Lots Of Buzz Over Broadband Enabled TVs, But Impact Not Felt For Many Years

As the CES show in Vegas kicks off this week, the buzz and announcements around broadband enabled TVs is starting to heat up. Netflix and LG announced that come later this spring, a new line of broadband enabled LCD and plasma TVs will be capable of streaming content from Netflix without the need for any type of external box. While this is not the first broadband enabled TV that will be capable of streaming content, both Panasonic and Sony already have models, it is the first TV manufacturer deal for Netflix.

The CES show also brought announcements from Adobe and Intel who are looking to bring Flash to Intel's Media Processor CE 3100, which Intel hopes will be used to bring web content to digital TVs before mid-2009. In addition, Intel plans to announce with Yahoo! support from TV manufacturers to sell sets that come with widgets that allow you to watch web content on your TV using the TV's remote control.

While the idea of broadband enabled TVs sounds like a great idea and catalyst for helping to bring more IP video directly to the TV set, the reality is that these devices won't have any major impact on the industry for many years to come. The poor economy has killed the sales growth of new TV sets, let alone new LCD and plasma displays like LG's where the broadband enabled versions cost an estimated $300 more than ones without the functionality.

But of course, that's not stopping the companies building these sets and analysts to say things like, "I think this will be a big, growing sub category in TV" or "Streaming video from the Internet and other means of direct digital delivery are going to put optical formats out of business entirely over the next few years.” It all sounds nice, but it's wishful thinking on their part, especially the idea that broadband enabled TVs and streaming will make the DVD obsolete in a few years time. The real question is how quickly will these new sets be adopted when Netflix says that most research data shows that the average consumer holds onto their TV set for at least a decade?

Parks Associates predicts that by 2012, about 3.6 million broadband enabled sets will be sold in the U.S., or about 14% of total new TV sales. If those numbers are accurate, three and half million sets in three years is not a very big impact on the market considering devices like the XBOX 360 and PS3 sell that many devices in one or two quarters alone.

Broadband enabled TVs could be the future, but the impact they have on the market will not be felt in any major way in the next three years. And while most in the industry are talking hardware, the real question in my mind is what the user interface is going to look like that allows viewers to find and control how they get web content to their TV set? The software layer is going to be the most important factor in the success of broadband enabled TVs and not the actual hardware itself. Building added hardware functionality into a TV set it the easy part, providing the software overlay that will control and operate the new user experience is where the real challenge comes in.

SM West Keynote Video: Albert Cheng, Disney ABC TV

On day two, Albert Cheng, EVP of Digital Media for Disney ABC Television Group opened the Streaming Media West show with a keynote discussing the current state of the online video advertising market and ABC's strategy with their video player. Albert's presentation also gave details on CPM rates amongst some of the major content portals and he discussed the impact long form content will have on ad revenue in years to come. You can download his entire slide deck here.

Almost all of the conference sessions and keynotes from the Streaming Media West show last month are now available online at www.streamingmedia.com/videos.

NY Video 2.0 Meetup Tonight In NYC

A quick reminder that tonight is the NY Video 2.0 Meetup at Webster Hall in NYC. Come see screen clips and discuss what's working, what's broke and where the industry is headed with Internet TV. Over 500 have people have already RSVP so if you want to go, better RSVP fast. Come hear a town hall discussion led by a panel of Internet TV innovators.

• Robert Millis - Founder, Hudson Street Media
• Paul Kontonis - Founder, For Your Imagination
• Andrew Baron - Founder, Rocketboom
• Jay Smooth - Founder, Ill Doctrine
• Sarah Austin - Founder, Pop17
• Kathleen Grace & Thom Woodley, Founders, Dinosaur Drama Productions

Visit the NY Video 2.0 Meetup website for all the details.

U.S. Not Lagging or Stalling In Broadband Adoption

Today, PEW released new data talking to the broadband growth rates in the U.S and way too many bloggers and news sites are writing headlines like "Broadband Internet Adoption Stalls", which is inaccurate. Some new sites start off by saying things like "Broadband growth in the United States has effectively stalled over the past five months...." But then when you read the PEW release, it turns out it has grown in three out of four segments. So it is not fair to say that it has "stalled", as a general statement. Yes, it has stalled for those with income under $20k a year, but then say that in the text up-front, especially considering the three other segments all saw growth of at least 23%.

The PEW data and report is very clear and the numbers speak for themselves. Yes, news sites want to spin the numbers in their favor to make grand headlines, without taking all the data into account. This report seems very similar to the one that many people in our industry seem to want to quote that says the U.S. is 15th out of 30 countries in broadband adoption. That could not be further from the truth.

The PEW report is the first one I have seen to really address the EVDO and WiFi connections, which clearly are showing a lot of growth. As much as people want to say the U.S. is lagging behind in broadband growth, the fact remains that the U.S. has more broadband connections, over 100 million, than anyone else. The U.S. got the top ranking from the World Economic Forum calling our Internet infrastructure one of the world’s best and Verizon alone, has more fiber customers today than exist in all of Europe.

Data from Verizon also says that "more than three-quarters of American households have access to at least two different broadband platforms, and many have six or more choices -- whether it's FiOS, U-Verse, EVDO, Wi-Fi, DSL, or cable". That's more broadband options that any other country has. And one of the biggest problems with the reports that compare the U.S. to other countries is the fact that none of them take into account the differences in geography and population density that make it nearly impossible to compare one country to another and don't include WiFi connections.

In addition, PEW and others don't take into account upgrades that Verizon or others make in their network for current customers. When I started with Verizon, I had a 15Mbps connection. Over the past few years, it's been upgraded to 20Mbps. Yet, since I am not a "new" customer signing up, my increase in speed is not shown in the PEW report as they are counting new broadband subscribers only. I'm not a new subscriber, but I have a faster connection which should account for something.

Also, most of these reports only take into account wired broadband connections to the home. What about broadband connections for small businesses, where a lot of people access the Internet every day? Or from an enterprise? If we are trying to get a true picture of how people access the Internet, then connections at small businesses, of which there where over 30 million in 2007, have to fit into the overall picture. Why aren't those included? Many people spend the majority of their time on the Internet during the day, from work. Why is it that the home market for broadband seems to be the one that we look at, by itself, and then devise all of our statistics from that one segment?

Some sites are also saying that, "broadband growth over the previous 12 or 13 months has dramatically tapered off." From 2006-2007 broadband growth was 12% and from 2007-2008 it was 17%. The PEW report says the growth was "comparable" yet many took that to mean slowing. Why is 5% growth year over year considered slow? And how can you say what the true growth rate for 2008 is when the year is only half over? If you are dealing with numbers and data, give it to your readers straight. Don't try and make it sound worse or better than it is just to make a good headline. The data speaks for itself.

Winner Picked For The Free Roku Netflix Set Top Box Giveaway

The drawing for the Roku Netflix Set Top Box is now over. Congrats to Robert Schumann who was selected as the winner using a random number picker website. I should have another set top box related product giveaway later in the week.

Last Chance To Win A Free Roku Netflix Box

On Thursday, I will be picking one random reader of my blog to give away my Roku Netflix unit to. If you want a free Roku Netflix set top box, go here and leave a comment on the post to enter.

UPDATE: Drawing is now closed. Robert Schumann was selected as the winner using a random number picker website.

Please note that the Roku box does not come with any Netflix service. So you either need to be a Netflix customer, or need to be willing to setup a Netflix account.

Brightcove To Be Profitable In 12 Months, Wrong To Compare To Move Networks

A lot of sites are covering the launch of the new Brightcove platform today, but many seem to be missing a lot of the major new features of the release and instead, are focusing too heavily on an incorrect comparison to Move Networks. Seems to me that many folks are only looking at the press release and didn't take the time to get a demo of the new features.

Last week I got to see the new platform in action and spent some time asking Jeremy Allaire, Brightcove's CEO, some questions about their core customers. While Jeremy would not confirm the revenue numbers that I am hearing in the industry for Brightcove, he did say that Brightcove expects to be profitable in 12 months. He also stated that Brightcove has "over 400 premium customers" for their services.

The new Brightcove 3 platform that launched in beta with select customers, has some huge improvements over the previous platform. For starters, player load times have increased from 300-600% in the new platform. One of the biggest gripes I always had about using the Brightcove system is how long it would take the player to load on my website. Looking at some live sites already using the new system, I saw players loading in under 2 seconds. A vast improvement.

In addition, the Brightcove system will now let content owners choose whether they want to encode their content using H.264 or On2's VP6 for what Brightcove calls "dynamic delivery". Very simply, dynamic delivery allows content owners to upload one video and have it transcoded to multiple bitrates. The result is that viewers get the best quality bitrate sent to them depending on their Internet connection. While some are saying this is a technology Move Networks created or adopted, RealNetworks introduced this technology, branded SureStream, back in 1998. Microsoft quickly followed suit with the same kind of technology branded as Intelligent Streaming in 1999. This idea of delivering the best file to the user, and encoding for multibitrate, is not new, but it is great to see Brightcove leverage it to make the end user experience better. For those who don't know which to select, H.264 or On2's VP6, Jeremy said the Brightcove system would make a default choice for them, but didn't yet know what that default choice would be.

As some have mentioned, the new Brightcove system includes new APIs that enable more customization and more importantly, gives each video in the system their own unique URL. Another complaint of Brightcove users in the past was that the system was not really setup to be able to have search engines easily find the content. With the new system, that problem has been eliminated. The new APIs also allow a lot of customization over the way a video is presented and enables content owners to showcase related videos and drive up the number of videos consumed per viewer. Based on initial beta testers, they are seeing a large jump in the number of videos per user being played thanks to the new options for how the player and the surrounding content is presented. The new system has a drag and drop interface and as a Brightcove user, I can see some tasks that use to take me six or seven steps, now only taking one or two. The new Brightcove 3 system will be free to all premium users, but those who share revenue with Brightcove based on an advertising model, which is a small segment of Brightcove's business, will have to wait for a newly packaged product offering.

While many are comparing the new Brightcove 3 platform to Move Networks technology, they have almost nothing in common, aside from both companies aiming for high-quality. At no time during my call with Jeremy did he call out Move or even mention them as a competitor. And the new features and functionality that the Brightcove 3 system now has, are relevant to all content owners, not just those with long-from content like some are speculating.

As a company, Brightcove has it's roots in being a provider to enable content owners to use video for marketing and promotion, as opposed to Move who focuses on the deep needs of broadcasters. Brightcove is not doing anything at the network and infrastructure layer, not doing what Move does with QoS, not providing automation controls and does not getting hands-on with the broadcasters technical infrastructure teams. On the other hand, Move is not out in the market with their own portal or syndication strategy and not going after customers who all need the same publishing system. Brightcove and Move are two very different companies, going after very different customers, who also have very different levels of traffic. Many of Move's content customers are delivering prime time content, to hundreds of thousands of simultaneous viewers, which is different from content owners using the Brightcove system. One is not better than another, both work well to fill two different demands in the market, but they are very different solutions.

Added: Another difference between Brightcove and Move Networks that I forgot is that Move Networks support live streaming. Something many broadcasters require.

More Video Platform Consolidation Coming: NeuLion and JumpTV Latest

While I expect almost no consolidation in the CDN market anytime soon, in other segments of the industry we're starting to see quite a lot of consolidation, especially amongst the small ecosystem providers. Three months ago it was Entriq and Dayport hooking up, last month was Onstream Media and Narrowstep and just last week it was announced that JumpTV and NeuLion would merge. Details on the length and complexity of the integration are not yet available and no new company name/brand has been determined.

I expect this is the start of many smaller consolidations we will see in the market over the second half of this year. On paper, many of these mergers make sense, especially since the majority of companies this sized don't have a lot of revenue and are burning through cash. For JumpTV, they did $8.9 million in revenue for 2007, but their net loss for the year was just over $30 million. NeuLion did $7.8 million in revenue for 2007 and had a net loss of $4 million. If companies of this size can combine services, cut their burn rate and increase their revenue, they have a better chance of being able to stay in the market.

There are easily more than 50 small providers in the market for things like transcoding, Internet TV platforms, webcasting software and the like. While the market is not yet large enough to support so many different vendors and probably won't be for the new few years, many companies in this space are going to have to look at strategic mergers and acquisitions over the next 8-10 months so they can really start to ramp up their revenue now. For many companies, it is crucial that they put the foundation in place today so that they are a leader in the space years from now when the market really matures.

Free Product Giveaway: Roku Netflix Set Top Box

The nice folks over at Roku sent me a set top box a few weeks ago and while I really would like to keep it for myself, I feel it would only be fair to give it away to a reader of my blog. These boxes are currently sold out and back ordered for weeks, so this is your shot to get one now.

UPDATE: Drawing is now closed. Robert Schumann was selected as the winner using a random number picker website.

To qualify to win the unit, all you have to do is leave one comment on this post with a working e-mail address. I will pick one person a week from today using a random number picker website and ship it out to the winner at no cost. (Sorry, U.S. residents only) The unit comes with all of the original materials, box, remote and cables.

Please note that the Roku box does not come with any Netflix service. So you either need to be a Netflix customer, or need to be willing to setup a Netflix account.

Also, Anthony Wood, the Founder and CEO of Roku will be one of our keynote speakers at the Streaming Media West show in September in San Jose. Registration is open and all keynotes are free. Register now for your pass to see Anthony demo and talk about the Roku in person.

What Classifies Online Video As HD Quality?

While there continues to be a lot of talk in the industry about HD quality web video, to date, I still have yet to figure out what classifies web video as HD quality? As an industry we are using the word HD to clarify video as being a certain level of quality, but these days it seems many are calling their video HD or their video delivery offering as supporting HD, but then the video is not truly HD by TV standards.

Depending on who you ask, the HD standard for the web video seems to be all over the map. While we know that for broadcast TV HD quality is usually defined by a resolution of 1080i, 1080p or 720p, the codec used for web video seems to play more of a role in the definition of HD web video than in the traditional broadcast industry. Some also say that you have to take into account the bitrate the file is encoded at in order to classify it as HD or not.

We've seen delivery networks say they can deliver HD video over regular 6 megabit connections and others who say they can do it over connections at half that. Many delivery networks all say they support "HD quality" but then don't define what they classify HD quality to be and what their offering supports. The recent Operation MySpace webcast was touted as HD quality but then I saw many in the industry commenting on how it really wasn't HD quality due to the codec that was used.

So what is HD quality on the web? What are the classifications we need as an industry? While HD web video has very little traction today, with the term being used so often, we better create some sort of standard agreed upon. If we don't, over time, the word HD may not be associated with such good quality video as we want it to be.