The entire entertainment industry sometimes waits for the US to tie its shoelaces before deciding whether or not an idea should be taken up. Of course some of the best ideas come from the US, but many are just evolved there, until they are ready for prime time.
The DVR for instance was invented not by Americans, but in America. The MP3 player may have come from anywhere, but it is an American initiative in iTunes Music Store which tied that market up. Cable certainly started there.
It is the freely available discretionary spending among a large portion of the US population and the previous high penetrations of technology which make this so. Pay TV has a higher penetration, mostly at a higher price, in the US, than anywhere in the world, while in handsets, penetration has always been lower than in Europe and parts of Asia Pacific and yet device spending per head remains higher.
Against this background it is obvious that the fate of boxes which turn PC or internet held video into something the TV set can view, are either going to be made, or be broken in the US, although some significant initiatives persist outside the country. Specifically there are initiatives in the UK, around its well established DVB-T Freeview and Freesat services, where a specification is being drawn up under the code name of Canvas, for a set top which will view both those services plus content from the internet.
But in the US there have been a plethora of devices which purport to offer content from the internet, devices which convert video formats on the fly or which have memory attached, such as the two generations of Apple TV (there is a new $99 report from our partners at Rider Research in the US called ‘Internet Video Comes to the Living Room’, which lists and evaluates each of these devices).
So far none of these have managed a concerted attack on this market in the US, and no obvious winner has emerged. But interestingly this week US researcher Parks Associates has a report out, based on consumer interviews, which shows that the US market for these products is waking up.
It reckons that 33% of US broadband homes now have a strong interest in Web-enhanced features for connected TVs and set-tops and goes on to say that VoD libraries and widgets will be the first generation of video services driving adoption of connected television experiences in the US.
Like all of these ideas, they take off faster when one of the major US pay TV operators such as Comcast or DirecTV decides it must offer it, and Parks encourages them to do just that. Its white paper on the subject is called From Boob Tube to YouTube.
The Widget aspect was really triggered at this year’s CES in January, and we can see the Parks guys sitting down then and saying ‘We must write a report about this’ in the days after CES.
It was the first appearance there at CES of the Intel CE 3100 in a product (from Samsung) which made us predict that a wave of cheap Intel based Blu-ray devices would be among us by this Summer. The Intel CE 3100 chip is a generic TV converter chip which we felt would replace devices like Apple TV for a just few dollars and be integrated into all the devices out there ‘ DVDs, digital TV sets and DVRs. It was the additional software layer which Intel is backing with Yahoo which put the icing on the cake, by developing a widget style TV screen overlay which drops Internet video widgets onto TV screens.
This Intel chip sat alongside the other internet connected devices all sporting their $300 price tags at CES in January with devices from LG, Netflix, Adobe, Broadcom, Yahoo, Amazon and Roku.
We said at the time that this was the device to make ‘Net to TV’ take off and what Parks has done is test the water out there in the US public and find that the water is fine, come on in, with Internet TV connectivity. Recent Netflix figures will support this view, given that it has just doubled its subscription uptakes since it introduced multiple devices which can stream internet VoD services direct to the TV.
Three of the major TV manufacturers ‘ Sony, Samsung and LG ‘ have all introduced devices which can do this in the US (using older, more expensive technology) and many of these now have VoD library relationships to go with them.
Already now Parks reports that there is enough consumer awareness, that despite the recession (or perhaps because of it among people wanting a cheaper internet VoD experience) some 33% of US broadband homes are already interested in widgets, and 50% are interested in premium Web content – TV shows and movies – through a connected set-top box.
Reports like these are part and parcel of the process whereby the CE universe gives itself enough confidence to get on with it and commit to designing one of these devices, cheap and in volume, possibly adopting the Intel architecture or one very like it, for instance from Broadcom.
“Broadband households are growing accustomed to viewing video off the Internet,” said Kurt Scherf, vice president, principal analyst, Parks Associates. “Demand for Web and user-generated content will increase, and those desires will influence their CE purchases and service provider choices. Widgets and VoD libraries will be the first in a long line of advanced video services people will want in their living rooms.”
Scherf added that consumers also want interactive features and are willing to pay – either paying extra for a more expensive TV or as an additional subscription cost – for certain features.
It will take more than one such report to stimulate the market, but once the US public starts taking this type of device to heart, a market leader will emerge and suddenly the results will spill over outside of the US into a global trend.
Meanwhile in the UK a more orchestrated approach has been under way for some time, with the BBC, independent TV stations and British Telecom all joining hands to develop an open architecture for a DVB-T set top that can also offer video over the internet. This is more or less what BT launched with its BT Vision hybrid IPTV broadcast service which offers DVB-T over the air plus paid movies and TV series over the internet. This has been in design simply forever but deployed for only 18 months, and the incumbent telco now realizes that its product actually works.
The BBC’s own efforts have been around streaming TV to mostly PCs using something it calls the iPlayer, which after a four year love affair with P2P software, now uses straightforward streaming.
The combining of these two ideas is the basis for Project Canvas, revealed this week for devices which have DVB-T or DVB-S tuners for free over the air TV, as well as broadband connections which can attach to the iPlayer service, already the largest free streaming video service in Europe.
Project Canvas is part of the BBC’s ideas for a series of practical partnerships to bring it in extra funding, which is why it is being pitched as a open platform for other broadcasters. We’re not sure if this will open the door to internet only services such as YouTube and most likely it will just take catch up TV internet usage by the broadcasters, from the PC back to the TV.
Already the BBC with its partners ITV and Channel 4 have run into Competition Commission problems with its Kangaroo idea, a shared catch up TV service, just for broadcasters, but if this survives accusations of anti-trust (which we don’t think it will) this will also be integrated into Project Canvas.