Insider Reporter


Insider Report

news and views on broadcast and professional video/audio sectors, worldwide

w/e November 4, 2009 SCRI International, Inc © 1984 - 2009

INDEX

Technology News | Industry News | Company News |
Product News | People in the News | Research News

TECHNOLOGY NEWS

Broadband Market Expands Despite Economic Downturn

Defying weak economic conditions, the global broadband business is continuing to expand in 2009, with both equipment revenue and subscribers rising in the third quarter, based on a preliminary estimate from iSuppli Corp.

New worldwide broadband subscribers are projected at 16.3 million in the third quarter of 2009, up 2 percent from 16 million during the same period in 2008. Meanwhile, global spending on broadband equipment is forecasted to rise to $3.2 billion in the third quarter, up 6.3 percent from $3.1 billion in the third quarter of 2008.

iSuppli plans to issue finalized third-quarter subscriber and revenue figures in the fourth quarter.

For all of 2009, new broadband subscribers are expected to increase to 64.2 million, up 5.2 percent from 60.99 million in 2008. Worldwide broadband equipment revenue will expand to $13.2 billion in 2009, up 5.8 percent from $12.5 billion in 2008.

"Around the world, telcos are experiencing plunging access line subscribers and voice revenues," said Lee Ratliff, senior analyst at iSuppli. "However, broadband subscribers are continuing to rise, driving increased data revenue. While access line revenue has eroded at an astonishing Compound Annual Growth Rate (CAGR) rate of 10 percent during the last three years, data revenue rose by 6.6 percent during the same period." Bundle up The continued growth in subscribers and revenue is being driven by the battle for the broadband bundle.

"Multiple Service Operators (MSOs), such as cable television providers, are competing intensely with telcos to attract data subscribers by offering complete suites of data, voice and video entertainment services," Ratliff said. "The MSOs are adding voice subscribers at a rapid pace, while telcos are offering Internet Protocol Television (IPTV) services. These companies are offering attractive deals to attract new subscribers, expanding the global broadband market." Broadband market goes wide Bundled services are driving bandwidth demands ever higher. The market is transitioning from a broadband data paradigm to a wideband multi-service and multimedia paradigm, according to iSuppli.

"Broadband rates of 1Mbit/Sec. to 5Mbit/Sec. were fine when Web surfing was the broadband killer app," Ratliff said. "But in the new user model, consumers are using IPTV, VoIP, peer-to-peer file sharing, online gaming and streaming audio-possibly all at the same time within a household. We're quickly moving toward a future where 50Mbit/Sec. to 100 Mbit/Sec., i.e., wideband data rates, will be standard. The race for wideband is expected to continue for several years as both incumbent telephone companies and MSOs morph into multimedia services providers-with the only real difference between them being their access plants." For more information on this topic, see Ratliff's new report, entitled: Broadband Market Changing Rapidly, Maintaining Growth During Economic Downturn.

Record-setting mobile TV quarter

In Q2-09, 6.97 million new Mobile TV users were added to the worldwide total, according to market research firm TeleAnalytics. In terms of mobile TV device sales, Q2-09 proved to be the best quarter ever with 11.57 million mobile TV devices being sold.

Commercialization of Ultra-High Definition (UHD)

While the market for High-Definition TV (HDTV) has hit the mainstream, the industry has already started speculating about the commercialization of Ultra-High Definition (UHD). Market research firm, In-Stat, believes there will be a lengthy time period before the UHD market reaches a critical mass of 5% household penetration. However, as the initial market debuts over the next five to ten years, there will be ample opportunities for technology companies, manufacturers, service providers and media companies to experiment with business models and strategies to make UHD a strong business in the long term.

“UHD formats provide between four and sixteen times the resolution of Blu-ray or 1080p high definition as well as 22.2 multichannel three-dimensional sound,” says Michelle Abraham, In-Stat analyst. “This is a vast improvement over the currently available end user viewing experience in the home.”

As originally proposed, UHD comes in two levels of resolution: 7680 x 4320 pixels (i.e., 8K resolution), and 3840 x 2160 (i.e., 4K resolution).

Recent research by In-Stat found the following:

  • The rising popularity of high resolution digital cinema will expose consumers to high resolution content. Then, early UHDTVs will be made available to provide a digital cinema high resolution viewing experience in the home. Ultimately, broadcasters will start offering UHD content to an addressable market of UHDTVs, between 2017 and 2022.
  • In-Stat expects the total installed base of UHDTVs Europe to approach 5% household penetration until 2021, and increase to over 28.2% penetration by 2025.
  • In Asia-Pacific, Japan will be among the early adopter countries.

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    INDUSTRY NEWS

    Nileson: TV Stations Lost Audience Share After DTV

    TV stations that went digital-only immediately lost, on average, an 8 percent audience share after the DTV transition. That’s according to a post mortem by Nielsen. The firm said half of the 8 percent decline was attributable to homes that had no digital reception devices--either TVs or digital-to-analog converter boxes. Another 13 percent of the analog audience, i.e., households receiving TV before the transition, had at least one TV set wasn’t adapted for digital reception. Nielsen said these homes likely accounted for some of the share loss as well.

    TV stations that moved their signals from UHF to VHF assignments fared a bit worse than the average. Those stations experienced a 13 percent share decline. In some cases, households that lost signal had antennas that were oriented for UHF reception.

    Spanish-language broadcasters also lost more households in the transition. Nielsen said about 9 percent of the ratings for Spanish-language networks came from TV sets that weren’t adapted for digital reception.

    Nielsen said seasonality could have been a factor in the declines. TV viewing traditionally falls during the summer, though the measurements were taken immediately after the June 12 transition. Nielsen compared the two-week period after the transition to the two weeks prior. The full share decline was 8.4 percent in that period. During the third and fourth week reaching into July, share was 9.3 percent lower. The typical mid-June drop is between 2.4 and 3.6 percent.

    Viewership of non-simulcast diginets was said to increase “modestly” after the transition. These continue to be tracked.

    More details of Nielsen’s DTV transition post mortem are available at Nielsen Wire.

    IBC Remains in Amsterdam thru 2012 & Announces Changes

    IBC, the world’s leading meeting place for content creation, management and delivery, has launched an industry-wide consultation programme on its future development. This follows a detailed research project, conducted among both broadcasters and vendors, to determine the future shape of the electronic media industry and how best IBC can serve it.

    The consultation programme will ensure that the event is sharply relevant to all decision makers, who increasingly include board level staff in broadcasters and production companies. The project is intended to enable rapid change, with the first innovations appearing at IBC2010.

    As a result of the decision to undertake this organic development, IBC will remain in Amsterdam for IBC2012. This will allow IBC to focus its resources on creating the right event for the media technology landscape of the future. “For more than 40 years IBC has been the global event at which the industry meets to exchange wisdom and invest in knowledge,” said Michael Crimp, IBC’s chief operating officer. “We all acknowledge that the industry today is changing faster than at any time in its history, and IBC has to change fast to maintain its alignment with the new environment.

    “This development programme will identify ways to strengthen our engagement with existing and new buying groups and thereby maintain our position as the event at which business is really done. We need to be sure that we consider every idea, however radical, that will deliver the audience to our exhibitors and impart knowledge to our delegates and visitors.”

    Talking of the decision to stay in Amsterdam for IBC2012, Crimp explained “As most people will know we have been seriously considering a move to Barcelona, and we remain extremely impressed with the facilities available there, both the Gran Fira convention centre and with the city itself.”

    “In the immediate future, though, we believe our resources are best used in consulting with all our stakeholders and pushing through the innovations which will result from that consultation,” he continued. “IBC now has a reputation for delivering sustained excellence, and we would certainly not want to risk that in any way. Our belief is that, for the next three years at least, we need to focus all our attentions on developing new and different engagements as part of the IBC experience. We are determined to make a significant and innovative impact to kick this off in 2010.”

    Summing up the announcement, Michael Crimp said “IBC has always innovated, taking the lead in fields like digital cinema and 3D, mobile television and IPTV, and digital signage. At IBC2009 we transformed the conference, bringing in thought leaders from around the industry and around the world.

    “We now need to increase the pace of our evolution, to ensure that IBC remains a compelling proposition to all our stakeholders: senior executives from across the extended industry, engineers and creative talent actively engaged in making content, and vendors who need a thriving marketplace to present their innovations. You will see compelling new initiatives from IBC beginning in 2010. This consultation will ensure our ideas match and meet our customers’ needs and aspirations at a pace of change that is sustainable for all.”

    Virgin Q3 up on forecasts

    Virgin Media beat analysts' forecasts for the third quarter, adding 8,100 net new cable TV households and boosting revenues by 1.3 per cent to £953 million (E1.06bn). The cable operator reported a year-on-year increase in operating cash flow of 6.8 per cent to £348 million for the quarter.

    Virgin Media added 37,000 customers to its TV service, taking customer numbers to 3.71 million, with video on demand (VOD) services accessed by 55 per cent of customers at least once per month. The company hit its highest ever average VOD (catch up) views per month of 66m in the quarter. It said that it added 80,800 customers taking its enhanced V+ high definition digital video recorder taking the total to 749,300, or 21 per cent, of its digital TV subscribers.

    There was an increase in broadband customer base by 39,000 to 3.77 million. Customers taking high-speed 10Mb or faster broadband services have risen 157 per cent year on year to 2.7 million, or 72 per cent of Virgin's customer base.

    Virgin added that it now has 59.5 per cent of customers taking three services – TV, broadband and home phone – while 10 per cent of customers also have a contract with its Virgin Mobile operation, becoming "quadplay" customers.

    Virgin Media's share of UKTV, the 50 per cent joint venture with BBC Worldwide, reported a rise in net income year on year from £3.2 million to £5.5 million for the third quarter. This business and possibly all of Virgin’s content business is for sale

    Viacom Q3 Profits Up, Revenue Down

    Viacom reported a 3% drop in third-quarter revenue, with a 14% increase in operating income and a 24% rise in adjusted net earnings. In the quarter ended Sept. 30, revenue dropped to $3.32 billion from $3.41 billion a year ago, primarily reflecting lower home entertainment and advertising sales, which more than offset increases in affiliate sales and theatrical revenues.

    The gain in operating income in the quarter was driven primarily by an $88 million increase in the Filmed Entertainment segment. Adjusted net earnings from continuing operations attributable to Viacom were $421 million, up 24% over the third quarter 2008 results, with adjusted diluted earnings per share of $0.69, a 25% increase over the prior year's results.

    CEO Philippe Dauman cited "ratings gains at several core networks and MTV delivered another record-setting Video Music Awards."

    Media Networks revenue was essentially flat at $2.12 billion, with solid growth in affiliate sales offset by lower advertising and ancillary revenues. Worldwide affiliate revenues grew 10% in the quarter. Domestic advertising revenues were down 4%, which is a 2-percentage point sequential improvement over the second quarter 2009 results. Worldwide advertising revenues declined 5%.

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    COMPANY NEWS

    Thomson struggling to sell Grass Valley

    According to a Reuters report, French media technology group Thomson is struggling to agree terms for the sale of its TV and film equipment maker Grass Valley to U.S. investment fund Platinum, French daily La Tribune reported on Friday.

    The French paper said the fund and the group were at odds on the level of financing required to fund the restructuring of Grass Valley. Thomson declined to comment.

    To cut debt, Thomson has pledged to sell businesses that contributed around 1 billion euros to 2008 sales, including advertising unit PRN and cinema advertising unit Screenvision on top of Grass Valley.

    La Tribune said other companies might be looking at the unit but no serious talks had been embarked on.

    Grass Valley has been suffering from crisis-induced delays to investments in the media sector.

    Last week, Thomson said the sale process of Grass Valley continued and it was "premature at this stage to anticipate the outcome of the negotiations."

    Thomson shares have gained 8 percent so far this year after losing more than 90 percent in 2008.

    Adobe engages Apple in "passive aggressive warfare"

    According to a report by Chris Ziegler on the engadget website, posted Nov 2nd 2009, Adobe's seemingly tried everything in its fight to get Apple to tear down enough development barriers to get Flash ported to the iPhone, culminating in a native compilation option in CS5 that... well, really doesn't solve much of anything. So far, nothing's worked. What's next? Get the masses fired up with some old-fashioned propaganda and let 'em riot down at One Infinite Loop, of course! Visiting Adobe's Flash download page from an iPhone now shows a pretty tersely-worded message informing the user that they're getting short-changed simply by Apple's refusal to budge, so yeah, if you hear an occasional cry of "this is outrageous, I'm writing Apple immediately!" while sitting at an airport gate or a coffee shop, you can safely guess what just happened.

    Freedom Communications Files for Chapter 11 Bankruptcy

    Freedom Communications filed its reorganization proposal in the U.S. Bankruptcy Court for the District of Delaware in Wilmington.

    Freedom’s secured lenders will take over the company under a debto-in-possession agreement reached before the filing. Primary lenders included J.P. Morgan Chase, SunTrust Banks and Union Bank of California, which were collectively owed around $770 million out of Freedom’s total debt of $1 billion.

    The court will have to approve Freedom’s disclosure statement before the company holds a vote on the reorg plan and seeks the court’s OK on it.

    A group of Freedom’s unsecured creditors petitioned the court in mid-October to reject the company’s investment banker based on conflict of interest. The same group objected to a proposal to award Freedom executives $7 million in bonuses when they themselves were allotted just $5 million. The outcome of an Oct. 14 hearing on the subject was not yet posted in court proceedings posted online.

    Alcatel: Growth predicted

    Ben Verwaayen, chief executive of Alcatel-Lucent, said he expected the telecoms sector to return to low single-digit growth in 2010 and that the company was still on target to reach break-even at the end of the year.

    His assurances come despite the fact that the Franco-American telecoms equipment maker reported a 9.3 per cent fall in revenues to E3.68 billion ($5.5bn) for the third quarter. Net losses deepened to E182 million from E40 million for Alcatel-Lucent in the same period last year.

    To achieve the forecast break-even at adjusted operating level, the company will need to make operating profits of about E360 million in the fourth quarter compared with an E11 million loss in the three months to the end of September. Verwaayen said growth was being led by the US and China and by the newer sectors of telecommunications, such as next-generation mobile networks and high-speed broadband.

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    PRODUCT NEWS

    Mac share grew after Windows 7 debut

    Microsoft has not halted Apple's momentum, according to Net Applications' October report Netapps pie chart

    According to the website, if Microsoft was hoping that the launch of Windows 7 would halt the erosion of its operating system market share — and curb further inroads by Apple (AAPL) — there is no evidence that it's working yet.

    In fact, preliminary data released overnight Sunday by Net Applications show Mac OS X's Internet share growing by 2.73% in October, from 5.12% to 5.26%.

    Windows' Internet presence, meanwhile, fell from 92.77% to 92.54% — its ninth loss in 12 months. Windows 7's share, however, was more than 2% even before its Oct. 22 general release, thanks to widespread use of early release versions. By Oct. 30 the Windows 7 portion was 2.85%, largely at the expense of Windows XP, according to a separate Net Applications report.

    Net Applications, it must be noted, is not measuring share of market in the sense of sales revenue or unit sales. Rather it tracks the presence of various operating systems on the Internet by sampling browser data from visits to its clients websites — some 160 million hits per month. It's a methodology that tends to favor devices that make it easy to navigate the Web, which explains the relatively high "market share" of the iPhone in the firm's monthly surveys.

    Net Applications issued an update Monday entitled "Windows 7 breaks 3% in daily tracking." Meanwhile, their quality control department has reviewed the OS market share trends shown below. In the revised table Windows' market share dropped 2 points (to 92.54%) and Mac OS gained a point (to 5.27%).

    Apple introduces Apple TV 3.0 software

    Apple has launched its new Apple TV 3.0 software featuring a redesigned main menu that makes navigating content simpler, and makes accessing the selection of on-demand HD movie rentals and purchases, HD TV shows, music and podcasts from the iTunes Store even faster through their TV.

    Users can now watch iTunes Extras and iTunes LP in full-screen with their Apple TVs, as well as listen to Genius Mixes and Internet radio through home theatre systems. The new Apple TV software is available immediately free of charge to existing Apple TV owners.

    Apple's iTunes May Offer Pay-TV Service

    iTunes is considering an all-you-can eat $30-a-month TV service. A new subscription service would turn iTunes into a pseudo cable and satellite TV operator -- a company that charges monthly fees for traditional TV/cable networks. The difference is that iTunes service would be sans advertising. Shows would not be distributed via linear networks -- but, as iTunes does now, by program. The story was first reported in AllThingsD.com.

    Apple's iTunes Stores is the original digital video Internet service, launching with Disney-ABC television shows back in October 2005 as a fee-based, ad-free service. Right now, it sells subscription season-long passes for some TV shows. Currently, TV shows are priced at $2.99 an episode.

    Soon after iTunes' early success, new digital TV/video business believed that ad-supported, free services would rule the day. Only recently, in conjunction with the weakness in the economy and TV/ video advertising, has the pay model been seen as offering greater value.

    The report said iTunes executives were having initial talks with TV networks. When Media Daily News contacted Apple, a spokeswoman said: "We don't comment on rumors or speculation." Network executives at NBC Universal, CBS, Fox, and Disney-ABC did not respond to inquiries by press time.

    A new pay-TV monthly service from Apple would have a big customer base, drawing from almost 100 million iTunes accounts on file. That could make it an instant competitor with a Hulu.com (which has some 38.5 million unique visitors a month), or the much smaller Comcast's Fancast. Both run premium network and cable TV programs.

    Hulu and Fancast are currently free, ad-supported digital sites. There has been speculation that Hulu might consider adding some sort of consumer payment model. Comcast has been pushing its TV Everywhere initiative that would require consumers to be Comcast or other cable system customers before being able to view TV programming online.

    Broadcast Equipment manufacturers Gear Up for Mobile DTV

    According to a report on BE, With the new A/153 mobile DTV standard now unanimously approved, suppliers of DTV transmission equipment said they are ready with the technology and systems required to leverage part of a station's 19.6Mb/s of allotted spectrum for sending video via terrestrial signals to portable devices. Now it's up to stations to bring these new services to consumers, as many have pledged to do by early next year. Treport author Michael Grotticelli nogtes that: "The broadcast industry is looking to the newly adopted ATSC Mobile DTV Standard A/153 as a way to reach more viewers and generate new revenue via real-time programming, emergency alerts and interactive services displayed on mobile devices like laptop computers, in-car entertainment systems and cell phones". As of this week, Axcera, Grass Valley, Harris and Rohde & Schwarz are all reported to have announced field-tested systems that adhere to the ATSC's new specification. All had been waiting for final approval of the A/153 Standard before committing to making specific equipment in quantity.

    RESEARCH NEWS

    SCRI RESEARCH NEWS

    2009-2010 Broadcast Pro Video Marketplace Reports

    2009-2010 Broadcast Pro Video Marketplace Reports Series is now available. A total of 25 individual product reports as well as a macro industry overview and micro quantitative data analysis reports are available. Contact des_chas@scri.com for more information.

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