Tech Untangled

Amazon has the Amazon Unbox on Tivo service, and both Netflix and Apple recently announced online movie rental services, and eventually you will be able to see Joost and Babelgum programs on TV. All this point to a market crowded with new ways to get movies fast and cheap over the Internet

Naturally, the incumbents - cable TV providers such as Comcast that deliver movies and TV programming over cable and satellite systems risk getting swept aside. Comcast is not waiting like a sitting duck. In early January, Comcast, the largest cable MSO in the U.S., announced Project Infinity to upgrade of its video-on-demand offerings and boosts the number of on-demand movies from 1,300 a month to 6,000. The cable operator says its video-on-demand services account for roughly 275 million viewings a month.

What Comcast has done to expand its movies-on-demand offering is to leverage its existing deals with Time Warner’s HBO, CBS’s Showtime, and Liberty Media Corp.’s Starz, something most others will find hard to do immediately.

At the same time, Comcast also announced the launch of Fancast, an online service at fancast.com [http://www.fancast.com] where subscribers can watch more streaming videos of TV shows from the likes of CBS and Fox and also use the site to order videos, get iTunes downloads, and program their digital video recorders to record TV shows while away from home. Comcast also plans to offer the service to other cable operators, making money from advertising and affiliate fees from DVD or download sales.

In the voice telephony world Comcast and others Cable providers are successfully taking on both VoIP providers such as Vonage and telephone companies such as at&t. In similar fashion, Comcast has a strategy to ward off anyone in the Movie and TV programming space. Comcast will not be able to stop Apple, Amazon, and Netflix completely, but will make a big enough dent in their profit plans.

Comcast in 2008 will offer High Speed Internet with speeds as fast as 160 megabits per second, which is a massive increase from its current maximum of 16 mbps. This is in many ways in response to competition from local telco’s such as AT&T and Verizon that are provide high speed Internet access over fiber optic networks. Of course, neither AT&T’s U-verse nor Verizon’s Fios has announced such high speed Internet offerings yet, but they certainly can have the capability to do so (Note: Verizon provides fiber optic all the way to the home, called Fiber-To-The-Home or FTTH, but AT&T and cable companies don’t), and it is this potential threat that is driving cable companies such as Comcast to one-up local telcos.

According to Comcast, this will allow a customer to “download a two hour-plus movie in high-definition in three minutes and 56 seconds”. No pricing has been announced yet. It might cost a pretty penny initially, with prices likely to fall once competitors start offering comparable download speeds.

Providing higher Internet speeds should be a boon for Comcast’s Internet business because it will help attract and keep customers that use high bandwidth servies such as gaming, video & music streaming and downloading, and Peer-to-Peer (P2P) applications extensively. However, this is a double-edged sword: Higher Internet speeds will fuel online movie and TV program downloads and streaming to a customers set-top box or TV from the Internet in a flash. This would be a great opportunity for companies like Netflix, which recently announced a deal with LG Electronics to develop a set-top box that can download movies and TV programs from Netflix over the Internet, and Amazon, whose Unbox service already sells movies to be downloaded to a Tivo. Apple with AppleTV, Moxi, Sling Media and others are also in the same arena.

Offering blazing Internet speeds will be great for Comcast in the short term, and Comcast will expand its Video on Demand service to counter the threat from the likes of Netflix, Amazon UnBox, and AppleTV, but in the long term this could very well be a double-edged sword that promotes online movie downloads and dampen interest in Comcast’s own Video on Demand service.

The Federal Communications Commission (FCC) recently voted to ban exclusive contracts between cable TV providers and the owners of apartment buildings, condominiums and planned subdivisions. This is a good move by the FCC (see Ushering a New Era of Consumer Choice in Set-Top Boxes for another cabled related good move by the FCC), which is expected to promote competition and reduce cable rates for an estimated 100 million consumers.

The problem with long-term cable contracts is that if an apartment, condominium, or subdivision enters into an exclusive agreement with a cable company, then other TV providers are hampered from offering service, even if subscribers want another service provider. This issue is made worse by exclusive cable contracts that last indefinitely (a small number of idiots have apparently done this!). Frankly, I don’t see much benefit in exclusive cable contracts when satellite is available.

I am in this exact situation - the town I live in has an exclusive contract with a small cable TV provider. Incidentally, the contract was given to a close relative of the mayor – something smells fishy here! Residents here can get satellite service, but they still have to pay the mandatory charge for the cable TV service whether they use it not.

The biggest benefit of this ruling may be for telephone service providers who offer TV services over Fiber (FTTP or FTTH) or copper (e.g. AT&T U-Verse). Of course, some cable TV competitors will benefit as well, as they will be able to serve apartments, condominiums, and subdivisions that were not approachable due to long term contracts.

However, there are benefits to long-term exclusive agreements; Property owners can negotiate rates in return for guaranteeing a large number of customers for cable providers, who otherwise might be reluctant to invest in setting up the last mile connection into buildings. Overall, everyone benefits – the cable provider gets subscribers, customers (tenants) get cable service, and property owners are able to market their properties better because the property has cable service. The customer lock-in is the only hitch!

The question is whether competitive cable providers have access through the same wires or does every cable service provider have to develop its own last mile network. I suspect it is the latter, which also means that property owners may have to pay more to rewire buildings for competitors – this is going to make this ruling mostly ineffective.

The FCC ruling is a good first step, but I’m not sure if this will resolve many of the problems associated with exclusive contracts. As for me, I am hoping that I have the choice to cancel my cable service and not have to pay for it (I can get satellite for less)

Your thoughts?

AT&T just cut its forecast for the number of homes that will have access to U-verse, the service that sends TV through home phone lines.

Now, AT&T expects U-verse to be available to 17 million homes at the end of 2008, down from a previous estimate of 18 million. According to AT&T this delay is due to preparing for U-Verse rollout in the former BellSouth territory, which AT&T acquired last year. As this is preparatory work, it will not result in U-verse being available to additional homes by 2008.

AT&T has delayed U-verse rollout several times, so no surprise here. IPTV so far hasn’t been a big hit in the U.S., with Europe and Asia leading the U.S. in terms of IPTV subscribers. Nonetheless, service providers see IPTV as a key component in providing bundled services and “three-screen” services (i.e. mobile screen, desktop screen, and TV screen).

More than 8.2 million customers subscribe to IPTV as of first half of 2007. This is a 179 percent increase in the 12 months ending June 30 2007, according to according to research from Point Topic (registration required).

Europe leads the way with the highest total subscribers (4,984,000) and also leads with a whopping 231% customer growth – indicating that Europe is now pulling far ahead of the rest of the world in terms of IPTV subscriptions. All the major European incumbents now have IPTV service. Around half of the IPTV customers are in France, primarily due to France Telecom’s strong performance in response to the deployments of rivals Free and Neuf. Spain’s Telefonica added almost 200,000 IP TV customers, Belgacom signed up 120,000 in Belgium, Deutsche Telekom landed 35,000 and BT in the UK added 20,000 customers during the same period.

The Asia Pacific region also has 2.1 million customers (excludes Korea, where only video-on-demand services via IPTV is provided), with 800,000 IPTV subscribers at PCCW in Hong Kong and Chunghwa in Taiwan gaining 200,000 IPTV accounts in the same period. These numbers should start hit the roof when Chinese companies move from trials to commercial deployment.

The Americas lags both Europe and Asia-Pac with only 1.069 million subscribers signed up in the first half of the year. Here, IPTV is seen as a response to triple-play competition from cable MSOs.

Verizon Wireless has launched a Veoh channel on its V CAST service. Veoh is an upstart Internet Television provider with more than 85,000 video publishers - from Paramount Pictures, Lions Gate, PBS and Us Magazine to many independent content producers, and 15 million unique users per month.

With Veoh, Verizon Wireless V CAST subscribers have access to the “Best of Veoh” video collection that includes animation, comedy, entertainment, drama, and Web-series video. The video clips are specifically selected for a mobile audience. Verizon Wireless is generally very strict about content guidelines, so my guess is that there’s some form of content filtering going on as well.

To get V CAST, a subscriber must have compatible mobile phone. V CAST is $3.00 for 24-hour (great for checking out the service) or $15.00 for monthly subscription. V CAST comes with a unlimited usage subscription and uses the 3rd generation EV-DO network.

Interestingly, this paves the way for Verizon (owns 55% of Verizon Wireless) to bring Veoh to the VerizonSurround broadband entertainment portal on FiOS TV this fall. FiOS TV is a Fiber based TV network. Good for Verizon Wireless and great for Veoh.

Selfcast is a new peer-to-peer based technology that enables “anyone, anywhere” to create live streaming content and broadcast themselves live on the Internet. Selfcast comes with a free software application to capture, mix and broadcast live video and audio, and then broadcast it live on the Internet. You can even invite friends, fans and family members to tune in through the integrated messaging tools.

To watch a broadcast, simply select or search for a cast at Selfcast.com, and you can watch the live show on the browser itself (requires Windows Media Player). Currently, only Microsoft Windows XP and Vista are supported. Mac support is coming. Selfcast has instant messaging (IM) tools built-in, so simply use your existing Skype login to IM your friends to tune in to your broadcast. Or, just send email from the Selfcast application. Selfcast plans to integrate MSN Messenger, AIM, ICQ, and Yahoo! Messenger into Selfcast in the future.

Essentially, Selfcast is creating the platform for anyone to stream their live video/audio stuff. This works much like Justin.tv, but Selfcast is a platform for anyone to do it. This is going to be the next generation of YouTube. As long as these guys can get the word out fast, this is going to be huge!

‘Selfcast’ is a part of the live peer-to-peer (P2P) streaming company RawFlow and is at http://www.selfcast.com/

Last month I talked about Raketu, the one-stop shop that combines social networking with integrated communications (VoIP, IM/SMS, feeds) and IPTV. While Raketu is unique in combining all three, which is where the future is, Raketu does not have a strong position in this space.

Nonetheless, Raketu has launched its Mobile version to bring free or real cheap national and international calls from a Smartphone with Symbian or Windows Mobile.

The VoIP client has to be downloaded onto the mobile device (bummer!). Frankly, I don’t think most users will care to or even feel comfortable downloading an application to a device. Furthermore, the user must have a Data Plan (bummer again!), which is still pretty expensive these days. See a related article on Skype complaining of high carrier data charges. Verizon has an unlimited data only plan for $49.99. I don’t think most uses would drop the voice plan and get a mobile with just a data plan (even though E911 will work just fine without a voice plan - something most people don’t know). The good thing is that one could use the service from anywhere in the world, as long as you don’t care about high data roaming charges! Unfortunately for Raketu, the mobile VoIP client is pretty crowded, including those like EQO and Talkster.

Mobile users can watch IPTV and VOD on they mobile phone, as long as they can access RakWeb via the Internet (No download required).

Babelgum, the upstart Internet TV network that looks and works much like Joost, has appointed Valerio Zingarelli as the CEO. Zingarelli takes over from co-founder Erik Lumer who will now focus on strategic product development. Prior to Babelgum, Zingarelli was an independent Boardmember of Fastweb, the second largest Wireline Telecommunication Company in Italy. Before that, Zingarelli was formerly Vodafone’s Global Director of Networks and Service Platforms, which he joined from Omnitel. Prior to that he worked for Alenia and for Cselt, both in Italy.

The most interesting part is that Babelgum is looking more and more like a Europe-focused company. Babelgum is founded by Italian entrepreneur Silvio Scaglia. Now, the CEO is someone with strong experience in Italy (but not much global experience). Nothing wrong with that, but a more global outlook would’ve been better.

Looks like Babelgum is placing its bets in Europe, rather than in the U.S., the biggest market for Internet TV (or is it?). With the level of competition in the U.S. Babelgum would have a better standing Europe. Contrast that with Joost, another European company, that is focusing on American consumers and American media, as judged by the media distribution agreements with U.S. media companies.

Speaking of Media, Babelgum’s recent content partnerships with 3DD, Associated Press, BBC MotionGallery, Big Picture Limited, Black Diamond, Breakthru Films, Entertainment Rights, Fight Network, Filmchest, Gong Anime, IMG, Fashion, Gamer TV, Golf, Indivisual, Intervision, ITN, Journeyman Films, Quattro Media, Reuters, Spike Lee, aren’t anything to write home about - more evidence that Babelgum is focusing on the indie-like niche.

This is disappointing as I was looking forward to Babelgum and Joost blazing a trail to bring Internet TV to the television via the set-top box.

Nonetheless, I like what I hear about Babelgum’s strategy. By the end of the year, Babelgum plans to grow to 100 employees. In the next year Babelgum will concentrate on the three sequential priorities of building quality content through direct acquisition of content and automatic self-uploads by independent content owners, marketing Babelgum to English speaking viewers around the globe, and addressing the advertising market. I think Babelgum has the right strategy - to focus on a niche. Why compete with traditional TV providers, and Internet TV providers like Joost, Veoh, and YouTube/Apple TV when you can carve out a profitable niche in long-form long-tail media!

adap.tv, a unique online video advertising platform that allows publishers and advertisers to match relevant advertising with online video content, has closed a Series A round of $10 million from new investor Redpoint Ventures and existing investor Gemini Israel Funds, to enhance and expand the company’s product offerings, broaden recruitment efforts, and grow operations. The company was founded in 2006, and is headquartered in San Mateo, CA.

adap.tv uses advanced technology to analyze the video, audio and metadata to serve contextually relevant ads without being too invasive, monitoring viewers interaction with ads and adapting to their behavior.

With video being one of the fastest growing areas, there is tremendous opportunity in video advertising. However, adap.tv’s focus on “video advertising beyond the pre- and post-roll”, is a bit puzzling - pre and post roll is where advertising has traditionally been tried and succeeded (perhaps less successful now).

I’m not so sure that users will click on an ad during a show because it will interrupt watching the video and take the user to a new page. Content producers and content networks wouldn’t be too happy if the users don’t get to watch the entire show!