More U.S. Households Rely on TV Broadcasts

In a recent letter to the FCC (as reported by TV Technology), head of the National Association of Broadcasters (NAB) Gordon Smith cited new figures about over-the-air television in the U.S. in support of his statement about the FCC auction of part of the TV radio signal spectrum.

According to his statement, the portion of U.S. television households that rely solely on free broadcasts has grown to almost 18%. In a separate blog post, Smith mentions a study by GfK Media, nearly 7 million more viewers dropped their subscription services bringing the total who watch over-the-air exclusively has risen to more than 20 million.

If the subscription services are losing customers, it is probably due to a combination of cost-cutting by consumers and a switch to online-streaming sources over broadband Internet connections. It may be impossible to separate the two, but I expect that tight finances is probably the larger factor.

Whatever the reason, we cannot ignore the need for broadcast television for a significant portion of the population. Any reform of the free over-the-air system and reassignment of spectrum is going to have to preserve these services for those who cannot afford or choose not to pay for access to the information that these broadcasters provide.

Sony Blu-ray Player for $40

Blu-ray has taken a long time to catch up with DVD, and as I continue to point out, the disc business appears to be in decline. Is if possible tht Blu-ray could catch up this late in the race?

It could if the premium between it and standard DVD players (which is “good enough” for the majority of consumers) dropped to something approaching “zero.” And apparently now it has.

Sony BDP-BX18 Blu-ray player available on eBay

A seller on eBay is offering refurbished Sony Blu-ray players for $40. I have not tested this model, so I can’t tell you if it’s any good or not, but it appears that the seller has sold many hundreds of them. And it’s no “transportation special” stripped-down model, either. It has Sony Bravia Internet video support and a wired Ethernet connection, a front panel USB port, and an HDMI connector. According to the product description, it was “originally purchased from a major retail store and returned.”

New Blu-ray players still cost more than DVD players, but with deals like this showing up, I’d expect the price differential to soon become meaningless.

Strawberries and Cream Over the Top

There is one type of content that makes “television” the most compelling entertainment media available: live sports. If streaming video — also known as “over the top” — is going to make serious inroads into the traditional linear television broadcasting markets, it will need to offer “better-than-television” coverage. And we’ve already seen many experiments that are making significant progress in this direction.

For example, the Olympics in China had more than 2,000 hours of coverage available online, which was significantly more than was broadcast on the several networks that provided programming in this country. It was a great way to follow some of the less-popular events (including my personal favorite, sailing, which rarely gets any network screen time), even though much of the coverage was presented without commentary.

Now you can follow another major sporting event online. Livestream is partnering with Wimbledon to provide online coverage of this famous tennis tournament. The broadcasts are free and will include live coverage of major matches. The high definition programming will also include player interviews, press conferences, and highlights. The Wimbledom.com site will offer the live stream, as well as an archive of clips.

This is an exciting development, and provides sports fans one more reason to connect a browser-capable device to their big screen. It also exposes one more crack in the wall that used to be the broadcast networks’ impenetrable barrier to effective competition. Online streaming video can only continue to grow more popular as a result of developments like this.

Verizon Jacks Up the Speed

Verizon’s FiOS service has become very popular with some users for its outstanding broadband service speeds. It doesn’t seem that long ago that getting a couple Mbps over DSL was amazing; now FiOS service starts at 15 Mbps download and 5 Mbps upload. And Verizon has now raised the ante.

Recognizing that broadband households are using more and more data from the Internet, Verizon has introduced “FiOS Quantum” service. This covers four new options: 50/25, 75/35, 150/65 and 300/65. (The first number is the download speed in Mbps, and the second number is the upload speed.) These rates are intended to support simultaneous streaming of video content from the Internet to multiple devices in the home at the same time. (Netflix recommends at least 3 Mbps download speeds for DVD quality, and 5 Mbps for HD quality.) It also will speed the downloading of content; Verizon estimates that you’ll be able to download a full-length DVD-quality move in about 20 seconds at the top speed of 300 Mbps, which can also suck down a full HD movie in a little over two minutes.

Triple-play bundles with the 50/25 service will start at $110, which is just $10 more than the starting price for triple-play bundles with 15/5 service. That’s more than triple the download speed, which could be attractive for many households.

Neither the press release nor the Verizon website makes any mention of monthly data caps, so presumably you get unlimited use at these speeds (unlike the company’s plans to put limits on wireless data transfers for their mobile phones and other devices).

This is a smart move for Verizon; it helps put some open water between them and their cable company competitors in terms of top speeds offered. It also sets up the FiOS service as the go-to choice for a fat data pipe into the home. It may also signal that Verizon recognizes that future success may lie in delivering data on-demand to consumers, as opposed to the linear broadcast of content that we still call “television.”

Amazon Adds MGM Movies

Amazon Instant Video is the quiet third-place contender behind Netflix and Hulu, but the service keeps adding content to its catalog. Many of the titles are available for free streaming — some in high-definition — for customers who pay for an Amazon Prime membership at $79 per year. In addition to benefits such as free two-day shipping on most orders and free “borrowing” of Kindle books, members also get to watch movies and TV online for free.

The service currently has a much smaller catalog than its competitors, but it is growing. Last week, Amazon announced an agreement with MGM to include hundreds of “classic” movies and television episodes. Movies include The Silence of the Lambs, Dances with Wolves, Rain Man and The Terminator. One of the TV series to be added is Stargate.

These additions aren’t likely to catapult Amazon to the top of the online streaming list, but they will help keep it competitive. This is likely to be a long race, and so long as Amazon can keep the other two services in sight, it could be in a position to make a strong move in the future.

Net Neutrality: Justice Department Investigates Cable

The Wall Street Journal reported that the U.S. Justice Department has launched an investigation into cable television company practices, especially as they relate to streaming online video from sources such as Netflix and Hulu. One focus of the agency’s concerns is the fact that some cable companies are imposing data caps on subscriber usage of broadband network connections. In particular, the Justice Department is probing Comcast’s preferential treatment of its own Xfinity content streamed over a Microsoft XBox. The company contends that it treats all Internet data equally, but does not count the Xfinity content towards a subscriber’s data usage because the data is streamed just within Comcast’s own private network.

The Justice Department is concerned that this practice violates Comcast’s agreement that it would not “unreasonably discriminate” against streaming data from other companies.

According to the WSJ article, Justice is also looking into the emerging practice of authentication as part of the “TV Everywhere” initiatives by cable and satellite services. The idea is that viewers who subscribe to a package of channels using these services would then be able to access some of that content over the Internet using a computer or mobile device. The Justice Department is concerned that this may be an anti-competitive practice because it requires the user to subscribe to a bundle of products in order to access the online content. This prevents users from subscribing to just an online version of the available content.

Both avenues of investigation have important implications for the future of subscription television services. If the cable companies are allowed to selectively apply data caps to content delivered by competitors — such as Hulu and Netflix — it could make it much more difficult for those online outlets to succeed. On the other hand, if the agency decides that subscription television services have to open up their online streaming content to viewers who do not subscribe to their cable or satellite plans, this could hasten a la carte pricing and result in drastic changes in the market for these companies.

Here’s a video on this story from the WSJ site:

Comcast, TiVo, and… PayPal?

Attention: QVC Shoppers! Open up those home equity credit lines because shopping online is about to get faster and easier!

On Tuesday, Scott Dunlap, vice president of emerging opportunities with PayPal, announced a new partnership with Comcast and TiVo. What could a cable giant, a DVR maker, and an online payment processor possibly do together? Let you buy stuff directly from your television, that’s what!

This means that you’ll be able to make purchases or donations in response to interactive ads that you see on your TV. Press a couple buttons on your remote control, and you can complete the deal using your PayPal account. And you can even pause the programming while you take care of business, then resume without missing anything.

This process has been dubbed “t-commerce” (like “e-commerce” but with a “t” for “television). PayPal did a survey last fall and found that nearly half of the TV subscribers polled were interested in making on-screen purchases. And a large portion of them were interested in using PayPal to make the payments. Viewers could start to see implementation of this system as early as this fall.

Until now, TV commercials have been simply advertising, part of a marketing campaign. This ability to interact with the screen and engage PayPal in the process could be a game changer as it adds the sales function, and removing extra steps for the consumer to buy. It also could breathe new life into commercials. If the ads frequently offer products or services that you care about, and if those ads offer special discounts or bonuses that are only available during the commercial, I can see how this could encourage more consumers to pay more attention to the commercials. And as any student of operant conditioning can tell you, an infrequent and random payoff is the best way to reinforce a behavior that is very difficult to extinguish. (Just ask anyone playing a slot machine.) It would not take many attractive deals sprinkled among the wasteland of commercials to make viewers want to sift through all of them, just so they don’t miss something.

This could make television commercials interesting again.

Alfred Poor on Video about HDTV

Yesterday, I had the pleasure of discussing HDTV and related topics with David Gewirtz of ZDNet, which he captured on video. We covered a wide range of topics, including OLED HDTVs, 3DTV, screen sizes, Smart TVs, and “direct LED” TVs. The video runs almost a full hour and was made during a Skype video call. (David has invested a lot of time and effort to develop a pretty sophisticated “Skype Studio” for recording interviews like this, and he gets some impressive results.)

So here’s the video if you want to hear more about my latest thoughts about buying HDTVs. If you or someone you know are thinking about getting a new set, you’ll probably find some helpful information here.

If you have any questions, you can email me at alfred@hdtvprofessor.com or send a Twitter message to @AlfredPoor.

Comcast Partners with Skype

In a joint announcement last week, Comcast and Skype unveiled plans to provide video chat service to Xfinity customers. By adding an adapter box to their set-top box and a “high-quality” video camera, subscribers will be able to send or receive instant messages or video calls to any Skype user worldwide, including smart phones, tablets, and personal computers, as well as other Comcast subscribers who are equipped for Skype calls. The press release describes it as “HD video calling” though it does not provide specific details on resolution.

The service will support picture-in-picture, so you can have your video call in a small window on your television screen, or press a button to swap it so the Skype window is full screen and the program that you’re watching is in the small window. (I can see how investment types might find this useful as an inexpensive way to videoconference while keeping a financial news station open in the window.)

The service will roll out in Seattle and Boston first, with Detroit, Indianapolis, Miami, Atlanta, Augusta, Chicago, Pittsburgh and Harrisburg, PA following almost immediately after. Existing Xfinity triple-play customers can get a free three-month trial. According to the Comcast website, the service will cost $9.99 a month after the initial promotional period.

I’ve said all along that Skype in the living room has been a missed opportunity for the television makers. I believe that should have been advertising the pants off this feature ever since they started incorporating support for it in their HDTVs. Making it easy for grandparents to see and interact with young grandchildren is a hands-down winner, and Skype is a staple for people of all ages who want to stay in touch with distant family and friends. I think the $10 a month seems a bit steep, even when you figure in the rental of an adapter box, camera, and the new remote control. Still, given the high penetration rate of broadband connections in the home, I expect that there’s a large market for the service even at this rate. Who knows? Maybe this feature could be a competitive advantage that even might drive new customers to sign up with Comcast.

Cable Loses; Telco Wins; SatTV Draws

The Leichtman Research Group, Inc. (LRG) recently reported on the pay television service subscriber counts for 2011. The numbers have not really changed much compared with 2010. The big losers continue to be the cable companies; the top 10 U.S. cable services lost more than 1.6 million subscribers in 2011. The telco services (Verizon’s FiOS and AT&T’s U-verse) picked up the lion’s share of the gains, splitting 1.5 million new video customers. The results were mixed for satellite TV services; according to LRG, DirecTV added more than 660,000 subscribers, but DISH Network dropped more than 160,000 from its rolls.

This trend is not good for cable. In a flat housing market, they continue to lose subscribers to the other services. Based on LRG’s numbers, Comcast lost about 2% of its total subscribers, Time Warner lost 4%, and Charter lost a significant 5% of its customers. It would appear that these companies will have to find a way to offer a better bargain. Maybe it will be to focus on delivering broadband services, or maybe they will be forced to offer subscription options that let viewers stop paying for all the channels that they never watch.

If there is any good news in all this, it is that the total number of pay TV subscribers increased by a modest 380,000 in 2011, in spite of the growth of streaming video over the Internet and the “cord cutting” movement.