Broadband Value-added Service Provider Acquired

The proliferation of digital pictures has engendered numerous business opportunities and created renowned photo storage, editing and sharing services such as Flickr.com and Photobucket.com. Simple Star is a company that dedicates itself to turning consumers’ digital photos into musical slideshows on multiple screens including computer, TV, DVD, and portable devices. A few months ago, I interviewed Simple Star’s CEO Chad Richard while I was writing our newly published Enabling Solutions for a Rich Broadband Experience industry report, which featured its PhotoShow and PhotoShow TV services as a successful cross-platform broadband value-added service. The news broke out today that Sonic Solutions, a digital media software vendor, has bought Simple Star for an undisclosed amount in a bid to expand its Web and multiple-platform presence.

The press release on this acquisition stressed Simple Star’s online success with 13 million copies of its software and flash-based online application installed since 2002. In the report, however, we mainly focused on Simple Star’s success in winning business from the two largest cable MSOs in the country – Time Warner Cable and Comcast, both of which have “deployed Simple Star’s PhotoShow application on PC and TV, by which subscribers can upload photos and short videos via PC and make them available for public viewing on digital cable Video-on-Demand channels… this convergence service, which is offered free to those who subscribe to both cable broadband and digital cable video services, has become the third-most popular channel on VoD platforms right after HBO and Showtime.” Actually, Time Warner Cable decided to take PhotoShow TV to a national level because of its popularity. Simple Star’s success recipe on this front is to help broadband service providers, all of which are trying hard to retain and attract bundle customers, to provide an easy-to-understand application that can make broadband service providers’ double-play or triple-play services more meaningful and interesting. In addition to using PhotoShow as a customer retention tool, cable MSOs have tied other revenue models such as advertising and local user communities to their photo sharing services.

Sonic has a much more comprehensive product portfolio including music, photo, video, and storage software. If it has a strategy to emulate Simple Star’s success path in the cross-platform area and leverage its existing relationship with cable MSOs, I have reason to believe that it is likely to become a strong broadband value-added service solution provider in the future.

Dell is Geeking Out

I'm a little late with this blog, but I thought it was interesting to see Dell's announcement that they're now providing more comprehensive digital home technical support services. Dell's expanding services beyond its legacy "Dell Connect" diagnostic software. Dell’s new premium support service is to provide a dedicated team of technical professionals which customers can contact directly for support of any Dell-branded product. This new fee-based offering is designed specifically for those customers who want to engage with the same dedicated team each time they have an issue with any of their in-warranty Dell-branded products. The company is also planning to provide new services for customers who buy Dell products through retail. Those services, available on Dell and other-branded systems, include home television installation, home theater set-up, technology integration, and other services that can help customers build out their digital lifestyle infrastructure. Given that Dell was particularly skewered recently by reports of poor customer service, any repositioning of services as providing a more customized and effective means of troubleshooting is probably a good bet for a company looking to reclaim some lost luster in the PC space.

Speaking of enhanced home IT customer support, for a few months now, I've been trying out a service from Clean Machine. The company offers a "PC Concierge" service where a remote technician regularly performs maintenance and performance optimization service. Many of the services they offer are the kind of standard checks that all of us probably should be doing on a regular basis but don't. They check for spyware and viruses, run disk defragmentation, and ensure proper configuration of applications such as Windows Firewall.

One nice feature of the service is the PC Concierge's detailed report that provides information about the services that they did on the home computer. I am amazed every month at the number of spyware/infected objects that they remove each month! They also include a detailed activity log that shows exactly what the technician did. The company has strict security and privacy policies in place (to the point of providing keystroke monitoring of the technicians). AIG - one of the largest insurance companies in the world - offers their PC and Internet security insurance.

Whether regular maintenance and optimization functions are being performed by a remote technician (a la Clean Machine) or are enabled through software dashboards, this sort of proactive service is a critical element of the whole customer support lifecycle. The more problems that can be diagnosed and corrected proactively, there is a greatly reduced chance of a PC manufacturer or service provider receiving lots of phone calls, many of which are considered out-of-scope. There should be a significant opportunity for these services and solutions.

JuiceCaster Nominated for Best Mobile Social Networking Solution in the 12th Annual Webby Awards: JuiceCaster a Finalist for ‘Oscars of the Internet’

The 12th Annual Webby Awards has nominated Juice Wireless’ mobile social networking application, JuiceCaster, for the Best Mobile Social Networking solution of 2008. The Webby Awards will announce the winners on May 6, 2008 and honor them at a star-studded gala in New York City on June 10. Additionally, from now through May 1, fans around the world can cast their votes for JuiceCaster in The Webby People’s Voice Awards presented by Nokia by visiting http://www.juicecaster.com/.

JuiceCaster instantly connects users to their online lives. It enables easy, one-touch sharing of pictures and videos from a camera phone to MySpace, Facebook, Twitter and additional online destinations. JuiceCaster has powerful integration to over 20 top online social networking and blogging sites. The latest version includes the ability for users to post and watch real-time video status updates directly on their phones. JuiceCaster members connect and communicate in a rich social-networking environment that includes profiles, pictures, videos, friend lists, comments, ratings and personal status updates, all on a mobile phone. JuiceCaster is made by Juice Wireless, Inc.

Nick Desai, CEO, Juice Wireless will speak at CONNECTIONS on June 25th at 2:30 PM on the session, MOBILE EVERYTHING: Mobile Platforms - Everything, Everywhere.

Pulse~LINK, Inc. Selected to Present its CWave® Ultra Wideband (UWB) Home Networking Solution

San Diego-based Pulse~LINK, Inc. has been selected to present its CWave® Ultra Wideband (UWB) home networking solution at the California Tech Showcase (CTS 2008), being held in conjunction with the World Investment Conference in La Baule, France.


Pulse~LINK pioneered the commercialization of UWB communications. Its award-winning CWave® UWB chipset is the world’s highest performing “no new wires” solution for networking High Definition entertainment devices throughout the home. Devices enabled with the Pulse~LINK CWave® UWB chipset allow multiple streams of HD video content, multi-channel audio and high-speed data located anywhere in the home to be shared across the existing coax backbone, in addition to wireless networking capabilities within each room with guaranteed Quality of Service.

Pulse~LINK is also speaking and a sponsor at CONNECTIONS on June 24th-26th in Santa Clara, CA. CONNECTIONS™: The Digital Living Conference and Showcase, hosted by leading research firm Parks Associates in partnership with the Consumer Electronics Association (CEA®), is the premier executive event focused on the market developments and growth factors for advanced digital lifestyle solutions.

Wii is a Virus and Nobody Turns it on?

According to an article on Gamedaily-Epic President Mike Capps had some interesting words for the Wii, saying that it spreads like a virus, but then 'nobody turns it on.'

"It's a virus where you buy it and you play it with your friends and they're like, 'Oh my God that's so cool, I'm gonna go buy it.' So you stop playing it after two months, but they buy it and they stop playing it after two months but they've showed it to someone else who then go out and buy it and so on. Everyone I know bought one and nobody turns it on. Obviously there's a class of people who really love it and enjoy it and are getting into the games but I'm still waiting for that one game that makes me play it. Who knows, maybe Wii Fit will be it."

I'm not sure where Mike got his data from, in addition to his gaming friends but it seems he fell into the "power/core gamer fallacy"-people in the traditional gaming industry tend to look at themselves and assume the entire gaming audience is like them. Data from our new multiclient study of 2,000 Internet gamers (defined as people who have Internet access at home and play games on a computer, console, portable player, or mobile phone for at least one hour per month) shows that the Nintendo Wii is actually the most frequently used game console.

Despite our difference, I do agree that Nintendo needs to create more games like the popular Wii Sports in order to maintain its momentum. Although it makes money selling hardware, software is still where the money is. Increasing software attach rate among Wii households who have been playing Wii Sports ever since they got the console is key.

DirecTV Moving Ahead with Broadband-Over-Powerline in Dallas

Just as we were wondering how DirecTV’s Broadband-Over-Powerline (BPL) partnership with Current Group is coming along after it made its initial announcement in August 2007, our Director of Broadband - Michael Cai bumped into DirecTV’s moving BPL advertisement on the back of a truck on his way back home last week. They surely are making some progress. Dallas Morning News reported that Current has quietly made 130,000 homes in East Dallas ready to receive this service, while DirecTV has begun marketing to half the ready households. The article did not mention how many subscribers it has obtained though. Although the 130,000 number is only 7% of the two companies’ original 2 million households plan, it represents a good start nonetheless.

In our newly published U.S. Broadband Market Update 2007 report, we estimated there were only about 10,000 households in the U.S. using BPL as their broadband access technology at YE 2007, or 0.02% market share. Going forward, BPL will remain a complementary technology overshadowed by dominant cable Modem, DSL and the fast growing fiber deployment. Rural and inner-city urban dwellings, however, will be BPL’s best shot. For one thing, in underserved rural areas, existing power lines can help alleviate the capital expenditure of deploying broadband lines. In urban areas, BPL is considered a favorable option for MDU (Multiple-Dwelling Units) deployment because population is more concentrated and the couplers used for in-building applications are smaller than those used in outdoor medium-voltage applications, saving space, cost, and installation time for the service providers. Thus, BPL will grow in importance in the broadband landscape. We forecasted there will be 400,000 BPL households in 2012, representing 0.5% of total broadband households in the U.S.

Nintendo. Sony. Microsoft. Ready: Fight!

The big three console manufacturers; Sony, Microsoft and Nintendo are set to release their latest quarterly results in the next few weeks. The last quarter will probably be pretty sunny for two for the three: Nintendo cannot keep the Wii on store shelves and Microsoft just dropped prices on the Xbox 360 in Europe and reported that sales have more than doubled. Sony will surely be content with third place; waiting in their cave and thinking of the day they finally get back into the lead. That won’t be anytime soon though.

With more than 20 million consoles shipped, Nintendo leads the pack for worldwide console sales. Nintendo’s innovative motion-based controls and refusal to compete with Sony and Microsoft on the graphics technology front has freed the company to deliver a console with more appeal across all consumer demographics. The upcoming US and European release of Wii Fit, a yoga and exercise focused game and wireless balance board peripheral, should only increase the mainstream and non-gamer appeal of the Wii console. Wii Fit was released in Japan on 12/1/2007 and has sold in excess of a 1.4 million copies to date. The $89.99 Wii Fit bundle would surely help move more Wii consoles; if only there were more on store shelves to purchase.

In the Sony and Microsoft camp, the release of Grand Theft Auto IV will help sell consoles and is already set to be the largest media release in history. It is the first time the franchise has been released on two formats simultaneously; and with pre-orders through the roof, both PlayStation 3 and Xbox 360 versions of the game will surely sell untold millions of copies. Currently, the Xbox 360 version is anticipated to sell more copies due to a larger installed base of the Microsoft console and a downloadable content deal with publisher, 2K Games. While the deal is exclusive to the Xbox for the time being, it is widely speculated that the downloadable content will eventually be available for the PlayStation 3. However, Microsoft’s marketing team is not going to let anyone forget that the content will arrive on their console first, and among gamers this is a significant fact.

In addition to the significant game releases in the next few weeks, there is another category that console owners are starting to weigh in their purchase decision: premium video downloads. Next-generation game consoles such as Microsoft’s Xbox 360™ and Sony’s just-launched PlayStation®3 are a new device category capable of acting as a media server or adapter. Microsoft’s Xbox 360 provides a glimpse at the potential role a networked game console can serve in the connected home. Since Xbox 360’s debut in November 2005, Microsoft had sold more than 17 million units globally as of January 2008. The console has incorporated Microsoft’s Media Extender technology, which can stream multimedia content from the home network (most likely a Microsoft Media Center PC) to a home stereo or a TV set. Most recently, Microsoft added hundreds of full-length TV shows for download to own and movies for download to rent from major TV networks and movie studios through the Xbox Live service.

Although Sony’s PlayStation 3 game console has lagged behind Microsoft’s Xbox 360, worldwide sales have now exceeded ten million units. Sony has also recently announced that – like Microsoft – it will begin offering premium content through its PLAYSTATION Network service, although it has not provided much in the way of specifics, saying only that they will be offering a video download and streaming service.

Examining sales of the three major consoles (the Xbox 360, the PlayStation 3, and the Nintendo Wii), last year saw 32.6 million units sold to consumers. Among that figure were 15.6 million Xbox 360 and PlayStation 3 consoles. For 2008, we are projecting Xbox 360 and PlayStation 3 sales to tally more than 14 million units.

VoloMedia gets 3.5 Million

Leader Ventures provided $3.5 million of venture financing to VoloMedia, one of the leading providerd of advertising, metrics, and reporting solutions for downloadable media: both video and audio.

Brian Steel, CEO, VoloMedia will speak at CONNECTIONS on June 25 at 2:30 PM - 3:30 PM on the session: Advertising: New Media and Digital Advertising: A Marriage of Necessity

Other confirmed speakers on this session include:
Pat Dunbar, Director of Mediaroom & Connected TV Advertising, Microsoft Corp.
Karen Feldman, Media and Entertainment Lead, IBM

Disney vs. Residents of The Virtual Magic Kingdom

Only a few days after Disney Online announced the imminent closure of the online Virtual Magic Kingdom (VMK) there are a number of petitions circulating to try and keep the worlds running. While the effort is commendable and indicative of how powerful virtual worlds have become, it is not going to happen. However, Disney is not entirely off the hook. The manner in which Disney is closing VMK will unravel much of the good will and support it gained from the current user base. Not to mention their parents.

Disney cannot be expected to run the Virtual Magic Kingdom forever. It was a celebratory, gracious, and deep offering to commemorate the 50th anniversary of the Disneyland Theme Park. It was originally intended to run alongside the 18th month celebration from January 2005 to July 2006. VMK made it almost two years past its sell-by date. However, to expect Disney to maintain and support a service that was never built with a sustainable business model is unreasonable and uninformed. VMK was never built to be a long-term virtual world and to turn it into one would require an entirely new world, built to different standards, and constructed outside the existing VMK. Disney is surely contemplating just such a virtual world and with the wealth of Disney IP available to fill a virtual world: even if done poorly, it would surely be a success.

However, Disney must have been losing a lot of money on VMK or the world was taking too much time and effort away from getting a new virtual world off the ground. How else can you explain dropping tens of thousands of users off the deep end? Virtual Magic Kingdom built a lot of good will for Disney. It helped establish the company in the virtual world space and gained a large following in the process. There are a lot of upset children, tweens, and parents glaring at Disney and asking why their world is being taken away from them. Disney’s remaining virtual world offerings in the youth-oriented space are popular and profitable, but do not capitalize on Disney’s IP lineup. Toontown Online and Club Penguin both serve a younger demographic than the typical VMK resident and do not utilize the Disney IP library to engage users.

We realize the technology that VMK was built upon was licensed from Sulake. We realize Sulake’s own Habbo Hotel virtual world has increasing relevance in the North American market and this could have sped up the VMK closure. We realize there are behind-the-scenes details unknown to all but Disney. Regardless, Disney needed an exit strategy; a plan to move these VMK residents into a new virtual world. A virtual world with an economy and a way to pay Disney for all the IP related digital content, social networking features and ways to interact with some of the world’s most recognized characters. Instead the company is looking back at angry residents searching for a new virtual world to inhabit. Hopefully Disney will come back soon with a new neighborhood for its fans to inhabit.

Costco Shopping List: 5 lbs. of Mayonnaise, 1,000 Paper Towels, and a Flat-screen TV

Today's issue of The Wall Street Journal discusses the flat-panel TV upstart Vizio in the context of emerging consumer electronics companies gaining market share in certain markets (such as high-def TVs) where prices are now starting to fall dramatically. Our own research (from our recently-completed study The Changing Consumer Electronics Purchase Process) indicates that Vizio is doing well, and its presence at the warehouse stores - such as Costo and Sam's Clu - doesn't hurt, given their penchant for offering rock-bottom pricing. In 2007, 13% of buyers of flat screen TVs bought them at these retailers.

Blockbuster - This is One Confused Company

Well, Blockbuster has finally done it. After years of simply copying the Netflix business practices (the movie rental via mail model and the Internet video model), it's definitely done something that Netflix is probably never going to do!

The blogosphere is already lit up with the news that Blockbuster has made an unsolicited bid for Circuit City (the official announcement from Blockbuster is here). I see that opinions have already come from CNET's Don Reisinger and Henry Blodget, and neither of them is positive, unless both companies like being referred to as "bricks" (Blodget) and "irrelevant" and "foundering" (Reisinger on Blockbuster and Circuit City, respectively).

I find Blockbuster's actions to be confusing and inconsistent. In their last quarterly call, Blockbuster officials talked about how they were finally about ready to unveil the Movielink services through a consolidated Website. They also talked about the potential to go above and beyond what Netflix was offering via its Watch Now Internet video service, by examining the potential to not only provide Internet video as a free value-added feature, but to start experiementing with transactional models that could include both subscription and a la carte features. Despite its challenges, Blockbuster still has quite a bit of clout with Hollywood, so perhaps they could have gone the route of experimenting even with earlier day-and-date type of releases. Now, this sort of activity would be very sporadic, and it wouldn't open the floodgates of moving all content to earlier release windows. However, Blockbuster officials talked during the March earnings call about having an exclusive 60-day window offer film rentals from the Cablevision unit IFC Entertainment. Particularly with smaller and independent film studios, day-and-date is more likely to occur as artists and stuidios may want more of a viral launch of their films to generate buzz. Blockbuster certainly has that capabilitity with the Movielink service.

The letter from Blockbuster Chairman and CEO Phil Keyes to Circuit City's Chairman, President, and Chief Executive Officer Philip J. Schoonover mentions the ability by both Blockbuster and Circuit City to "differentiate products in both Blockbuster and Circuit City stores by offering exclusive content and content-enabled devices." I question this strategy on a couple of fronts. First, is the exclusive content just going to be mostly the indepedent films, such as those brought ot the table from the IFC Entertainment arrangement? I don't see this as particularly interesting in a brick-and-mortar environment, but as I mentioned above, it could benefit an electronic distribution model where keeping the costs of distribution low and encouraging consumers to discover content that they otherwise may have not thought was relevant to them. Second, is Blockbuster really wanting to turn its rental stores into consumer electronics stores? I'm not saying that a successful business can't be built from this sort of business, but one must also look at the struggles of retailers such as Radio Shack and CompUSA (before its demise) in trying to become consumer electronics players. Both have struggled, and the struggles may be more related to corporate culture in addition to some of the obvious challenges (such as Radio Shack's limited shelf space to carry more than a couple of products).

Blockbuster paid pennies on the dollar for Movielink last August, so the potential merger with Circuit City and a retrenched focus on DVD sales and rentals isn't necessarily mean that they would have lost a ton of money (assuming that the online services development takes a backseat to a reorganization of the Circuit City retail business). With the end of the high-definition DVD format debate, Blu-ray players are certainly going to sell in greater numbers this year versus last (we've pegged stand-alone Blu-ray player sales in the U.S. in 2008 north of three million units, up from the measley one million units sold in 2007). Still, it seems like a curious time to be visiting the retail space, given the progression toward electronic movie delivery, Circuit City's struggles, and Blockbuster's rumored focus on developing a 'Net-connected set-top box to take advantage of its Movielink content. It just seems that now is the wrong time to be getting distracted by the potential pitfalls that a Circuit City merger will bring.

It's too bad that Blockbuster is (again) late to the game with looking to DVD rental and download kiosks as a way to reduce their retail overhead costs and begin delivering more convenient ways of acquiring movie content. To me, this seems like an area that offers much more upside than the acquisition of a struggling retailer. Company officials gave some commentary on their kiosk strategy during the March 6 earnings call, but there was very little detail provided. Given Blockbuster's well-known brand, I would have thought that they would want to be more active in exploring the rollout of things like video download/download-to-burn kiosks that they could set up not only in their own stores, but also grocery stores and pharmacies (a la Polar Frog Digital or TitleMatch). It looks like they're going to get left in the dust yet again.

And my final thought on this potential merger is to simply remember how badly the Circuit City and Digital Video Express (DIVX) self-destructing DVD business went back in the late 1990s. It just seems like these combinations between specific content and retail businesses just don't pan out the way originally they were orginally envisioned.

Adobe Media Player - That Connected CE Market Looks More Interesting Now

There have been some interesting comments made on Adobe's announcement yesterday that its Adobe Media Player 1.0 software is not available. There have been some comments made about what this means in terms of competition with Microsoft's Silverlight initiative, and I think you're now seeing the giants such as Adobe, Microsoft, and Apple all gear up to put together end-to-end ("soup-to-nuts") video publishing, delivery, ad-insertion, and connected CE solutions together.

Will Richmond at VideoNuze has some interesting commentary on the Adobe Media Player announcement today.

Bottom line? The potential for more connected CE announcements that leverage Internet video to provide an over-the-top video-on-demand experience just got more significant. And, the potential is quite large. Our market forecasts for devices such as HDTVs, high-definition DVD players, and game consoles (which will increasingly become more connected and be able to access premium video services) shows annual unit growth of 69 million this year to more than 100 million devices by 2012 (that's a worldwide forecast).

Some other thoughts we have on the Adobe Media Player announcements:

• Adobe has some good premium content partnerships. Yesterday's press release clearly indicates that there is a good amount of it. Granted, many of the titles are the catalog clips of older shows. But, the early experience of Web video has shown that people like the older content such as Airwolf, Battlestar Galactica, and Welcome Back Kotter.
• Would this eliminate the need by a consumer electronics manufacturer to embed a browser (from Oregan Networks or another supplier) into their devices to make them ‘Net-video capable? If so, would this eliminate some cost into creating a Web video-enabled TV?
• Also, eliminating the browser requirement means that content can be stored and played back locally without an Internet connection. So, this opens the opportunity for Adobe to work with a growing number of device manufacturers and expand beyond the PC pretty rapidly, I would think.
  The fact that the Flash can support content scaled as high as 1080p seems pretty significant, especially with TV manufacturers all pursuing connected content strategies.

Reflections on the ATA Annual Show

I just came back from the American Telemedicine Association’s Annual Show in Seattle. Compared with last year, the format and agenda of the show did not change much. There were many educational sessions on telemedicine practices and the show floor featured about roughly 100 companies and organizations.

I attended the show with a keen interest in consumer telehealth applications and services. There was one concurrent session track focused on this topic hence I spent most of my time there. Although the topics appear interesting, I was a bit disappointed about the speakers’ willingness to discuss means and incentives to jumpstart the still-dormant consumer telehealth market. The best session, in my opinion, was a Q&A session after a panel discussion featuring two Continua Health Alliance’s board members, including David Whitlinger, the Chairman of the organization from Intel, Michael Robkin, the Treasurer of Continua from Kaiser Permanente, and Bernard Harris, a venture capitalist and physician himself from Houston-based Vesalius Ventures. Questions from the audience clearly indicated their interest in practical strategies and tactics to take down the barriers for consumer telehealth adoption. At least I think the three panelists gave honest and forthcoming answers. One question is about physician’s endorsement of the technology. Bernard was very straight-forward by saying that the solution is either waiting until the older physicians retire or showing to them that the technology can bring them additional revenue and increase their income. “Will five-year worth of clinical data change their mind?” asked one attendee. “No,” Bernard replied.

On the show floor, I met a few interesting new companies besides reconnecting with some of my old contacts. One of them is Pharos Innovations. The company uses an IVR (Interactive Voice Response)-based solution to offer remote home health monitoring services to hospitals and health plans. Hospitals are their major customers, instead of home care agencies pursued by other home telehealth vendors, according to Bob Rivas, VP of Sales. He shared a bit details about its business model which I found very interesting. Another company is BodyTel, which makes Bluetooth-enabled glucose testing devices and offers diabetic care management services. Glucose readings are wirelessly transmitted to the cell phone of the user who can download the glucose acquisition software directly from the Web to his phone. The company also develops a Web-based information portal that allows clinicians to manage diabetic care patients almost in real time. Angie Pisacane, BodyTel’s Director of Marketing, promised me to talk more about its technology and solution when the device gets FDA 510(K) clearance in a couple of months.

Overall, the Show is good for people to know the existing telemedicine technologies and practices. But I would like to see more discussion about the future: how we can grow this industry from a practitioner-centered, grant-driven market to a consumer-powered, venture capital-funded high-growth market. I shared my thoughts in a 30-minute presentation at one of the case study sessions on April 7. Interested parties can download the slides from ATA’s Website or send an email request directly to me.

Hey There Big Spender

While digging into the results of Parks Associates latest survey, The Changing Consumer Electronics Purchase Process, I discovered some interesting data points I wanted to share. The survey analyzed purchasing decisions as well as the amount spent. To nobody's surprise, we found the overwhelming majority of all respondents[1] (86%) had purchased a consumer electronics product with the past 12 months—nearly two thirds had purchased two or more. The total amount spent by broadband HHs on CE products was impressive. Over-one half of all HHs surveyed had spent more than $500—one-quarter had spent more than $2,000.

Once you factor the amount spent against the number of spenders (within each category) an interesting pattern emerges. Approximately 75% of all expenditure is accounted for by just 25% of the respondents (see figure). The market for consumer electronics products, it would seem, is thus concentrated among a handful of households. The "long tail" concept applies to DVD players as well as DVDs. Interesting indeed...

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[1] The survey sample was representative of broadband heads-of-household age 18 and over.

Hulu's Ads are Sold-out: I credit Airwolf

Yesterday, NBC's Jeff Zucker said that Hulu had sold out its advertising inventory. Hulu has intentionally kept the inventory low for now, so while it may not be an indicator of blockbuster success for the premium primetime TV Website, it speaks to the enthusiasm of certain advertisers to move their marketing to the world of IP video. It could also mean that we fans of Airwolf - the most popular show on Hulu today - are an advertiser's dream. It's probably the former rather than the latter!

And Brightcove will now the the publisher for a number of social networking and online video sites, including Veoh Networks, Bebo, Meebo, RockYou, and Slide. Another sign indeed that the new video era is going to include a big role for personal recommendations and viral sharing of content. I for one am excited about the possibility of the electronic program guides of tomorrow incorporating in not only technology-based recommendation algorithms, but also the ability for people like my brothers to ping me to let me know about some cool show where stuff is getting blown up on The Discovery Channel.

Digital Converter Boxes: The Parks Associates Mystery Shopper Report

Believe it or not, we've got an analyst at Parks Associates who doesn't subscribe to any television service! We sent our intrepid analyst out to the retail stores late last week to do some digital converter box comparison shopping. Armed with the $40 coupon from the federal government, our mystery shopper reported the following information

• Of the 38 different models listed, there are only 6 in the retailers listed and none can be purchased online from these retailers, although you can supposedly order from RadioShack via the phone.
• Online with the BSAT e-Shop listed as the only online retailer, you can chose from Artec T3A-PRO at $44.99 and the RCA DTA800 at $47.99, but any savings from purchasing it here is negated in the shipping costs.
• In the store, Best Buy only had one box as an option, the Insignia NX-DXA1 at $59.99.
• Circuit City's Website listed only one as well to be purchased in store, the Zenith DTT900 at $59.99.
• Wal-Mart listed two for its stores, the Magnavox TB100MW9 at $52.97 and the RCA DTA800 at $49.87.
• RadioShack listed the DigitalSTREAM DTX9900 at $59.99 and the Zenith DTT900 at $59.99.
• None of the ones listed from the stores are the ones indicated on the paper from the NTIA Coupon Program as being "capable of passing through an analog signal to the TV set" to get you by until all television is HD.

Blogging from the Virtual Worlds Conference Show Floor

Chris and his gang runs good shows. My session titled "Virtual Worlds By The Numbers Today and The Future" attracted more than 350 people, standing room only. Jack Myers, Joey Seiler, and I shared some good numbers and perspectives on the current state of the virtual world market and where it's heading. I'll blog somemore next week when I return to the office about our presentations.

On the showfloor, there are quite a few companies coming from overseas, bringing with them innovative solutions. A couple of companies (such as Freggers from Germany) are launching enabling solutions for 2.5D virtual world. No need to download, just open up a browser and play. Companies like Vivaty are bridging 3D virtual worlds and 2D Web. You can download a plugin and initiate a full fledged 3D virtual world right from your Facebook page. There are also quite a few companies offering economic enabling solutions for corporations and even individuals to launch their own virtual world, entering a space already getting crowded. In addition to the incumbent players such as Linden Labs and Makena, upcoming companies include Mycosm, 500 Mirrors and Vastpark. Mycosm is a very interesting company to watch. With deep roots in sophisticated 3D urban design software (still the cash cow of the company), Mycosm will soon provide free software for prosumers to design their own 3D virtual space. As user base scales, these individuals can plug their worlds into a bigger metaverse. Just imagine when you are buying a new house and want hire an interior designer and she invites you to view her portfolio in a realistic 3D space. Wouldn't that impress you?

More thoughts and interview notes to come next week.

Another IPTV and Xbox Convergence Story

BT's last quarterly results from February noted that Xbox 360 owners will be able to receive BT Vision television services - in addition to games and other video services - via the game console. I'm sure that the telcos love this sort of convergence as having the potential of drastically eliminating set-top box expenses. Granted, not every customer is going to have an advanced game console via which IPTV services can be accessed, but certain telcos definitely are going to take advantage of a growing number of these consoles to lower their costs and potentially grow some new revenue.

Analysts from Parks Associates will present new digital media research in San Jose next week.

Analysts from Parks Associates will present new digital media research on April 10th at the Fairmont Hotel in San Jose. Its a must attend event with the ability to meet with analysts and senior-level executives from various industries. "The Business Cases for New Media Workshop," hosted by Parks Associates, scheduled from 8:00 A.M. to 4:30 P.M.

Featured analysts include: Kurt Scherf, VP and Principal Analyst; John Barrett, Director of Research; Michael Cai, Director of Broadband & Gaming; and senior-level executives from various industries.

Session topics include: Strategies for Broadband and Bundled Services Providers, TV 2.0 Critical Links in the Value Chain, Buying and Using Digital Media Platforms, Electronic Gaming: The Fastest Growing Entertainment Media, Broadband Video: To the PC & Beyond, and The Monetization of Digital Media: Advertising and Alternative Payment Solutions. The full agenda can be viewed here.

Event Registration. Media can register for a free press pass.

Triggers & Inhibitors for CE Purchases

New research from Parks Associates examines the decision-making process of today's consumers and key factors that trigger or inhibit purchasing. Price isn't the only important factor, especially as people buy more fun, high-tech devices such as gaming consoles, HD DVD players, photo printers, etc.

The Changing Consumer Electronics Purchase Process survey provides greater definition and measurement of purchase intentions as well as key barriers to technology adoption. The analysis measures the impact of information resources and word-of-mouth endorsements, explains the research and evaluation steps for a product purchase, and links the purchase decision steps into an evaluative metric that identifies critical steps.