Media Private Equity specialist Veronis Suhler Stevenson (VSS) has just published its annual Communications Industry Forecast 2007-2011, saying that total US media communications spending grew by CAGR 5.9% from 2001 to 2006, exceeding GDP growth to reach $885.2 billion, driven by strong gains in alternative advertising, marketing, and institutional spending. Overall media communications spending is projected to grow 6.4% in 2007, to exceed $1 trillion in 2008. Internet advertising is expected to become the largest ad segment in 2011, surpassing newspapers. For the first time since 1997, consumers spent less time with media in 2006 than they did the previous year, as media usage per person declined 0.5% to 3,530 hours, due to changing consumer behaviors and digital media. Advertisers have diverted money from traditional print and broadcast media to alternative digital platforms to combat audience fragmentation.
The FCC this week failed a prototype made by Microsoft, and supported by a technology coalition including Google, Dell, HP, Intel and Philips which was designed to offer high-speed internet services on the gaps between television spectrum, saying that it could not reliably detect TV stations and could cause interference. Microsoft immediately submitted another filing which it said would get over the problem, requesting another test.
UK web TV facilitator Narrowstep said it has completed a private placement of its common stock resulting $10.1 million in proceeds after costs, issuing 42 million shares and warrants to purchase another 21 million at $0.50 a share, with Renn Capital acting as lead investor in the deal. Narrowstep supports a number of web TV channels offering bandwidth, servers, management software and spare advertising inventory sales, similar to Brightcove in the US.
Qualcomm head lawyer, Lou Lupin, resigned this week after a series of unsuccessful legal campaigns over patents with rivals such as Broadcom, which has resulted in its chips being banned from import to the US by the US ITC. One judge complained of litigation misconduct and concealment and included the legal team in his criticisms. The company issued a statement thanking Lupin for his help on Qualcomm’s strategy on intellectual property, but there was more than a hint that with his departure the company may go through something of an attitude change. Qualcomm still has cases with Broadcom to settle, but more importantly multiple cases coming to trial involving patent claims both ways with Nokia.
Broadcom said this week that a US District Court in Santa Ana, California has ordered Qualcomm to pay double damages of $39.3 million for past infringement of three Broadcom patents. The judge also ordered Qualcomm to pay Broadcom’s attorneys’ fees in the litigation. In May a jury trial found that Qualcomm had ‘willfully infringed’ the Broadcom patents, and awarded Broadcom $19.64 million in damages.
British Telecom said this week that it is one of the telcos planning to use the Microsoft Xbox 360 doubling as an IPTV set top as well as a games console, according to gaming site Xboxer and will introduce them bundled into its BT Vision service before the end of the year. BT Vision was launched in December and after a slow start now has 20,000 customers.
The Spanish regulator will issue a UHF license for mobile TV, which is likely to be bid for by a consortium of Abertis Telecom, Nokia, Vodafone with possibly the addition of TDF’s Axion, by September. All three trials so far in Spain have used DVB-H, since 2005.
Dallas based RipCode said this week it has raised $10.5 million in a second-round funding with ATA Ventures, Hunt Ventures, Vesbridge Partners and El Dorado Ventures, just a year after closing its first $7 million, round. RipCode offers appliance based video transcoding, which is translating between two different codecs for PCs, mobile phones and iPods and will spend the money ramping sales and marketing.
UPC has acquired Austrian cable operator Telesystem Tirol, from the Moser family which has interests in newspapers, printing plants, radio stations and online properties. Telesystem Tiral has 50,000 customers with 25,000 also taking broadband and 10,000 taking telephony service.
On2 Technologies has upgraded its Flix Engine encoding software to support the H.264 compression to go with the H.263 and VP6 schemes it currently supports. The announcement comes on the heels of On2’s acquisition of Hantro Products Oy, which develops a broad portfolio of standards based video compression, positioning On2 as a single source for all the leading video compression schemes. On2’s VP6 is the basis of the encoding in Adobe Flash Video.
UK newspapers report this week that local ISPs believe that widespread use of the BBC’s new iPlayer will push their networks to breaking point. The complaints come from Tiscali, BT and Carphone Warehouse and they are calling for the BBC to share revenues with them to cover the cost of upgrading capacity.
US market researcher In-Stat says that LCD TVs will make up 75% of the
market by 2011, with plasma fading to less than 15%, and breaks the results into the regions of North America, Asia and Europe. In-Stat says that interest in HDTVs is falling in the US, not rising, while the other regions were more keen on HD. In-Stat says shipments for digital TVs will grow from 68 million units last year to over 144 million by 2011 bringing in revenues of $76.7 billion.
The Hindustan Times this week carried an item saying that Mahanagar Telephone Nigam (MTN) in India, which introduced IPTV services a year ago wants to attract 50,000 users over the next 18 months from the 1,000 it has today. This is based on the sudden take up of broadband lines, which will reach 500,000 in each of Mumbai and Delhi, this year.
Universal Music Group says that it is experimenting with DRM free tracks in experiments running from August through to January, and will include US retailers Amazon, Wal-Mart, Best Buy, Rhapsody, and others, but not Apple’s iTunes store which pioneered DRM free music in conjunction with EMI. UMG will offer its most popular content in MP3 and will include watermarks for tracking it on internet P2P sites.
US market researcher IDC says that the three main gaming consoles will have new forms of revenue by dint of being connected over the internet, including subscription fees, content sales and advertising. This revenue will grow from $981 million in 2007 to $10.5 billion by 2011 when it will account for 18.6% of total the market revenue. This is additional, it says, to console sales and retail games sales. IDC says that subscription revenue for premium services will reach $2.4 billion; downloadable content will reach $7.2 billion and advertising revenue will grow to $858 million.
JumpTV, the US internet TV service which specializes in delivering foreign TV to ex-pat communities announced that it has bought Cycling TV as it gave its quarterly results. Cycling TV is one of the most successful start up web TV services in the UK, which has bought content rights to all the major cycling races around the world, including the Tour De France. JumpTV also announced that in its second quarter it took over $1 million in revenues. Cycling TV should just about double JumpTV’s annual revenue. Currently JumpTV averages 2.5 million viewing minutes and 2 million ad impressions per day.
Liberty Media said on its results call that it intends to spin out a separate share listing for DirecTV called Liberty Entertainment, which it is in the process of acquiring from News Corp. The new stock will include the Starz film channel. Liberty also operates a tracking stock for Liberty Interactive, which runs the QVC shopping channel and another for its Capital Group, for diverse holdings. Operating income at the group fell slightly on revenue down $10 million for the quarter to $254 million.
Tecom Investments has signed a deal for Deutsche Telekom’s Media and Broadcast, to build a DVB-H mobile TV network in Dubai, which will be brought to market in parallel by Etisalat and operator du, also partly owned by Tecom.
UK chip designer Mirics has raised $12 million after around $2 million of additional capital was invested by Acacia Capital Partners to the money already put in by fellow investors Intel Capital and Pond Venture Partners to complete its design of a chip which can offer DVB-H, T-DMB and ISDB-T. This device will operate from 150 KHz right up to 1675 MHz. The company claims it will use just 13mW of power on average.
UK’s watchdog, the Office of Fair Trading says it will investigate BSkyB’s £125 million ($250 million) takeover of the consumer electronics firm Amstrad which supplies 30% of its DTH set tops. The OFT is concerned that this will lead to less competition in the set top market. BSkyB is already being investigated for its purchase of a substantial minority holding in rival ITV.
Meanwhile the OFT has also referred the deal whereby Australian bank Macquarie acquired both of the major UK broadcaster networks, with the BBC broadcasting infrastructure, which was held by National Grid Wireless being added to its existing holding in Arquiva. The concern again is that the merger may result in a substantial lessening of competition in the sector since virtually all TV channels would be dependent upon broadcaster networks owned ultimately by the same company.
A US federal judge this week said that the Californian law, championed by Governor Arnold Schwarzeneggar is unconstitutional, which regulates video games, limiting their amount of violence and their sale to minors. The case was brought by the Video Software Dealers Association and the Entertainment Software Association trying to block the law, which will now be repealed.
US RBOC Verizon has applied to the FCC to extend the one-year waiver if gave Verizon to allow it to offer an integrated set top with encryption, which is a procedure that must stop under the CableCard ruling.Verizon wants three years before the ruling applies to it, instead of one and said in its application that a common standard for downloadable set top security would not be in place before July 2008, and under its current waiver it would not have time to deploy it.