Has Apple delivered the digital content model ?

A fascinating week for the digital media industry with Endemol revealing "banker" tendencies by delivering @33% of profits from buying back their own debt from hedgefunds, ITV appoint a new CEO, Sky deliver very strong results plus go 3D and the IPad is launched to mixed reviews.

A few numbers to throw into this - ITV revenues in the first 9 months of 2009 were £1.9 billion, Sky's recently released 6 month revenues were £2.9 billion.......but wait for it Googles UK revenues in the first 9 months of 2009 were £1.9 billion and the Apple app store having launched in 2007 with 11 apps is now running to 140,000 apps and is estimated to generate £1.5 billion per year.

In no time at all the app store has taken a bit slice of the content revenue pie and the consumer clearly loves it as the IPod touch is likely to soon overtake the Iphone in sales terms and its major USP is the app store.

The rate of growth of Google and the App store is amazing and outside of the highly specific and clearly well executed Sky model the remainder of the traditional UK media industry is left paddling around in the detritus.

The Ipad opens the possibility of digital text and video being delivered to the consumer on a paid for basis - which might actually generate profit for content owners. This is in contrast to the YouTube model which neatly leaves most content owners out of the equation.

Interestingly, very recently YouTube have started to approach their content partners to see if they can offer £ to secure rights and recently secured a deal with the Indian Premier League. However, very few YouTube partners make decent revenues from their channels and it seems that being on the app store offers a much better chance of monetizing content.

Perhaps the app store offers content owners the chance to make £ from their efforts in the digital age and the Ipad offers an interface that will work for text and video. Clearly piracy reamins an issue but Apple look like they have moved one big step closer to an economic model for content owners.

Why The iPad Is A VOD Product

Not surprisingly, the web is abuzz with chatter about Apple's new iPad. To add in my ha'pennysworth it seems that Apple is aiming directly for the paid for market. The majority of web advertising is now in the Flash format and the device doesn't support Flash, so it's very clear that this device is meant to extend Apple's hegemony in the music market into books, magazines and movies.

But, looking specifically at its applications for watching movies, where exactly would you use it ? At home I'll stick to my large LCD screens (There's no HDMI connection so you're not going to link it into your main screen.). If I want to watch on a medium sized screen I already have a laptop or two, if I'm on the go I'm not going to pull out this monster to read the paper on the bus (I travel almost daily on public transport in London and have yet to see anyone use an eReader at all).

When new gadgets come along I spend a long time justifying to myself why I don't need them. In this case I'm still trying to justify why I would need the iPad or what I would do with it.

Consultation on Digital Britain Open

Anyone with an interest can now contribute their views on Next Generation Broadband Access. Responses are required by 1 April 2010 and the main issue is whether the creation of a Next Generation Fund involving a landline duty of 50p PCM is justified.

Copies of the document are available at the link below.

http://www.berr.gov.uk/files/file54154.pdf

Let's Play Monopoly

Once upon a time there used to be anti-competitive and anti-monopoly quangos that ensured that there was competition in markets. But then, successive governments ensured that such inconveniencies were not to get in the way of a 'market economy'. Many of our creative industries are effective monopolies or oligopolies as a result: search advertising, online display advertising, even broadband is offered in many areas by just one provider.

Now, news that Live Nation and Ticketmaster are to be allowed to merge is quite stunning. This is a very bad day for anyone who likes live events. Ticketmaster are second only to Ryanair in their activities and allowing them to vertically integrate is worrying. The irony is that the new company that comes from this merger will be the most powerful force in music in the UK, leaving the record labels far behind.

Digital Economy Bill

In the midst of all the current excitements (bankers, politicans, Blair being found out, sharks in Cape Town etc) it is quite a challenge to focus on a fairly dry piece of legislation that reaches the Committee Stage in the House of Lords on the 26th January - the Digital Economy Bill.

However, this piece of legislation, however it is finally framed, will shape the creative industries in the UK for many years to come. A key area is the extent to which the ISP's will be held accountable for "turning a blind eye" to persistent illegal use of their networks as well as the requirement to disconnect persistent offenders. The outcome of this Bill will impact on the profit and loss accounts of the ISP's so much lobbying over lunch no doubt.

Fundamentally if profit cannot be made from originating and distributing content then as an industry it will scale back - and once the Pirates have bled the archive dry - the content industry will have been decimated. It is not a reasonable argument to suggest that this is simple the evolution of an industry - ripping off copyright is simply illegal but being facilitated by new technologies. This Bill is an opportunity to help the UK creative industries prosper in the digital age.

Charles Dunstone argues against an Orwellian nightmare of ISP "snooping" - but that may be because he is providing a great platform for the illegal filesharers with generous bandwith offers and he has no financial exposure to the content producers.

Google must also be brought into this discussion as YouTube, AdWords and Adsense are all weapons commonly used by the Pirates to market and monetise their streams. In the main the Pirates generate income by using the Google advertising platform - this could easily be stopped by Google and the ill gotten gains re-directed to the content producers and rights holders.

Hopefully the legislators and politicans are not all too old and corrupt to create a fair framework for the content producers, ISP's and consumers to co-exist in the new digital world - but time will tell.

Out Of The Mix

News reaches me that Global Mix has put its CDN business into liquidation, but aims to persevere with its services business.

This is a shame since Global Mix was one of the few smaller CDNs that had a differentiator (Narrowstep had a sophisticated VMS and CacheLogic/Velocix had its 'server side P2P' system).

GlobalMix's emphasis was on multicasting - a technology that will still have its day. Basically, mutlicasting involves sending one stream to many people over IP ( a bit like traditional broadcasting) rather than sending one stream to every viewer. The cost savings are obvious all around, but the technology only really works for simulcast - where everyone is watching the same stream at the same time - and does not work on most current networks, which use IPv4 rather than the more advanced IPv6. However, more and more networks such as Virgin's and BT's C21 will support IPv6, as do most domestic routers and equipment now.

But the market is limited and companies further up the value chain such as Level3 are now targeting the simulcast market. Delivery of video on IP is a commodity and differentiating is tougher than ever..

£807 million loss a real winner ?

The attempts to present Sky's purchase of a stake in ITV as a success says more about the power of Sky's PR budget than anything else. The Court of Appeal yesterday ordered Sky to sell down it's stake which is pretty much game over for this particular episode.

If Sky had left the courtship of ITV and Virgin Media to go ahead would a new UK media superpower have emerged ? Most unlikely - an ITV Digital outcome with monkey in tow was much more likely. Think of the rights that could have been snappped up in this market for £800 million.

However, the real issue is that Sky is very squarely in the regulators crosshairs now, and if the Labour Party should sqeak in at the next election, the full cost to Sky of the raid on ITV could be much greater than £807 million.

What’s Incurring ?

We're incurring a lot for the media and I am now in an absolute lather about two very small sections of our society.

Investment bankers and top footballers have a lot in common. Both groups earn obscene amount of money, especially for what they contribute to society (and let any banker who thinks they work hard swap their life with a nurse for a week).

They also both live in unique bubbles: commercial markets where the actual companies operating in the market will compromise their own well being and that of the actual industry they operate in, in order to maintain the pay of these ‘rainmakers’.

If you take this logic to its conclusion, what is the value of a human life ? So, what should a nurse really be paid ? £30k is a human life £100k is a goal in the Premiership and £2m is the cost of fucking up yet another part of the UK's little remaining manufacturing industry. So many Brits took 'Wall St' as a training video...

I’m rattling on because BT has announced that it wants to take Sky on in the sports rights market. Despite its recent poor performance, it is amongst a handful of companies that could make a mark thanks to deep pockets and a reasonably unadulterated balance sheet.

This is bad news for footballers, a few hundred of whom earn obscene amounts. And as the world’s biggest sport club, Manchester United, discloses that it has three quarter of a billion of debt (what kind of regulations allow a company to be taken over and then saddled with the cost of the takeover – utter madness..) there are only two directions to go -unilateral rights or bankruptcy. I suspect Man U will be bust within five years with their moronic American owners.

The terraces are emptying, sponsors are more difficult to find, more and more clubs are going bankrupt, and the places where the bankers met the footballers (almost all Premiership clubs) just saddled the clubs with so much debt (so, I’m going to buy your company only after I promise it to the bank to pay for the debts I’m incurring) that they might not survive the downturn.

The net effect of this is actually likely to be changes to the collective bargaining that is unique to British soccer – in Italy and Spain clubs negotiate their own TV deals. This does benefit the bigger clubs, but it also creates a market. The collective bargaining in the UK will go within the next two years.

Of course, the same situation exists all over the world, from Australian rugby league and Aussie rules to the NFL in the US.

Sports remains the major driver in selling paid for TV subscriptions, even though only a minority of the population actually watch them.

So, the eagerly expected decision by OFCOM which might force Sky to share sports rights they exclusively hold is going to set the landscape for UK TV for a long time to come.

From their seemingly impregnable position, Sky are being pummelled on all fronts. Project Canvas will bring OTT functionality to Freeview boxes that Sky cannot currently match (indeed, Sky’s technical offering, so good in the past, has imploded recently, can I again mention that the Sky Player is utterly laughable even if I’m being kind ?). Everyone from Samsung to Orange wants a share of their market. And now the regulators are also taking them to task.

Who’d be a billionaire media mogul? Those overpaid fatcats at the BBC, who have no chance of a job in the rough and tumble are purrrring away... What will it take to put a talentless plutocrat like Alan Yentob out to pasture ? Oh, sorry a few million, obviously...

What's incurring? Well, we are... We'll be paying for all of this for years to come.

Canvas Outjumps Kangaroo

Project Canvas has been well managed (what else would you expect from a very capable industry veteran such as Eric Huggers, who was simply wasted at Microsoft ?).

Carphone Warehouse/TalkTalk have very sensibly delegated their tech development to this consortium. And I now have little doubt that Canvas will be good piece of middleware. The number of parties involved gives it critical mass and ensures its success.

However, I do object to using millions of pounds of my money to promote this PSB initiative (even if the commercial broadcasters are also contributing something), especially since it was intended as a platform, not a delivery system. The BBC is now becoming Intel and promoting 'Canvas Inside' to the benefit of technical partners such as Humax. Freeview never obtained such support and this part of this initiative stinks of commercialism that the BBC shouldn't touch. They will, I predict, regret this more than anything in their history. Spending £40m on burying commercial middleware providers is obscene and all those involved will regret their involvement in taking an overinflated public broadcaster into a position that destroys all commercial broadcasting in the UK. Obviously, the fallout will not be immediate, but there will be public enquiries on this one in the future. Unfortunately, the moronic EU's 'Television Without Frontiers' directive (or the AV Directive, as I believe it is now called) just supports this type of idiocy . The likes of the BBC, Murdoch and Google are laughing all the way to the bank.

The BBC Trust in its everlasting naivety has been conned again. All together now: ‘ah, bless...’. When will we stop appointing Miss Marples and Sir Somethings to this Board that is singularly responsible for shaping British media.

They recently advertised for members (or is it trustees ?) and I entertained applying, but then quickly realised that I am far too un-establishment to ever be given a job by a quango.

So, Kangaroo was clipped (although it might reappear as Seesaw, God bless...). Hulu is knocking on the door and Canvas is allowed to run roughshod over anyone who created IP around video delivery technology in the UK (the BBC Trust might understand the arguments around content, but they are utterly clueless about technology).

So, let’s sack the the BBC Trust and disband OFCOM, appoint some people who understand media and especially the future of media, and make them responsible for the BBC, Google and the current OFCOM as well as the companies they now hamper, and also regulate overseas media on a level playing field.

As we head into a general election no political party is really willing to tackle the issues facing our media. The Tories are sickeningly tied to Murdoch and Google. Labour is just clueless, and the LibDems, well who cares about wannabies (even if they could field Clegg as PM, Kennedy as Home Secretary, Ashdown at the FO, Cable (my personal hero) at the Treasury, and how about Lumley at Defence ?).

But then again, Kangaroo was a dream ticket too...

IPL change the game

The worldwide (ex US) rights deal agreed between Google and the IPL (referenced by Iolo below) is the first major IPTV deal since YouTube is a effectively a default setting on all internet enabled TV sets. The broadcasters have been left a bit flatfooted here as the usual problem for new entrants into this space is the inability to effectively market to consumers - not an issue faced by Google.

It will be interesting to see how this impacts on YouTube's approach to illegal IPL content - cynics will argue that now that there is a vested interest it will be much more tightly controlled across the AdWords, AdSense and YouTube platforms.

If so, Google have done the IPTV industry as a whole, a big favour.

Google Becomes A Broadcaster

Google has found that the only way they can monetise YouTube effectively is by being a broadcaster (duh!). Their deal with the Indian Premier League to show the world’s premier cricket league live in the UK shows what a slippery slope they are descending.

For all of its history Google has claimed that it is an indexer, not a publisher, but this position has been disabused and it’s high time that the company adhered to the rules other media owners have to follow. OFCOM seems obsessed with regulating traditional media companies into the ground enabling non regulated broadcasters such as Samsung, the BBC and Google to fill the gap.

$450 million plundered from App store by Pirates

Recent research from 24/7 Wall Street calculates that $450 million has been lost through pirated versions of apps appearing on the IPhone or IPod touch. To put this in perspective this equates to about a year of gross revenue since the app store went live in July 2008.

This trend has accelerated as the ability to jailbreak / unlock these devices has become easy and does not require programming knowledge. Games developers, such as the excellently named Smells Like Donkey Inc, report piracy rates as high as 90% for the paid for games they have developed.

From an Apple perspective the core objective is the sale of handsets so there is little incentive invest resources in dealing with the Pirates. However - the content providers do need to become more active to avoid a generation of consumers expecting premium content to be free.

Oink admin cleared......BPI & IFPI not covered in glory

Allan Ellis, founder of the illegal file sharing site Oink, was found unanimously not guily of conspiracy to defraud by a jury at Teesside Crown Court.

Oink was closed down by Interpol in October 2007 but had enabled 21 million illegal downloads to an estimated value of £20 million.

The interesting point is that he argued that he was not aware of the illegal content but was just providing a "network". No doubt this will lead to a collective sigh of relief from the ISP's who turn a blind eye to illegal activity themselves. He also argued that the £200,000 in his bank account deriving from this activity were not profit....

This is in contrast to the decision in the recent Pirate Bay case and really underlines the need for rights owners to actively protect their rights. Had Mr. Ellis been forced to recognise that illegal activity was taking place his defence that "I did not know it was happening, guv'nor" would have failed.

By going after a marginal case however the position of rights owners in the UK has suffered a setback but this highlights the need for active policing of rights so that prosecutions can be brought based on actual knowledge of these network operators who claim, like Manuel is Fawlty Towers "I know nothing..........."

Samsung Change The Game

Perhaps the most significant news to emerge in the development of internet TV is that Samsung is building access to the BBC iPlayer and to UK Netflix clone Lovefilm into its screens. Yes, its TV screens. Not a box...

As we've long predicted on this blog, the eyes have it and the first thing a TV viewer sees is, well, whatever the TV manufacturer puts on its screen. There's a challenging time ahead for the STB industry...

It is also Samsung's first step to open out ongoing revenue streams from its screens. Expect most other screen manufacturers to follow suit.

Back To The Future

It seems that 3D is the real telly technology trend of 2010. Now there's news that you'll be able to watch England rugby matches in 3D at your local cinema thanks to 3D specialists Inition.

This shows innovation all round - digital delivery to cinemas has given them a new lease of life for special events even as cinema box office taking rise for yet another year. Home cinemas, poor movies and the credit crunch seem not to have affected the industry at all.

And just as it seemed that every kind of technology innovation had been used in sport, along comes something new. However, it does mean that we might have to face Sky Sports 2 Extra +1 HD 3D as a channel in the near future... What's happening in cinemas today will undoubtedly find its way into our living rooms tomorrow.

I'm not sure if those 3D specs will work in the scrum down the local pub come the 6 Nations, though.

Online Video Viewing Falls

For the first time, the month on month amount of video watched online in the US fell in December.

Overall Online Video Usage (U.S.)
	Dec-09	Year-Over-Year	Month-Over-Month
Unique Viewers (000)	137,411	10.3%	-0.7%
Total Streams (000)	10,726,014	11.8%	-4.0%
Streams per Viewer	78.1	1.4%	-3.3%
Time per Viewer (min)	193.2	13.2%	-3.4%
Source: The Nielsen Company

This is a bit surprising, considering the amount of leisure time people have in December, but does bare out my experience that the majority of video viewing goes on during the working day (with lunchtime and late afternoon as peak viewing times).

There's more detail from Nielsen here.

Boxeed In

More column inches seem to be devoted to Boxee than any other internet TV company or technology. After the company's much hyped box launch and presence at CES I decided it was time to go and see what all the fuss was about.

Now, Boxee the product is still in solderware, so there's no chance of buying it in the shop. So, the alternative is to download it, which I did to my Dell Studio Hybrid PC which does little apart from play online content to my Samsung LCD.

The install is reasonably painless and the app then takes over your desktop, which is also not a problem. I then did the modern equivalent of RTFM (WTFIV - I'll let you figure it out).

Now, you have to get to grips with a paradigm shift here. Channels aren't called channels, they're called Apps.

The interface is fussy and confusing, despite telling it not to show content that I couldn't play it didn't. Indeed, its main use seems to be as a media centre interface, but I already have versions of that from Microsoft and Dell on the same PC.

Oh, and it also froze and crashed. I'm totally and absolutely failing to see what the fuss is about.

One out of five and back to my Vidibox....

Pay more than the other guy ? Online rights valuation

In conversation with a seller of sports rights for one of the big agencies I asked him what his approach to rights valuation was and his reply was "Pay more than the other guy". This conversation was a few years back and one can only assume he passed on this wisdom to Setanta and their backers.

Another more rational approach is to look at the level of revenue the rights will generate over the term, deduct implementation costs and a margin and bid the balance.

In the online space this presents a problem - the revenues are still uncertain.

Ad funded models whilst looking good on paper do not seem to be generating high levels of income (outside of adwords) and PPV and subscription models are in the early stages.

Rights owners, and their representatives, therefore conclude that they must wait until a "Pay more than the other guy" person comes into view and get a deal done ASAP.

However - the Pirates step in at that point and fill the gap - devaluing the rights further and creating a vicious circle.

In much the same way that the Banks urgently needed / need to write down the value of their assets to reflect true value rights holders need to do the same before a generation of consumers become used to watching free live premium content on an illegal basis.

Popup TV

Popup restaurants, sales, live events; in the content industry they talk about ‘windows’. A concept started in the sports and entertainments industry is working its way through many other businesses now, such as catering and retail.

There is one thing that temporality brings – the ability to charge. The release of films has long followed a temporal path that is now that is being challenged by technological developments. Movies have to go to DVDs faster than ever, and soon they will never touch a physical medium.

Look at music – a recorded performance is valueless and pirated. A live event has value. Recorded music has been replaced by live music.

My decade and more’s experience of internet TV informs me that this business is even more susceptible to this trend. Live sells. Live events have always been the single biggest driver for internet TV audiences.

Indeed, the lack of efficiency in exploiting temporality is probably the defining business model underlying TV Everywhere (the company not the cliché). VidZapper enables live events as well as on demand video, Rights Tracker helps define windows for content rights and Vidiactive makes content available on the big screen now.

Time is something none of us can control, and as such it has ultimate value. Time is precious and time is what content owners need to pay the keenest attention to.

It is sad to see how few sports events are available in near real time windows. This is a real business opportunity. But the long term value of these events is next to nothing. There is an unexploited long tail at work.

Time has a great lesson to tell to anyone involved in internet TV.

Multicasting solves bandwidth issues

Bandwith hungry applications such as high quality live video streaming are likely to congest the broadband internet still further - a point picked up in the last post.

Perhaps the ISPs see a charging model here but if they enabled multicasting on their networks this issue would be removed with the flick of a switch (or configuration of some routers and switches).

Outside of Global-MIX and INUK very few people are looking at multicasting but the reason for this is that it requires the ISPs to implement it - BT, in particular, given the control they have over the UK's internet backbone. However in the same way that BT ran a "stalingrad" defence to LLU they seem equally stubborn about multicast.

Whichever Government "leads" the country after the next election could give Broadband Britain a big boost by driving a multicast strategy across the UK internet and freeing up bandwidth for all.

The Unconnected World

My better half works for Google, which has a very clear world view based around connectivity. Rather arrogantly, in my view, Google presumes that the whole world is wired at 20Mbps at the very least, otherwise none of the company's applications work. The company is oblivious to the real world for 95% of people, and actually often works against them (many ISPs may throttle users due to over use of Google services).

Now, I’m told of all the good Google does through charitable foundations and the like, but it’s done nothing to improve the provision of its services in, for example, rural Wales.

This hypocrisy, or maybe myopia, is not unique. I once sat in an OFCCOM consultative meeting with a bunch of Guardian reading vegetarians from South East London who swore that bandwidth was no longer an issue to anyone with a computer. Not to them perhaps in their urban communes, but perhaps the lentil eaters should get out more to the real world that a huge number of Brits live with...

The reality, as I’m seeing it, is that connectivity is rapidly degrading in rural Britain. The number of users actually consistently achieving the ‘Broadband Britain’ target of 2Mbps is probably minuscule. I've seen figure stating that the average broadband in the UK is now 4Mpbs, but I remain highly sceptical of this figure.

I personally saw BT Wholesale throttle my local exchange from a 4Mbps line to a 2 Mbps line over Christmas, with Tiscali further throttling a line I hardly ever use from a theoretic 4Mbps to 300Kbps. It rendered everything useless apart from basic web browsing and downloading emails.

Now, we all have to recognise that dedicated bandwidth is more expensive than contended bandwidth, but we also need to be able to purchase this. The only current option offered by non-LLU exchanges is to treat all customers the same. Having fallen victim to all the Xbox360 kids I’d love to be able to outbid them for bandwidth even on a non-LLU exchange. Surely this makes economic sense all around?

But this is not unique to rural UK. Finally Africa has some decent costal connectivity, but at a cost. How will this be metered ?

When I set up a development base in Chennai in India a decade or so ago, I was informed that we could buy bandwidth of 32Mbps. As it happened, this was the total bandwidth serving the whole city and the region beyond (some 45m people). In the end we did manage to buy 2Mbps dedicated for a huge monthly fee. India a decade ago and Wales today are not that different. It's a dreadful indictment of how legislators have failed their constituents with even basic service provisioning yet again.

It seems that fifteen years into the internet era provision is now worse than it was five years ago. To see the Tory party leaving this to the open market is terrifying. At least Labour’s proposed phone levy gives some hope that the rural parts of Britain might be able to achieve basic parity. Personally, I will be voting around bandwidth provisioning lines when this election comes along, and would encourage you to do likewise.

Sign Of The Times

News from France that screen manufacturer LG is delivering content directly from a TV portal operated by Orange shows how rapidly the TV marketplace is evolving. Neither of these are names you'd associate with being a broadcaster. Expect many more companies to take on the challenge of establishing broadcast services in the near future.

CES Themes

CES seems full of familiar themes - getting tv available on every device, getting every application available on the tv. The rise of OTT content (or the second box, as I prefer to call it) is prevalent.

Microsoft embarrass themselves again by launching a sheep in wolf's clothing to try and take away some of Google and Apple's thunder by launching a slate computer that was, well an old fashioned tablet computer (but you have to give them credit for coming up with the idea a decade before Apple).

We didn't quite make it to CES this year with the Vidibox, so I'd argue that it's one of main missing links in the whole story of where television is going from here: social, connected, where you view with friends, albeit in different places, where content can be easily 'thrown' from the PC or mobile to the big screen in the living room (a feature that Boxee also announced at CES).

Everyone is doing deals with everyone and one of the most curious features is the lack of content; it's like being a foodie at a crockery show.

The reality is that most of the devices being peddled do what all the other devices, only with a slightly difference key selling point ("it's for reading books", "it's for playing music", "it's for showing web video").

Differentiation is going to be a major issue for hardware manufacturers and software providers alike.

Internet Pirates - coming to a TV near you..

This year we're welcoming guest contributors to IPTV Times. Here are some thoughts on how to manage piracy by fellow industry veteran, Peter Lewinton of Servercorp:

“Nature abhors a vacuum” (Aristotle) has been proved to have validity over time. We have all watched the music industry being put to the sword by the illegal downloader’s and some have been surprised by the lack of a coherent response from the content owners and distributors.

History is repeating itself as illegal sports streamers are now out in force and individual streams of illegal PPV content on sites such as Ustream and Justin.tv achieve up to 30,000 viewers - figures which would not embarrass a small channel on the Sky Platform.

This level of popularity suggests a major gap between what the consumer is being provided with and what they really want – the vacuum created by the sports PPV broadcasters is being filled by the sports streamers.

If we look at the UK sports TV market in a historical context we are offered a few clues as to why this might be. Before the emergence of Sky in 1989 (21 years ago) premium sports material was distributed on a free to air basis via BBC and ITV. Sky cleverly spotted the fact that live football was such an important part of many people’s daily lives that if it was locked behind a payment window viewers would be forced to subscribe on the basis that they would have no other choice.

About the same time (1990) Sir Tim Berners Lee published the first web client and server and the internet came into being. The narrow band world was very limited in its capability and appeared little more than a tool for communication between developers. However, some pioneers of broadband such as Simon Hochhauser at Video Networks realised that a broadband enabled telephone line could, and would, be the basis for a new open access entertainment platform.

A contrary, if wrong, view of broadband was offered by the Chief Executive of BT at the time, Sir Peter Bonfield who famously commented that BT did not intend to commit to broadband rollout as there was little consumer demand for it. Since then broadband has whizzed past the 350 million subscriber mark worldwide and has been the fastest rollout of technology in history. BT’s share price has not moved forward in quite the same way.

The technology crash in 2001 further slowed development but in the background PC’s were being enabled with graphics and sound cards, Google and YouTube were about to burst onto the scene and broadband speeds were improving to 2mbps and beyond. Payment solutions were being refined and production and editing equipment at the consumer level was becoming ever more powerful. Crucially bandwidth costs were also falling sharply.

Bringing us to the present day suddenly YouTube probably has a bigger audience than Sky and Google has a very significant slice of UK advertising spend. For under £300 per month a user can set up an internet TV channel, integrate it with cost per click advertising and go wild. A few cables connected to a set top box plus an encoder card, account with a free streaming provider and a Google account and millions of pounds of content is at your fingertips with an eager user worldwide user base. Money talks and suddenly profit can be made from illegal streaming online.
TV quality pictures are now delivered, for free, directly to your PC for the majority of live sporting events on an illegal basis.

Strange as it might seem this is still a fairly niche activity however from a viewer perspective. Watching entertainment on the PC remains an activity for the hardcore fan. Losses to the existing PPV operators remain at “manageable” levels and thus it seems that little investment has been made in addressing this issue to date.

The massive popularity of the BBC I Player on the Virgin Platform when delivered to the TV give some clue however as the next stage of development.

At new chips emerge, such as vidiactive, Ethernet ports become standard on TV sets, and devices become more interoperable internet delivery to the TV will become ubiquitous – of both legal and illegal streams. At that point it is highly likely that the current incumbent commercial TV stations will lose control of the EPG – perhaps to Google / YouTube, and the fact that all Premier League games, for example, can be watched for free in high quality online will start to matter financially.

It seems unlikely that the “walled garden” approach to IPTV will work – the consumers and providers will simply jump over the wall to access whatever material services they want.

Common sense suggests a simple legal solution to illegal streaming – surely this can be shut down by the corporate legal departments ? In reality Intellectual Property Law varies significantly country by country, the legislation on Copyright was written for a different technological era and the wheels of change turn very slowly the legal arena. The Premier League recently lost a case against YouTube in the USA as they had failed to register copyright for their material in the USA.

US studio executive likened Pirate Bay, a well known file sharing site, to the Goddess Shiva “Destroyer of Worlds” – digital dollars were being substituted for digital cents and Porsches were likely to lose their slot in the studio car park. That may be true but commerce, like nature, will roll forward regardless and unless the current models are adjusted to better meet consumer needs the vacuum referred to at the start of this article will be filled even more effectively by the digital pirates when the internet hits the TV over the coming years.

Almanac 2010

Here are our predictions for the year ahead:

Rise of Subscriptions – they say where there’s a will there’s a way and there’s little doubt that there will be more paid-for content around in the coming year, although I expect the majority of this to take the form of flat fee subscriptions. Think Spotify for video. This is, after all, nothing new. Traditional cable and satellite has free to air channels and premium channels. One off payment will be reserved for major sporting events and the like. Another model that might begin to find some purchase is micro charging where very small amounts are debited to a user account as they consume content. However, one thing I doubt will be a success will be NewsCorp’s attempt to monetise traditional new journalism: people pay for timely information. This means that Twitter has a better chance of revenues than NewsCorp. However, remember how everyone said the telegraph would be the end of regional newspapers ? Often these media end up complementing each other in unusual ways.

Bandwidth Blues – the next year is set to be a dreadful year for anyone using ADSL; providers have racked up contention rates and are making the same lame ‘too far from the exchange’ excuses time and again (technically, this is bullshit). The reality is that almost all ADSL consumers in the developed world should be capable of 2Mbps however far they are from an exchange, the real issue is how much the service provider is willing to invest in achieving this. In my rural home I have seen reliable bandwidth decline from a steady 2Mbps five years ago to a bare 300Kbps now. This is an affliction bedevilling millions of people and needs to be addressed urgently. Having the gas company tell you that you can only put the thermostat to 12 degrees would be considered a crime. Any contended bandwidth under 2Mbps should be legislated against in the same way. But it won’t, and rural areas have fewer voters, so they can go and hang...

Cutting The Cable – In Obama’s words: yes you can... But: do you dare ?

US takeover of UK TV market – the coming year will see even more market dominance by US owned and controlled media, largely by stealth, even as the creative side of the business is being shored up by Brits both on and behind the scenes (from Flashforward to House, a British lead is de rigeur, just as all of our formats are being repurposed for US TV). The election means that there will be pressure on OFCOM not to rock the boat and the likes of Google and Sky are likely to have a free run at what’s left of the British media industry. The BBC, however, is likely to find itself in ever deeper water with its unjustifiable tax-funded budget. It wouldn’t surprise me to see BBC Worldwide being prepared for flotation before the year is out. The fightback will take the form of Project Canvas and Seesaw. I expect the former to succeed partially (as a format for box manufacturers) and the latter to crash and burn.

Internet TV Publishers – the economics of web TV publishing now stack up, and just as the later eighties saw the rise of specialist magazine publishers, expect the teenies to see the arrival of some nascent Internet TV publishing enterprises.

TV 3.0 - Social Television – television used to be a communal affair, with the family gathering around the box to watch together; then it increasingly became about ‘MeTV’ in the TV2.0 days we are currently experiencing. However, I think that we’re moving into a new era of social television. I've been trialling the Vidiactive box over the holiday season and it's been a revelation. It's changed the way I interact with TV. Boxee is soooo TV 2.0.

Internet TV Shopping – over the years I’ve seen massive successes with the use of video in selling products; expect a new breed of video driven ecommerce sites to appear over the coming year and for this to be a massive growth area in the Internet TV industry.

New Formats – it’s an open secret that Google is unhappy with its use of the Flash wrapper, and possibly also has issues with the H.264 codec since neither are technically open source; the company’s still-to-be-verified acquisition of On2 was possibly aimed at giving it added engineering clout in this direction. There are also a number of other players seeking to improve on currently available codecs, especially from the open source community. H.264 will be King in 2010, but its crown might be shaky...

The Screen – 2010 will be the beginning of the end for the set top box: it has a long way to go yet, but more and more functionality and processing power will be built into the screen or the projector; already over 15% of screens sold have what is essentially a computer built into them.
Flash Influence – a highly undocumented element of the development of Internet TV has been the influence of Adobe’s Flash. The technology might be ubiquitous on computers, but is energy and resource hugging and has struggled with being ported to mobile and STB devices. I’ve seen this struggle from the inside and Flash 10 is still a way from being deployable on lower powered devices. This means that operators have to develop separate interfaces for mobile and STBs, each of which need customising, making the commercials impractical. However, Flash will finally come to these devices during Q2 and this will open a whole new realm of opportunities in app development for iPhones, gPhones and STBs.

The Decline of Games – the dollars to cents decline that has impacted upon the music industry and, more recently, the movie industry, will spread to games as they increasingly become available for hire online; the rise of games exchanges has already had a huge impact on revenues and the recession makes the £50 ticket price of some games breathtakingly expensive. Moreover, the top-end game market is being hit by ever higher production costs and a declining market. Expect more and more delivery of games over set top boxes and even mobile devices to the big screen. Even Google are getting in on the act.