IHS Screen Digest’s Future of Digital Media Distribution 2011 conference covered a broad range of topics from broadcast through to UltraViolet. Digital2Disc was there to bring its readers some of the highlights.
Gerry O’Sullivan, who recently moved from BSkyB to become VP of Global TV and Entertainment at Deutsche Telecom (DT), was the invited keynote speaker. Whilst respectful of his previous employer’s business, O’Sullivan was definitely keen to emphasize the superiority of IPTV over satellite delivery.
DT’s statistics are impressive – almost 250,000 employees worldwide, a turnover of €61 billion and a 46% share of the broadband market in its home country – but impressive though these numbers may be, in the context of the TV market DT is a small player. It has just 700,000 subscribers across the eight countries it serves (compared with Sky’s 10m+ in the UK alone).
A variety of technology platforms are employed in the different markets but the offering is fundamentally the same: a set-top box equipped to receive local digital TV broadcasts plus additional content delivered across the IPTV network. Much of this is niche programming, but in O’Sullivan’s view, “No content is so niche that it’s not worth exploring. The UK may love its football but in another market they might watch chess all day!”
O’Sullivan does not consider connected TVs as the right devices for receiving IPTV. In his opinion the user experience is not good enough. A full TV service also needs back- office, billing and other consumer support functions which, in his opinion, CE manufacturers are not equipped to provide.
DT has recently launched a service which plays to one of IPTV’s core strengths. Called LIGA Total Interactiv, it is built around the coverage of Germany’s top football league. Unlike most other countries, all Bundesliga matches are played at the same time, making it difficult for viewers to track the outcome of any games which might have an impact on the fortunes of their own favourite team.
With LIGA Total Interactiv viewers can enter the team they support and the program will deliver live results – or, if preferred, clips using a multi-screen format. Addressing the hot topic of using tablets as second screens to watch TV away from the main set, O’Sullivan sees additional opportunities to use them for control, saving the need to bring the EPG up on the main screen.
CONNECTABLE BUT NOT CONNECTED
IHS Screen Digest’s Chief Analyst Ben Keen followed and provided the possibly surprising statistic that the number of CE devices in the market capable of receiving online content almost equals the number of non-connectable TVs. There are 1.5 million connected TVs, Blu- ray players, games consoles, etc, versus 1.8 million ‘dumb’ TVs. That said, the percentage of connected devices that are actually accessible – with an active online connection – is still relatively low. A new generation of ‘smart’ set-top boxes is also emerging. These provide all the intelligence, processing power and storage centrally, while secondary devices are simply ‘thin clients’.
With regard to the question of whether operators will open their connected devices to allow access to content outside their own walled gardens, as well as providing their content to devices other than their own, Keen is optimistic. He envisages subscribers being able to access a mix of managed and unmanaged networks on both managed and unmanaged devices inside and outside the home.
In a panel session that followed, O’Sullivan admitted his company was constantly guessing how consumer behaviour would change in today’s rapidly evolving market, as it’s not practical to support all devices. Picking up on Keen’s comment, he said DT would focus primarily on managed devices, although in the case of the iPad “it’s a no-brainer”. To ignore it would be seen as not being on top of things. On a personal level, O’Sullivan revealed that he hadn’t bought a CD for 10 years and hadn’t downloaded any music for the past five. He highlighted the importance of Facebook, which is now linked with several music streaming portals.
A questioner from the floor asked whether starving connected TVs of content is the right way to go, to which O’Sullivan responded that they definitely should not be ignored but reiterated the point regarding support services. “It’s easy for a CE manufacturer to throw up an EPG, but it’s not the pay TV experience,” he considers. He is also seeing a resurgence of ‘social TV’. Programs such as X-Factor and [costume drama] Downton Abbey are pulling in audiences of up to 10 million.
In conclusion, O’Sullivan commented that he’s already thinking of Facebook and Twitter as being “in the past. What will people be thinking of in the future?” This is something that’s obviously high on his agenda.
Using the fireside chat format, IHS Screen Digest’s Head of Broadband Media, Dan Cryan, interviewed Holly Knill, BSkyB’s Head of Sky Player and Mobile TV. Knill provided some interesting insights into Sky’s recently launched Sky Go service – an enhanced version of Sky Player which enables subscribers to access more than 30 channels on their iPhones and iPads in addition to a PC, Mac or Xbox. Sky Go is free to subscribers and, according to Knill, the service is seen as a way to retain subscribers by satisfying the demand to watch programs on the move as well as at home, rather than as a means of generating additional revenue.
Sky Go is not available on connected TVs, is this because they’re not considered good enough? Apparently, Sky has not yet been presented with any convincing arguments to persuade them. Aside from the fact that the number of connected TVs is currently small, there are also some concerns over content security. Knill repeated the point made earlier about customer service – who is responsible when the system fails? The look of the EPG is also very important to Sky, which wants to ensure that viewers get the ‘Sky experience’.
Most Sky Go viewing is linear, not VoD, with 80% of all kids’ programming being watched on an Xbox. To date, the largest audience (across all platforms) was for a Manchester United v Chelsea soccer match... though the actual viewing figures were not revealed.
Surprisingly, perhaps, Knill expressed the hope that YouView (the UK’s proposed multi- channel online platform of which Sky has been critical in the past) will go ahead. She believes that the uncertainty surrounding its launch has been responsible for a slower uptake of connected TVs in the UK, while other countries like France – which has adopted the open standard HbbTV – are forging ahead.
At present most of the promotion for Sky Go is on the sports channels but next year will see a drive to communicate what the service has to offer to a wider range of customers. Other plans for 2012 include support for the Android platform.
CONTENT IS CRITICAL TO SUCCESS
The panel session ‘Defining the user’s experience: building the best connected devices’ featured Dan Saunders, Head of Content Services, Samsung Europe; Eddie Abrams, CEO, IP Vision (which operates the Fetch TV platform) and John MacFarlane, CEO of Sonos, a manufacturer of wireless home music systems.
Getting consumers to actually connect their connected devices is always the challenge, Saunders acknowledged. At the outset it wasn’t so much an inability to connect their TVs that prevented consumers from doing so, there was a lack of compelling content and they couldn’t be bothered. Today the availability of services such as LOVEFiLM and the BBC’s iPlayer is encouraging consumers to hook up their TVs, particularly those purchasing higher-end products. The latest high-end Samsung TVs also make the process easier by automatically detecting the WiFi. All the consumer has to do is enter the security key. However, this feature costs money so the lower cost models are, Saunders admitted, more “clunky” at present.
2011 has also seen a move towards better communication of the connected TV proposition to consumers. John Lewis, the respected British retail chain, recently ran a series of ads along the lines of: ‘Here is a TV with iPlayer’. Abrams agreed that content is critical to its success. Fetch TV is a content platform which can be accessed via a range of devices, not just on a dedicated Fetch TV box.
Asked whether Samsung has aspirations to be a pay TV operator, Saunders said not; the company did not see itself as a competitor to Sky or [cable operator] Virgin. Samsung will simply provide the hardware and software that enables content providers to deliver programming. He pointed out that the processors in connected TVs are not powerful enough for pay TV operators, who will continue to need a STB. The sets are more targeted as a complement to [UK free-to-air platform] Freeview.
75% of Samsung’s TVs are now Smart TVs, it is no longer a premium offering. Saunders believes that many people are very likely buying a Smart TV whether they want it or not, although Rovi recently estimated that 50% of Samsung’s Smart TVs are actually connected. Catch-up services are the most popular at present; Saunders predicts the next requirement will be better discoverability – a way to enable content to be found in a more intuitive way. One thing is certain, it is becoming harder to sell a TV on physical appearance alone.
Sonos’s MacFarlane highlighted a key difference between the audio and video markets: whereas record labels regularly make titles available online ahead of their release on CD, the movie industry has a very defined release schedule. When studios have tried to bring forward the window for releasing a disc, cinema owners have threatened not to show the movie, while an attempt to offer a movie via VoD ahead of the disc release resulted in stores refusing to stock that title.
There is also a key technological difference between Sonos’s audio streaming products and connected TVs. WiFi can easily handle the relatively low data rates involved with audio but, MacFarlane pointed out, it was never designed for the purpose of carrying video.
An eagerly awaited session was the fireside chat between Ben Keen and Michael Comish, CEO of online video service Blinkbox, which was recently acquired by the UK’s largest supermarket chain, Tesco. Comish noted that Tesco’s ClubCard loyalty scheme has 17 million members, 11 million of whom buy at least one DVD or Blu-ray Disc a year – 3 million buy five or more.
According to Comish, the new word in today’s increasingly online world is ‘access’, not ‘ownership’. He acknowledges that sales of physical media will decline, but not like music. What the industry hasn’t done is make digital product exciting enough, he believes. The lack of portability is also an issue and UltraViolet is an important part of addressing this and providing consumers with more value. In 10 years, Comish predicts, the vast majority of consumers’ libraries will be stored in the cloud, the exception being kids’ content where ownership will continue to be important.
Stores like Tesco can offer an Avatar or Harry Potter disc as a loss leader because it is normally just one item in a shopping basket containing a range of goods, but what’s the digital basket equivalent, Comish asked? He added that he loves the subscription model if you have scale and can get a fixed-price deal with the studios; citing data extrapolated from information given by the Competition Commission which indicates Sky makes a 70% gross margin.
DECE has not yet announced its launch plans for UltraViolet in the UK but Comish believes the first UV-enabled titles will appear in the first half of next year [for playback on software devices], with hardware arriving in time for Christmas 2012. As the second largest retailer of DVDs/Blu-rays in the UK, and also the third largest CE retailer, Tesco is well placed to promote UltraViolet to consumers and it has been a strong supporter from the outset. The retailer is relaxed about consumers buying a cheap disc on the internet and then turning to them for downloads and streaming. In Tesco’s view it is, in effect, a free customer acquisition, which is where it sees considerable value.
