The Future of PC/TV Convergence: Opportunities and challenges in online video

Convergence is ongoing across the communications and entertainment markets. Video content is now accessible via numerous channels, beyond traditional services such as terrestrial, cable and satellite and towards online and mobile platforms. As a result, the online and broadcast markets are colliding, with video services making the move to the PC environment and web-based services becoming a core element of the TV viewing experience. There are an ever-expanding number of channels available for content to be distributed over and an ever-increasing range of technologies to aid the transmission.

Executive summary

Market context

PC-based video services hit the mainstream

Delivering internet-based services to the TV

Content provider and device manufacturer profiles

The future of PC/TV convergence

Chapter 1 Introduction

Introduction

Who is this report for?

Definitions

Convergence

Digital pay-TV (DTV)

Digital terrestrial TV (DTT)

Internet Protocol TV (IPTV)

Internet TV

Mobile broadband

Mobile internet

Mobile TV

Video on demand (VOD)

WiMAX

Chapter 2 Market context

Summary

Introduction

PC/TV convergence market trends

Broadband changes the rules of the game

Higher speeds bring new content-related opportunities

Consumers exploit broadband potential

Changing the face of media consumption

Broadband challenges remain

Entertainment market in flux

TV market in transition

Changing content consumption patterns

Traditional media hit

Traditional advertising market under pressure

Physical media is not (yet) dead

Significant obstacles exist for online video distribution

Move to high definition places greater demand on connectivity

Piracy concerns restrict progress

DRM restricts consumer uptake

Content rights issues restrict geographic expansion

Business model uncertainty reigns

Content owners are still not providing full support for new distribution channels

Chapter 3 PC-based video services hit the mainstream

Summary

Introduction

Online video delivery reaches the mass market

Online video is no longer synonymous with low quality content

Online video is a disruptive force in the video delivery arena

IPTV may lose its competitive advantages

Broadcasters take a more direct approach

Broadcasters and content producers make strong investment to new channels

BBC iPlayer provides numerous learning points

One-stop online shops for broadcasters’ content emerge

Consumer uptake on the rise

The demographic divide

Maximizing online potential

TV on the move

Mobile TV starts to gain some momentum

Not yet a mainstream proposition

Alternative portable solutions are gaining more traction

Significant challenges remain for mobile TV deployment

Portable PC-based video boosted by netbooks and mobile broadband

Netbook market growth will boost demand for portable video

Mobile broadband offers new possibilities

Chapter 4 Delivering internet-based services to the TV

Summary

Introduction

Digital entertainment devices get connected

The death of the ‘living room PC’ concept?

No one-size-fits-all home content hub exists

In-home content sharing takes center stage

Direct TV connection is essential if online video is to become mainstream

Media extender market makes slow progress

Consumer electronics devices get in on the act

Major TV manufacturers launch Ethernet-connected models

Widget-based services emerge

Yahoo and Intel drive a widget-based approach

Does consumer demand for connected TVs exist?

Does delivering internet services to the TV make sense?

Internet connectivity takes DVR-based services to the next level

Satellite pay-TV operators look to gain a foothold in the VOD market

Online video: complement or substitute?

Games console manufacturers push online video services

Sony and Microsoft battle for the living room

Sony playing catch-up

Consoles already well regarded as multimedia hubs

Consoles add to the video disruption

Connecting the PC and TV environments is a difficult task

Chapter 5 Content provider and device manufacturer profiles

Summary

Introduction

Amazon

Apple

BBC iPlayer

Comcast

Google / YouTube

HP

Microsoft Xbox 360

NBC/Fox Hulu

Netflix

Sony

Chapter 6 The future of PC/TV convergence

Summary

Introduction

The future of PC/TV convergence

Online video will be a mainstream alternative to traditional distribution

Content owners must fully embrace new distribution channels

DRM will remain a stumbling block

Business model uncertainty will continue

Internet-connected, networked consumer electronics devices will become the norm

Leveraging content across multiple distribution platforms will be essential

Broadband providers must be fairly recompensed for their role in content delivery

Chapter 7 Index

List of Figures

Figure 2.1: Global consumer broadband subscribers, by platform, 2007-2012

Figure 2.2: Global consumer broadband subscribers (000s), by region, 2007-2012

Figure 2.3: Broadband uptake boosts multimedia usage (% users by activity), UK

Figure 2.4: Use of traditional communications services on the decline in the UK (minutes per person per day), 2002 and 2007

Figure 2.5: Increasing internet usage hits TV viewing

Figure 2.6: Uptake of new media platforms lower among older consumers

Figure 2.7: New video distribution platforms are gaining traction

Figure 2.8: Proportion of advertising spend attributable to TV and internet, by country (% proportion), 2007

Figure 2.9: The importance of internet advertising (% of advertising spend), by country, 2006-7

Figure 3.10: Short-form content still rules in the online world (% users accessing content by type and country)

Figure 3.11: User-generated content is highly valued by younger consumers

Figure 3.12: Proportion of broadcasters’ IT budget being invested in new distribution channels

Figure 3.13: Proportion of online population streaming online video, December 2008

Figure 3.14: Online video reaches 80% of US consumers

Figure 3.15: US online video viewing declines with age

Figure 3.16: Online video usage declines with age

Figure 3.17: Factors that would encourage greater use of online video services

Figure 3.18: Mobile multimedia usage remains relatively low

Figure 3.19: Portable video usage remains relatively low

Figure 3.20: The rise of mobile broadband

Figure 4.21: Watching TV and surfing the web concurrently is commonplace

Figure 4.22: Worldwide console shipments, 2005-2007

Figure 4.23: Consumers show some interest in console-based multimedia applications

Figure 5.24: The rise of legitimate online TV services in the UK

Figure 5.25: Content provider and device manufacturer summary

List of Tables

Table 2.1: Global consumer broadband subscribers (000s), by platform, 2007-2012

Table 2.2: Global consumer broadband subscribers (000s), by region, 2007-2012

Table 2.3: Proportion of UK internet subscribers participating in multimedia usage by type (% users)

Table 2.4: Time spent using communications services (minutes per person per day, UK), 2002 and 2007

Table 2.5: TV viewing habits in comparison to internet usage (respondents), France, Germany, Italy, UK, US and Japan

Table 2.6: Uptake of communications services, by age (proportion of UK households)

Table 2.7: Time spent watching movies/TV programmes (% of viewers watching at least one hour per week, UK)

Table 2.8: Proportion of advertising spend attributable to TV and internet, by country (% proportion), 2007

Table 2.9: The importance of internet advertising (% of advertising spend), by country, 2006-7

Table 3.10: UK online video usage (% users accessing content), 2008

Table 3.11: Types of online content most valued by different age groups (% users), UK, 2007

Table 3.12: % of online population streaming online video, December 2008

Table 3.13: US consumer TV and video viewing patterns (% users), 2008-09

Table 3.14: Average time spent watching online video (hours per week, US)

Table 3.15: Proportion of households using the internet for multimedia applications (by age, UK)

Table 3.16: Proportion of adult internet users using mobile phones to watch video content (% users)

Table 3.17: Portable device usage for multimedia (% users by frequency), UK, 2008

Table 3.18: Notebook mobile broadband users (000s, global), 2008-2014

Table 4.19: Users watching TV and surfing the internet concurrently (% user by frequency), 2008

Table 4.20: Global console hardware shipments (000s), 2005-2008