Upfront - March 2012
Latest Industry News and Insights
Comcast, Verizon come out punching
Some traditional service providers have decided to coexist with overthe-top providers. Comcast and Verizon have decided instead to play hardball with their OTT rivals, notably Netflix, which may be injured but keeps finding new ways to stay in the game.
The cable operator’s new streaming video offering, Xfinity Streampix, is a subscription service that allows Comcast customers to watch movies and TV shows in and out of their homes. The content is initially available on iOS devices, but Comcast said Streampix would work with additional devices, such as Xbox 360 and Android, over the coming year.
Streampix will be included as part of some Xfinity triple-play packages or separately for an additional $4.99 a month with other video packages.
Comcast spokeswoman Alana Davis said that Streampix was designed to complement the 75,000 TV shows and movies currently available on Xfinity On Demand, on XfinityTV.com and through the Comcast Xfinity TV app.
Comcast signed licensing agreements with corporate brother NBCUniversal, Disney-ABC Television Group, Sony Pictures, Warner Bros. Digital Distribution and Cookie Jar Entertainment to provide movies and TVs shows for Streampix.
“This product was really built to complement what our customers already get,” said Davis. “We definitely recognized that there was a marketplace for deep library content and past TV series. We really offer everything else to our customers, but that’s one area that we could of pumped up a little bit, and that’s what we did with Streampix.”
Earlier in the month, Verizon also challenged the OTT players by announcing a video streaming service with Redbox and its DVD rental kiosks.
Verizon and Coinstar, Redbox’s parent, said the service will be national and available to non-Verizon customers, as well. It adds another leg to Verizon’s quest to become a force in home entertainment, and it looks set to compete to some extent with the cable TV services it already sells.
With the Redbox venture, Verizon is breaking ranks with the cable and satellite industry, which makes its own video streaming services available only to people who also subscribe to its traditional TV feeds.
Verizon and Coinstar didn’t reveal prices or other details of their service. It’s intended to give subscribers access to DVD and Blu-ray discs, as well as streaming movies, starting in the second half of the year, they said.
And also earlier in the month, it was reported that Rogers Communications and Bell Canada Enterprises (BCE), two of Canada’s largest service providers, were in talks with Apple to use the latter’s iTV platform. Apple is said to be seeking companies that are both wireless and broadband providers to test out its TV sets.
Meanwhile, the OTT players had some streaming news in February, as well. Netflix said it will stream certain movies from The Weinstein Co. under an exclusive licensing agreement.
The companies said their multi-year agreement will cover foreign-language movies, documentaries and some other films in the Weinstein vault and make them available for instant viewing on Netflix.
And Google’s YouTube is aiming to create 25 hours of programming per day with the help of some of the top names in traditional TV. The Google-owned site is spreading its wealth among producers, directors and other filmmakers using a $100 million pot of seed money it committed last fall.
Finally, investors dropped $20.5 million on Aereo, a start-up that has devised a means of streaming broadcast television to mobile devices. Aereo, previously known as Bamboom Labs, plays off the network DVR approach.
Canoe Ventures shuts down iTV business
Canoe Ventures is scuttling its interactive TV advertising platform to focus on videoon-demand and TV Everywhere dynamic ad insertion (DAI).
Canoe Ventures, which was formed in 2008 and is backed by the nation’s six largest cable operators, is laying off the 120 employees from its New York City office; the remaining 30 employees will move forward on DAI out of Canoe’s Denver Technical Facility.
Canoe’s entire senior management team – including CEO Kathy Timko, chief product officer and former CTO Arthur Orduña, senior vice president of sales and distribution Jim Turner, general manager for iTV Jonathan Bokor, CFO Neil Schaffer, and CMO Vicki Lins – will be leaving once the New York office closes on May 23.
Denver-based Joel Hassell, who took over as CTO from Orduña last year, is the new CEO of Canoe Ventures.
Canoe Ventures launched its EBIF-based request for information campaign in 2010, and it’s currently available in 25 million EBIFenabled households, with Comcast accounting for most of those homes.
“Cable’s iTV business will continue through the ad sales teams and video business units at the individual MSOs as they pursue business opportunities with these capabilities within their own footprints,” Hassell said.
“It’s not the technology,” a Canoe spokesperson said. “In fact, we built the nation’s largest iTV platform with 25 million households. We were starting to gain some traction in the marketplace, but this analysis we’ve been going through over the past few weeks with board members, some key MSOs stakeholders, Canoe management and some industry leaders, what we heard loud and clear was that there’s a significant opportunity, demand and value for monetizing video-on-demand content across multiple platforms.
“That’s what our customers, the national programmers, want the most, and we can also service our owners, the operators, most effectively by pursuing that, too. So it became a fairly logical business decision to pull back on what is a costly and work-intensive venture into iTV and streamline and focus on what is an easier path, and a more valuable and robust business opportunity, with on-demand. Unfortunately, the ramifications of that are to significantly reduce the workforce, cut back on the resources and move in a different direction.”
Canoe started to queue up DAI in VOD late last year, with some trials and plans for a rolling commercial launch this year.
The Canoe spokesperson said those rollouts could ramp up now that ad insertion is the company’s main focus.
Cable closes in on universal support for TV apps
The cable industry inched toward a technology for interactivity that would work the same for most MSOs with a demonstration at CableLabs of the same apps successfully running on a number of players from different companies.
EBIF was supposed to be that common platform, but it has been implemented by different MVPDs (cable operators and Verizon use EBIF) in ways that are dissimilar enough that any given app that runs properly on one company’s system might have to have its code tweaked to run properly on another’s system.
So the industry has been working through CableLabs to evolve its ETV (Enhanced TV) specification and CoDF (Content Definition Format) specification. Last year, CableLabs issued the I06 version of the former spec and the I02 version of the latter.
CableLabs held an interop in February to test those specs. Applications were executed consistently across 10 different user agents, meaning that an application has the same look and feel regardless of playout software across different cable systems.
Participants included Canoe Ventures, Comcast, Cox, enableTV, Ensequence, ESPN, FourthWall Media, HSN, icueTV, Ignite Solutions, S&T, S3 Group, Showtime, S o f t e l USA, Starz Entertainment, Time Warner Cable, Unisoft and Zodiac Interactive.
Enhancements in the I06 release of the ETV specification include a graphics device profile that supports .jpg and .gif image formats, as well as increased support of animated widgets. Other added features include support for unbound applications (not synchronized to the underlying video) and time-shifted content, as well as common approaches to navigator functions and extensions of ETV apps to launch VOD content.
Research: IP-based home security on the rise
According to Parks Associates, more than 20 percent of households across the nation will have installed IP-based multi-service home networks by 2015.
Homeowners are starting to gravitate toward energy management and bundling opportunities with IP-based security, monitoring and control features.
From a service provider perspective, Verizon, Comcast, Suddenlink and Time Warner Cable have all thrown their respective hats into the home automation ring. Both Comcast and Time Warner Cable said on their most recent earnings reports that they plan to offer home automation services to more cities and communities this year. Parks Associates hosted its third-annual “Smart Energy Summit: Engaging the Consumer” recently in Austin, Texas. The roster of announced participants included Sprint, Verizon, Duke, Best Buy and Reliant.
“Consumers are interested in ways to reduce energy consumption and maximize efficiency at home,” said Tricia Parks, CEO of Parks Associates. “Connected devices, smart grids and energy management technologies offer new opportunities for industry players to meet these needs.”
Research: OTN transport, switching revenue to hit $10.6B by 2015
Global manufacturer revenue from optical transport network (OTN) transport equipment and switching equipment will reach $10.6 billion by 2015, according to a recent research report.
Infonetics Research’s first “OTN Hardware Market Outlook” report also said that Huawei was the leader in both the OTN transport and the switching markets, thanks to its large telecom customers in China that were among the first to readily embrace all-OTN networks, including the largest installations of OTN switching.
“OTN switching revenue jumped 132 percent in 2010 over 2009, while OTN transport revenue grew 9 percent,” said Andrew Schmitt, directing analyst for optical at Infonetics Research. “Both segments are growing at a pace that far outstrips the 3.7 percent CAGR of the overall optical market.”
Other highlights from the report included:
- In 2011, optical transport network transport equipment spending made up 92 percent of the overall OTN hardware market, while OTN switching made up 8 percent; with the OTN switching segment growing much faster than OTN transport, these proportions will change significantly by 2015.
- Rapid growth in the OTN switching market is expected to continue as 40G and 100G coherent technology rollouts catalyze the deployment of new technologies, including OTN switching.
- OTN switching and transport hardware together made up 45 percent of global optical equipment spending (WDM and SDH/SONET) in the first half of 2011 and are expected to grow to 70 percent of the total by 2015.
Report: Providers tap into home automation
Home automation is a burgeoning sector for service providers because it provides incremental revenues and reduces customer churn, according to a recent report by Infonetics Research.
“While the home automation market is still young, major operators, including Verizon, AT&T, Comcast, Time Warner Cable and China Telecom, have already made public announcements regarding home automation services, and some have begun initial rollouts, and many more will jump into the game this year,” said Jeff Heynen, directing analyst for broadband access and video at Infonetics. “Many broadband operators are starting out small, offering remote control of lighting, doors, thermostats, audio, video and security systems. The goal will then be to layer on additional revenue-generating services, such as a full-fledged home security system.”
Highlights of Infonetics’ survey included:
- The top two reasons broadband providers were deploying home automation services were to increase ARPU and reduce subscriber churn.
- Home security service was the most popular home control service offered currently and will remain a top home automation service.
- Monitoring of appliances and monitoring of whole-home energy usage will see the biggest growth among home automation services between now and 2013.