Parks Associates Blog

Monday, March 31, 2008

i-Mate and its Momento Wireless Picture Frame-Review

The digital picture frame market has seen explosive growth in recent years. While many frames on the market only display photos from the plugged-in memory card or internal memory, a few manufacturers have begun to add connectivity to this device. People from i-Mate, a brand best known for its mobile phone accessory products, were kind enough to send me a 10.2-inch Memento 100 for review. The following is the summary of my test.

Overall, the model exceeds my expectation for a product concept that is still evolving. From a hardware perspective, its contemporary-looking, white and acrylic frame shell meshes well with my living room furniture, and a decent LCD resolution (800x480) is adequate for most of my photos. But for a number of high-resolution photos I received from my friends (God knows what cameras they use…), the visual effect was less stunning than on my Sony VIAO laptop. The only shortfall on the hardware side, in my opinion, is the model’s lack of internal memory. I have to plug in my camera’s memory card or a flash drive, which is more a hassle of inconvenience than cost. Even a mere 128MB internal memory will help.

The user interface is a bit confusing at the start. I have to refer back and forth from user manual to remote control to screen menu to understand each RC button’s function and how the UI is organized. Each photo source is highlighted as an icon at the top of the UI menu, but navigation to these different photo sources wass not as straightforward as I thought. I figured it out after several attempts. I like the feature that allows a user to select photos to display based on tags, folder names, star ratings, etc. They will come pretty handy for those who are into meta-labeling photos, like my wife. Overall, UI still needs a bit tweak to make it more intuitive, especially for people whose only RC experience is with a TV remote control.

Photo display software has my biggest complaint. My family and I are part of the blame too. Since my wife and I are not good shutterbugs, we do not always end up with photos that have people’s faces/figures in the middle of the shot. What makes me edgy is that the frame honestly tells the viewers how incapable we are. It becomes worse when the frame’s software auto-crops the not-well-shot pictures to fit the screen. As a result, my daughter was without her favorite hat in one shot and half my father’s right leg is gone in another family portrait. In fact, such problems occur to many other frame models I have seen or tested. “Intelligent cropping” should be an area for all frame vendors to make improvement.

What I had the most concerns with prior to the review turned out not a hassle at all. Maybe I am an avid network user, or thanks to my digital media adapter experience, configuring wireless network and connecting the Momento 100 to my home network is a no-sweat job. Although I struggled a bit through the keying-in-the-network-key session with the remote control and on-screen keyboard display, wireless connectivity was quickly established. I certainly appreciated the reminder message telling me that I need to turn on my PC and enable the Windows Media Player’s media sharing function, even it cost me several trips back and forth between my study and living room. My wife was very delighted when she saw all her pictures on PC can now be displayed on the frame.

Next I tested the Momento Live service. The user manual provides detailed account set-up process and I followed it religiously—it didn’t give me headache at all. But I began to realize that the user interface on the live account might be a bit foreign to new users. It has all the tabs, like Account Management, My Pictures, and Search. But some of the sub-menus of these tabs did not give a concise explanation of what these functions can do. I intentionally asked my wife to navigate through the account website. She paused, tried several tabs, tested a few functions, and apparently became confused and cautious about what these features can give her what kind of experience. Under the “Search” tab, she turned back and asked me what a RSS feed is and what the drop-down menu is for. After I showed her how to get pictures from Flickr, she became much relieved and excited about these features. Maybe describing the features in plain language with clickable links to these partner websites will help consumers out of the guessing game.

But many features enabled by this network connectivity did amaze me and my wife. I was able to set up Flickr photo streaming, tested linking my Frame Channel account to the frame, and displayed photos sent to my Momento Live account through email. Each time, the service was fairly easy to use and set up. Best of all, all these services are free to users.

So the bottom line is: the Momento 100 is a well-functioning digital photo frame ideal for technology-savvy consumers. At $299.99, it is not positioned as an entry-level product but even tech guys might hesitate to put down their money immediately. The frame’s software still has room for improvement, and I would love see its LCD resolution improve to at least 800x600. I gave its connectivity and network features an “excellent” rating, but if i-Mate hopes to extend the frame’s target market to mainstream consumers, user interface and account navigation on Momento Live have to be more convenient to use, and a bit more explanation about these service features will be helpful too.

The photo frame market is currently dominated by simple, unconnected frames. Network connectivity definitely opens the door for many innovative Internet features and services. But such knowledge is still largely limited to a small group of technology-oriented users. From my wife’s experience and reaction, I can tell that the wireless photo frames can have a much bigger market share in the future, IF consumers are made aware of the benefits of these value-added content features and services enabled by network connectivity. Parks Associates envisions that by 2012, 73% of all frames sold will have embedded networking functions. To make this happen, the price point must be right, so are the user interface and services. For years, we talk about digital home lifestyle through connectivity but applications like digital media adapters and Apple TVs have failed so far. The digital photo frame might give consumers a good reason to embrace such a lifestyle in earnest.

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Parks Associates' Gaming Analyst to Present New Consumer Data and Forecasts at Virtual Worlds Show

Yuanzhe (Michael) Cai, Director of Broadband and Gaming, Parks Associates, will present new gaming research at Virtual Worlds Spring 2008 in New York on Thursday, April 3 at 11 A.M.

Cai will present data from the Electronic Gaming in the Digital Home II, a consumer survey of 2,000 Internet gamers divided into six groups: power, social, leisure, incidental, dormant, and occasional. This survey analyzes trending in all aspects of the gaming domain, including gamer habits and expenditure on different hardware platforms, online vs. offline gaming activities, and interest in different gaming offerings such as online console gaming, multiplayer online gaming, mobile gaming, virtual worlds, and free-to-play games.

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Thursday, March 27, 2008

Odd VoD

We're currently engaging with a bunch of interesting companies in the broadband video space as we're completing work on Internet Video: Direct-to-Consumer Services (Second Edition). If I were to sum up the results of our discussions with the companies involved in the space, it might go something like this:

1. User-generated video drives lots of eyeballs to a PC screen, but there are lots of questions about its inherent value (ad-monetization) overall;
2. TV shows on the Web have been a resounding success, because there is an ad model that seems to be working, there is little evidence that the programs are cannibalizing primetime TV, and sites like Hulu and AOL video can help resurrect catalog content (like the Airwolf citing I made in yesterday's blog) that would otherwise not be monetized.
3. Movies delivered over the Internet have underwhelmed all expectations.

The movies issue is an interesting one to me, because monetizing movies in a VoD or broadband video environment has been a consistent struggle, no matter the distribution path (first with cable and now with the Internet). Our own findings with traditional cable VoD services bears out the fact that while Comcast and Time Warner Cable are both reporting huge VoD numbers (for example, Comcast reporting on March 19 that they've topped 7 billion views and 1 billion hours worth of VoD since 2003), only a tiny portion of this is pay-per-view movie content. One industry statistic I've heard recently is that the average use of premium pay-per-view is 0.8 times per month per cable subscriber. Our own data indicates that only 28% of digital cable households surveyed use premium pay-per-view on a monthly basis (from our Global Digital Living II study). And, a recent interview with CinemaNow's CEO Curt Mavis, he told us:
"I would be less than truthful if I told you that the growth of CinemaNow and the industry was what we had expected. We started the company eight years ago. In worst nightmarish predictions, nobody would have predicted that digital distribution wouldn’t be a mainstream business. It still remains a very small piece of the overall home video entertainment pie."

The challenge to both a cable operator and the CinemaNows and the rest of the purveyors of online movie rental services comes down to licensing. And, it's a very convoluted and confusing area to understand. Steve Swasey at Netflix described the situation this way:
There is no one set rule that applies to when movies can be available for electronic rental. Each movie’s window of availability is individual, so one cannot make blanket assumptions about when a title might be available.
Also, one one of the biggest variables is the broadcast rights that each studio makes for each film. Television networks generally have the right to air a movie on their channels about two years after the movie appears in a theater. If a movie has broadcast rights associated with it, then it is not available for electronic rental. Even older films such as James Bond or Patton are not available for electronic distribution, because a TV network has the right to air them exclusively.
Then, there's something that the industry calls the "HBO Hole." Content may be available for electronic distribution on an Internet site (or via standard VoD), but once HBO, Cinemax, Showtime, Starz, etc. get hold of it, it can no longer be rented via Internet sites. Now, it could come back to the electronic distribution channel, but there's no standard - all titles are different. Finally, there is guarantee for clearance of content that was released prior to 2000. Getting the rights to this content requires separate agreements with many of the players involved in the production of the film - from the producer to the director, and including the guy who wrote the musical score. In many cases, content aggregators are dealing with the estates of the key players.

The cry that we're hearing from the Internet video services that are pushing movies is for Hollywood to relax its strict windowing and allow greater freedom and flexiblity to distribute titles earlier. The argument that they make is that - in the end - it will boost Hollywood's bottom line by promoting increased sales of DVDs. And they cite the early day-and-date experiments such as Warner's distribution of certain titles via Comcast and Time Warner. The results - where VoD availability occurs at the same time a subscriber chooses to buy the DVD - have shown that sales of the DVDs do increase, while rentals are slighlty suppressed.

In the end, the studios are only going to release their tight grip on the strict windows when it can be proven consistently that earlier releases will help to boost their revenues. That's going to be a tough row to hoe, as the studios are not only must justify such moves internally and to their investors, but they must contend with their distribution partners such as the movie studios and large retails, both of whom have enough clout to derail any large move away from the traditional distribution models.

My prediction is that we'll continue to see window shrinking occur in an incremental and often piecemeal fashion, with the cable operators being the bigger winners, given their scale and ability to apply different payment models to their content. I was told by one company that an increase of 1-2% in VoD uptake is enough to cause a service provider to do backflips. Boy, the bar has been set pretty low for VoD success, hasn't it?

Netflix at the Xbox 360?

A rumor circulating by a Reuters report indicates that Xbox 360 owners may be closer to being able to use the Netflix Instant Viewing feature (catalog content available via streaming) to watch content on their TVs. Netflix has apparently surveyed its customers about their interest in having the service accessible via their game consoles, although Netflix Director of Corporate Communications Steve Swasey declined to say whether a partnership was imminent. If there were some kind of agreement reached, however, I'd be looking at Microsoft's entertainment strategy in a whole new light.

There's no question that Microsoft's Xbox 360 strategy is - to date - Microsoft's most successful foray into the living room. The launch of Mediaroom IPTV solutions has been characterized by fits and starts, although Microsoft does have major Tier 1 service providers such as AT&T, BT, Bell Canada, Deutsche Telekom, and others using the solution. The earlier Microsoft (and Intel) visions of "A chicken in every pot and a Media Center PC in every living room" also failed to gain traction. It's as simple as people don't want PCs in their living rooms.

Game consoles, however, are a different story. Microsoft has already done well in building the Xbox Live Marketplace as a compelling destination for TV shows and movies for Xbox Live Silver and Gold subscribers to access. In January, ABC and MGM joined the content lineup at the Marketplace. In total, Microsoft says that the Marketplace offers 3,500 hours of premium entertainment content from more than 35 studios and networks. And, our own consumer data shows that not only are Xbox 360 users watching streaming content from the Marketplace, but they're paying for it. More than 15% of Xbox 360 users say that they're paying for video downloads on at least a monthy basis, according to our Digital Media Habits II survey.

The potential for the Xbox and other game consoles to be "set-top box killers" is significant. While VUDU and Apple TV as dedicated video download units are compelling devices (and we recently contributed to a press release for VUDU in announcing some partnerships with well-known companies in the custom installation market; a very good fit for a product such as VUDU), the mass-market potential of these stand-alone devices is limited, in our opinion. Just compare our forecasts for the dedicated boxes (VUDU/Apple TV, etc.) to the Xbox 360 over the next few years. In a best-case scenario, we see VUDU and Apple TV box unit sales growing to perhaps 3-4 million units by 2012. At the same time, combined sales of the Xbox 360 and the PlayStation 3 in North America are going to be at around 40 million units (with a huge base of penetration already). If I'm a content provider or a service like Netflix that is looking for the largest potential market opportunity, I'm going to look to target those big installed bases of products such as game consoles. We certainly anticipate that a connected DVD player (which could come of of the Netflix and LG Electronics announcement from January) and connected TVs (like the MediaSmart TV from HP or products like the Sony BRAVIA Internet Video Link or the Sharp AQUOS NET or the Panasonic VIERA televisions) are also key platforms for connected entertainment experiences.

It will certainly be interesting to see if the Netflix and Xbox 360 partnership emerges. I'm also quite curious to see how a company like Blockbuster is going to respond. They bought Movielink last year for $6.6 million - now what are they going to do with it?

Wednesday, March 26, 2008

Top Ten Technology Trends for TV

A friend was recently telling me about listening to his morning radio show on the drive to work, and the DJs were discussing their memories of the early days of TVs (you know...the TV dark ages of the 1970s and 1980s). My friend cited people calling in talking about the needlenose pliers turning broken channel changers, the "vertical hold" button, some guy's dad who whittled a notch into a broomstick so he could change the channel from the couch, etc.

I remember not having a remote control for a TV until my first TV purchase as an adult in the early-1990s. My brothers and I were thrilled with having cable for the first time in the 1980s. We had one of those switching devices that had the numbers you had to punch down, and the unit came with perhaps 20 feet of cord. So, it acted like a remote control ... one could lie in repose on the sofa, with 20 feet of cord stretched back to the TV and barely move a muscle to change that channel. Good times.

Fast-forward to 2008, and the context for television has changed considerably. After shows like CES and the recently-completed Future of Television event that I attended on Monday and Tuesday, I'm struck with all of the potential that TV and video services have. Of course, I'm also struck with the potential failures that will take place if the technology know-how that is so adeptly exhibited by Silicon Valley doesn't match the business plans of the content owners in Los Angeles and New York. And, it will all come to a very ugly end if your average user in Cincinnati (which I understand has supplanted Peoria as the metropolitan litmus test for "average" U.S. consumer sentiment) is intimidated by the application, doesn't understand it, or can't get it to work.

I had the opportunity yesterday to moderate a panel at The Future of Television Conference titled New Television Technologies You Need to Know. In that discussion, we were able to define some of the key technology trends that are going to characterize what Parks Associates has come to call "The TV 2.0 Experience." If you forgive the complete lack of originality in the title, the overall theme that we're working under with our "TV 2.0"-related research is that big changes are coming to the TV screen, and we anticipate some significant opportunities for technology companies to supply solutions to media companies and deliver a much more rich and immersive video experience.

So what are the key elements of the TV 2.0 experience? We believe that next-generation television services will be built on a number of key features and experiences delivered not only to the TV screen, but also other viewing platforms (such as the mobile phone, the PC screen, the in-car LCD display, and other portable and mobile devices). The features and applications that define TV 2.0 are characterized by key industry megatrends, such as:
  • The expansion of network capacity by incumbent operators, allowing them to increase quantity and quality of programming (providing more channels and increasing high-definition offerings);
  • The move from multicast programming to unicast offerings (linear vs. on-demand);
  • An erosion of strict linear program lineups to more personalized scheduling, enabled today by the DVR and tomorrow by the on-demand and “Catch Up” services that are now beginning to account for a significant amount of video consumption;
  • The ability to blend communications and entertainment experiences, beginning with simple features such as Caller ID on the TV and moving to more advanced features such as consumer “telepresence” and video conferencing;
  • Home networking that allows the set-top to act as more than just a TV signal decoder; it can now link to PCs and other devices to pull content as well as stream it;
  • The move to combine traditional Web activities such as social networking and creating and sharing user-generated content and bring it in a higher-quality format to the TV screen;
  • The ability to more efficiently deliver advertising and marketing to consumers based on more specific targeting, likely starting with general geographic targeting, then targeting based on their viewing habits, and moving to demographic-based targeting;
  • An acknowledgement that the Internet is becoming a powerful and efficient tool for delivering higher-quality programming and content and figuring out how to blend that with the TV experience; and
  • A move to bring TV content to other devices without the set-top box necessarily being involved.

In yesterday's New Television Technologies You Need to Know panel, my panelists (including Awshin Navin from BitTorrent, Anton Monk from MoCA, Perry Solomon from FAST Search, and Brad Auerbach from HP) were able to help me define some of the key technology areas that they see as most impacting the new generation of television services. The list that we developed during yesterday's discussion includes these areas:

  1. Distribution (making it more efficient and cost-effective)
  2. Seamless content experiences (three-screen)
  3. Personalization (time/place-shifting, VoD, customization, ec.)
  4. Social networking aspects (recommendations, chat, etc.)
  5. Search (helping viewers locate and discover content)
  6. Connected platforms (home networking)
  7. Marketing/advertising (targeting, immersive, behavioral/demographic targeting, analytics/measurement)
  8. Communications (features like Caller ID, video calling, chat, etc.)
  9. Measurement (who’s watching what when and how, dynamically altering content lineups to reflect the democratization of the viewing experience)
  10. User interfaces (electronic program guides, remotes)

We're going to be digging deeper into these issues with at least two studies this year, one targeting consumers and the other a focus on the industry. We'll look forward to sharing the results!

Old TV Doesn't Die - It Goes to Hulu Heaven

The folks at Digital Media Wire put on another classy and informative Future of Television Conference on Monday and Tuesday. I was pleased to have been invited to deliver a presentation on "The Top Digital Media Trends Impacting the Television Industry" on Monday along with Steve Canepa at IBM. I also moderated a panel yesterday titled "New Television Technologies You Need to Know." That panel included a nice broad representation of companies in the video technology space, including BitTorrent, the MoCA Alliance, FAST Search, and HP.

Leading off the conference was a panel titled A VIEW FROM THE TOP:The Outlook for the Television Industry & Digital Media. Moderated by Andrew Wallenstein, Deputy Editor at The Hollywood Reporter, this panel included representatives from Warner Bros. TV, Starz Media, Fox Entertainment Group, and MGM. All of these panelists were in agreement that the online distribution of their primtime TV programming via channels such as Hulu,, MySpace (Fox), and other outlets has exhibited nice growth for the past couple of years. Of course, their comments also riled at least one Hollywood writer in the audience, who told me in a conversation afterwards that the studios' sunny outlook about online video distribution is in stark contrast to the message that the writers were receiving during the recently-resolved contract talks that ended the three-month Hollywood writers strike. Basically, I was told, the studios were much less bullish in their outlook for digital media distribution, and the writers accepted a proposal that (as was described to me) provides a cap of $1,600 per year that a writer can receive on content distributed over the Internet. In the end, it's clear that that there are some writers who are quite resentful about the terms of the new contract, and they are eager to explore alternatives to the traditional studio gatekeepers and see if there are more amenable terms available for them as they explore their own digital distribution deals.

One of the most interesting tidbits of information from that panel was finding out the Airwolf (the1980s TV show starring Jan-Michael Vincent and Earnest Borgnine) is the most-popular piece of content on Hulu. Now that's long-tail content that actually matters to a mid-30s geezer like me!

Xohm+Clearwire+Cablecos=National WiMAX

I was wondering why Clearwire stocks were getting a boost yesterday, and today too! WSJ broke the news late last night that Comcast, Time Warner Cable, and Bright House Networks are discussing a potential partnership with Sprint and Clearwire to fund a nationwide WiMAX network. Comcast will contribute $1 billion, followed by $500 million from Time Warner Cable, and $100-200 million from Bright House. Sprint and Clearwire will run the network. It's public knowledge that the cable companies have been examining WiMAX technologies for more than 3 years. Are they finally convinced that the technology works and the cost for involvement is right? Although encouraged by the news, I have many questions:
  • Is Google officially out?
  • When will Sprint announce plans to spin off Xohm and merge it with Clearwire?
  • Brian Roberts announced during Comcast's latest quarterly conference call that his company does not have major plans to invest in wireless. Was that just camouflouge?
  • What will the cablecos do with their 700MHz holdings?
  • If the cable companies experienced so many operational challenges with Pivot and have to halt that Sprint partnership, what makes them so convinced that second time will be a charm?
  • What will happen to the partnership between Clearwire and the two satellite companies? What will happen to Building B?

Whatever happens, two things are certain.

  1. Cable companies need to have a wireless strategy in place as soon as possible. AT&T and Verizon are speeding up their deployment and marketing efforts of quad-play bundles and are leading the race.
  2. The wireless market will become much more interesting with a variety of new entrants poised to disrupt the competitive landscape with new business models and strategies.


Wednesday, March 19, 2008

New Healthcare Study Outlines Strategies To Increase Adoption Of Home Health Monitoring Technologies

Opportunities for Vendor Success in Projected $2.5 Billion Digital Health Industry --

The digital health industry still faces formidable challenges in convincing private insurers to adopt home health monitoring technologies. Yet vendors can overcome insurer resistance by providing independently verifiable trial results and further education regarding the benefits of home health monitoring technologies, according to Private Insurance and Digital Health Solutions.

“With U.S. market potential of $2.5 billion in device and service revenues by 2012, the home health monitoring industry has every incentive to convince private insurers, along with other potential payers, of the technology’s value and feasibility,” said Harry Wang, Senior Analyst.

Private Insurance and Digital Health Solutions is Parks Associates’ latest primary research on the private health insurance industry. The study’s analysis is based on January 2008 interviews with twenty senior executives from the private health insurance industry and includes twelve major findings and ten key recommendations.

Harry Wang will present Parks Associates research findings at ATA 2008 in Seattle on April 7, 2008. For more information about Parks Associates’ digital health research, visit

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Time to Revise Those Broadband Numbers

The FCC finally voted to change the way they count Broadband numbers. 3 years ago, I began to prepare for this day and it finally came. 200kbps no longer qualifies as broadband and the threshold is now 768kbps. Nobody knows the damage this change will do to the number of total U.S. broadband households. Likely the number of DSL households that qualify as broadband will take a bigger hit than that of cable households. DSL service providers may still continue to report their DSL subscriber numbers but now we'll need to take a discount in calculating broadband DSL numbers. I'm eager to see the first FCC report on High Speed Internet after the methodology change. I'll be busy make assumptions and revising our numbers once it comes out.

The FCC also made a few other changes and CNET did a great job highlighting the key points.

Majesco Reported Strong Quarter

Majesco, a leading game publisher, announced a strong quarter ending January 31, 2008 with sales up 29% to $18.7 million and a net profit of $2.7 million, up from a net loss of $900,000 a year ago. This dramatic turnaround followed the company’s strategic shift two years ago from large-budget console games to lower-cost “value and handheld video games,” primarily for Nintendo Wii and DS. After reading this news, a few points came to my mind:

  1. From a financial perspective, casual style games for Nintendo DS and Wii represent lucrative opportunities for game publishers as they are made on smaller budgets and sold for a premium. I accompanied my friend to BestBuy a few weeks ago. He bought Big Brain Academy for Wii (a very casual game) at about $50 and Call of Duty 4 for PS3 at about $60. Which one do you think have a higher profit margin? No wonder gross margin for Majesco in Q1 increased to 40%, up from 31.1 percent a year ago, as the majority of the sales from either Nintendo Wii or DS.
  2. If I ran a small game studio with limited resources, I would seriously consider a niche strategy catering to Nintendo Wii and DS. At the current stage, besides a few exceptions such as Guitar Hero and Cooking Mama franchises, most of the top sellers on Nintendo Wii and DS remain first-party. I believe any third-party publishers able to make breakthroughs with Nintendo will reap benefits.
  3. Casual games are sweeping the industry and we predicted that. RealNetworks, a leading casual games publisher on the PC platform, grew its casual game business to $108.5 million in 2007, a 26% increase from 2006. We are right on target with our forecast. In the Casual Gaming Market Update report we published in 2007, we forecasted a 29% revenue growth of the industry in 2007, driven by a number of factors: 1) expanded user base; 2) diversification of business models to include retail, advertising, subscription, micro-transaction; 3) porting of games to multiple screens such as PC, mobile and TV.

Coming back to Majesco, although it regained its financial health and established a franchise that is able to bring steady cash flows, I believe they can be even more successful on Nintendo Wii by finding the next casual hit and scouting interesting PC casual titles that can be ported to the console front.

Tuesday, March 18, 2008

No Media Company Left Behind-The Gold Rush to Gaming

Brian Stelter at New York Times wrote a very good article on Nickelodeon's casual gaming strategies. I agree with most of the arguements and points he made in the article, including that my 3-year old daughter is a big fan of Dora and she would love to play the character herself. I learnt all the Spanish words I know from that show. However, I have different opinions on a couple of things:
1. Viacom and MTV have made a lot of acquisitions over the past several years and they are certainly becoming a big player in the gaming space but they are certainly not the most aggressive. Other big media companies are also making heavy investments. Vivendi is one of the biggest gaming company in the world and with the merger of Vivendi Games and Activision, the company will become even more powerful. Disney is also heavily invested in gaming and it will likely be the biggest competitor to Viacom in children games. Its acquisition of Club Penguin shows its resolution to play a big role in the space. Time Warner is also making heavy investment in the space. Comibined, billions of fresh dollars will flow into the gaming space from these big media conglomerates. in the next few years.
2. Yahoo! is really not that strong a competitor in the online casual gaming space anymore. The company has struggled over the past several years and its gaming team is turning over people like a windmill. Although it still gets a lot of traffic, its new strategy is likely aligned with the company's strategy-refocusing on advertisement. Going to its gaming site, you'll notice that it links to many other sites, including Gametap. A few years ago, Yahoo! made a big splash entering the Games-on-demand business itself but now its games-on-demand site is rebranded as part of Trygames, which was recently acquired Real Networks. Viacom's competition won't come from Yahoo! Rather, Disney, up-and-coming casual gaming companies such as Miniclip/addictinggames, WildTangent, and BigFish, and established publishers entering the casual space, such as Electronic Arts, are the ones to watch for.

Friday, March 14, 2008

CONNECTIONS Releases Press Release Officially Announcing Agenda and Keynote Speakers

Parks Associates and the Consumer Electronics Association (CEA) announced Thursday the agenda and confirmed keynote presenters for CONNECTIONS: The Digital Living Conference and Showcase. CONNECTIONS is a strategic conference and showcase focused on the market developments and growth factors for advanced digital lifestyle solutions. The spring CONNECTIONS conference will take place June 24-26, 2008, at the Santa Clara Convention Center.

CONNECTIONS brings together nearly 1,000 executives in the converging digital living industries. The three-day conference provides the ideal venue to learn, network, share ideas, and gain a greater understanding of new business models, industry trends, and future forecasts as the market for digital solutions continues to grow.

Parks Associates forecasts total U.S. revenues for installed home theaters and multiroom audio systems will grow from $6 billion in 2007 to more than $11 billion by 2012, due in large part to the advantages of digital content.

"This year's event features an intense focus on entertainment, communications, control, and the extension of the product purchase and customer support lifecycle," said Kurt Scherf, vice president, principal analyst, Parks Associates. "With an audience of key executives and sessions featuring industry experts and the latest consumer and market analysis, CONNECTIONS is the preeminent event for this industry." Keynote speakers include:
Amy Banse, President, Comcast Interactive Media
Rebecca Jacoby, Sr. Vice President & CIO, Cisco Systems, Inc.
Paul Liao, CTO, Panasonic North America
Phil McKinney, Vice President & CTO, Personal Systems Group, HP

Parks Associates, Motorola, and TM Forum will conduct pre-show workshops and seminars on June 24, prior to HP's opening keynote. CONNECTIONS also features sessions hosted by Motorola, Peak8 Solutions, IBM, and MoCA. Conference sessions, moderated by Parks Associates research analysts, will provide strategic analysis on key digital living categories and focus on the opportunities and challenges emerging in these evolving markets.

Session topics include:
Hollywood and the Digital Age
Digital Solutions for the Automobile
Gaming and Virtual Worlds
Residential Energy Management and Home Systems
Digital Health
Service Support for the Digital Home
Broadband VideoMobile Platforms
New Media and Digital Advertising
User InterfacesTelevision 2.0
Wireless Networking for Multimedia
The Evolution of Social Networks
Broadband Devices
Place shifting and Content Storage
Solutions for Service Providers
Investment Opportunities in Digital Living

For full agenda, visit

CONNECTIONS will announce confirmed speakers soon.

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Thursday, March 13, 2008

Bebo Goes to … AOL!

Online social networking site Bebo found a new owner: Time Warner’s AOL unit. On Thursday morning, AOL announced the acquisition worth $850 million. The deal finally helps AOL land a piece of hot online property: 40 million members and about 80 million unique visitors per month. And it is a complementary deal from both a geographical perspective and a business perspective: Bebo is most popular in the U.K., Australia, and New Zealand whereas AOL’s user base is concentrated in the North America; Bebo’s audience is much younger than AOL users’ demographics so the acquisition will make AOL’s properties more attractive to advertisers. Like all major social networks, Bebo is experimenting with original video content aggregation as well as syndications from broadcast networks, a plus for an online business that increasingly relies on video to drive traffic and increase website “stickiness.” So the deal makes sense from a strategic perspective.

The risk remains in the integration area. Since AOL initiated the Platform A strategy, it has made quite a few acquisitions, but the ad unit is struggling both financially and structurally. Most recent financial data painted a slower ad revenue growth than I had expected, and senior ranks’ turnover rate is high by industry standard: the most recent departure of Curtis G. Viebranz, a senior executive in the Platform A unit, further spurred suspicion about AOL’s execution of its ad strategy. Can Bebo be quickly and smoothly integrated into AOL’s overall ad business and can all the pieces that AOL acquired start adding value to Bebo’s execution? A big question mark in my mind and AOL has to show the proof quickly.

An interesting perspective is the fact that Yahoo has reportedly intensified its talk with AOL for a possible deal in order to run away from Microsoft, but Yahoo also runs the search and banner ad business for Bebo, a deal that was struck down only six months ago. Will AOL’s purchase of Bebo spoil the talk between AOL and Yahoo, or pull them closer? We will find out soon as Yahoo’s board election and the proxy fight with Microsoft draws near.

Disclosure: the analyst owns shares of Time Warner Inc., the parent company of AOL.

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Tuesday, March 11, 2008

Home Systems: Spring 2008 Update at EHX

Parks Associates and EH Publishing will present "Home Systems: Spring 2008 Update" at EHX this week. The briefing will include a summary of their latest research, analysis, and forecasts on topics such as multi-room audio and home theater systems (including media servers), control and security systems, and state and local residential construction market trends.

If you would like to meet with Bill or Daryl at the show, please let me know. They are available to provide more insight into home controls topics and forecasts for the market.

Parks Associates recently launched a Home Systems Newsletter. We invite you to sign up for free at

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The Cable Industry Starts “Canoeing”

The cable industry started to push for progress in the addressable advertising space. Over the past two or three years, they have been working on a set of addressable advertising standards, known as DVS 629. Now they are trying to put these standards under real-world test with the public announcement of the Project Canoe on March 10. The “Canoe” is now officially a joint venture of the six major cable operators, namely Comcast, Cox, Time Warner Cable, Cablevision, Charter Communications, and Bright House Networks. The six cable MSOs chipped in a total of $150 million to kick off the venture with Comcast reportedly investing the most: $50 million.

In a nutshell, Canoe will help pave the way for the cable MSOs to sell addressable ads on a common platform across many different cable systems. The exact role of Canoe is still less defined, but we speculate that Canoe will eventually evolve into an ad sales unit (like Comcast’s SpotLight) and act as an intermediary between ad buyers and publishers, in this case, the cable systems. What is uncertain is whether the joint venture will take on the responsibilities of supporting ad delivery infrastructure and ad tracking: the former function is currently taken up by individual cable MSO and the latter one is outsourced to Portland, OR-based Rentrak.

We have long argued that the cable industry should move faster to address all the key challenges it faces in serving more targeted ads. In our latest advertising report, we highlighted five major challenges particularly for the non-linear part of the cable business, including:
-Lack of compelling content on VoD
-Difficult to meet future on-demand bandwidth need
-A diverse network infrastructure and CPE platform
-Lack of ad delivery standards
-Less experienced ad sales force and complicated selling process

We are pleased that the cable industry is gradually filling the gaps on these five fronts, and the Canoe venture will address, at least partially, the last three challenges listed above. In our view, they should move faster, and they have to, because new media, the Internet video in particularly, has shown its potential to not only steal ad dollars from TV broadcast networks but also cut into the capability of the cable TV industry to generate more ad sales. The cable industry perhaps already regretted secretly about their slow reaction to the telcos’ fiber strategy; they should not miss the boat again this time.

Maybe changing the joint-venture’s name to “cruiser” will help.

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Hulu Launching on Wednesday

Hulu, the online video site created by NBC Universal and Fox, will officially launch on Wednesday, according to today's Wall Street Journal. The article, along with other commentary I've read today, is more focused on poking holes in Hulu, noting that the site still only contains programs from NBC, Fox, and limited content from SonyPictures and MGM. The site still has no content from Viacom's CBS or from Disney's ABC. Other commentary criticizes NBC and Fox for establishing an exclusive site like Hulu in a time in which widespread syndication is the norm. Still others comment that Hulu can't stack up against the popularity of Google's YouTube. This to me is a strange argument, as YouTube and Hulu offer diametrically different programming.

In the end, I do anticipate that Web video viewers will gravitate to well-organized video sites that offer both the premium content that they're seeking and a hassle-free experience. With NBC and Fox behind the initiative, you can bet that the advertising is also going to be of higher quality. From my experience with Hulu, I've found it to be a well-organized site in which I don't have to search endlessly for the program I want to watch.

Tuesday, March 04, 2008

Research Analyst, Michael Cai Speaks at SXSW

According to Parks Associates, 59 percent of all consumers in the U.S. who play games on their mobile phones are women. The majority of Internet-based gamers also are women. Will women continue to drive the growth of casual gaming? Or will men drive right past them?

Parks Associates analyst Michael Cai will be at SXSW Interactive this week to participate in "The Female Takedown of Casual Gaming," on Sunday at 10am in Austin, Texas.

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