Analysis and review post: CES – Retail, Cable Congress- European Cable, DVB World – Broadcasting, IPTV World Forum – IPTV, OTT, Connected TV.

Too Many Technologists

It has become very apparent that the Digital TV market place is now facing a huge problem of “over-supply” of Hardware, Software, Applications and Services!

The recent IPTV World Forum had 147 exhibitor stands in Olympia London; it has become a concentrated or a compacted hall 1-5 of IBC – but this is without the presence of any Broadcasters or Operators.  The show merely revealed just how many Technology Companies are chasing the same Customers in the same Business Sector, for both traditional and non-traditional Digital Television Broadcasting. (DVB-S, DVB-T, DVB-C, IPTV, OTT, CDN, Cloud)

Everybody (and I mean “EVERYBODY”) has an “IDENTICAL” technology offering … and there is NO differentiation at all with approximately 90% of the Digital TV products available today!  What has been shown at and since IBC 2010?

• TVs – SD, HD, 3D, Hybrid
• Hybrid STBs
• Hybrid Media Centers
• Hybrid Multi-Room DVR
• Hybrid Games Consoles
• TV Anywhere (on multiple devices)
• Companion Screens with Interactivity
• Middleware (all flavours mostly proprietary) and especially HbbTV
• Hybrid GUI with the ability to add OTT channels
• Interfaces with Blu-ray & 3D Capability
• Applications (both on device, companion screen or remote store)
• Widgets
• Search & Recommendation
• VOD & Push VOD clients
• … CDN, the Cloud

Lots of big STB & CE Companies with the all embracing strategy of  a “COMPLETE HOME MEDIA” offering (combining many or all the elements shown above and in some cases their own CA), many of these Companies build MOST or ALL of their own Software.

Small Companies like Soft-at-Home, Wyplay, Digisoft, TVinci, Orca Interactive, and many more are managing to grow in stature with deals sufficient to keep them alive.  They have very good looking, well funded stands, loaded with their SMART technology offerings; all claiming lots of business – somewhere!

Even the CA Vendors and Encoder and Decoder specialists are now offering a mix of STBs, GUI’s and Middleware solutions for (e.g. ARRIS + Digeo, NDS + everyone they bought, Nagra + OpenTV, Via-Access + Orca, etc.).

New World v Old World

As embedded Java software technology skills are replaced by Internet based technology skills there appears to be more available engineers in that realm (more Companies have been created since Internet TV became the hype than ever before).  Ant, Opera, Espial, Access, MiniWeb and many, many others now offer a TV Browser (HTML/Javascript) and the market seems OK with that … Broadcasters and Operators have all but decided what path they will follow and therefore either have a solution or are testing solutions once again and/or not planning to change. Unfortunately the STB and TV manufacturers are also trying to dictate strategy.  Those in a position to select, are now choosing the “new world” not the “old-world”, but the “new-world is unknown territory, so it is all a little hit and miss at the moment.   In the Browser world of the Internet there is Hacking and Malware etc.  There is now discussion of Hacking, Virus and Security problems in the future TV Browser space but this does not deter anyone plunging, potentially suicidally headlong in this direction.  Firewalls are coming to the TV and we will need a resident Internet/Web Administrator in the home.

What is Next? The only item technologically speaking that appears to be on the technology horizon and yet to be achieved is the “Gateway” … The business model for the Gateway is almost completely unknown; as is what format this product will ultimately take…

Struggling Business Models.

With this huge proliferation of the “SAME” technology (mostly HTML based), suppliers are now fiercely under-cutting their competition.  Broadcasters, Operators & Telcos can now freely play Suppliers against one another in order to achieve better pricing.   The Same or Similar Technology Offering also means big “MARKETING WARS” in order to get the attention of a limited market.

As the TV business and the Internet merge the whole business model remains completely unknown with regard to the present “TV Everywhere” strategy!  TV to all devices around the home, or on the move, is a great idea, so we are told, and can be achieved relatively easily now,  but who is going to pay for it all?  I am allowed ONE subscription at home for TV…. No More, No Less!  So Can we afford all this Paid Content that will rain down on us?   Here is another issue looming on the horizon: “Net Neutrality” is now in question as Companies decide that more Bytes/sec means more $’s/sec and there appears to be a move to multiple-tiered Internet and Mobile access (pay for what you use) . This is not actually a well-planned, well thought out Business strategy by the industry it is just a “cause and effect” situation as Digital Data ramps up uncontrolled.  A panic situation based on a free-for-all in Digital Multimedia.

Traditional TV is Threatened, Supposedly!

The aforementioned TV Anywhere strategy was started by the OTT craze or Connected TV hype and it has created a huge “gold rush” with no apparent gold in the digital rivers.  Huge investments have been necessary in New TV Models, TV Portals, Interfaces and Content gathering.   But most viewers (Customers), despite the hype we hear, are taking free “Catch-Up TV” content from a variety of sources, as this is very much the easy, cheap route and “of the moment” – Let us not forget that the DVD Recorder still features as the catch-up TV source (and still is the only way in many homes).  So as you can imagine this proliferation of technology is causing huge problems when it comes to sustainable business and long-term gains for Companies who need revenue to maintain business, pay engineers, sales people and run their Companies!   All that we see is more TV fragmentation taking place with smaller bespoke and very unique vendor offerings on a massive scale.   Making any money in a TV Everywhere environment therefore is also a huge challenge for the future.

Terrestrial is in Turmoil

The Terrestrial market is in huge flux as rather weak offering of lots of reported Teletext and Catch-Up TV via HbbTV (but only in Germany and in small volume) as another Acronym becomes the favourite buzzword of the moment!  Digital Swithch-Off the only goal in many locations hopping to DVB-T2.   HbbTV is a browser-based technology that has already been mentally commoditized before entering the market (just like Blu-ray).  It is only a Mid-NRE/Low-Royalty business that will not sustain growth of any Medium sized to Large Company.  The Company “Access” out of Japan claims to have sold the most HbbTV stacks to date in the market (often combined with DLNA) and this is now probably going to dominate until there is realization that the Business Models on Vendor and Broadcaster side cannot be sustained and we see another Advanced Services Business Model Failure in DTT.

Cable Stays Calm, So We Thought

In the Cable industry Liberty Global has started to increase its portfolio having recently acquired Telenet, Unity Media and KBW … they are looking to buy Ziggo and others in Europe.  NDS is now well established in Liberty Global and as a result that means the Horizon Project will find itself in these new accounts.   Tivo has also made new inroads into the market with Virgin Media and ONO and they have a huge marketing machine that wins hearts and minds.  There has been statements about not rushing into all IP systems and that OTT is not a threat.  The Cable industry remains calm.

Satellite Moves Slowly

Rupert Murdoch has Sky UK, Sky Germany (ex Premiere) and Sky Italia and continues to look for more properties.  As these are also NDS accounts it is unlikely that there is any opportunity going forward for any new player.  The Satellite market is heavily dominated by the CA Companies and whilst they have the 1^st access into these accounts they tend to offer their own “Home Grown/Home Built” solutions first and it is an uphill battle to gain access into the new Hybrid Satellite Opportunities if you are not a CA vendor or STB player.

IPTV is NOT Necessarily Winning

Telcos have selected their Technology and have struggled to have a good IPTV service that has rolled out in any meaning in Europe.  The fight has been to gain new customers from Cable and Satellite subscribers!   That has been a huge money spending exercise.  Many Telco’s now have their own home-built solutions and we see Huge Corporations like Ericsson, Microsoft and Alcatel-Lucent playing in this space.  The IPTV World Forum was focused on OTT and nothing more.

Conclusion

There is an over-supply of Identical Technology all fighting for the Revenue of the Broadcasters, Network and Telco Operators, many who have already selected their collaborators.

There is an over-complicated Standard Development situation with more fragmentation and duplication of work in IPTV, Hybrid, OTT, 3D etc.  Again we see the need to keep the TV technologists busy otherwise there would be nothing for them to do!  In fact the differing groups in the SDO arena have the same Corporate individuals in the different camps creating huge conflicts of interest but it is appearing to be a job creation strategy!

TV Technology has reached a wall with HD and 3D it has nowhere left to go unless we think we can sell holograms?   There are almost too many “Super Highway Routes” to the consumer and the human race is presently faced with more television that can be physically watched.  The consumer cannot pay for ALL pipes into the home and pay for ALL content that they want to watch so in effect Free to Air TV and the Pirating of Prime Content will most definitely still prevail; especially in these austere times.  In Corporate terms all concentration is presently on Technology Solutions and not Business Models.  We cannot offer a Company how to make money but we can offer them Technology that they think they need.  We are, without doubt, right in the middle of a “Technology Bubble” in the Digital TV Market.

If we consider growth by acquisition and/or funding this reveals that all recent M&A deals have been very small in terms of dollar value and this is a significant indicator.  Acquisitions of Companies that were “Ripe For Picking” happened in 2010  (e.g. Pleyo).   On the larger Corporate deals Philips, Latens, Dreampark and others have seen extremely small transactions take place (between 5-70 Million Dollars).  We have not seen the 150-300 Million Dollar deals that we would expect considering the hype that many of these “world-leader” Companies tell the market and the hype purveyed by the enormous amount of TV Analysts for Digital TV Market Growth.

I believe in 2010 we saw the end of a 10–year-cycle for traditional interactive TV and the start of another in an Application/Widget-Browser-Connected-Web TV frontier.  If any established TV Technology Company did not catch the “new wave” and have the required technologies and models for this “new world” then it will suffer as the market opportunities dry up.  These Companies will have to dig deep and re-organise and potentially hope that the WebTV-Connected TV  hype will burst once again before it is too late for them…but will it this time?  Or will there be a huge Digital TV Technoloy Bubble Burst?  That is the question!