IPies 2009

They're back! It's time to reward the good, the bad and the ugly of the Internet TV and IPTV world after a year's absence due to work pressure.Yes, it's that time of year to sit down with the mulled wine and hand out the TV on IP's least prestigious awards.

Newcomer of the Year – after spending the holiday season playing with various technologies, I have to go home and not away on this one. Vidiactive is in danger of being the company that redefines how television is seen and used, linking traditional viewing with complementary screens and providing the missing link between TV viewing and social media.

Technology of the Year – year after year this is a toughie, but Spotify has done more than anyone to define how content can be and consumed in the future. Of course, they are not yet active in the Internet TV market, and may never be, but the model they have established is one that will be forever emulated.

Service of the Year - goes to the BeebPlayer, an app that enables Android user to view the BBC iPlayer on their mobile, developed by an enthusiast and something the BBC themselves should have done years ago.

The Don't Hold Your Breath Award - goes to Project Canvas, a 'hedging your bets' initiative if ever I saw one; essentially a framework for developing VoD sevices for Freeserve boxes, as far as I can tell. The fact that iPlayer and excellent services such as the BeebPlayer (see above) don't use it says it all, despite gaining some recent momentum and support.

Trend of the Year – TV Everywhere - we're still deciding if we're going to sue over the widespread adoption of our trademark as a generic long after we first coined the term... But there again, we were also responsible for TV2.0, global tribes and the re-definition of narrowcasting...

Person of the Year – the ubiquitous Eric Huggers at the BBC for taking over Ashley Highfield's mantle and playing politics even better whilst having a much firmer grip on technology than his predecessor and former employer. As ever, Steve Jobs is not eligible for already being Person of the Universe 20thC and Person of the Universe 21stC .

The Where Are They Now Award – goes to Joost, who thought technology could triumph over content and ended up being a second hand technology company; honourable mention to Kangaroo, which will remainfest itself in many guises, I suspect, from Arqiva to Hulu to NDS's Locate TV.

Smart Acquisition of the Year Award – goes to Comcast for NBC; expect lots more vertical integration.

The ‘So What ?’ Award – goes to everyone building IPTV boxes in the UK; I bought what is reported to be the best of the bunch - the Humax Foxtel and it turns out to be primitive beyond belief.

The 'We Don't Care Because We're The BBC' Award - goes this year to Gordon Brown for ensuring that the UK has a publicly funded broadcaster that is bigger than the whole of the TV advertising market. Also, for allegedly enabling 150 civil servants at said corporation to earn more than he does for running he country.

Dumb move of the year – Stephen Carter's Digital Britain report, which was a case study in Birt-like stating he bleedin' obvious. It missed a real opportunity to sort out Murdoch, the BBC and regional news, amongst many other issues, but did lay the foundations for universal broadband. Let's hope they meant 2Mbps as a minimum...

The Village Idiot Award - goes to Sky Player, who learnt nothing from the mistakes of iPlayer and 4OD and who have gone on to make the same mistakes, seemingly compounding them by being unwilling to pay for decent CDN provision for a service for which they charge a small fortune.

The Stranglers Award - goes to Tiscali, who are now routinely throttling all their internet customers, if chatrooms and my experience are to be believed. Steer clear!

The World Keeps On Turning Award - goes to our friends in the City, who seem totally immune to the rules that everyone else has to play by when building and running businesses. I'm personally willing to fund many one way tickets to Hong Kong, Zurich, and, of course, Dubai, for these masters of the universe, who ostensibly pay a lot in tax, but then require a hundred time more to bail out their bonuses and still regard this as a deal we can't refuse.

A Happy New Year to all IPTV Times readers and subscribers - thanks for all your comments and feedback during the year !

A Taxing Time For Media

Reading Murdoch's latest attack on Google, this time for paying just £141k tax on revenues of £1.7bn in the UK, brings a smile to my face. It's worth pointing out that NewsCorp has consistently been a master of tax avoidance, and is currently under pressure in Australia for some of its dubious tax avoidance practices.

The unlevel playing field caused by this is apparent if you look at the tax paid by UK media companies (notwithstanding that our largest media company is, perversely, paid for by a tax).

In its last profitable year (2007), ITV paid £50m in tax on profits of £138m. Beleaguered newspaper operator Johnston Press - perhaps one of the biggest victims of Google's success - paid £27m tax on £99m in revenues in 2008.

The UK tax regime has some benefits, such as the ability to offset losses in one year against future tax bills, but even this is horribly abused, with international companies dumping carried losses into UK subsidiaries.

In effect, Google has a 25-30% advantage over UK based media, and NewsCorp is able to make similar advantageous use of resources. At a time when cash and borrowing are key to the success of any business this goes a long way towards explaining why there are so few world class commercial British media companies.

Now, I'm no fan of protectionism, but hobbling our own media industry and giving away massive tax receipts (which you and I will have to make up for through direct and indirect taxation).

With both Google and Murdoch cosying up to the Conservatives, whose naivety leaves them flattered by the attention, this position is unlikely to change unless the current Government shows the courage of its convictions.

The Vidibox

As the year winds down I'm having a lot of fun with my new Vidibox. What does it do ? Well suffice to say that I've been sending Internet TV programmes from my phone and PC to my LCD, everything from all the VoD programmes on Channel4, BBC and Five I'd like to catch up with over the holiday to a kitschy list of all those Christmas song videos from YouTube.

Almanac - How Our Predicitions For 2009 Worked Out

So, it’s navel gazing time again as I look back on my predictions for 2009 and see how well my crystal ball was working back at the beginning of the year.

The Death of the STB - The biggest theme of this year's CES show will be the death of the set top box, with LG launching a screen with Netflix embedded and Intel working with Toshiba and Samsung. The screen manufacturers have finally realised that they, actually, own the eyeballs, and are likely to try and leverage this in the near future. In the past they might have used this as a means to leverage sales of their commoditized plasma and LCD screens, but now they're more likely to look to take a share of ongoing rentals and downloads, having learnt the lesson the hard way from the likes of Apple.

Well, I think this one is a 8/10. More and more screens are appearing with chips built into them. This will be a slow process, especially with so many incumbents, and even new entrants to the IPTV market such as the UK MNOs are likely to use STBs in the short term, but the trend is certainly underway.

Major Vendors Take Video Seriously - Twelve years ago I started to stream video over the internet. Now, Microsoft's Steve Ballmer thinks that this is a good idea. Welcome to the party, Steve! But the real reason that Microsoft and Intel take this seriously is that their mainstay - the corporate market will be spending in this sector and nearly nowhere else over the coming year, since video networks will be cheaper than flying executives business class and putting them up in four star hotels and arranging huge conventions for salesmen and resellers.

Another good score. 2009 was the year when internet video found its feet. Giants such as Cisco and Intel are making serious efforts in this arena. 9/10.

Corporate Takeup - I'm cheating here since I seem to predicting this year after year, but already 2009 has seen a flood of enquiries to VidZapper from corporates, educational establishments and government agencies wishing to launch their own channels and I suspect Internet TV will prove reasonably durable during the downturn since it presents a cheaper, more accountable way of doing video market, now that objections about bandwidth, etc.. have largely disappeared.

Hmm, not quite as I’d expected. Companies having web channels as readily as they have websites is still some way off, although more and more companies are experimenting. 4/10.

The Small Screen - Of course, the other major trend is going to be smartphones - just as the concept of carrying all of your record collection in your pocket seemed pure fantasy a decade ago, so perhaps does the same concept for video now; as Blu-Ray struggles we're moving into the era of downloads taking over from DVDs and the new format may well be marginalised. Downloads will be the theme for the next couple of years, but in time both music and video will become virtual objects, living on remote servers (indeed, one of the best ways for rights owners to protect their content will be to centralise control rather than having millions of copies flying around the internet).

The rise of Spotify, Hulu and iPlayer means that this was spot on. 10/10.

Rights - whilst on this theme, we're moving into the age of more complex, and perhaps more flexible, rights management. Rights owners will need to sweat their assets as new budgets are cut; I expect it to be a busy year for the company where I am Non-executive Chairman, Rights Tracker. I still think it's early to predict that someone will set up a company that effectively sells and deals in secondary and unused rights online, but that day can't be so far away.

Again, this has been the year of rights. Indeed, if anything this aspect of the industry is going to become more important year on year. 8/10.

Stagnant Ads - the ad market is not likely to see any great moves forward this year, despite the success Hulu has been having; expect more complex sponsorships to come to the fore as every quieter ad agencies finally have to get clever about their business.

The recession somewhat stymied this prediction, even if almost every MPU now seems to carry a video ad. 5/10.

CDN Clearout - CDNs are likely to suffer from more competition and from the advent of cloud services. Already Amazon's S3 has seen great takeup amongst Web 2.0 startups.

The CDN market has been surprisingly stable, but the pie isn’t growing. The value of the market is staying the smae year on year as the value of bandwidth declines and the entry of major wholesalers such as Level3 have made it an uncomfortable time for the incumbents. Amazon’s decision to offer streaming Flash (already supported by VidZapper) is likely to have great impact. 7/10.

Universal broadband - with Governments all over the world now determined to invest in infrastructure to ease their ailing economies, expect initiative all over the developed world in the provision of better broadband services for everyone.

Yes, the UK Government, followed by many other governments around the world, announced a levy to pay for universal 2Mbps broadband (whatever that means). 10/10.

Mergers and Closures - inevitably the coming year will be one of consolidation, and services such as Bablegum and Joost may struggle to survive unless funded by the deep pockets of their respective founders.

Bablegum struggles on, but Joost has hit the rails. More and more mergers are happening as the industry consolidates.

What did I miss ? Well, the co-operative initiatives in the industry such as Hulu, HBB and Canvas were worthy of more than a passing mention.

The sheer growth of viewing of internet TV was also a surprise, as was the fact that people are viewing more TV, both traditional and online.

So, look out for out 2010 predictions on this blog before very long, and please feel free to add your own thoughts.

Happy Christmas!

Canvas Off The Drawing Board

Hybrid boxes are finally in danger of appearing in the UK market following news that TalkTalk (owners of TiscaliTV/HomeChoice) and Channel4 have joined the Project Canvas consortium shows that there is some momentum behind the initiative finally after it recently unveiled some of its plans.

The key task now will be to marry the technology with Freeview and Freesat boxes from the likes of Humax, who are also part of the consortium. With iPlayer enabled screens already appearing it's likely that the public will end up very confused about the benefits of hybrid just after they've got to grips with digital. But it keeps the boxes rolling for the manufacturers..

Red Light Spells Danger

The BBC has (at last count) nine broadcast channels, but still puts a lot of sporting coverage on its 'red button' or Interactive service. This is an approach that works well (although it doesn't seem to stop endless snooker from disrupting the BBC2 schedule) and is seemingly vindicated by the figures published today of 11 million weekly users of the service.

Commercial broadcaster have singularly failed to capitalise on the red button - something that was, once upon a time, seen as a boon to advertisers, enabling viewers to request more information. But viewers don't want more information when they're watching a TV programme. And there is a lesson here for online video ads. Television advertising isn't a 'below the line' activity, with 'calls to action'. What television seems to do (and no one is actually sure exactly how despite decades of research) is to build brands and awareness.

There were even companies, such as the original Two Way TV, set up to capitalise on the opportunities that the red button offered, but it all amounted to very little.

Eight years ago I fully expected TVs to have the ability to add 'additional' channels by using broadband, but this type of hybrid service seems to be still a while away. In the meantime, the red button has life in it yet, if only for sports on a public service broadcaster.

Britain Is Becoming VC Unfriendly

One of the things that I most enjoy doing in life is helping other people build their businesses. I currently have two non-exec roles and will probably add a third in the New Year. Asking experienced entrepreneurs to help nascent companies is a tradition in British business which has served the economy well, in my belief.

But there's a fly in the ointment. Generally, fees in undertaking these roles are comparatively low, since preserving cash is essential to developing companies, so the balance is often made up in share options. The problem is that share options for non-execs are treated like income, so will, from next year, attract 50% tax and 13.5% NI - an effective tax rate of 60%.

So, a 2% share in a company originally valued at £1m and sold for £5m will generate £32,000, which might reflect three to five years' work.

On top of the changes in CGT taper relief, the UK is fast becoming a very unfriendly place to be a start up, with the R&D tax credit allowances being one of the few remaining reasons to justify starting a company in the UK. The UK has tens, if not hundreds of innovative companies in the IPTV and internet TV space, following on the heels of world class companies such as Pace, ARM and NDS, and they need to be encouraged.

With the government pumping hundreds of millions into venture funds via regional development authorities it seems that they're playing the old trick of giving with one hand then taking away with the other.

Having Their Cake And Eating It

A survey of who's willing to pay for online content in the US and Europe has, not surprisingly, some up with the conclusion that the majority of people don't want to pay for content and don't want to see ads either. Indeed, 87% when questioned by researchers GfK said that they wouldn't pay.

With 'paid for' likely to the theme for Internet TV in 2010, this extensive survey of 16,000 for WSJ Europe could have been more insightful if it had asked more pointed questions, such as how much someone was willing to pay. People confronted with specific choices tend to behave in a very different way to those able to broadly vent their voice. (see Quirkology: The Curious Science Of Everyday Lives).

It's not a question of if users are willing to pay, it's more a case of for what they're willing to pay. Expect a lot more detailed research in this area as everyone from NewsCorp to Hearts to Axel Springer announce that they're going to be playing with paid for content.

Elegant Degredation

Certainly Sky and their partners Microsoft cannot be accused of elegant degradation: this is what rugby looks like on their paying service over a stable 2Mbps link. Actually, that's not true, this is what you see in between the endless buffering.

I'm getting the feeling that Sky have a laptop squirrelled away somewhere which is serving all of their video from an old dial up modem whilst they cream in revenue from mugs like me. But I will be onto trading standards and OFCOM in the morning. This is a scandal that needs to be exposed.

Passing The Buck..

The trouble with the internet is that you want to start a dialogue with everyone, but really don't want to talk to them. Talking is expensive in terms of time and resource. Online businesses work hard to minimise their actual human contact with 'users'. But when you pay £34 for something you expect better than this:

*** THIS IS AN AUTOMATIC ACKNOWLEDGEMENT OF RECEIPT OF YOUR EMAIL. PLEASE DO NOT REPLY TO THIS EMAIL AS REPLIES TO AUTO ACKNOWLEDGEMENTS WILL REMAIN UNANSWERED ***

Dear Iolo,

Thank you for contacting Sky Help Centre.

We have received your message and would advise that we are currently receiving a larger volume of e-mails than normal, but will provide you with a personal reply as soon as possible. We value your custom and appreciate your patience during this busy period.

In the meantime it may help if you visit our Sky Help Centre

Regards,

Sky Help Centre

I am fast coming to the conclusion that NewsCorp/BSkyB (if there's a difference..) see the internet as an evil they have to cope with, not a medium they truly seek to exploit.

I will report back on what happens once they get through their 'larger volume of e-mails than normal' (here's a hint - sort out your service and you get fewer emails...).

Some Feedback On Sky

So. let's wash Sky's dirty clothes in public.

Many people from the industry read this blog and I'd be grateful if you could - anonymously if you prefer - comment on your dealings with Sky regarding their online and mobile provisioning.

I have no idea what CDN they use, who developed their technology and why they're getting it so wrong. Any ideas ?

How Did Sky Player Go So Wrong ?

Internet forums are full of ordinary people berating themselves, their web connection and their PC: http://www.skyuser.co.uk/forum/sky-player/33348-sky-player-keeps-buffering-live-tv-2.html et al... They're all looking to blame anyone except for Sky. I guess the company's traditional TV track record is such that no one doubts their dubious credentials online.

Some of them seem to have twigged the Kontiki issue and have dumped the install. However, the problem is all with Sky. These viewers can watch iPlayer and ITV.com with no problems and speed test show they have a reliable connection to the internet. In my view Sky simply aren't provisioning their service properly and need to totally drop P2P and work with a proper CDN.

More savvy users are blaming Sky'd Xbox service: http://www.digitalspy.com/forums/showthread.php?p=37053444. But the issue is the same: if Sky are asking for sky high subscriptions they should be provisioning the service properly.

Also, the use of the pisspoor Silverlight technology, which has been dropped by most serious webcasters (including most recently ITV) exacerbates the problem.

Sky need to sack their tech team, adopt H.264 and a decent VMS and go and speak to the CDN guys as fast as possible. They should also find some people who can redesign their dreadful player whilst they're at it.

Otherwise a reputation they built so well in TV1.0 land will come crashing down around them in the world of internet TV.

In The Shadow Of The Medicis

If you look at the Medicis and the Rothschilds and the banking world today, they have one thing in common: they are global whilst countries act in their own narrow interests. Therefore, bankers threaten to leave for other shores at the hint of taxation, and they already move most of their revenues around the world with impunity (Goldman Sachs, pro rata, pays one tenth of the tax that TV Everywhere pays in the UK. It should be pointed out that pro rata TVE also gives more money to charity). The benefits are huge, and they have any government over a barrel, as today’s pre-budget in the UK makes patently clear. The UK has basically transferred a couple of hundred billion into the bank accounts of a tiny number of people in order to preserve the semblance of financial normality for the rest of the population and asked for half a billion back. What a raw deal for the 'hard working Britons' the politicians pretend to represent.

In reality the world’s leading nations should have acted in concert and got the banks to pay an operational or transactional tax that would act as insurance against any future bail out of their mad excesses. But as current goings on in Copenhagen shows, getting the leading nations to work together is impossible even when all of their interests should be aligned.

The power of the bankers is therefore such that they operate globally with pretty much impunity.

So, how does all of this ranting impact on the internet TV industry ?

The biggest problem facing the internet is, quite ironically, that it is a global medium with local reach. Advertising budgets remain territorially based and therefore revenues are local. Even the most targeted web services will be lucky to attain a 75% local audience – by its nature audiences, expat or otherwise, will be discounted as part of the campaign spend. The wastage is enormous. The leverage is non-existent and the structures, built in the 50s, that power the advertising/media status quo are yet to be challenged in any real way.

The result is that value is destroyed and the industry constantly bids itself down. Lower CPMs may seem to be a result for media agencies, but, in my experience, this inevitably leads to a degradation in audience and delivery.

When will global brands start to operate globally ? When will global agencies use their global reach ?

There are still lessons to be learnt from the Medicis...

Vevo Aims For 'Internet MTV' Status

The beleaguered music industry has seen another saviour in the guise of Vevo, the soon-to-be-launched music video service that is said to be to the internet what MTV was to multichannel television. Sony, Universal and EMI have already signed up, so the opportunity to create a 'video Spotify' certainly exists. But before the music companies crack open the champers, it should be pointed that the economics of the music industry still don't stack up.

Certainly, things have improved since YouTube attained and established a much lower benchmark for residual payments to artists and songwriters, but the reality is that the artist, the songwriter, the label and the management are all likely to have their cut; the service then needs to pay for marketing and promotion, delivery (that is, bandwidth) and ad sales.

But as long as the service manages to play a commercial before every video and attain $15 gross CPM they might succeed (I won't go into the full maths, see past posts..), adding in e-commerce, PPV for live events and the kind of sponsorship MTV was famous for might help further.

However, the real irony is that the majority of the advertising is likely to come from the music industry, eager to break new stars in a fragmented world. This may seem self-sustaining, but this circular flow of revenue can quickly dry up.

Narrowstep Pursues Onstream

It's a case of the pot calling the kettle black as David McCourt and the erstwhile 'management' of what's left of Narrowstep seek damages regarding the deal they did in 2008 with fellow online TV company, Onstream. This filing from Onstream a couple of days ago:

"On April 22, 2009 we filed a report on Form 8-K with respect to Narrowstep's issuance of a press release on April 16, 2009 announcing that it was seeking $14 million and other damages from us, as a result of our alleged actions in connection with the termination of the agreement to acquire Narrowstep. This demand was made in the form of a letter issued at about the same time by Narrowstep's counsel.

As disclosed in that report on Form 8-K, after reviewing the demand letter issued by Narrowstep's counsel, we determined that Narrowstep had no basis in fact or in law for any claim.

On December 1, 2009, Narrowstep filed a complaint against us in the Court of Chancery of the State of Delaware, alleging breach of contract, fraud and three additional counts related to our alleged actions in connection with the termination of the agreement to acquire Narrowstep and seeking (i) $14 million in damages, (ii) reimbursement of an unspecified amount for all of its costs associated with the negotiation and drafting of the merger agreement, including but not limited to attorney and consulting fees, (iii) the return of Narrowstep's equipment alleged to be in our possession, (iv) reimbursement of an unspecified amount for all of its attorneys fees, costs and interest associated with this action and (v) any further relief determined as fair by the court.

After reviewing the complaint document, we have again determined that Narrowstep has no basis in fact or in law for any claim and accordingly, we do not expect the ultimate resolution of this matter to have a material impact on our financial position or results of operations."

Now, considering that I was a major shareholder in Narrowstep at the time of the deal, I, nor to my understanding, any other shareholder, was a) informed of the deal apart in filings; b) had an opportunity to vote on the deal; c) had the opportunity to raise the issue at an Annual Meeting since the company did not hold an Annual Meeting. I understand that there might be legal proceedings afoot from many of the company's shareholders regarding the above shortcomings.

People who live in glass houses should be wary of throwing stones...

Comcast Get Hulu Share

Some months ago on this blog we predicted a bid for NBC Universal from Comcast - the US cableco that cannot expand since it already has the maximum 25% of the market allowable under US regulations. And so it came to pass today.

One of the assets acquired in the deal is part ownership of Hulu, which is perhaps the online TV equivalent of Comcast.

The deal makes a lot of sense for Comcast, which actually owns very few of the channels it carries and is low on content expertise. And it wouldn't be a surprise to see Hulu, or content on the service, being charged for.

The Value Of Journalism

There seems to be a lot of talk about ‘quality journalism’ these days. This is what Murdoch et al are hoping to charge for online.

But, er, the majority of news stories that now appear in any news outlet come from a very small number of sources such as Reuters, AP, PA and AFP. And, let's face it, the total crap that the majority of national newspapers have written over the past half a decade is totally valueless anyway. The libel laws in the UK have negated investigative journalism to our national shame and who really cares about the opinions of publishers and the meanderings of self obsessed columnists?

Even the BBC, where you can find this stuff for free anyway, is moving at a snail’s pace, whilst pulling the carpet from under the feet of any commercial online provider (the BBC's budget now exceeds the total value of the TV advertising market). And, as I have personally experienced recently, the quality of BBC journalism is totally biased by predefined agendas (a recent example was political correspondent Rory Cellan Jones blaming Google for the 'free journalism' mentality of the UK public whereas the BBC were not mentioned, but are clearly far more culpable).

Today when I need to find traffic conditions or the very latest news I’m far more likely to turn to Twitter or blogs. The writings of journalists are largely too slow, lazy, opinionated, badly resourced and controlled to be of any interest to me.

So, Murdoch believing that we will pay for his rhetoric and bile is misguided. Let’s face it ‘quality journalism’ emanating from the most political manipulative publisher since Hearst is at best an oxymoron. At worst it’s the dying breath of someone who has spent his life running roughshod over democracy in pursuit of money and believing that free people will pay for his dreadful view of the world (Fox News - enough said).

Journalism is valueless unless someone puts a value on it, and the reality is that in a world of real time communications the ability to string a sentence according to the demands of a media mogul is largely valueless. The ability to think for oneself, to blog, to tweet are far more valuable. And the ability to interpret, sift and decipher are equally valuable.

I have only once paid and subscribed to an online service – and ironically that was the new media site GigaOm. It was the worst investment I ever made. They just pass off some pathetic stories they make public anyway and provide no added value.

Murdoch might have won a passing, glancing fight with Google, but his world view is dimming fast. As someone who has watched his influence with horror, I shall surely enjoy watching his demise.