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Gary Arlen President
Arlen Communications LLC
Prepared for
"Medientreffpunkt Mitteldeutschland 2012”
8 May 2012
New Opportunities = New Competition
Spectrum vs. Bandwidth: Airwaves and the avalanche of content transmitted to viewers
Spectrum Dilemma
Wireless carriers demand spectrum for growing mobile services
M2M systems proliferate
Cross-platform Delivery
“Over-the-Top” video, streaming, IPTV
Tablets, smart- phones as preferred viewing devices
“Non-traditional” carriers (Google, Yahoo) aggregate content and customers
© 2012 Arlen Communications LLC 2
Cisco Global Forecast for bandwidth demand, 2010- 2015
Video
64.7 Exabytes (billion GB)
Lobbyists Technology Media
A Star-Studded Array
of Powerful Providers
Have Major Financial
Stakes in Spectrum
and Multi-platform
Delivery Policies and
Economics
3 © 2012 Arlen Communications LLC
• FCC Spectrum Allocation *
Proposed Incentive Auctions for TV stations Motivated by demand for mobile/wireless bandwidth
$25 billion income to Federal Government
$7 billion to emergency wireless network
$2 billion to broadcasters for channel repacking
$15 billion for jobs programs, etc.
Voluntary Broadcaster Participation • Theory: fast cash. Reality: insufficient value in small markets
• No timetable, but “soon” – target 2015, unlikely
• Related issues – Spectrum repacking = transmitter changes – White Spaces = avoid interference
• For use by unlicensed transmitters (e.g. wireless home networks)
– Demands of public safety, security
4 © 2012 Arlen Communications LLC
* “Spectrum Grab” to broadcasters
“Channel Sharing”
• Seeks to preserve local stations and reclaim spectrum for wireless services
• Two channels would use same 6 MHz frequency • Could limit HD or 3D broadcasts • Raises Questions about:
• Must-Carry vs. Retransmission Consent • Local availability • Technical issues • Independent management of FCC rules
FCC opened rulemaking process in April
© 2012 Arlen Communications LLC 5
Policy Makers’ Dilemma
• Two-phase auction: – Reverse auction to reclaim TV channel space/determine supply – Standard auction to allow wireless companies to acquire spectrum
• Spectrum Allocation issue also involves • Relinquish government spectrum
• 500 MHz by 2020
• Reassign mobile satellite spectrum for terrestrial
wireless services
• Retransmission consent for cable carriage - uncertain
• Also confronting: • Mobile DTV deployment • Network neutrality (especially wireless broadband)
© 2012 Arlen Communications LLC 6
FCC Chairman
Julius Genachowski
Marketplace Reality • Big cable companies’ “SpectrumCo” un-built wireless
licenses sold to Verizon $3.6 billion; needs FCC approval
• Verizon plans to launch wireless Others video service by end-2012 o Would leverage FiOS wired broadband content connections o Would add to spectrum congestion; require new data pricing
• Verizon will divest other spectrum (FCC spectrum caps)
• Google’s spectrum and landline ambitions o Kansas City 1 GB to the home wireline pilot
• Lobbying juggernaut: House adopted FCC revision plan.
o Top 10 legislators got nearly $500, 000 in campaign contributions from broadcasters, telcos, wireless lobbyists.
© 2012 Arlen Communications LLC 7
Internet/Online Advertising has exceeding all
other platforms except broadcast TV.
But the gap is closing.
Source: Interactive Advertising Bureau, April 2012 : IAB Internet Advertising Revenue Report: An Industry Survey Conducted by PwC and Sponsored by the Interactive Advertising Bureau (IAB) 2011 Full Year Results
U.S.
Broadcast TV
Internet
And Also… • Mobile video?
Via broadcasting?
… or wireless broadband?
25% of U.S. video viewing is on “other platforms” including tablets (Source: Parks Associates, April 2012)
© 2012 Arlen Communications LLC 9
• Using existing TV stations
• Need wireless telco cooperation to put
receiver chips in subsidized handsets
Mobile Content Venture
Speaking of tablets and 2-screen TV
• Smart TVs with hundreds of apps
• “TV Everywhere” (cable companies) with authentication
• Ultraviolet Studio control via the cloud
• YouTube’s $100 million original production fund + studio deals
• Facebook studio deals © 2012 Arlen Communications LLC 10
Cross-platform and multi-platform deliver expands
© 2012 Arlen Communications LLC 11
Again: the Divas are ready for marketplace battle
Trying Again
Facing the Era of Cord Cutting • “Over-The-Top” delivery: relies on broadband • “Cord Cutting” and “Cord Trimming”
• Reducing cable services: availability of online video • 5% - 9% of cable churn now • Streaming services carry TV shows: (owned by NBC, ABC, Fox)
• Will grow as more VOD rights are cleared • Fueled by and
• Cable MSOs acknowledge: their core business may become data, not video packaging • Comcast introduces • Time Warner Cable envisions “Pandora-like model”
• Wreaks havoc with core financials • Hulu commercials generate 50% revenue of network advertising
© 2012 Arlen Communications LLC 12
OTT: Where the Shows Are TV set-makers have deals with video aggregators to make their
programs available directly to ’Net-connected “Smart TVs”
13 (c) 2012 Arlen Communications Inc.
Source: Parks Associates, Arlen Communications, companies, 2011
As for “Hybrid TV”…. • Has not yet clicked in the U.S. • Broadcast TV delivered via Internet facilities
o Some startups:
© 2012 Arlen Communications LLC 14
Proprietary hardware that lets TV stations stream
personalized TV to authenticated connected devices.
Investment from NAB and CEA. 50 initial markets.
Tiny OTA antennas to pick up all local broadcast station,
transmit via IP to home or mobile devices $12.99/month.
Uses DVR copyright case to avoid retransmission
consent. Being sued by broadcasters.
And also: Broadcast TV via the Internet:
Even Comcast has patent to let set-top box surf the Web
Broadcaster
Approval
?
Social TV and Simultaneous Viewing
• 80% of U.S. tablet and smartphone users have the devices nearby while watching TV
• Social TV most popular during events • 13 million during CBS Grammy (music) awards • 12.2 million during Super Bowl • 3.8 million during Academy Awards (older audience) Source BlueFin Laboratories, March 2012
• Advertisers are developing games, T-commerce
• Enhanced pricing for commercials, with direct-marketing implications
© 2012 Arlen Communications LLC 15
Simultaneous Use of Tablet While Watching TV
Source: Nielsen April 2012
29%
9%
13%
20%
14%
15%
20%
7%
10%
23%
17%
24%
29%
9%
15%
19%
16%
12%
12%
7%
13%
24%
19%
26%
Never
1/mo or less
Several times/month
Several times/week
Once a day
Several times/day
USA
Germany
UK
Italy
© 2012 Arlen Communications LLC 16
Identifying the Global Appeal of Interactivity Consumer opinion about the ability to interact more personally with content (rank “appealing” or “very appealing” in 5-level survey)
Source: IBM “Beyond Digital” report, April 2012; Data from 2011 Digital Consumer Survey
http://www-935.ibm.com/services/us/gbs/thoughtleadership/ibv-beyond-digital.html
Viewers of all ages are connected, multi-tasking
and comfortable with Internet-delivered video
Source: IBM “Beyond Digital” report, April 2012; Data from 2011 Digital Consumer Survey http://www-935.ibm.com/services/us/gbs/thoughtleadership/ibv-beyond-digital.html
More Policy Factors • Privacy and security
• U.S. standards are now weaker than in Europe
• Network neutrality • Challenges as media/carrier companies have
more control of content on their infrastructure
• Bandwidth management • Related to ‘net neutrality and competitive pricing
• © Copyright • Antitrust
• Ownership caps, Spectrum caps
© 2012 Arlen Communications LLC 19
Digital Outlook Different industries are finding new ways to
collaborate, but legacy turf-wars will persist
Technology providers are increasingly guiding the process of delivering entertainment and information
• Relying on
• “TV Everywhere” is the mantra, especially for young audiences
“Media malaise” persists:
What happens next? © 2012 Arlen Communications LLC 20
“The Cloud”
Thank You
.
© 2012 Arlen Communications LLC 21
Gary Arlen Arlen Communications Inc.
7315 Wisconsin Avenue Suite 805E Bethesda, MD 20814 USA
www.arlencom.com 301 656 7940
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