Digital Lifescapes

Subscribers to digital TV services in China will grow in number from just over 1 million in 2004 to 50 million by the end of 2008 -- representing a 165 percent compound growth rate -- according to a report from Research and Markets. There are currently 5.35 million digital TV subscribers in China. Research and Markets predicts that China's digital TV industry will enter a rapid development era over the next three years, when government agencies will set standards on transmission technologies and other areas, encouraging accelerated investments. The number of digital televisions sold in China between 2004 and 2008 is expected to exceed 25 million, while the volume of digital TV set-top boxes during the period is expected to exceed 21 million.

Los Angeles Times reports that DirecTV Group Inc., the El Segundo-based satellite television company controlled by Rupert Murdoch's News Corp., may spend as much as $1 billion to get into high-speed Internet access. News Corp. and DirecTV are considering options such as partnerships to sell Internet service, Murdoch said at a Citigroup media conference in Phoenix. "You'll be hearing from us within two months on a very clear plan what will happen, and it's not as expensive as you might think," Murdoch said. "We have a lot of people on this full time at the moment." News Corp., which beefed up its Internet presence with acquisitions including MySpace.com last year, is looking for new ways to distribute its TV shows and movies, Murdoch said. DirecTV, the largest U.S. satellite TV company, competes with cable television providers that already offer Internet access.

Red Herring reports Yahoo struck a deal with Starwood Hotels & Resorts Worldwide to provide Internet lounges and free Wi-Fi access inside several Sheraton hotels as part of a test program. The Yahoo Link @ Sheraton service will be available in two hotel lounges in the Sheraton San Diego Hotel & Marina in California and the Sheraton Boston in Massachusetts, as well as guest rooms. It also will be available from guest rooms in the Sheraton New York Hotel & Towers in New York City and the Sheraton Stamford in Connecticut. The service includes Wi-Fi and wired Internet access and email, along with reviews of local attractions, and the ability to print boarding passes from airline sites. Users also get a free 30-day trial of Yahoo�s premium services, such as Yahoo Music, Mail Plus, All-Star Games, Finance Tracker, and Briefcase. To access the Yahoo service, Sheraton guests receive a code when they check in that they can enter into either their own computer or when they log on to ...

Alibaba CEO Jack Ma told Information Times that eBay Eachnet's recent strategy of offering some of its services for free is too late to help Eachnet regain the market share it lost to Alibaba's Taobao. Ma said that if Eachnet launched the free strategy 18 months ago, it would have been very difficult for Taobao to develop. However, Ma said that Taobao has surpassed Eachnet to become China's most popular C2C website. According to Ma, Taobao had 22 times as many registered users as eBay Eachnet before eBay Eachnet launched its free strategy and the gap has been widened to 24 times after Eachnet launched free services. Ma said Alibaba will not seek to go public in 2006. Alibaba will focus development on domestic trade, which includes offering customer service in different dialects, in 2006, as opposed to its current focus on companies looking to export products. Ma said that 75 percent of Alibaba's paying users renew their contracts.

According to a Melanie Wells commentary in Forbes, she predicts that advertising will be driven by unconventional wisdom. "Madison Avenue players and some big marketers still believe that traditional ad agencies can help them understand new technology and navigate the new media world. But some marketing executives now gripe that their mainstream agencies aren't pitching break-through ideas or introducing them to interesting new concepts or companies. It seems clear that marketers can't rely only on these ad and media shops if they are going to experiment with newer ways of marketing their products, such as car wraps and buzz-marketing campaigns. The future will belong to idea shops, not ad agencies."

A flood of TV programs in the DVD format is blamed for crowding out theatrical titles in video retailing. But that torrent of programs hogging shelf space isn't a rising tide anymore, forecasts Kagan Research. This year is expected to be a peak for total revenue from DVD sales of TV programs, with $2.71 billion in worldwide revenue at the consumer-spend level forecast by Kagan Research. Consumers are switching from fixed media such as DVDs to on-demand electronic downloads," notes Bridget McCullough, associate analyst with Kagan Research. "They are becoming more and more comfortable with the concept of storing their video entertainment on a hard drive as opposed to on a shelf." The plateau in 2006 will end a sharp run-up. In 2000, TV program sales on DVDs generated just $570 million. After 2006, Kagan Research forecasts the category to slide slightly through 2012. Kagan Research sees TV programs representing a shrinking slice of global video/DVD total revenue. TV pro...

Strategy Analytics asserts that the market for Bluetooth-enabled devices grew to more than 272 million units in 2005, twice the number of units shipped globally in 2004, as outlined in "Bluetooth Doubles: CSR Still Gaining Momentum." To date, Bluetooth for hands-free cellphones has driven the adoption of Bluetooth. In the future, more users are expected to want Bluetooth-enabled cell phones and headphones for listening to high quality stereo music. According to Chris Taylor, Director of the Strategy Analytics RF & Wireless Component Service (RFWC), "Cambridge Silicon Radio (CSR) has maintained a strong lead in the Bluetooth chip market by aggressively reducing cost, power consumption, and footprint, while increasing data rates and adding features to its chips. This has allowed it to stay ahead of powerhouse competitors, including Texas Instruments and Broadcom." "CSR is well positioned to maintain market share in cellphones, headsets, notebooks, and automot...

Each year, roughly 46.4 million existing cell phone subscribers churn out � usually to switch service providers � and thus are up for grabs. That hefty figure is due to the industry�s monthly subscriber cancellation rate of 1.92 percent, which means every year about 23 percent of the 201 mil. U.S. cell phone subscribers churn, according to Kagan Research newsletter Wireless Market Stats.

Clear Channel is ramping up its Web presence again, with a planned launch this month of video-on-demand capabilities for 17 station Web sites in five major markets. The radio conglomerate will begin its VOD initiative in New York, Los Angeles, Boston, St. Louis and Washington, D.C., customizing archive access to thousands of videos to the branding of respective stations. "An urban station in St. Louis will look very different from a country station in D.C.," Clear Channel executive vp online music and radio Evan Harrison said. "We want to take advantage of the extent to which stations can customize the product locally."

Apple's Steve Jobs shared digital media sales results during his keynote speech at the Macworld Expo in San Francisco. Apple controls only a small percentage of the personal computer market. But as consumers begin to spend on gadgets like the iPod, and the songs and videos to fill them up, digital media related purchases may become the most important growth sector in high-tech. Jobs announced that iTunes will hit the billion-songs-purchased mark in the next few months. The iPod is also exceeding expectations. Apple announced that sales reached 14 million during this past holiday quarter � more than triple the same period in 2004. The iTunes store is currently selling songs at a rate of 3 million per day, and it accounts for 83 percent of all digital music sales. Last October, Apple beat all of its rivals to the online video marketplace, and has since sold more than eight million videos, including TV programs from content providers such as NBC, ABC and of course, Jobs' other com...

Service providers around the globe are shifting into high gear and making major investments to converge their data networks, says a new study by Infonetics Research. Changing traffic patterns and applications are the main causes of the convergence charge, with broadband Internet, metro Ethernet, and IP VPNs being the top three drivers causing IP traffic growth for carriers participating in Infonetics' study. "IPTV and broadcast video, which loom large in many carriers' plans, will create a huge increase in traffic when it becomes prevalent," said Michael Howard, principal analyst at Infonetics Research. "Carriers expect decreases in legacy service revenue (ATM, frame relay, leased lines), but expect big increases from IP VPN, VoIP, and metro Ethernet revenue, and those planning broadband and IPTV expect sizeable revenue increases from those services as well." Incumbents and competitive operators face significantly different challenges and opportunities as th...

Online spending in 2005 increased 22 percent, reaching $143.2 billion, according to consumer research firm Comscore Networks. During the holiday season (1 November through 31 December), online consumers spent $28.2 billion, also a 22 percent increase from last year. For the year, online consumers spent $60.9bn on travel, a 20 percent increase from 2004, and $82.3bn on non-travel (i.e. retail) items, 24 percent more than in 2004. Nearly a quarter of online retail spending ($19.6bn) occurred during the holiday season. Apparel and Accessories was one of the fastest growing online consumer categories in the past year, with sales of $12.2bn, a 36 percent increase on 2004's numbers. Computer software (excluding games) also grew by 36 percent year on year. Other large consumer category increases included Home and Garden (32 percent), Toys & Hobbies (32 percent), Jewelry & Watches (27 percent) and Furniture (24 percent).

The UK has overtaken France as the broadband leader in Europe, according to broadband research firm Point Topic. As of 1 January 2006 there are approximately 9.8m broadband lines in the UK, compared to 9.7m in France. Point Topic predicts that the gap will widen in the near future, as the British broadband market is currently making changes to stimulate growth. Unbundling is expected to greatly drive growth in the country during 2006. Point Topic expects the large UK ISPs, such as AOL, Wanadoo and Tiscali, to start migrating customers to their own unbundled equipment on a very large scale. Although the changes will most likely promote competition and therefore benefit consumers, the changes are likely to require a large management effort on the front end. The creation of Openreach, a provider of broadband access to all service providers on equal terms, is also expected to expand the broadband market in the UK, as is the proposed merger of NTL and Telewest, with the post-merger company ...

As the border between broadcasting and telecommunications blurs, DMB will become a key part of global broadcasters' strategies for future business diversification, and will provide tactical momentum driven by bundling of services. According to Seoul-based ABI Research analyst Andy Bae, "In the context of the Korean market, DMB (digital multimedia broadcasting) may emerge as a multimedia and broadcasting sub-function for WiBro or WCDMA handsets, similar to the situation that developed with camera- and MP3-equipped phones as they became mainstream. The bottom line is that incumbent telecom operators � faced with falling voice and mobile Internet data revenue � have recognized the opportunity that bundling DMB and other services can bring, allowing them to enter broadcasting territory and generate new service revenue." The long-term value for DMB users will lie in the content and the applications that can deliver differentiated, personalized broadcast media. "As DMB ser...

The digital home industry came of age in 2005 as global revenues surged past the $100 Billion mark for the first time, according to new research from the Strategy Analytics Connected Home Devices service. Star products such as digital flat panel TVs, MP3 players and portable games consoles helped drive retail revenues to $118 Billion, a growth rate of 25 percent. 2006 will be another record year, according to the study, with revenues forecast to exceed $150 Billion. Hot growth sectors in 2006 will include entertainment PCs, next generation games consoles such as Xbox 360 and PS3, and new HD-DVD and Blu-ray Disc players. "Consumers worldwide are embracing the digital home," says Peter King, Director, Director, Connected Home Devices. "Further waves of new technologies and emerging digital product segments will support significant revenue growth for years to come." David Mercer, Vice President and Principal Analyst, notes, "The next few years will see unprecedent...

Worldwide, the combined market of both digital satellite and terrestrial radio will grow from approximately 5 million unit shipments in 2004 to 22 million unit shipments in 2009, reports In-Stat. The primary drivers for this growth will be new and compelling content, data services, price erosion for digital radio receivers, and digital radio provider partnerships with new car manufacturers. "In the US, satellite radio is driving the digital radio market," says Stephanie Guza, In-Stat analyst. "In other markets, most notably in the UK, terrestrial digital audio broadcasting is driving it. The launch of Digital Multimedia Broadcast (DMB) services in Japan and Korea, along with increased promotional activity in Singapore, Australia and Taiwan over the next year, will drive digital radio shipments in Asia." In-Stat found the following: - Roughly 600 US AM and FM stations will broadcast in HD Radio technology by the end of 2005. - The two US satellite radio providers hav...

U.S. consumers spent $22.8 billion buying and renting DVDs during 2005, an 8 percent increase over 2004, according to a report from the Digital Entertainment Group, a trade group representing home video retail and rental companies. DVD retail sales grew 5 percent, to $16.3 billion, while rentals were up 14 percent to $6.5 billion. However, the overall home video market -- which includes sales and rentals of both DVD and VHS -- actually shrank slightly in 2005, to $24.3 billion, from 2004's $24.5 billion. More than 1.6 billion DVDs were shipped during 2005, a 9 percent increase from 2004, bringing the total number of DVDs shipped since the format's launch to 5.6 billion discs. The number of U.S. households with a DVD player, including portable models, rose to 82 million; when DVD-playing PCs and video game consoles are factored in, the number grows to 89 million. The DEG estimates that over 80 percent of U.S. TV households can now play DVDs.

Intel CEO Paul Otellini introduced the company's new Viiv platform at CES, promising a new era of digital entertainment. Intel Viiv consists of a suite of Intel-based hardware and software matched to Microsoft Windows XP Media Center Edition 2005. Later this year, the platform will add features to help simplify the set-up of a home network along with the ability to transfer digital content from the PC to other devices. Google will make its video service available on the new Intel Viiv technology platform. The companies said their planned collaboration is intended to give consumers an easy way to search, manage and consume the huge amount of video information available on the Internet. "Both companies believe open standards are critical to provide rapid growth in digital entertainment," said Susan Wojcicki, vice president for product management at Google.

The cable industry has said it will begin OCAP launches in 2006 and complete headend installations nationwide by the middle of 2009. The OCAP middleware software specification for interactive television was established by CableLabs, the non-profit cable industry research and development consortium. OCAP is based on the European DVB MHP standard, enabling applications to run across a broad range of set-top boxes and cable-ready televisions and ultimately provide a national footprint for interactive services. The cable companies noted that common standards have always been a benefit to the industry and the consumer, citing the example of the DOCSIS cable modem standard. They said that OCAP holds similar promise and represents the most potent competitive advantage for cable providers over their satellite competitors. Progress was also announced on a new downloadable conditional access system known as DCAS that will ultimately replace the CableCard system based on removable security cards.

The huge 2006 CES show closed yesterday. The exhibitor catalogue compared in size to the New York telephone directory. ABI Research sent four seasoned analysts, specializing in digital home entertainment and media, broadband, automotive systems and telematics, to this "greatest show on earth". Here are some of their comments. Automotive A host of new navigation devices were introduced from nearly every automotive infotainment hardware provider in the industry, including Tier Ones. Unfortunately the majority of these devices were "me too" exercises that got lost in a sea of homogeny. "Differentiation will be the key going forward," said Frank Viquez, Director of Research, Transportion. "High-priced devices are at a major disadvantage unless they offer some sort of truly special functionality or unique user experience." Broadband video The idea of the set-top box as video content "mothership" (outlined in a recent ABI Insight) received fu...