (or failure) is strictly a matter of consumer acceptance. Vendors have no prior need to first convince a licensed carrier to offer the functionality, or negotiate a revenue split with that carrier.

Arguments that spectrum auction proceeds should be maximized in order to minimize the Federal Budget deficit are convenient smokescreens. Merely from the limited bands available to date, unlicensed spectrum uses such as Wi-Fi add a minimum of $16 billion annually to the U.S. economy. according to the Stanford Institute for Economic Policy Research.

This is not to say the need for licensed spectrum is not valid, and for many of the same reasons the concept was originated a century ago. It is, for one, an effective method for controlling interference. However, it defies common sense to believe that technological progress has failed to provide embedded electronic methods of automatically managing traffic contention among users within a common spectrum. Wi-Fi has in fact proven the opposite, meaning there is no legitimate reason to believe similar techniques cannot apply to TV-band white spaces.

The failure of the House of Representatives to adopt legislation more constructive to the use of TV-band white spaces is counterproductive to the advancement of wireless technologies and market competition.

If you haven't read Phil's report, Television Band White Spaces: Analysis and Forecasts, you definitely should. The report includes a five-year quantitative market forecast, as well as future business opportunities for TV Band White Spaces.

Netflix Nets 2-Billion Streaming Hours Viewed in Q4 2011, More than all U.S. PayTV VoD Combined. Ouch!

The Diffusion Group — Fri, 06 Jan 2012 15:02:00 GMT

Bill Niemeyer, Senior Analyst

January 6, 2012

Netflix released a fairly astonishing number this week, reporting that subscribers streamed two billion hours of on-demand TV shows and movies in Q4 2011. Netflix notes this was worldwide viewing by their over 20 million streaming subs in 45 countries. Undoubtedly, almost all that viewing was in the U.S. as domestic subscribers represent 94% of the Netflix total (according to their Q3 2011 financials).

These numbers have serious implications for TV incumbents including networks and PayTV operators. As I'm in the final throws of writing a new report on cable/telco IPTV operator video-on-demand (VoD), I'll focus on the implications for PayTV operators in particular.

The fact that Netflix streamed two billion hours of on-demand video in Q4 means its streaming service enjoyed greater viewership than all cable/telco VoD during the same period. And by "all" I mean all: from all cable/telco IPTV VoD programming including broadcast, cable, and premium TV networks. If you're an operator, alarm bells should be going off in the corner offices at any moment (they should have gone off long ago).

Rentrak's OnDemand Essentials VoD measurement service reported that total 2010 PayTV VoD viewing was 3.6 billion hours and 2009 viewing was 3.1 billion hours. Using this annual growth rate of 16% (a reasonable assumption based on my review of historic trends), I estimate 2011 saw 4.2 billion hours of U.S. PayTV VoD viewed. Assuming for simplicity's sake that VoD usage varies little by season, total PayTV VoD viewing in Q4 2011 was around 1.1 billion hours.

Recall that in Q3 2011, 94% of global Netflix subscribers were in the U.S. Of the two billion hours viewed worldwide, it's likely about 1.9 billion were viewed by U.S. Netflix streamers. That's 1.1 hours per sub per day. While this may seem a bit high, TDG primary consumer research from early 2011 indicated the average Netflix streamer watches about 5.5 hours per week of content (from TDG's "Video Behavior in the Age of Quantum Media: 2011").

So, in Q4 Netflix generated 1.9 billion hours of U.S. on-demand TV show and movie viewing, compared with 1.1 billion among PayTV VoD users. That's an 80% advantage to Netflix. Remarkable.

The start-up that began streaming in 2007 has been able to blow by the combined VoD efforts of incumbent PayTV operators and networks that first came to market in the early 2000's. This is even more remarkable given Netflix's catalog is much weaker than PayTV VoD, at least with respect to the newest hit movies and TV shows.

While use of PayTV VoD services remains low, it has the potential to grow, and quickly so. How to make this happen is the central thesis of my upcoming report, a message of particular relevance given the new data validating Netflix's dominance of the VoD space.

Social TV is more than Facebook on an iPad While Watching TV

The Diffusion Group — Fri, 06 Jan 2012 14:58:00 GMT

Colin Dixon, Senior Partner, Advisory

January 6, 2012

2011 saw the emergence of a new term for us to get our heads around: "social TV." As conceived today, social TV encompasses an unnecessarily wide range of activities; from using Facebook on an iPad while watching TV to participating in viewing parties on a game console.

This vast social TV umbrella was perhaps best typified by Lost Remote's 2012 forecasts for the space. As I read through this very interesting list of predictions, I began to realize that something was missing - something rather significant.

Throughout these forecasts, there is a tacit assumption that, regardless of what "social" ingredient is added, the core TV experience remains essentially the same. In other words, any "social" part is viewed as just an extension of a conventional TV viewing experience.

Ancillary devices such as iPads and cellphones are thus seen as separate but linked to the "pure" TV experience, which is thus unsullied by all the social interaction going on around it.

This view ignores the fact that the nature of the "television" is changing, with or without social TV. With more and more devices becoming connected - including the TV - show producers are waking up to the fact that connectivity is as much a part of the entertainment experience as sound and video. Further, social media is, well...media, capable of entertaining all by itself! The combination of television + connectivity + social media is a classic example of the sum being greater than the parts.

What does this mean for TV? In the short term, only a few shows are integrating social media into broadcasts in order to make live shows more valuable. For example, in BET's 106 & Park, the show uses social media to involve the viewer more directly in the "entertainment," thus making the show more fun and engaging. Other shows are also trying this approach, such as Oxygen's Bad Girls Club. Expect to see many more TV programs give social media a try in the coming year.

Where this will end up is anybody's guess. This will be determined by the creative people producing these new media TV shows and, perhaps more importantly, by us, the viewers. How much social interaction can we stand in the context of a TV show?

One thing is certain: in the next few years, social media will significantly alter the "TV viewing" experience, and not just for the young and technologically advanced. This goes far beyond simple Facebook or Twitter entries. The resulting shows will require social media, will be meaningless without it! Now that will really be social TV.

The Ghost of Research Yet to Come

The Diffusion Group — Thu, 22 Dec 2011 23:24:00 GMT

Colin Dixon,Senior Partner, Advisory

December 22, 2011

Scrooge: "You are about to show me shadows of the things that have not happened, but will happen in the time before us. Is that so, Spirit?"

Prediction #1: Netflix will return to growth in Q1 2012.

Reason: Consumers will be unwrapping a lot of connected devices with super screens this holiday season, each of which will feature a Netflix app. With a free one-month trial readily available, who can resist giving it a try?

Challenge: Will this new wave of trial members stay with the $8/month fee, or will they bail by Q2? If the latter, watch for churn to be in the five million range in Q2.

Prediction #2: PayTV providers will raise subscription prices in 2012, as the number of subscribers will decline yet again.

Reason: With the NFL increasing fees 60% in 2011, watch for other major franchises to follow suit. As well, broadcasters such as Fox and ABC are looking for new license fees from operators.

Challenge: Stopping a major exodus of subscribers tired of high PayTV costs. Although cable has been losing subs for years, they've been able to increase revenue by getting more out of those that chose to stay. With stagnant salaries, a lousy housing market, and high unemployment, Operators will have a tough time squeezing more from cash-strapped household budgets. Keep an eye on subscriber numbers in the quarter immediately after prices are increased. As monthly subscription rates increase, Netflix and Hulu at $8/month start to look really attractive!

Prediction #3: By the end of 2012, more than 50 million U.S. households will be watching Internet video on their primary TV.

Reason: A number of new OTT video services will arrive in 2012 and exploit unmet needs and niches traditional media simply cannot afford to service. And yes, all of them will be much less expensive than cable.

Challenge: Being found. Consumers are already overwhelmed with content choices. Subsequently, content discovery solutions will have a banner year in 2012.

Prediction #4: By the end of the 2012, all 32" and above TV sets in electronics stores will be "smart." That said, less than 10% of them will contain Google TV.

Reason: The price difference between smart and "stupid" TVs will be almost zero, meaning buyers will have little reason not to opt for the smart sets. Google TV 2.0, while an improvement over 1.0, will fail to connect with TV viewers. Despite Eric Schmidt's protestations to the contrary, with only LG and, maybe, Sony showing Google TV-powered sets at CES, achieving a larger share in 2012 seems far-fetched.

Challenge: Creating a unified application and business environment that works across Smart TV brands. Each TV manufacturer has its own Smart TV interface, none of which work together. Consequently, creating applications for all the different flavors of interfaces is burdensome for developers. As well, content providers simply don't want to share revenue with manufacturers. Can CE manufacturers unify the technical and business terms to create a legitimate TV app and OTT content market?

Scrooge: "Good Spirit, your nature intercedes for me, and pities me. Assure me that I yet may change these shadows you have shown me, by an altered life."

The Ghost of Research Present

The Diffusion Group — Thu, 22 Dec 2011 23:17:00 GMT

Andy Tarczon, Founding Partner, Corporate Development

December 22, 2011

Ghost of Research Present: "Come in, come in. And know me better, man... You have never seen the like of me before."

Scrooge: "Spirit, conduct me where you will... if you have anything to teach me, let me profit by it."

It's funny how "miser" and "misery" seem so closely related. Regardless, Scrooge clearly understood the rewards of investing his most precious commodity (time) to benefit from the lessons he learned. As we explore the evolving new world of OTT, our Members learn about consumers, technology, and the businesses impacted by change - lessons all drawn from our on-going research.

So what questions are we asking? Let's peek under my skirt, err, robe...

"Where do people turn when they want to watch TV?"

Viewing Behavior in the Age of Multisource Television is TDG's latest report, one that examines this very issue. The study found that, when consumers first sit down to watch TV, about a third turn first to an on-demand source. While the stat is flashy, it points to much deeper considerations for operators, content providers, and even CE manufacturers.

"What are the implications of so many consumers turning to on-demand sources?"

In 2010, some 3.6 billion hours of VoD content were viewed in the U.S. While the number sounds large, it accounts for only 2.4% of the video consumed by VoD-capable households. Growing this market presents a number of challenges to VoD providers. In January, TDG will be releasing a new study that dives deeply into the topic and offers suggestions for operators looking to better monetize this offering.

"Which devices and where?"

No doubt helping spur growth in the VoD segment, many of today's CE devices are Internet-enabled, thus allowing consumers to view content on multiple devices throughout the home. As we do early each year, TDG will soon publish a 2012 update for our In-Home CE Ecosystem of U.S. Broadband Households report. The title is a mouthful, but that's only because the data presented is both comprehensive and deep. For instance, our 2010 study found that home network routers have migrated from the home office to the living room as consumers look to enable SmartTVs, game consoles, and other devices. We just completed a new primary project that updates not only where each CE device sits within the home, but also whether it is net-connected and how so. Look for the report to come out in early February, even earlier for TDG Members.

"How should operators compete with so many connected devices?"

TV Everywhere services as originally envisioned have failed to hit their mark. While operators are adding linear content, it has been content creators who have been most active in extending authenticated content to consumers. For instance, 16% of homes with broadband and HBO have downloaded the HBO Go app to their iPads. This week, our Members are reading our soon-to-be-released report, TV Everywhere Update 2012, which will be published for mass consumption in January 2012.

The Ghost of Research Past

The Diffusion Group — Thu, 22 Dec 2011 22:59:00 GMT

Michael Greeson, Founding Partner, Research

December 22, 2011

Ghost of Christmas Past: "Rise and walk with me.... You recollect the way?"

Scrooge: "Remember it? I could walk it blindfolded...."

Ghost of Christmas Past: "These were shadows of the things that have been. That they are what they are, do not blame me."

As my dad used to remind me, once you put pen to paper it's hard to take back. Well, our analysts live and die by the 'printed word' and must defend our past predictions, especially to our Members.

The good news: the Ghost of Research Past says that 2011 has been a particularly good year for TDG, as many of our past predictions have come to pass, and within the time horizon we expected. For example...

In May 2009, TDG predicted that Netflix's biggest competitor would be HBO, not other over-the-top video services. The reality?

In December 2011, at a UBS media conference, Netflix CEO Reed Hastings said, "The competitor we fear most is HBO Go. HBO is becoming more Netflix-like and we're becoming more HBO-like. The two of us will compete for a very long time."

During the same month at the Videoschooze conference in NYC, HBO Co-President Eric Kessler told a NY audience that HBO's primary competitor is Netflix and, not surprisingly, and there is 'no chance' that the OTT service will get access to HBO content.

In June 2010, TDG predicted that, by 2020, more than half of TV viewing will be from Internet sources and delivered over last-mile broadband connections. The reality?

In December 2011, Netflix CEO Reed Hastings said that by 2021 more than half of TV viewing would be from Internet sources.

During the same month, Former FCC Chair and current NCTA President, Michael Powell, said in a speech to the Media Institute in Washington that, "Congress and the FCC are on the verge, perhaps for the first time, of declaring that the highest and best use of spectrum is not broadcasting, but broadband."

In late 2004, TDG forecast that by year-end 2010, 47 million households would own a home network. The reality?

As of January 2011, 55 million U.S. households owned a home network; meaning TDG's 7-year old forecast was 15% off.

In 2006: TDG forecast that by year-end 2010, the U.S. would have 71 million broadband households. The reality?

In January 2010, the U.S. had 74 million broadband households; meaning TDG's 4-year old forecast was only 4% off.

4 Predictions for 2012

Colin Dixon — Thu, 22 Dec 2011 21:36:00 GMT

Four Predictions for 2012 Colin Dixon, Senior Partner, Advisory (Adapted from OTT Monitor published 12/22/11) Prediction #1: Netflix will return to growth in Q1 2012. Reason: Consumers will be unwrapping a lot of connected devices with super screens this holiday season, each of which will feature a Netflix app. With a free one-month trial readily available, who can resist giving it a try? Challenge: Will this new wave of trial members stay with the $8/month fee, or will they bail by Q2? If the latter...(read more)

NFL Achieves Record TV Revenue, Consumer Cable Prices Headed Higher

The Diffusion Group — Fri, 16 Dec 2011 23:33:00 GMT

Michael Greeson, Founding Partner, Research

December 16, 2011

Here we go again!

This week the National Football League put yet another notch on its belt, this time securing from broadcast and cable networks some $27 billion over the next nine years. Sure, this is the way the system works: high-value content brings in higher ratings for the networks and thus justifies higher retrans fees. Given that NFL games still deliver the largest audiences of just about any TV programming, why shouldn't the NFL be able to exploit this to their advantage?

That, however, is not my primary complaint. I'm annoyed that consumers who do not want to pay for this sports programming are being forced to shoulder the burden of increasing sports carriages costs. PayTV operators will have to increase subscriber costs to foot the bill; and for all their viewers, not just those that favor sports programming.

According to this morning's New York Times, the average PayTV subscriber spends about $100 a year on sports programming - regardless of whether they watch it. TDG estimates that average monthly PayTV bills are around $85; meaning that of the $1000 a year the average PayTV subscriber spends on the service, about 10% is purely for sports programming.

True, TDG's research has long found that ESPN ranks among viewer's top-10 TV networks. Then again, why are all consumers forced to accept it as part of the basic service tier as opposed to premium tier designed for sports enthusiasts? Keep in mind that the ESPN suite alone accounts for the larger part of this $100 annual fee (around $5 per month just for ESPN, then another $1.50 or so for other ESPN networks).

For years PayTV operators have argued that a la carte (whether pure-play or Canadian style) is not feasible; that breaking up the preset bundles or tiers would wreak havoc on their business. I've long argued that is mostly hot air used to defend the stranglehold these virtual monopolies have on consumers. Seems I was not too far off base, as several cable operators have since introduced tiers with fewer channels and (specifically) without ESPN. Sadly, such offerings remain the exception - at least for now.

I enjoy watching sports just like most TV viewers, but after more than two years of living without cable TV, I've been able to get my sports fix though broadcast channels - that plus the occasional pub crawl! And I'm pretty sure my behavior is not that unique, nor will it be if the costs of PayTV subscriptions continue to rise.

Listen to Colin Dixon and Videonuze's Will Richmond's take on this issue in this podcast.

Family Digital Media Accounts: A Trend to Watch for in 2012?

The Diffusion Group — Fri, 16 Dec 2011 23:27:00 GMT

Andy Tarczon, Founding Partner

December 16, 2011

With only a few days left until Christmas, Santa, the original "Over-the-Top" expert, is expected to deliver millions of new digital media devices to happy little girls and boys. Sadly, the content viewed on these devices will go largely unchecked as most services lack family settings and controls.

Digital media services are now entrenched in our daily lives and across our personal devices. Kindle for ebooks, Napster for music services, iTunes, Netflix, XBOX Live...the list goes on. In most homes, however, multiple users often engage a single service.

In TDG's latest research, we found that OTT households are 40% more likely than average broadband households to have children living in the home. Despite this fact, parents have few tools to help manage a child's access to content on digital media services.

Netflix, for instance, serves around 25 million subscribers, meaning the service is a common, shared experience among all viewers in the household across all the platforms within the home. You can watch any movie on any device that can access Watch Instantly. While Netflix will let you create separate profiles for your DVD queue, consumers don't have separate account options for streaming users in the family.

The implication is that parents and children are receiving recommendations based on total account usage as opposed to their personal use. You may not be a fan of "Thomas and Friends" and your young ones probably shouldn't watch "Breaking Bad." (Though, we can all agree "Fineas and Ferb" rocks!)

Amazon accounts face much the same issue. If you are a Prime member, you can assign up to three other users in your home to share in your second-day delivery benefit, yet others do not have access to your digital content unless they know your password. Earlier this week, the million-devices-sold-per-week Kindle Fire was trounced for several issues including privacy. One of the complaints stated that this "personal" device has the audacity to keep track of your recent activities. Oh the horror! But then again, is this really that surprising? Since content licenses do not permit sharing within the home, consumers are left to skirt the issue by assigning all content to one central account - be it Kindle reader apps, Amazon MP3s, iTunes, etc.

There are, however, services attempting to address these issues, admittedly with limited success. Microsoft has created XBOX Live Family Pack, an option that has customizable usage and time limit controls for up to four household members. The service also activities monitoring and other features designed for helping young ones share the content in an appropriate manner. That said, the service is not cheap, coming in at $99 per year and specific media services, such as Hulu may only run on one user's account. For once, DECE's Ultraviolet shines brightly by allowing up to six profiles to be created per account. This allows all content to be shared and still maintaining parental controls.

So this year, we can thank Santa for delivering all these shiny new devices. Perhaps next year's Christmas list should include a request that Santa convince service providers to enable parents to share digital content with other family members in a responsible way.

Is Your Business Ready For Unending Accelerating Change in OTT? It Better Be.

The Diffusion Group — Fri, 16 Dec 2011 23:20:00 GMT

Bill Niemeyer, Senior Analyst

December 16, 2011

Recently there's been a topic on my mind - the notion of "Accelerating Change." It's not news that shifts in digital media over the past decade (and more recently online video and OTT) have been driven by rapid change in technology availability and cost, and that this change is ongoing. However, while it may be ongoing, it isn't constant. In fact, the pace of change is accelerating; the degree to which is surprising to me and something for which OTT business strategies had better be ready.

There's an interesting article on Accelerating Change on Wikipedia. On that page I found the following graph, created by Ray Kurzweil for his 1999 book, The Age of Spiritual Machines.

It's a fascinating graph. Kurzweil's data shows computer power per dollar has been increasing exponentially since 1900 (going back to Hollerith's punched cards) at such an accelerating rate that the chart has an exponential trace even when viewed against a logarithmic scale. Accelerating change is happening in hard drive prices and even the cost per pixel of digital cameras.

So what does it mean for OTT? Of what relevance is it that in 15 years $1,000 buys the computing power of a human brain, or in 40 years the power of all human brains? (Other than that Terminator Skynet becomes reality sometime in between?)

It means OTT strategies had better be ready for unending (and breathtaking) transformations in what technology will be placed in the hands and living rooms of consumers all over the world; and for periodic "perfect storms" where opportunity and vision come together to create quantum-like change in consumer behavior and media business models. The iPad is one example. Considering the enormous change created by the iPad, it's sometimes hard to believe that it came to market only 20 months ago.

Of course not everything in the media business will see accelerating change. MVPD carriage agreements and their considerable fees will keep cable TV and (soon) broadcast TV content under the umbrella of operators for some time. And the 60-year old TV model of linear interstitial commercials used to monetize online content will still work (although it certainly can be improved upon).

Nonetheless, TV and video landscape companies do need to have OTT strategies that can adapt to accelerating change. Concepts like "forward thinking" "being nimble" and "risk tolerant" have to be more than buzz words in executive press statements. It's difficult to monetize TV/video ecosystem business strategies in the midst of a continuous digital revolution, but then you knew the job was dangerous when you took it.

DigitalSmiths' new video search technology may outsell flagship product

The Diffusion Group — Mon, 12 Dec 2011 17:58:00 GMT

DigitalSmiths' new video search technology may outsell flagship product
NewsObserver.com | David Ranii | December 12, 2011