Analysis for 'AppleTV'
Thursday, December 11, 2008, 9:59 AM ET|
Back on December 16, 2007, I offered up 6 predictions for 2008. As the year winds down, it's fair to review them and see how my crystal ball performed. But before I do, a quick editorial note: each day next week I'm going to offer one of five predictions for the broadband video market in 2009. (You may detect the predictions getting increasingly bolder...that's by design to keep you coming back!)
Now a review of my '08 predictions:
1. Advertising business model gains further momentum
I saw '08 as a year in which the broadband ad model continued growing in importance as the paid model remained in the back seat, at least for now. I think that's pretty much been borne out. We've seen countless new video-oriented sites launch in '08. To be sure many of them are now scrambling to stay afloat in the current ad-crunched environment, and there will no doubt be a shakeout among these sites in '09. However, the basic premise, that users mainly expect free video, and that this is the way to grow adoption, is mostly conventional wisdom now.
The exception on the paid front continues to be iTunes, which announced in October that it has sold 200 million TV episode downloads to date. At $1.99 apiece, that would imply iTunes TV program downloads exceed all ad-supported video sites to date. The problem of course is once you get past iTunes things fall off quickly. Other entrants like Xbox Live, Amazon and Netflix are all making progress with paid approaches, but still the market is held back by at least 3 challenges: lack of mass broadband-to-the-TV connectivity, a robust incumbent DVD model, and limited online delivery rights. That means advertising is likely to dominate again in '09.
2. Brand marketers jump on broadband bandwagon
I expected that '08 would see more brands pursue direct-to-consumer broadband-centric campaigns. Sure enough, the year brought a variety of initiatives from a diverse range of companies like Shell, Nike, Ritz-Carlton, Lifestyles Condoms, Hellman's and many others.
What I didn't foresee was the more important emphasis that many brands would place on user-generated video contests. In '08 there were such contests from Baby Ruth, Dove, McDonald's, Klondike and many others. Coming up in early '09 is Doritos' splashy $1 million UGV Super Bowl contest, certain to put even more emphasis on these contests. I see no letup in '09.
3. Beijing Summer Olympics are a broadband blowout
I was very bullish on the opportunity for the '08 Summer Games to redefine how broadband coverage can add value to live sporting events. Anyone who experienced any of the Olympics online can certainly attest to the convenience broadband enabled (especially given the huge time zone difference to the U.S.), but without sacrificing any video quality. The staggering numbers certainly attested to their popularity.
Still, some analysts were chagrined by how little revenue the Olympics likely brought in for NBC. While I'm always in favor of optimizing revenues, I tried to take the longer view as I wrote here and here. The Olympics were a breakthrough technical and operational accomplishment which exposed millions of users to broadband's benefits. For now, that's sufficient reward.
4. 2008 is the "Year of the broadband presidential election"
With the '08 election already in full swing last December (remember the heated primaries?), broadband was already making its presence known. It only continued as the year and the election drama wore on. As I recently summarized, broadband was felt in many ways in this election cycle. President-elect Obama seems committed to continuing broadband's role with his weekly YouTube updates and behind-the-scenes clips. Still, as important as video was in the election, more important was the Internet's social media capabilities being harnessed for organizing and fundraising. Obama has set a high bar for future candidates to meet.
5. WGA Strike fuels broadband video proliferation
Here's one I overstated. Last December, I thought the WGA strike would accelerate interest in broadband as an alternative to traditional outlets. While it's fair to include initiatives like Joss Wheedon's Dr. Horrible and Strike.TV as directly resulting from the strike, the reality is that I believe there was very little embrace of broadband that can be traced directly to the strike (if I'm missing something here, please correct me). To be sure, lots of talent is dipping its toes into the broadband waters, but I think that's more attributable to the larger climate of interest, not the WGA strike specifically.
6. Broadband consumption remains on computers, but HD delivery proliferates
I suggested that "99.9% of users who start the year watching broadband video on their computers will end the year no closer to watching broadband video on their TVs." My guess is that's turned out to be right. If you totaled up all the Rokus, AppleTVs, Vudus, Xbox's accessing video and other broadband-to-the-TV devices, that would equal less than .1% of the 147 million U.S. Internet users who comScore says watched video online in October.
However, there are some positive signs of progress for '09. I've been particularly bullish on Netflix's recent moves (particularly with Xbox) and expect some other good efforts coming as well. It's unlikely that '09 will end with even 5% of the addressable broadband universe watching on their TVs, but even that would be a good start.
Meanwhile, HD had a banner year. Everyone from iTunes to Hulu to Xbox to many others embraced online HD delivery. As I mentioned here, there are times when I really do catch myself saying, "it's hard to believe this level of video quality is now available online." For sure HD will be more widely embraced in '09 and quality will get even better.
OK, that's it for '08. On Monday the focus turns to what to expect in '09.
What do you think? Post a comment now.
Thursday, October 18, 2007, 12:42 PM ET|
It's funny how often I'll be talking to someone and they will casually start interchanging the terms "IPTV" and "broadband video/online video/Internet TV".
Yet it's important to clarify that there are differences and they do matter. While some of the backend IP transport technology is common between IPTV and broadband video, the front end technology, business models and content approaches are quite different.
In presentations I do, I distinguish that, to me at least, "IPTV" refers to the video rollouts now being pursued by large telcos (AT&T, etc.) here in the U.S. and internationally. These use IPTV-enabled set-top boxes which deliver video as IP packets right to the box, where they are converted to analog video to be visible to the viewer. IPTV set tops have more capabilities and features than traditional MPEG set-tops, and telcos are trying this as a point of differentiation.
However, at a fundamental level, receiving IPTV-based video service is akin to subscribing to traditional cable TV - there are still multi-channel tiers the consumer subscribes to. And IPTV is a closed "walled garden" paradigm - video only gets onto the box if a "carriage" deal has been signed with the service provider (AT&T, etc.). IPTV can be viewed as an evolutionary, next-gen technology upgrade to existing video distribution business models.
On the other hand, broadband video/online video/Internet TV (whatever term you prefer) is more of a revolutionary approach because it is an "open" model, just like the Internet itself. In the broadband world, there's no set-top box "control point" governing what's accessible by consumers. As with the Internet, anyone can post video, define a URL and quickly have video available to anyone with a broadband connection.
The catch is that today, displaying broadband-delivered video on a TV set is not straightforward, because most TVs are not connected to a broadband network. There are many solutions trying to solve this problem such as AppleTV, Microsoft Media Extender, Xbox, Internet-enabled TVs from Sony and others, networked TiVo boxes, etc. Each has its pros and cons, and while I believe eventually watching broadband video on your TV will be easy, that day is still some time off.Many people ask, "Which approach will win?" My standard reply is there won't be a "winner take all" ending. Some people will always prefer the traditional multichannel subscription approach (IPTV or otherwise), while others will enjoy the flexibility and features broadband's model offers. However, for those in the traditional video world, it's important to recognize that over time broadband is certainly going to encroach on their successful models. Signs of change are all around us, and many content companies are now seizing on broadband as the next great medium.UPDATE: Mark Ellison, who is the SVP of Business Affaris and General Counsel at the NRTC (National Rural Telecommunications Cooperative, an organization which delivers telecom solutions to rural utilities) emailed to clarify that it's not just LARGE telcos that are pursuing IPTV, but many SMALLER ones as well. Point well taken Mark, it was an oversight to suggest that IPTV is solely the province of large telcos like AT&T.
Friday, July 13, 2007, 5:51 PM ET|A new report out by iSuppli, written up in EETimes, caught my attention yesterday. I haven't read the report, but the highlights are that an iSuppli survey showed that "61% of respondents agreed or strongly agreed that they wanted the ability to network the Internet to their televisions, while 71% of male respondents agreed or strongly agreed. How is this relevant to Apple TV?Last December, in my "7 Trends for '07" newsletter, I argued that Apple TV would only succeed if Apple adopted an "open" content model. In fact I suggested that Apple TV's key value proposition would be allowing users to access web-based content easily and quickly. Unfortunately Apple chose the opposite approach and made Apple TV essentially an extender of the closed, "walled-garden" iTunes. More recently it has opened open slightly, incorporating YouTube videos.I continue to believe that Apple TV would rule if the product gave users what the iSuppli report underlines - i.e. a way to see their favorite broadband video right on their TVs. This is a problem begging to be solved. Untangling the UI, hardware and software issues is what Apple excels at. I really hope they see the light on this soon. It would help convert Apple TV from a "hobby" as Steve Jobs recently put it, to a product with real potential. If Apple doesn't do this soon, someone else will.
Video Research Around the Web
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