Consumers not ready to embrace cloud-based digital locker solution for music and video

The industry is rapidly moving content solutions to the cloud, but consumer interest is not keeping pace, as less than 30% of U.S. broadband households find the digital locker an attractive alternative for music or video.

Cloud Media and the Digital Locker, a new report from Parks Associates highlights the challenges within the industry, including device and format interoperability, consumer awareness, and security and delivery issues. Market fragmentation is also a major inhibitor, and efforts including Digital Entertainment Content Ecosystem's (DECE) UltraViolet initiative and Disney’s Studio All Access aim to overcome these barriers.

The benefits of cloud services are popular with consumers, indicating significant market potential. Access via mobile devices is important, and over 50% of U.S. consumers consider multiroom access to music and video content and guaranteed replacement of lost or damaged media to be equally important features of the digital locker.

Cloud Media and the Digital Locker examines how key players from content owners and distributors to platform and technology solution providers are tailoring their cloud-based solutions to include secure delivery, high quality, and ubiquitous access models.

Disney Acquires Kids' Social Network, Togetherville

Togetherville, a social network for for families to create safe online neighborhoods for their children under 10 years old, has confirmed that it was purchased by Disney according to Mashable.com. It sets itself apart from other social networks for children by facilitating parent-child interactions.

Togetherville mimics adult social networks in a kid-appropriate way. Each neighborhood is built around each specific child and remains closed to outsiders. Kids have their own profile pages, complete with their photos. In Togetherville, kids can

• play games and brainteasers
• watch videos
• create artwork
• send and receive gifts
• update their status with pre-screened text phrases, called "quips," such as "Who is going to see Diary of a Wimpy Kid?" and "Aced the test. Oh yeah!!"
• send "safe" messages to friends
• and comment on or "Heart" their friends' activities.

All achieved with active participation from friends and family. You and your child build the neighborhood by creating an account on Togetherville.com. You sign in with your Facebook login - no need to create a new username or password. Togetherville automatically finds your Facebook friends and their children who already have Togetherville, and you easily build your child's neighborhood from there. You can "allow" specific friends to become part of your child's neighborhood or invite others in who may not already have Togetherville accounts.

Nearly two-thirds of U.S. broadband households with a next-gen game console have connected it to Internet

Multimedia content, such as Netflix streaming services, and popular games with online components, such as Call of Duty and Madden NFL, are driving households to connect their game consoles and creating a new foundation for future growth in online video. Parks Associates' new report Connected Game Console Update finds 64% of U.S. broadband households with an Internet-connectable game console have it hooked to the Internet, a major increase from 2007, when only 25% had their next-gen console connected.

PlayStation 3 and Xbox 360 have higher connectivity rates among the current generation of consoles, showing the power of multimedia offerings and popular game franchises in getting gamers online. Despite the Wii's built-in wireless capabilities, it has been less successful in getting users online due to less compelling online games and multimedia content. However, with its large installed base, it still is a significant player in this market.

Parks Associates forecasts households will connect more than 260 million game consoles worldwide to the Internet by 2015. Broadband connectivity enables new business models for game consoles and positions them as hubs for all household entertainment services. Both Microsoft and Sony are now leading providers of premium Internet video content and derive a large share of their gaming revenues from their digital video outlets.

Connected TV market to hit 76% by 2015

While their presence was more subtle than 3DTV and not as in-your-face as non-iPad tablets, connected consumer electronics devices were more diverse and pervasive at the 2011 International Consumer Electronics Show in Las Vegas, with every major manufacturer showing off new electronics that have their own built-in apps and can access content from the Internet.

With devices that incorporated complete Internet browsers, HDTVs that offered hundreds of applications, even set-tops that turned current HDTVs into a completely connected device, the theme of combining the home theater set-up with a PC experience was everywhere.

“We’re starting to see some real trends develop here,” said Kurt Scherf, VP and principal analyst with Parks Associates. “And connected TV is not just about online video.”

Consider: In 2010 less than a quarter of all HDTVs were connected, according to research firm Parks Associates. By 2015, Parks believes that number will hit 76% (more than 150 million units). The firm projects that by 2015 there will be more than $8 billion worth of transactions on connected consumer electronics devices, from e-purchases to gaming to VOD and streaming.

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Sales of Internet-connectable TV devices soaring to 350 million by 2015

Consumer desire for on-demand and online video content will motivate sales of Internet-connectable TV devices to nearly 350 million units worldwide by 2015, setting the stage for intense competition in app development.

Parks Associates' Connected Living Room: Web-enabled TVs and Blu-ray Players forecasts worldwide sales of Internet-connectable HDTVs, Blu-ray players, game consoles, and digital video players such as Roku and Apple TV will grow approximately fourfold from 2010.

The market has reached the fourth generation of connected TVs, and all major manufacturers are debuting new models at CES with innovations in content aggregation, apps development, and user interfaces. Content options are finally catching up to the hardware innovations, and growing libraries of on-demand movies and TV available are starting to unlock the potential of connected TV devices as multifunction online entertainment and communications platforms.

The expanded presence of these devices will increase opportunities for apps developers – including third-party developers and giants such as Google, Samsung, and Yahoo! Consumers will also be key in deciding whether a controlled apps environment or the open-browser approach advocated by Google will be the dominant model for the connected TV market in the next five years.

Companies across the value chain – including content aggregation, broadcast television, delivery and management, CE, pay-TV providers, and retail – have significant opportunities to deliver content to a large number of new devices.

Access to premium and user-generated video is a main driver for adoption and use of Internet-connectable devices. Access to streaming music, online photos, social network updates, personalized news and information, and simple games are also popular features for current users and likely buyers.

The market for Internet-connectable device sales over the next five years has a strong international focus. With pay-TV penetration lower in certain European and Asia-Pacific markets and with the broadcast television community showing strong interest in supporting technologies for interactive television, connected TV devices will become de facto set-top boxes in many of these countries. At the same time, today’s pay-TV providers will embrace the delivery of managed video services to connected TV devices to differentiate, increase customer satisfaction, lower capital expenditures by deploying fewer set-top boxes, and reach new bases of customers.

Sony Qriocity Online VoD Service Officially Launches in Europe

From Broadband TV News, Sony Europe has announced the European launch of Video On Demand powered by Qriocity in France, Germany, Italy, Spain and the UK.
The pay-per-view movie streaming service works with Sony 2010 network-enabled Bravia TVs, Blu-ray disc players, or Blu-ray disc home theater systems

Contracts are in place with major studios including Twentieth Century Fox Home Entertainment, Lionsgate, Metro-Goldwyn-Mayer Studios Inc. (MGM), Paramount Pictures, Sony Pictures Home Entertainment, Starz Digital Media, The Walt Disney Company, NBC Universal International Television Distribution, and Warner Bros. Digital Distribution, as well as films from local studios.

The play list includes new releases as well as a wide variety of favourites, classic movies and local language movies, many of which are available in both SD and HD. New content will be added regularly and consumers can register for the service and check news of the latest additions to the movie library on the Qriocity Website.

After renting a film, consumers have up to 14 days to start watching their movie, and once playback is started, they have 48 hours to watch the film as many times as they like. Rental prices for SD content start from £2.49 (€2.99) for library content and £3.49 for new releases, while HD content start respectively from £3.49 and £4.49.

New Entrant into the U.K. Online VoD Market - Film4oD

From DigitalTVEurope.net, UK broadcaster Channel 4 and video-on-demand provider FilmFlex have launched an online VOD service.

Channel 4 operates the Film4 digital channel and the VOD service will be branded Film4oD. It will offer movies on-demand for between £0.50 (€0.58) and £3.99 and allow consumers to stream titles from a home computer. FilmFlex is a joint venture between Hollywood studios Sony and Disney.

The service will make about 500 films available at launch, and will reflect the tone and content of the Film4 channel. The service will only be available online initially, but Channel 4 may look to expand it to other platforms once it has a better understanding of the level of demand for the service.

Netflix could be the Netflix of Europe

There's LOVEFiLM attempting a Netflix-like rise in Europe, but there's also the original looking beyond North America.

According to this article, Netflix may invest US$50 million (€36 million) in the second half of next year to launch services beyond North America.

In the near term, Netflix plans to extend a subscription-based streaming service already tested in Canada to the US if tests currently under way are successful, according to CEO Reed Hastings, who said that plans for expansion outside North America could follow soon after.

“Our success with our pure streaming offering in Canada at $7.99 has encouraged us to test this model in the USA. If our results are as strong as we think they will be, then we will look to start this offering later in this Q4,” said Hastings on the company’s website as the company posted strong quarterly results last week. “Pure streaming could become our core offering in the USA, and DVD would be offered as a supplement for an additional charge, like we offer Blu-ray today. We'll know by the holiday season if consumers would prefer this more streaming-centric approach.”

Hastings said Netflix would look to launch internationally if conditions continued to look positive. “If we continue to gain confidence in a large return on our Canadian investment, and we have confidence in the financial return on further geographic expansion, then we'll look to grow beyond North America starting in the second half of 2011,” he said. “In that case, we would invest approximately $50 million for beyond-North-America expansion in the second half of 2011, and our addressable market would increase significantly.”

Can I rely solely on Internet streams to replace traditional TV? Netflix says yes, while the studios say no

Here are a couple of news items that show both sides of the potential "cord-cutting" story.

First, Netflix is reported to be trialing a streaming-only plan, costing $7.99 a month. Or, is it $8.99 a month?

At the same time, the studios are taking a harder stance to the availability of ad-supported streams of television shows, reports the Associated Press. Broadcasters took a big step toward eliminating free TV shows on the Web after they blocked access to their programming online this month to enforce their demands to be paid.

Recent actions by Fox, ABC, NBC and CBS in two separate fee disputes suggest that after a few years of experimenting with free, ad-supported viewing, broadcasters believe they can make more money from cable-TV providers if they hold back some programming online.

And, the rumor du joir regarding Hulu is that its Hulu Plus service fee may be cut in half, to $4.95 per month.

EU TV Markets: Progress of IPTV, VOD, DTT services

The Western European market for television service features a diverse set of offerings and regulations across nations. Terrestrial services are a common choice among consumers in all nations, but IPTV is making inroads in some areas, with France in particular serving as a worldwide leader in IPTV growth. The following is a brief overview of several key countries, with information and data from Parks Associates' recent report Television Services: Global Outlook (Second Edition).

The upcoming executive summit CONNECTIONS Europe™, November 15-16 in Amsterdam, will feature multiple sessions focused on advanced TV services and devices, including "Consumers and Connected Consumer Electronics," "Bringing the Content: Content Delivery and Control for Connected TVs," "Extending the Video Experience to Multiple Screens," and "Value-added Services & the Video Ecosystem." Register Today at www.connectionseurope.com.

To read more about the EU TV Markets: Progress of IPTV, VOD, DTT services, subscribe to Parks Associates' European Research Update Newsletter.

Click here to subscribe to other Parks Associates complimentary newsletters.

The "Netflix of Europe"? LOVEFiLM streaming content available on PS3

LOVEFiLM's streamed content (about 5,000 titles) has been available on Sony BRAVIA® and Samsung Internet @ TV HDTVs and Blu-ray players in the U.K.. Now, this content is available on PlayStation 3 game consoles, expanding LOVEFiLM's potential footprint to about three million homes.

LOVEFiLM offers a subscription service starting from £5.99 (€6.80) a month. PlayStation users will be able to access the service via the console’s XMB menu system. Lovefilm is set to launch on the console in November.

New Online Video Service and the Philips Net TV

UK technology company BiBC is launching an internet TV service. The over-the-top service will be deployed via TV manufacturer Philips’ new range of connected TVs. IT will allow consumers to watch content from ITV, Cartoon Network and others for £2.99 (€3.57) a month.

Uncertainty is Holding Back Consumer Spending on Digital Content

When it comes to paying for digital video, consumers are faced with a significant amount of uncertainty, enough to keep them from more actively spending.

If a consumer decides to watch a movie or TV program, they likely do not know if they have already paid for that content. So, they have to consider checking their channel listings (is it on Bravo or HBO currently?), their DVR (did I record that?), their Netflix subscription (is it an Instant View or do I have to wait for a disk?), free VOD or catch-up TV, and perhaps Hulu or other options. And this is all assuming that they know in advance the specific content for which they are searching. (If you add in the additional decision of which content that they might want to watch, the decision process becomes a real headache.)

Some in the industry are taking notice. TiVo is specifically addressing this issue by improving their search feature to allow searches across content sources (linear, DVR, online, etc.), allowing consumers to see the content to which they have access. By seeing what video is "theirs", will consumers be more willing to spend to add to their "collection" of available video?

Consumption of PC video is increasing, but TV still main video source

More U.S. households are watching online video and on a wider variety of devices now than two years ago, but they are not sacrificing their TV viewing to do so. Digital Media Evolution II found 40% of all U.S. broadband homes now regularly watch long-form video on a computer. However, service providers can allay their fears of cord cutting for now as high use of PC video does not yet correlate with decreased TV viewing.

People are using online video to fill in the gaps. When it comes to watching TV shows and movies, nobody’s first choice is the computer. People will watch this content on a computer when it is not convenient or feasible to watch on a TV.

Households with a high incidence for viewing PC video are also heavy DVD users. Both DVDs and the Internet are non-linear video sources. That makes them somewhat similar from the consumer’s perspective. They don’t care about the distribution method so much as the experience, which will be enhanced through the ability to view premium content on a variety of devices. Service providers and other video retailers that offer high-quality, consistent multiplatform viewing experiences will come out ahead in the battle for consumers’ eyeballs.

Digital Media Evolution II quantifies and analyzes the market demand for emerging media platforms, features, and services.

Is Hulu really dying?

The popular online video site, Hulu has been gaining popularity and increasing its visitors since its launch date in 2007, but the popularity may be dropping off. Although Hulu has been proving that networks can make money by making their content available online for free, the number of videos viewed in June verus May decreased from 43 million to 24 million according to ComScore.

U.S. online video advertising revenue will exceed $1.3 billion in 2010

Steady growth in online video viewership, combined with the ability to target specific viewers based on preferences and viewing history, will push U.S. revenues for online video advertising over $1.3 billion in 2010.

Online Video Advertising: Strategies & Results, finds large percentages of consumers, especially younger consumers, have yet to form a strong opinion regarding targeted advertising. These advertisements include commercials shown before an online video or overlays displayed during the show, with the content based on the user’s Internet, TV, and mobile usage and viewing habits.

Among U.S. broadband households, almost 50% of heads-of-household aged 18-34 are indifferent to targeted advertising, while 42% aged 25-54 and 25% aged 55 or older are similarly neutral. The younger age groups are more receptive to the concept of targeted advertising, and advertisers place a premium on the ability to reach these demographics.

While online video does not yet have the same audience reach as traditional broadcast and cable TV, the medium continues to grow its user base, and increased content offerings via TV Everywhere initiatives will bring in more viewers and boost advertising revenues. Currently over 50% of heads-of-household 25-54 watch online video at least weekly, and the percentage jumps to 75% for ages 18-34.

Service Providers Being Repositioned As Media Companies

The popularity of online video consumption is forcing service providers to reposition as media companies with new offerings such as TV Everywhere, according to this report, Online Video and Broadband Provider Strategies.

The number of U.S. broadband households watching premium online content doubled in the last year. Over 25 million U.S. broadband households regularly watch full-length TV shows online, and over 20 million watch movies online.

Connected CE devices are affecting the competitive ecosystem of the television industry, and while the current number of cord cutters isn’t substantial, service providers are concerned about these developments. Pay-TV providers are working to head off a possible shift that might devalue their services by offering TV Everywhere. These services supplement their traditional offerings, which might not dissuade anyone determined to cut the cord, but providers could use them as models for future business strategies.

Online Video and Service Provider Strategies also reports that consumers have yet to establish strong preferences on whether they get video and other value-added services from broadband service providers or over-the-top providers such as Hulu. Service providers can leverage this consumer neutrality and reposition themselves as media companies.

U.S. households using PCs and game consoles to extend online video to the TV

Parks Associates finds consumer interest in Web-on-TV applications is so strong that households are making their own connections via PCs and game consoles. From 2008 to 2009, the number of U.S. households using Web-connected game consoles increased by 64%, and the number connecting a PC to a TV increased by 36%, according to the firm’s latest report Digital Lifestyles: 2010 Outlook.

Over three-fourths of U.S. households with PC-to-TV connections and one-third of Xbox 360 owners are using these connections to stream online video. These households, as they extend online video and other Web experiences to the TV screen, are laying the foundation for future behaviors with connected CE and entertainment services.

Digital Lifestyles: 2010 Outlook examines the rise of Web-connected CE as one part of the many developments in consumer electronics and services. The report provides analysis and forecasts for a variety of digital lifestyle product categories, including broadband Internet, television services, digital content services, and products (home networks and consumer electronics).

For more information, visit http://www.parksassociates.com.

CONNECTIONS™ addresses business strategies and new technologies that leverage consumer interest in TV Everywhere services

Parks Associates reports TV Everywhere services are gaining popularity, with over 40% of U.S. broadband households very positive on these services, which will be a prominent topic at the upcoming CONNECTIONS™: The Digital Living Conference and Showcase.

CONNECTIONS™ includes multiple sessions on New Media and Digital Content:

• TV Everywhere and Online Video
• Mobile Internet and Cloud Services
• Trends in User Interfaces
• TV and Online Video Advertising Metrics
• DRM, Conditional Access, and Payment Models

Other Event Sessions:

Entertainment Platforms & Value-Added Services

• Digital Home Technical Support Services
• Digital Lifestyles
• Service Provider Innovation
• The Service Provider and the Connected Home
• Innovations & Investments: Venture Capitalist Insights

Consumer Electronics

• Design Elements for Connected CE
• Monetizing Connected CE
• The Future of the Set-top Box
• 3DTV
• TV Technology in the New Age of Consumer Buying

Home Systems & Controls

• Residential Energy Management
• Getting Consumers to Care about Home Controls
• Business Models for Energy Management
• Architectures and Implications for the Home Area Network
• Energy Management as a Key Application for Home Controls

For more information, visit www.connectionsus.com or contact sales@parksassociates.com, 972-490-1113.

Telecom Italia with a Hybrid OTT Set-top Box

Interesting news from Telecom Italia that they are going to deploy a hybrid set-top box (reported to be an Intel-based box supplied by Amino) that will receive broadcast DTT channels and online video.

With all of the hand-wringing going on about cord-cutting here in the U.S., I think the threat is far more serious in Europe, where free DTT service is already a barrier to growth for both IPTV and cable operators. We've heard from European operators that the hybrid set-top box supporting broadband-enabled VoD services will be a critical service in allowing them to keep at least a broadband connection in a home that doesn't desire a pay-TV subscription.

And, with Intel as part of the Telecom Italia mix, it looks like consumer electronics players may be able to take advantage of opportunities to provide service providers with a means to provide unique services to their customers. Could television manufacturers be allies for the operators? Perhaps, if we see more partnerships such as the one announced at CES between LG Electronics and France Telecom/Orange. I tend to think that the majority of hybrid deployments will involve lower-cost set-top boxes, but there's no reason to think that connected TVs, Blu-ray players, and other Web-enabled CE devices won't be able to take advantage of the VoD services being supplied over broadband connections by the service providers.