February 13, 2012
Volume XXXVIII, Issue 5
Cyclops on the Run
Genos Corporation announced this week that it is nearing its first production run of the Cyclops, a patented, Spark award-winning, wireless thumb keyboard/remote.
Created to communicate with Internet-connected devices such as Google TV, PlayStation, PC/Mac, select Blu-Ray players, and many more set-top boxes (STBs), Cyclops is now being featured on kickstarter.com, where early adopters can place pre-production orders to purchase Cyclops devices.
Genos Corporation Chief Technology Officer (CTO) and Cyclops co-inventor Mike West reports that the Cyclops pre-production prototypes have received international acclaim, and suppliers are anxiously awaiting receipt of inventory from the first production run.
Cyclops is a round ergonomically-designed wireless thumb-keyboard with mouse-combo and TV universal remote.
There are three features on Cyclops that make your life easier: 1) the "plug-n-play" USB dongle (which takes less than ten seconds to set-up) to use your wireless keyboard and fire-up your social media on your selected Internet-connected device; 2) the "learning" function for the universal remote (which takes 7 old devices and "learns" to your Cyclops); and 3) the ergonomic-design that allows Cyclops to fit "snug-as-a-glove" in your hands while thumb-typing.
Unlike the hard-to-type and old-style square-cornered remotes, you can use the Cyclops to efficiently communicate and interact with your favorite TV shows, MLB, MTV, YouTube, Hulu, Netflix, Facebook, and Twitter through your connected TV, select Blu-Ray players, Google TV, MAC/PC, TiVo, Boxee, Roku, and many more Internet-connected device brands.
Gary Kellmann, Genos Corporation's VP-Sales, reports strong interest from some of the world's largest makers and distributors of consumer electronics (CE) devices, as well as from prominent international retailers.
Genos Corporation developed the Cyclops as an outcropping of its work in creating the first nationwide Internet-based cable television service in the United States. The IPCableTV service will be known as GenosTV, and is planned to launch this year.
For more information, e-mail Gary Kellmann at gary@genos.tv, go to www.kickstarter.com and keyword "Cyclops" to pre-order, or click the link here.
Cloud Computing Gets Top Billing at Consumer Electronics Show
Excerpted from CloudTweaks News Report by Sourya Biswas
People pessimistic about the world economy can take heart from the recent Consumer Electronics Show (CES) in Las Vegas, NV. Not only was the largest trade show in the Americas bigger than ever, it also managed to attract a record number of visitors. Over 153,000 footfalls were recorded over four days in January, flocking to stalls spread across 1.86 million square feet, or the equivalent of 32 football fields. And importantly for our readers, cloud computing had top billing at the show.
In its second year, the DCIA's in-depth CONTENT IN THE CLOUD Conference within CES was standing-room-only (SRO).
While cloud computing has often been promoted as a cost-saving, efficiency-maximizing panacea for enterprises, which incidentally is not far off the mark, the individual consumer has not been the focus of attention on cloud-related matters. Not any longer.
As the large number of announcements at CES 2012 that mentioned "cloud" showed, cloud computing has well and truly entered the consumer electronics domain. David Linthicum, writing for InfoWorld outlined the reasons behind this plethora of cloud announcements.
He says that one reason is the desire for electronics manufacturers to differentiate themselves. With the gamut of choices on offer, the consumer demands something "extra" to patronize a certain product; often, its cloud services that provide that "extra" zing to the products.
The second reason is the desire to convert a one-time sale to a continuous revenue stream; thus, in the same manner that utilities are charged by the month, subscriptions to cloud services can bring in the dollars long after the electronic device or equipment has been sold. Additionally, satisfaction with such service can prevent customer churn - the consumer may come back to the same manufacturer for the next model of the device.
Thirdly, Linthicum believes that the proliferation of connected technologies necessitates the sale of cloud-based services. For example, manufacturer X, which sells mobile phones, laptops, and tablets, can ensure greater brand loyalty by providing cloud access to share data across these devices.
Acer was one of the companies that announced the launch of cloud services at CES 2012. Although some analysts derided AcerCloud as a copy of Apple's iCloud, there's no denying that Acer customers will benefit from this offering that would allow them to manage music, photos, and documents across multiple devices.
Lenovo also announced the Lenovo Personal Cloud, which it says will transform the company "from a "personal computer" manufacturer to a "personal cloud solution" provider that integrates hardware, software, and cloud computing together."
And it's not only computer makers who jumped on the cloud bandwagon. Premium auto manufacturer Mercedes-Benz announced a new cloud-connected dashboard computer called Mbrace2 that provides access to 3G Internet, apps such as Facebook and over-the-air software updates.
Commenting on the usefulness of over-the-air updates, Daimler AG Chairman and Mercedes-Benz head Dieter Zetsche said, "You might know someone who drives a 20-year-old car, but do you know anyone who uses a 20-year-old mobile phone?"
Report from CEO Marty Lafferty
 Thomson Reuters News & Insight this week reported that cloud computing and cybersecurity will rank at the top of the list of software related concerns this year, trends that the National Association of Broadcasters (NAB) identified and called to our attention last year.
The NAB asked us to focus on how software developers are addressing two major concerns with respect to cloud-based solutions for audio/video content delivery - reliability and security - in developing the new CLOUD COMPUTING CONFERENCE for the 2012 NAB Show.
There is a sea change in workflow coming as the entertainment industry migrates to the cloud that is part of a broader movement in the technology sector.
Broadcasters, like participants in other industries, must work to ensure that they have proven processes and systems in place to protect content. For starters, there need to be reassessments of the way studios, networks, and digital content services control data and handle personal information of customers, employees, and associates.
Producers and distributors need to be proactive about this so that data security becomes an everyday business practice.
In high-value audio/video program delivery businesses, this means becoming aware of what pieces of data need to be stored - both directly and indirectly related to the entertainment content files and streams themselves - as well as where these should be located and how they should be secured.
Putting in place data access hierarchies makes a lot of sense, too. Restrictions to specific data elements should vary depending on the authorization level of internal staff and external partners. It's also important to document such security systems for liability and potential regulatory review.
According to a new study from IBM, 60% of information technology (IT) leaders say cloud computing is in their plans to increase competitiveness and improve business operations, and along with the basic logistics of migration to the cloud, they will need strategies for keeping cloud-stored content and business information safe from data breaches and loss.
Among other cloud security and privacy concerns that audio/video programmers and distributors must address are the ownership and governance of data crossing international borders.
The Patriot Act, for example, gives the US government broad authority to compel organizations to turn over private information. However, this conflicts with the EU's data protection laws, which are much more restrictive when it comes to sharing information with third parties.
The EU is expected to further bolster its data privacy requirements with rules that impose serious fines on businesses for violations. According to Viviane Reding, the European Union's Justice Commissioner, in a recent speech, "In a world of ever-increasing connectivity, our fundamental right to data protection is in this moment seriously tested. Although the basic principles and objectives of the 1995 European data privacy law remain valid, the rules need to be adapted to new technological challenges."
A fundamental question about international Internet governance this year is going to be whose law dictates control. The conflict of applicable laws will create uncertainty; uncertainty will breed hesitancy; and hesitancy will interrupt innovation. In other words, conflicting legal and technical requirements have the potential to curtail economic progress in this space.
Location-based services pose additional concerns. With greater amounts of information, including valuable entertainment content, being stored online, the number of channels through which it can be accessed has increased dramatically in recent years. As such, it is no longer enough for companies to simply guard individual endpoints.
Instead, organizations must protect the data itself by using encryption, cloud-based security measures, and a number of other solutions. In most cases, careful implementation of these approaches will ensure that commercial, personal, and confidential data isn't lost or stolen.
The globalized nature of the Internet and the distributed nature of cloud architecture suggest the need for a universal set of rules to protect privacy; rules that apply to cloud services everywhere on the network.
There can be no question that a set of such global rules will be difficult to achieve. International structures are notoriously cumbersome and slow-moving; and this will be particularly challenging in the context of quickly developing cloud technology. And international organizations' governance structures are often based on near unanimity for actionable agreements, meaning that countries with counter-productive agendas may have a disproportionate influence on rulemaking.
Beyond these issues, for cloud computing deployments this year, especially software-as-a-service (SaaS), there's a growing concern over feature creep, manifesting itself in situations where the customers or the developers or both keep adding changes to an application rather than using it to perform its intended task. The solution to this particular problem is to cut the major undertaking down into a set of much smaller iterative projects.
One of the benefits of the cloud is ease with which organizations can jump in-and-out of cloud services for development, specific tasks, and pilots. But cloud service purchases can get out of hand. The answer here is to think about the cloud strategically, because exploiting it tactically can have undesirable consequences.
Proper control comes from sponsoring and encouraging the use of cloud with proactive management support; otherwise people will find a way of just doing it anyway, randomly expense it, and possibly open up the enterprise up to unforeseen vulnerabilities.
In addition to management tendencies to permit endless changes in functionality and unintentionally enable ad hoc procurements, the impact on accounting functions within an IT department can be significant.
Instead of paying a handful of substantial invoices on a quarterly basis, the volume of transactions with cloud computing can more closely resemble a consumer smart-phone data plan, with a great many mini-charges for short-term server and software rentals that all need to be validated.
And finally, the ability to integrate cloud services across legacy systems and to incorporate legacy data is where business value can be optimized the most, but it is challenging to accomplish this; and failure to approach the cloud in a structured manner can turn new technology into part of an old problem.
Notwithstanding all of these growing pains, cloud computing offers enormous benefits to content professionals charged with competitively managing and distributing high-value audio and video assets. Broadcasters, programmers and studios all need cloud-based solutions for their post-production, transcoding, storage, and delivery requirements - as well as performance analytics. Share wisely, and take care.
Oracle Buys Taleo for $1.9 Billion to Extend Reach into Cloud Computing
Oracle said Thursday it agreed to buy web-based human resources management software maker Taleo for $1.9 billion as the company seeks to strengthen its foot hold into cloud computing.
Cloud computing provides software, data access, and stored resources that are hosted on servers, while users can access cloud-based applications through web-browsers or mobile apps.
Redwood, CA based Oracle will pay $46 per share for Taleo, which is an 18 percent premium to Taleo's Wednesday closing stock price of $38.94.
Oracle's shares edged down 0.24 percent to $28.66 each, while Taleo's stock jumped nearly 17 percent to $45.54 apiece today on Nasdaq.
Taleo's board has unanimously approved the deal which is slated to close in the middle of this year. The transaction is subject to customary closing conditions and regulatory approvals.
Oracle's Thomas Kurian, an Executive Vice President, said, "Human capital management has become a strategic initiative for organizations.
Taleo's industry leading talent management cloud is an important addition to the Oracle Public Cloud." Taleo's cloud-based talent management solutions optimize how organizations hire, manage, develop and motivate employees to improve performance and drive growth. It has about 1,400 employees.
The move allows Oracle to better compete with rivals like SAP. SAP purchased cloud human-resources software maker SuccessFactors for $3.4 billion to expand its toehold into the cloud.
Oracle, founded in 1977 with over 108,000 employees, is an enterprise software company which makes and develops services database and middleware software, applications software, and hardware systems worldwide.
Google Near Launch of Cloud Storage Service
Excerpted from Wall Street Journal Report by Amir Efrati
Google is close to launching a cloud-storage service that would rival one of Silicon Valley's hottest start-ups, cloud-storage provider Dropbox., according to people familiar with the matter.
Like Dropbox, Google's storage service, called Drive, is a response to the growth of Internet-connected mobile devices like smart-phones and tablets and the rise of "cloud computing," or storing files online so that they can be retrieved from multiple devices.
Drive allows people to store photos, documents, and videos on Google's servers so that they could be accessible from any web-connected device and allows them to easily share the files with others. If a person wants to e-mail a video shot from a smart-phone, for instance, he can upload it to the web through the Drive mobile app and e-mail people a link to the video rather than a bulky file.
The Google service, which is expected to launch in the coming weeks or months, will be free for most consumers and businesses. Google will charge a fee to those who want to store a large amount of files.
Google's Drive is one of several recent attempts by the Internet giant to catch up to smaller companies in hot new areas. Last year, the company released Google+, which aims to compete with social-media sites Facebook and Twitter. Google Currents, a mobile-device app that lets people read news articles, was launched last fall and is viewed as a competitor to Flipboard and other such apps. Google also has developed services and bought business-reviews company Zagat to better compete with Yelp.
Google previously contemplated a cloud-storage service. Five years ago, Google co-founder Larry Page, who is now the company's chief executive, worked with teams of programmers to develop a service, known internally as "G Drive," to let people store music files and other data online, according to people familiar with the matter. It was set to launch in late 2007 but never did.
Since then, Dropbox, founded in 2007 by two graduates of the Massachusetts Institute of Technology (MIT), has skyrocketed in popularity. As of October 2011, Dropbox had more than 45 million members who saved one billion files every few days. At the time, Dropbox raised $250 million at a reported $4 billion valuation for the company. Dropbox CEO Drew Houston has said the company turned down a "nine-figure" buyout offer from Apple in 2009.
Google's Drive service also would rival Apple's iCloud, which lets people store data online but only can be accessed through Apple devices.
Google's service is expected to be added to its suite of online software that it sells to businesses, called Google Apps. That would also make Drive competitive with Box.net, which sells cloud storage to businesses.
World-wide, $830 million was spent on such file and back-up storage services in 2011, and that figure is expected to grow by 47% to $1.2 billion this year, according to Gartner.
The free version of Dropbox lets people store as much as two gigabytes of data. People can pay $10 or $20 a month to store up to 50 or 100 gigabytes, and hundreds of dollars for a lot more storage.
Google's initiative aims to offer such storage for a smaller fee.
Dropbox is able to store so much data thanks to Amazon Web Services, a division that maintains a network of computers that stores data online. Amazon rents out this network to Web companies such as Dropbox, video site Netflix, and social game company Zynga.
Google already has a massive cloud infrastructure to store and power all of its services, from web search and video site YouTube to web applications such as Google Docs, which lets people create and work on documents and other files online.
In World of Copyright Craziness, BitTorrent Soars to New Heights
Excerpted from Ars Technica Report by Jon Brodkin
It's a turbulent time in the world of content distribution. Despite a successful protest against overly restrictive anti-piracy legislation, law enforcement has demonstrated its already considerable power to take copyright-infringing websites offline, and several hosting and torrent sites have gone dark voluntarily to evade prosecution.
In the middle of all these warring groups - or perhaps more accurately, completely removed from them - stands BitTorrent, a company whose technological innovation gave the Internet important new capabilities, making it easier for everyone to share files. The company has steered clear of legal problems by avoiding any distribution of unlicensed content, and narrowing its focus to delivering the best Internet file-sharing technology it's capable of building.
BitTorrent, developer of the BitTorrent peer-to-peer (P2P) file sharing protocol and owner of the popular BitTorrent and uTorrent client software, says its monthly active users have increased from 100 million to 150 million in the past year. Chief Strategy Officer Shahi Ghanem tells Ars he expects nothing but continued growth. And the company has its eye on new markets, including live streaming of content and an experimental "cloud storage" service taking advantage of the same P2P technology BitTorrent is known for.
"We've always focused on being a technology company, and building technology to make the Internet work better," Ghanem said in a phone interview.
Founded in 2004 and headquartered in San Francisco, CA, BitTorrent is a private company. While it doesn't release financial information, Ghanem says BitTorrent today is profitable, making money from licensing its software, sales of premium versions of its software, and advertising. It wasn't always such smooth sailing. In the mid-2000s, Ghanem notes that BitTorrent tried its hand at becoming a content distributor before realizing it was the wrong move.
"We moved into the content business in the mid-2000s, and became one of the largest licensees of Hollywood content in history," Ghanem said. "We realized that wasn't a viable business model for us. It almost killed the business. We are not a media company, we are a technology company."
BitTorrent exited the distribution business in 2007, Ghanem said, and is now focusing on a few key goals. In addition to developing the BitTorrent protocol that most Ars readers will be familiar with, BitTorrent also developed the uTP protocol to relieve Internet congestion problems that BitTorrent traffic contributed to. Ghanem said uTP now regulates the majority of BitTorrent traffic, intelligently ratcheting back BitTorrent activity to allow more critical traffic (such as Internet-based phone calls) to come through, and giving bandwidth back to BitTorrent after the critical traffic has passed.
The BitTorrent protocol accounts for roughly 20 percent of Internet bandwidth usage. There are dozens of clients using the protocol, but BitTorrent and uTorrent make up about 80 percent of market share by number of users - excluding China, a country in which the company has only a nominal presence. How do you build on those numbers? BitTorrent is taking several approaches.
The company's new live streaming technology, BitTorrent Live, is available in beta, and already being used to stream concerts. A personal sharing app, available in alpha, is designed for users to send videos, photos, and any files to friends without any limits on size. Perhaps most ambitiously, BitTorrent is working on a P2P cloud storage system, but the project is just in the R&D phase and Ghanem could give no indication of when it might become available publicly.
"We have figured out how to become the dominant provider of technologies that allow distribution of data across the Internet in a peer-to-peer fashion," Ghanem said. "What we're looking at now is, 'can we take these billion PCs around the world that are networked together and create a way for them to have distributed storage capability?' Rather than uploading everything into a data center, which is called a cloud, can't the cloud be these billion PCs connected to one another, sharing disk space, sharing backplane, sharing computational power, and sharing bandwidth."
"The technical challenges are data redundancy and data availability," he said. "If we're doing distributed storage, it's not one-to-one mapping. If I say I'll give up 5GB of my hard drive if you give up 5GB of your hard drive, I don't always know if your 5GB will always be available to back up mine, and vice versa. That's where the challenging bits of the algorithm live."
BitTorrent has also built publishing tools to help content creators distribute content through BitTorrent to users (including educational materials), has applications for Android, and says it's in talks with system-on-chip vendors and device-makers about optimizing chips and devices for distribution of content to TV set-top boxes (STBs), Blu-Ray, and DVD players, smart-phones, and tablets. Ultimately, Ghanem says the company wants BitTorrent software to have the reach of iTunes, but without proprietary restrictions.
BitTorrent's technology has been touted as a good example for copyright owners by researcher David Price, who says that instead of trying to sue everyone and push for restrictive Internet legislation, music and film companies should emulate BitTorrent by providing more convenient ways for consumers to get the content they want.
Ghanem says the music industry is "reconsidering us as a great distribution mechanism." Both signed and unsigned artists have released music through BitTorrent, although the company has no deals directly with major labels. BitTorrent is also in talks with Internet service providers (ISPs) to deploy uTP more widely, although names haven't been released, and these talks are happening primarily in Europe and Russia rather than the US.
"We used to be at odds with the operator industry, but we've become kind of an ally to them and they're looking to deploy uTP technology within their networks."
Redbox Inks Out-of-the-Box Deal with Verizon
Excerpted from Marketing Daily Report by Thom Forbes
I'm not saying that there are folks who regret canceling their Netflix subscriptions entirely because of its perceived arrogance in raising its prices as much as it did last year. I'm just saying that I've heard some grumblings out there - call it terminator's remorse - from people (very close to home) who've discovered that the alternatives aren't quite as good.
Now one of consumerdom's favorite villains, The Phone Company in the guise of Verizon, is getting into the fray by teaming up with Coinstar subsidiary, Redbox, to offer another combined service.
"The joint venture will combine the accessibility and value of Redbox with Verizon's vision for a borderless lifestyle - where consumers easily accomplish what they want or need to do, on their terms, through the power of the network," says Bob Mudge, President of Verizon Consumer and Mass Business Markets, in a release. "Together, we are erasing old technology boundaries, freeing people to spontaneously enjoy the entertainment they want, whenever they choose, using the devices and media they prefer, at home or away."
Together, in other words, they are taking on Netflix. The combined service is expected to roll out in the second half of 2012. The companies did not disclose pricing but analysts expect that it will be almost half of what Netflix charges (which would be close to what Netflix used to charge), according to the NY Times' Amy Chozick.
Redbox is the nation's top DVD rental company with nearly 30 million active users, compared with 24.4 million Netflix subscribers in the US, reports Ben Fritz in the LA Times. But the Redbox machines only carry about 200 titles. Eleven million Netflix customers subscribe to its DVD delivery service, with a much broader array of titles.
"Netflix is a bigger moneymaker, generating $3.2 billion in revenue last year compared with $1.6 billion for Redbox," Fritz writes.
Redbox also announced yesterday that it is buying approximately 9,000 blue-and-yellow Blockbuster kiosks from NCR for up to $100 million. NCR holds a license to use the Blockbuster logo. Blockbuster's assets were acquired by Dish Network last year.
Verizon will own 65% of the new joint venture. All broadband customers -- even those who are with other carriers -- will have access to the service. Verizon "is gambling that the advantages of gaining a nationwide customer base would outweigh the risk that a less expensive online-video offering could undercut the lucrative pay-TV part of its broadband FiOS's business, which reaches about 14% of households," wrote Anton Troianovski and Sam Schechner in the Wall Street Journal.
"It's the best of both the physical and the digital," Coinstar CEO Paul Davis told Chozick. "We'll target existing customers, but we'll also be agnostic as to where you get your broadband," Mudge says. Even if you don't have Verizon, "you'll get Redbox-branded content."
Troianovski and Schechner point out that traditional media executives have been perplexed by how to respond to the growth of Netflix. "Many want to cash in on a big new source of revenue," they write. "But others worry that the new services, which often don't include ads, could eventually train a new generation of viewers that they don't need to watch traditional TV."
So far they've compromised by mostly making deals for older content -- and therein lies the rub. Wired's Tim Carmody, for one, isn't all that impressed by the new alliance, at least in the initial stages, for precisely that reason.
"After all, without competitive content, it's just Redbox -- which more or less remains the same as it is -- tied to a vanity digital video project from Verizon," he writes. "Both companies are looking for something, anything to both differentiate itself from and catch up to Netflix, Amazon, HBO, other telecoms and the rest of the companies carving off slices of the digital video market."
"The content partnerships for digital streaming will be the key to the services' success," writes Carmody. Executives from Redbox and Verizon tell him "their offering will include a broad and deep array of content, competitive with everything comparable in digital VoD on the market today" and they suggested that they might also pursue exclusive or multi-tiered streaming agreements.
"Redbox and Verizon will enter a competitive landscape for digital movie rentals that includes not only Netflix but also Amazon, Dish Network and its subsidiary Blockbuster, and Wal-Mart's Vudu," Fritz points out. One thing that's for certain: The streaming genie has been unleashed and it's not going back into the box -- Red or otherwise -- as the plot for the subscriptions of the consumer thickens.
Octoshape Supports Adobe Flash Access
Octoshape, an industry leader in cloud-based global streaming technologies, this week announced support for Adobe Flash Access content protection technology in conjunction with the Octoshape Live and VoD Infinite HD platform.
"As we continue to drive a new level of consumer expectation in the market with regard to OTT video consumption, it is critical we integrate and partner with best-in-class technologies like Flash Access to fully enable the ecosystem," said Michael Koehn Milland, CEO of Octoshape.
Successful OTT content offerings must have a critical blend of components to enable business models that work. They must also have a consumer experience that drives consumption. Combining the Octoshape and Flash Access technologies raises the bar for consumer experiences to a new level in the space.
Flash Access brings the increasingly crucial content protection layer that enables monetization of premium video content. Equally as important is a high-quality, consistent experience to which consumers have become accustomed with TV-quality viewing.
The Octoshape Infinite HD technology suite facilitates the highest TV-quality video experiences in the market today, unique scaling advantages that enable TV-sized audiences, and global reach technologies that allow for worldwide audiences without the previously required capital investments to provide a high-quality service.
Barriers Fall Between TV and Internet
Excerpted from News Observer Report by Scott Canon
You say TV, I say Internet. Toe-mate-o, toe-mah-to.
Technology increasingly blurs the lines between computer, television, phone and tablet. Online video options grow almost by the hour. A screen, in the era of cyber choice, is a screen is a screen.
You can now plug the Internet straight into the newest TVs. You can buy gadgets that will bring the web to your old set. Or you can use your phone, tablet, or other electronic gizmos to tap into the Internet to give you TV on the go.
Still, to fill your screen with popular sports, comedies and dramas from the brands that dominate your television, generations-old economic models will have to be rearranged for the wild, wild web.
Some entrepreneurs are toying with new models that tap into an Internet specialty - the ability to tailor choices to the individual viewer - that might give advertisers a better platform on the Internet than they have in one-size-fits-all cable TV audiences.
But true Internet TV is facing a big obstacle: It's the old-school cable and cable-like services, after all, that have got the makers of programming locked up in mega-contracts.
"There's technology, and then there's commerce," said Jim Barry of the Consumer Electronics Association (CEA). "The technology is ahead."
Commerce, meanwhile, hasn't fully figured out the best way to make a buck off Internet video.
Some yet-unproven business ideas have begun to bubble up. Broadcast networks created Hulu to accommodate people who want to go online and stream video, but it typically makes shows available later than you can get on traditional TV and makes it impossible to skip commercials.
Web surfers watch about 4 billion YouTube videos a day. And YouTube, owned by Google Inc., is launching dozens of "channels" with programming minted in Hollywood.
But the vast majority of choices at the website are still amateur and amateurish, and the coming professional YouTube channels from Hollywood are tightly focused niches. You still won't get feature-length movies or popular sitcoms. You still won't find the National Football League, Major League Baseball or the National Basketball Association. (This year the Super Bowl was a notable exception. NBC live-streamed the Giants-Patriots game, making it the first Super Bowl offered online in the United States.)
So if you're in the market for a new TV, think about getting a set that can handle a Wi-Fi signal or that comes with a plug for an Internet cable. Many now ship with web browsers, allowing you to wander the Internet the way Explorer, Chrome, and Safari do on your computer.
The choices will only grow. Already, one in five Americans watches some video online every week.
Even if cable remains your chief source of programming - it probably will - the Internet could make it better.
That said, just a fraction of consumers are cutting the cord with Time Warner Cable, Comcast or the rest and settling for Internet-only video. Marginal losses in cable TV subscriptions have more than been offset by new customers signing up for satellite TV or TV packages sold by telephone companies.
As a threat to the industry, said media analyst Judah Rifkin of ISI Group, the market share that might soon dump cable service and find stuff to watch on the Internet is "most probably going to be a rounding error."
Rather, the near future will find the Internet supplementing what we're watching through the cable box, not replacing it.
Consider Austin Falley, a 23-year-old in Lawrence, KS, on a budget and unashamed to admit he likes to watch a little TV. He finds a good amount of video to watch online, whether it's streaming movies through Netflix or watching recent network programming on Hulu Plus.
But he still splits a cable TV and broadband bill with a roommate. There's simply too much - basketball games involving his beloved Jayhawks, cable news, the serendipity of browsing channels - that he can only get with a conventional pay-TV service.
"There are times when it's just nice to channel-surf," he said. "It's sort of like" - he laughs - "using StumbleUpon," the web service that refers people to nearly random sites they presumably wouldn't discover on their own.
At the same time, the Internet sways what he watches over his cable box. Online he recently discovered "Downton Abbey," the guilty-pleasure British period soap, and watched some old episodes. Hooked, he now sets his digital video recorder, or DVR, to capture every Sunday night episode on public television.
Some cable programming, notably ESPN and HBO, can be had online - but only for people who first pay for a conventional pay-TV package that includes the two popular networks.
A range of long-standing partnerships between content providers and distributors - Hollywood's studios and your local cable company - have created the pact that makes hundreds of channels available at a flat price.
When Bruce Springsteen sang "57 channels and nothin' on" in 1992, the implication was that 57 seemed like a heck of a lot of channels.
Indeed, research shows that although households routinely have hundreds of choices, most tend to watch fewer 24 channels with any regularity. That drives complaints from consumers wondering why, for instance, they have to buy more than they want.
Yet look at ESPN, the Disney-owned sports buffet that forms the most popular part of any multichannel video services - the Time Warners, the Dish Networks, the AT&T Uverses that nearly nine in 10 American households subscribe to. Because ESPN is so popular, it can command more than $4 per subscriber per month from the companies that pipe programming to your TV.
So why wouldn't ESPN just sell you an online subscription to its programming and cut out the middle man?
First, it would have to spend more money marketing its product, filling up your mailbox with offers the same way cable companies do now. It would likely get far fewer subscribers than it has now, critically losing a significant audience that tunes into a ball game is unwilling to buy a sports channel a la carte.
Suddenly the sports network would have to demand far more than its $4 per monthly subscriber to make up for the shrunken audience. Likewise, advertisers wouldn't pony up so many millions to fill the timeouts if fewer eyeballs were trained to a game broadcast.
"The actual costs of the programming" - on-camera personalities, studio time and the gasp-worthy contracts for the rights to carry a league's games - "don't go away just because somebody's streaming the signal over their computer," said cable industry consultant and analyst Steve Effros.
He noted that some networks, notably Fox, have trimmed back what they offer online. A potential viewer can go to a network's website, where they find that a show can be streamed - to a computer, tablet or Internet-capable TV. That offers the network another way to hook viewers and another place to sell commercial time. But if too many viewers see that programming on the Web, Effros said, a network risks cannibalizing the audience drawn from a place on a cable lineup.
Television advertising remains a $76 billion industry, and steady. Still, notes Forrester Research in a recent report, some networks have begun bundling their broadcast and online advertising sales. It's recognition of an emerging Internet viewer. Some 93 percent of CWTV.com viewers only watch its shows online rather than on the CW Television Network's broadcast parent. The struggling network appeals mostly to a younger audience.
Another Forrester report last spring noted that almost 25 million Americans had watched online video on their TVs, mostly the streaming of movies over a videogame console or other gadget channeling a feed from a Netflix subscription.
What if advertisers knew not only that you are watching the basketball game tonight, but that you regularly tune into do-it-yourself and nature shows? They might show you a different commercial than the person across the street watching the same game, but who gravitates more often to reality TV and sitcoms.
Suddenly that advertising becomes more valuable, creating more revenue for the people who produce the programming.
"Targeted advertising has worked very well online. You can imagine the potential," said Bruce Leichtman, whose Leichtman Research Group tracks the media and entertainment industries. "But the programmers aren't ready to kill their own business model."
A fledgling Kansas City business is looking at teaming the Internet and TV to blaze a shortcut between advertisers and consumers - by turning programming into virtual shopping trips. By some estimates, more than 40 percent of American TV watching is over a DVR-style recording device. That's great for skipping commercials, but not for networks and their advertisers. Meantime, a Nielsen study last year found that about 70 percent of smart-phone or electronic tablet owners use the gadgets while watching TV. In fact, tablet users say they are most likely to use the device while watching TV.
That, says TiBi.tv co-founder David Windhausen, makes the television commercial increasingly obsolete. We're either going to skip past it or turn our attention to what's on our iPad during those TV interruptions. So TiBi is working with TV manufacturers to install its application - an Internet overlap on programming allowing for instant purchases.
Say an advertiser has paid for product placement, and as the camera focuses on an actresses shoes as she crosses a room a TiBi icon lights up in the corner of your TV screen. Grab your remote, click, and you've bought a pair. Somebody makes a sale, part of the cost of producing a show is defrayed without the interruption of traditional commercial.
"We see this in the marketplace now where there are different ideas and thoughts to see how to make it possible for TV and the Internet to meld," Windhausen said. "It's inevitable."
Coming Events of Interest
Cloud Connect - February 13th-16th in Santa Clara, CA. The premier technology event for cloud computing, features the latest technologies, platforms, strategies, and innovations within cloud computing.
Cloud Computing Imperative 2012 - March 12th-13th in Dubai, UAE. Strategies to implement IaaS, PaaS, SaaS, and XaaS. Plan the shift of IT responsibilities, get fresh perspective on managing project budgets, build a strong ROI for cloud computing, understand the shift from managed services to the cloud, master the cloud infrastructure and see cloud security from a hacker's perspective.
2012 NAB Show - April 14th-19th in Las Vegas, NV. From Broadcasting to Broader-casting, the NAB Show has evolved over the last eight decades to continually lead this ever-changing industry. From creation to consumption, the NAB Show has proudly served as the incubator for excellence - helping to breathe life into content everywhere.
CLOUD COMPUTING CONFERENCE at NAB - April 16th in Las Vegas, NV. Don't miss this full-day conference focusing on the impact of cloud computing solutions on all aspects of production, storage, and delivery of television programming and video. |
