Needham & Co. released a report on Friday — “The Future of TV: the Invisible Hand” — that helps explain how the television industry has so far weathered the digital storm that has affected other media segments.
“TV offers one of the best price/value ratios of any consumer product,” note media analysts Laura Martin and Dan Medina in the report.
For the average U.S. monthly cable bill of $75 a month for 135 TV channels, “consumers pay about 30 cents for every hour of TV they watch. Compared with other forms of leisure time, this looks inexpensive.”
“Today, the Internet content creators cannot create perfect substitutes for TV content, owing to the enormous content costs,” write Martin and Medina. “For example, broadcast networks — ABC, CBS, Fox and NBC — typically spend $2 billion to $3 billion each year, equating to about $2 million to $5 million per hour of prime-time programming.”
“The primary reason that TV networks can commit to these enormous production budgets is because the business model of the ecosystem raises money before anyone knows which channels and shows will be hits,” adds the report.
More than three-quarters of network revenues is derived from the upfront advertising market. “Advertisers this month agreed to shell out $9 billion for prime-time commercials on the major television networks,” reports the Los Angeles Times.
Search giant Google doubled its global ad and promotion spending to $1.5 billion last year. “Factor in 2011 ad spending for just-acquired Motorola Mobility Holdings, and Google is now a $2.1 billion global advertiser,” reports Advertising Age.
Google receives most of its revenue through advertising, with 96 percent of its $38 billion revenue in 2011 coming from advertising.
Ad Age notes that Google is also a big ad buyer: “Google’s stated worldwide advertising and promotion spending doubled in 2010 and doubled again in 2011. Ad and promo spending as a percentage of revenue reached 4.1 percent in 2011, up from 2.6 percent in 2010 and 1.5 percent in 2009.”
“Estimated U.S. ad spending for Google and Motorola topped $1 billion in 2011, placing the combined company No. 34 on Ad Age‘s ranking of the 100 Leading National Advertisers,” adds the article. “This marks Google’s debut on the list.”
According to Google: “We expect that sales and marketing expenses will increase in dollar amount and may increase as a percentage of revenues in 2012 and future periods as we expand our business globally, increase advertising and promotional expenditures in connection with new and existing products, and increase the level of service we provide to our advertisers … and other partners.”
Reviews for Google TV have been less than complimentary. Hands-on reviews from CNET and Gizmodo have commented on its “kludgy integration,” and “overly complex and buggy software.”
“What makes sense works poorly, and what works well shouldn’t be available at all, pulling together all the worst possible parts of using Android together and putting them on the biggest screen you own,” suggests Gizmodo.
Forbes questions the wisdom of the two-sided remote and notes there may not be enough third party content deals yet to make Google TV attractive.
Nevertheless, Google is rolling out Google TV in the UK next month. And later this year, it will be available in Canada, Australia, Brazil, France, Germany, Mexico and the Netherlands on two new Sony set-top boxes.
Rather than provide an overly complex system for users who want to watch everything, everywhere, anytime; most users would settle for a curated a la carte selection that matches their interests and use patterns.
The question is whether Google can attract sufficient developer support to create the apps that provide that kind of experience. We’ll see if there are any significant Google TV announcements at the I/O Conference on Wednesday. If not, there will be more interest in an Apple TV.
Facebook announced it will replace its Facebook Credits system with a payment system that allows global users to pay in their local currency.
The move signals the beginning of a payment rivalry between Facebook, PayPal, Google Wallet, and iTunes, reports VentureBeat.
Facebook explained the move, saying that it makes “it easier to reach a global audience of Facebook users who want a way to pay for your apps and games in their local currency” because “you will be able to set more granular and consistent prices for non-U.S. users and price the same item differently on a market-by-market basis.”
VentureBeat contributor Rocky Agrawal noted that “Facebook is PayPal on steroids, with the strength of a billion members.”
Perhaps this move, and not advertising, is the most effective way for Facebook to monetize its massive user base.
Over the past week, Facebook introduced a new Timeline feature that creates an @facebook email address while it also hides your existing email address.
The new settings options make it unclear which address is being shared with the outside world. This change was made by default meaning millions of users may likely be using their new addresses.
This is part of a major effort by Facebook to replace existing communication systems and increase the “stickiness” and use of Facebook.
So how does Facebook describe the change? “As we announced back in April, we’ve been updating addresses on Facebook to make them consistent across our site,” explains the press release. “In addition to everyone receiving an address, we’re also rolling out a new setting that gives people the choice to decide which addresses they want to show on their Timelines.”
“Ever since the launch of Timeline, people have had the ability to control what posts they want to show or hide on their own Timelines, and today we’re extending that to other information they post, starting with the Facebook address,” adds the release.
One can only imagine how Facebook will use your email contacts (and perhaps even the messages too)!
Following weeks of speculation, Microsoft has announced it will purchase enterprise social networking start-up Yammer for $1.2 billion.
The deal marks Microsoft’s largest acquisition since the $8.5 billion Skype deal.
“The acquisition of Yammer underscores our commitment to deliver technology that businesses need and people love,” said Microsoft CEO Steve Ballmer. “Yammer adds a best-in-class enterprise social networking service to Microsoft’s growing portfolio of complementary cloud services.”
“Yammer operates like a gated Facebook: A business can set up a private network where employees can post announcements, share files, create events, swap messages and more,” reports CNNMoney. “It also offers more traditional corporate features like a content management system and an ‘extranet’ that businesses can use to communicate with outside contacts like customers and vendors.”
Microsoft is betting that corporate America is ready to integrate social networking tools with traditional office and enterprise tools.
“Yammer will become part of the Microsoft Office Division, run by Kurt DelBene, though the Yammer team will continue to report to [CEO David] Sacks,” reports AllThingsD in a related article. “The plan calls for Yammer to stick to its current track of developing its own service, while Microsoft pushes ahead to nudge further adoption alongside SharePoint, Office 365, Microsoft Dynamics and Skype.”
Penguin Group USA is working with 3M and New York City public libraries to make Penguin e-books available in libraries by August. “If it is a success, the program could be expanded in public libraries across the country,” according to The New York Times.
This announcement comes as publishers and libraries continue struggling to determine how much access to e-books there should be for library users.
As an increasing number of book buyers are using Kindles, Nooks and iPads to read, they’re finding library access to e-books convenient and cost-efficient. “But major publishers, including Penguin, concerned that free downloads at the library were costing them e-book sales, have scaled back their books’ availability in recent months,” details NYT.
“We have always been committed to libraries and we are hopeful that this experiment will be successful,” said David Shanks, chief executive of Penguin Group. “Our partnership with 3M and the New York Public Library is a first step toward understanding the best means of supporting the growing digital missions of our great library institutions and their sincere desire to bring writers to new readers.”
David Brady and a team of researchers at Duke University have developed a gigapixel camera that records more than 30 times the data captured by conventional cameras. The AWARE2 camera project is funded by the Defense Advanced Research Projects Agency.
“The new camera is not the first to generate images with more than a billion pixels (or gigapixel resolution),” notes MIT’s Technology Review. “But it is the first with the potential to be scaled down to portable dimensions.”
The AWARE2 prototype has 98 micro-cameras, each with 10-megapixel resolution, all positioned behind a shared lens. Eight graphical processing units work in tandem to correct distortions, while multiple cameras behind a shared lens make it possible to process different portions of the image separately.
Hardware required for the AWARE2 is expected to shrink as computer processing power improves.
“Imagine trying to spot an individual pixel in an image displayed across 1,000 high-definition TV screens. That’s the kind of resolution a new kind of ‘compact’ gigapixel camera is capable of producing,” notes the article.
Brady says gigapixel cameras could revolutionize digital photography, image surveillance and video broadcasting. His team hopes to offer a version of the camera by the end of next year for $100,000.
Nintendo has announced the August 19th availability of the new $200 3DS XL, a larger version of its portable console with improved battery life.
“Unlike the Nintendo DS Lite, which released just over a year and a half after the original DS, the 3DS XL does not make necessary improvements to the look and ergonomics of the 3DS,” reports Digital Trends. “The Lite made the DS more compact but dramatically improved its screens and comfort. The 3DS XL increases the size of the 3DS’ screens by 90 percent, with a 4.88-inch top screen and a 4.18-inch bottom screen.”
The new size (close to that of the iPad when the clamshell is unfolded) may make the 3DS a more usable device for some gamers.
The battery life has been improved, offering 30 minutes more play time than the original. Additionally, the 2GB SD card of the original DS has been replaced with a 4GB card.
However, Digital Trends suggests these are the only improvements. “The screens are bigger but the resolution is not improved. The 3DS XL also fails to add the most necessary hardware improvements like a second analog slide pad for improved control of the three-dimensional games,” explains the post.
Mashable takes a look at how augmented reality — although still in its early stages of deployment — is already beginning to impact retail businesses and the consumer shopping experience.
“Augmented reality technology typically overlays the virtual world on top of the real-world environment through a device, such as a mobile phone or a tablet,” explains the article. “But certain companies are redefining the bounds of virtual reality experiences by home-growing their own unique AR technologies and platforms.”
For example, the GoldRun AR platform is available in app form for iOS and Android devices. It can customize AR-based experiences to be shared via Facebook and Twitter.
“GoldRun specializes in interactive experiences accessible directly on the app platform, which hosts various campaigns at one time,” notes Mashable. “For example, clothing retailer H&M can hold a virtual photo-based scavenger hunt, while New York Giants fans can virtually try on the Super Bowl XLVI championship ring and share photos online.”
“We’re creating a platform where we can use augmented reality to create a one-stop shop, based on the concept of using virtual brands to create geo-specific or geo-targeted virtual photo opportunities,” explains Shailesh Rao, co-founder of GoldRun.
Holition is a marketing firm and AR laboratory that has created an interactive digital platform that is complex on the back end, but seamless for consumers who want to try on virtual goods via a Web cam and Internet connection.
“We are pursuing active ways in which the other senses can be integrated into augmented spaces, whether that be touch or sound,” says Holition brand director Lynne Murray. “A lot of our brands say, ‘About 50 percent of our product is ensuring customers can feel the weight of it.’ So, we’re looking at how to include haptic interfaces to our experiences to allow us to communicate multiple sensory experiences.”
ETCentric reported from January’s CES about companies such as Lego developing AR kiosks. Retailers are already letting customers try on clothing and jewelry virtually. Macy’s in Culver City, California recently conducted a demonstration of full body scans of customers in the Fox Hills Mall courtyard.
Paul Adams — former lead researcher of social Web and mobile applications at Google — is currently a researcher at Facebook where he focuses “on researching and designing better ways for businesses and people to communicate and interact,” according to his website.
Marketing firm Simply Zesty has posted a compelling video featuring a presentation by Adams in which he discusses the history of social media and why he firmly believes Facebook has a strong future.
“He is one of the best thinkers when it comes to social and this video that Facebook has just shared shows his thoughts on how advertising works on Facebook and why the world will continue to become more social,” explains Simply Zesty.
“One of the biggest takeaways from the video are his three huge trends to watch: 1) The Web is being rebuilt around people, 2) The amount of information you can access is increasing exponentially and 3) All this information will be available everywhere,” suggests the post. “Those three points perfectly describe where social is at right now. Unlike most sales videos that all the big networks release, this is actually massively useful at showing where the world is headed.”
ETCentric staffer Phil Lelyveld adds: “This 20 minute video articulates part of the foundation of the ETC’s “Big Data”/Metadata project. He says that the future is about our friends, our interests, and our friends’ interests.”
The U.S. State Department is proposing to increase its efforts in monitoring social media sites by asking software developers to create multilingual tools that can perform “deep analysis of topics, conversations, networks, and influencers of the global social Web.”
The government believes that close inspection of social sites will “more effectively engage with foreign populations and track conversations in the wider world.”
Related efforts have already been in the works. For example, the State Department recently launched the trial run of a social media game that offers public users cash rewards for identifying criminals.
The Department of Homeland Security’s Social Networking/Media Capability program monitors online activity to gather awareness of individuals’ behavior.
“In addition, the FBI is working to persuade Facebook, Google and other Internet companies to make their sites friendly to wiretapping,” reports Mobiledia. “Bureau agents argue the Communications Assistance for Law Enforcement Act, originally passed to permit phone tapping, should extend to social media sites as well.”
The article notes that it seems ironic these initiatives come from the same administration that recently criticized Syria for shutting down social media sites in an attempt to quiet dissidents.
“This prevents people from speaking their minds,” said Ginger McCall of the Electronic Privacy Information Center. “It quells dissent.”
Researchers from the Object-Based Media Group at MIT’s Media Lab have developed an alternative to installing over-sized TVs in order to create a more immersive viewing experience in the living room.
The cost effective approach uses additional side and ceiling screens that are positioned to target a viewer’s peripheral vision.
“And instead of simply stretching the video image to completely fill the area the viewer can see, the Infinity-By-Nine system, developed by Daniel Novy and V. Michael Bove Jr., uses custom software that generates and renders a real-time extension of the image on either side of the TV,” reports Gizmodo.
“Because the viewer’s peripheral vision is never in focus, the extensions being generated only have to be crude blobs and blurry shapes to sell the effect,” adds the post. “Which also means the Infinity-By-Nine system can run on consumer-ready hardware, instead of requiring a room full of state-of-the-art supercomputers.”
Initial testing of the multi-screen system has shown that viewers are increasingly drawn into the story and universe. “And it has even been found to create the illusion of feeling other sensations, like heat when an on-screen explosion feels like it’s completely surrounding the viewer,” notes Gizmodo.
The post includes a video introduction to the Infinity-By-Nine system.
As CE devices continue to integrate new features, developers want to make the complexity visible. “But all the features in the world don’t mean a thing if you can’t present them in a welcoming, intuitive way,” argues Sam Grobart in The New York Times.
Grobart cites Samsung’s Smart TVs as an example of a product line with impressive functionality, but often frustrating design. The TVs essentially mimic smartphone designs with floating applications over a background, but while smartphone users can click to launch applications, the approach does not work as well on a television as it creates what Grobart describes as “a new source of confusion right on my screen.”
Grobart suggests part of the problem may stem from a need to boast impressive functionality. “I can see how this layout came to be,” he writes. “First, a TV like this can do a lot of things, so wouldn’t you want everyone to know all the great things it did? You don’t want to hide your capabilities, so you give many of them pride of place on that opening screen.”
Whereas smartphones thrive using touch-based systems, “an interface that is based on touch and proximity may not play as well on a TV. Seeing all these options in front of me on a 60-inch screen was almost overwhelming, not simplifying,” he explains.
Grobart closes with some advice for manufacturers: “If you are going to cram a device full of features, figure out a way to organize things so your users don’t pass out from frustration. The interface is every bit as important as the features. Maybe even more important, actually.”
According to the report “Choosing Content: Viewing Video” by Parks Associates, “17 percent of premium cable channel customers and 16 percent of video-on-demand pay-per-view customers would consider using an online subscription service such as Netflix Watch Instantly instead of their current viewing choice,” reports Digital Trends.
Netflix receives higher customer satisfaction ratings because it has more material available and boasts a lower price point.
“Consumers can pay for a month of Netflix for about the same amount as for two pay-TV VOD movies. Parks Associates research shows consumers know the quality of the [subscription] service is not comparable to pay-TV quality, but the cost-benefit comparison is enough to affect their purchase decisions,” notes Brett Sappington, director of research for Parks Associates.
In a related Forbes article, Mark Rogowsky argues that while cable purchases used to be the norm when moving into a home or apartment, today’s younger generations skirt the system using Internet television solutions and illegal websites.
“Given that excess disposable income doesn’t appear headed for the wallets of twentysomethings in the U.S. anytime soon (and even if it were, it’s not clear they’d rush to sign up for cable),” writes Rogowsky, “there’s a real possibility that over time, multichannel penetration in the U.S. will drop off meaningfully from the current 90-plus-percent level as the current customers die and the prospective new customers don’t automatically opt in.”
Digital Trends suggests that cord-cutting may soon become less of a concern for television companies than consumers who never establish cords to begin with: “It’s not that people will give up their television for the Internet, but if the Internet can convince people who’ve never really had a cable subscription before that they don’t even need one… Well, that could be a real problem.”
Needham & Co. released a report on Friday — “The Future of TV: the Invisible Hand” — that helps explain how the television industry has so far weathered the digital storm that has affected other media segments.
