Digital-Lifestyles

Business

Changes to business digitisation brings

  • Netflix’s Subscriber Growth

    Netflix have released their latest subscriber numbers, and whilst the company’s user base has certainly grown, the future is certainly in online movie delivery.

    Netflix had 2.23 million subscribers at the end of Q3 2004 – up 73% from 1.29 million on its books at the end of Q3 2003. Only 4% of its current subscriber base are on free trials, and those 96% of paying subs brought in a projected US$21 million in Q3 2004.

    Netflix’s current business model is to rent up to three DVDs at a time to customers via the postal service. With the growth of home broadband, sending films out in the mail evidently has a limited lifespan, and so the company recently partnered with TiVo in a venture to designed to switch the delivery mechanism to online – finally putting the “Net” in “Netflix”.

    However, the company believes that their 25,000 title DVD library still has some legs on it – CFO Barry McCarthy commented in a statement: “Three years ago we shortened the estimated useful life for our DVD rental library from three years to one year. For a young company with limited operating experience, that accounting estimate was management’s best judgement of the useful life of catalogue content at that time. However, with several years of operating history behind us and based on analysis of this historical data, management’s current best judgement of the useful life of catalogue content is three years.”

    SG Cowen and Co. report that things won’t be so simple for Netflix, and that they will face stiff competition from Blockbuster when they go online – Blockbuster’s brand and market share will impact Netflix’s subscriber base, both in its DVD by post and online rental business, over the next few quarters.

    Netflix

  • BPI to Sue UK Filesharers

    The British Phonographic Industry is about to begin action against illegal filesharers in the UK. The BPI has observed that similar programmes, notably the RIAA’s own action in the US, have worked in other countries and intends to crack down on Britain’s music pirates as early as this month. The rapid rise in broadband adoption in the UK has also spurred them into action before the problem gets out of control.

    The BPI will be following a 15/75 rule in which individuals they sue – they believe that 75% of all infringing files on the internet are being shared by just 15% of the file sharing population.

    A BPI spokesman, told NME.com: “There are a small percentage of hardcore internet users who are uploading material regardless of its illegality. It would appear that litigation is the only way to deter them. It’s becoming pretty obvious that litigation needs to be there as a deterrent.”

    We have a call in with the BPI and will bring you more information from them as soon as we have it.

    The BPI

    NME

  • Microsoft FAT Patent Claim “Bogus”

    Microsoft’s patent on the File Allocation Table disk format has been rejected by the US Patent Office, on the grounds that it should never have been granted in the first place. The Patent Office has ruled that, although the patent was granted in 1996 and is not due to expire until 2013, the technology was obvious and there was prior art. Two big no-nos if you want to register a patent, basically.

    The re-examination was prompted by the Public Patent Foundation (PUBPAT), a non-profit legal services organisation that aims to protect the public from miss-use of the patent system.

    Although first introduced in 1982, and largely superceeded by file formats like NTFS, the decision is a blow to Microsoft. FAT is currently enjoying an extended lifespan because it is used in Flash memory cards and by Linux to read DOS and Windows drives, and Microsoft were using the patent as a revenue stream by charging a licensing fee to those who wanted to use the technology. If you buy a Lexar Flash card for your camera, US$0.25 (€0.20) of the cost is for the FAT technology.

    Dan Ravicher, PUBPAT’s executive director said: “The Patent Office has simply confirmed what we already knew for some time now, Microsoft’s FAT patent is bogus. I hope those companies that chose to take a license from Microsoft for the patent negotiated refund clauses so that they can get their money back.”

    Microsoft have 90 days to put their side of the story forward or lose the patent claim altogether.

    Public Patent Foundation

  • Disney and Intel to Launch “Mickey Symphony”

    Disney and Intel are to launch an interesting broadband content service in Japan – an interactive version of some segments form Fantasia 2000. The three initial sections are “Pomp and Circumstances”. “Rhapsody in Blue” and, always a favourite, “Carnival of Animals”.

    Users will be able to enjoy interactive special effects, arrange the scenes’ backgrounds, and dance with Donald and Daisy. Which can’t be too bad. There’s a preview that I’ve linked to below – though when they say broadband, they mean broadband: it takes ages to load.

    Though currently rather limited in scope, the product hints at what Disney might be able to offer in the future with its rich range of intellectual property.

    Koji Hoshino, President of Walt Disney Japan said: “As a leading media company, Disney is committed to delivering content which satisfies a broad range of consumer demands utilizing new technologies … The achievement with Mickey Symphony has taken us to a new level of content creation and distribution. Intel and Disney, leaders in technology and media respectively, joined forces to create this milestone product in Japan and expect to continue further expansion of our collaborative relationship.”

    Disney believe that this will be just the first of many such products, and that it will act as a catalyst for increasing public demand for broadband content and services.

    Have a look at Mickey Symphony

  • Overpeer Launched in Europe

    Loudeye have launched their Overpeer anti-piracy technology in Europe. The system, which uses a number of techniques to protect content, has proven popular in the US and Asia and currently protects 60,000 digital entertainment titles. This translates to millions of blocked downloads every month.

    “As we enter an important stage in the legitimate distribution of digital media content, content owners around the world face challenges in managing the illegal distribution of their material across peer-to-peer networks,” said Marc Morgenstern, vice president and general manager of Loudeye’s asset protection and promotion business in a statement. “Our proprietary systems and technology are designed to interdict illegal peer-to-peer traffic, blocking illegal transmission of copyrighted material and helping content owners take control of piracy. These systems have been highly effective for our customers in the US and Asia, and we’re pleased that we are now launching the services in Europe through OD2, our European subsidiary.”

    Overpeer uses content spoofing to distribute fake music, software and movie files across P2P networks – if downloaded, the file can then redirect a PC user to a legitimate source for the real content with the option of buying it.

    Overpeer

  • Two Way TV Acquires Broadcast Games

    Two Way TV has acquired mobile-to-TV specialist Broadcast Games, and will incorporate the company to form Two Way Mobile. Two Way TV hope that the acquisition will bolster its existing mobile services, including a service produced with ITV earlier this year.

    Founded last year by Julian Jones and Jani Peltonen, Broadcast Games bring their SAMPO mobile-to-TV interaction platform, which lets users play games, chat and interact with TV broadcasts using their mobile handsets, interactive TV button and internet connections.

    Commenting on the deal, Jean de Fougerolles, the chief executive of Two Way TV, said: “We are integrating the expertise of Broadcast Games with our existing mobile-to-TV services, to create innovative and market-leading mobile-to-TV games which work on analogue services, as well as digital platforms. This is all part of Two Way TV’s aggressive growth strategy to make sure that we stay at the forefront of interactive programming and is the first in a number of strategic partnerships that we will be announcing between now and Christmas.”

    Julian Jones added: “This is a really strong partnership. Broadcast Games was set up last year but in that time we’ve managed to get a platform off the ground. This deal with Two Way TV means we will become part of a substantial, growing company where mobile-to-TV games form an important component of the business.”

    Two Way TV

  • Chrysalis Launch Music2Mobile

    Chrysalis Mobile have launched a new range of licensed products for mobile phones under the name Music2Mobile. The product range will include ringtones, images and, eventually, downloads of full tracks. The label also intend to licence content to other major providers in the UK and abroad.

    Music2Mobile has already been picked up by Carphone Warehouse, and they will soon be offering products through their UK stores. That’s right – although the product is available download from internet and WAP sites, the range is principally intended to comprise of branded, physical products. They’ll be popping up in point-of-sale displays in a shop near you soon.

    Content is selected on a weekly basis by a team at Chrysalis Mobile to keep up to date with consumer tastes, and will initially feature these three offerings (information supplied by Chrysalis Mobile):

    Playlist – full physical catalogue of tunes across seven genres. Content can be requested directly by texting to short-codes, accessing via a music2mobileTM-powered WAP portal or over-the-counter instore using pin-code activation.

    Genre Cards – seven individual cards updated monthly, containing ten leading songs within a specific music category; these cards are paid for over-the-counter and the consumer can then select multiple content items from the card list.

    Monthly Theme Cards – individual cards promoting official content (including real tones and wallpapers) from a specific artist and negotiated directly with labels; the consumer purchases the card over-the-counter and selects their favourite content for download.

    Monthly Tone Chart – a Top 20, instore ring tone chart updated fortnightly. Content can be requested directly by texting to short-codes, accessing via a music2mobileTM -powered WAP portal.

    Chrysalis Mobile are not offering full song downloads immediately, preferring instead to wait until network bandwidth and phone technology are capable of delivering the user-experience the company wants.

    But why concentrate on retail? Nick Gregg, Strategy Director of Chrysalis Mobile, said “Retail is a logical extension for Chrysalis Mobile given our focus on leading brands that have significant audience reach. Under the music2mobileTM brand we have coupled the development of high quality content optimised specifically for mobile phones with our experience working directly with record labels to provide a real differentiated service for major retail players.”

    Chrysalis Mobile

  • Schwarzenegger signs P2P Bill for California

    In what some view as payback time to the industry, Gov. Arnold Schwarzenegger signed Californian legislation on Tuesday forewarning those engaged in online piracy. The bill, which is the latest attempt by film and music trade associations to combat the use of elusive file-sharing software, requires anyone disseminating movies or music on the Internet to disclose their e-mail address.

    The opposing camps could not be more different.  The bill’s sponsor – surprise, surprise – the Motion Picture Association of America, applauded the signing, its president Dan Glickman saying that Schwarzenegger had “a unique understanding of the powerful impact of piracy. ” Does this mean he appreciates that if lots of people with very questionable taste in cinema had not pirated copies of Schwarzenegger movies, he would be even richer than he already is? He also remains a member of the (not exactly indigent) Screen Actors Guild, which supported the bill.

    On the opposing side you have the San Francisco based Electronic Frontier Foundation who say that ‘suing fans doesn’t pay artists’, and the American Civil Liberties Union.  Both the EFF and the ACLU say the measure infringes on the privacy rights of computer users and could turn casual file-sharers into criminals.

    This Internet piracy bill will work like a sniffer dog tracking down people who download copyrighted material. Henceforth in California, file sharers who trade songs or films on the Internet without providing a valid e- mail address will be guilty of a misdemeanour.

    Schwarzenegger already signed an executive order last week prohibiting state employees from using software designed for file sharing.  He did not comment on the signing, but if he did it might go something like, Play da movia ya, but give me you’re email address first.

    Legislation

    Electronic Frontier Foundation

  • UK Football League sue legal advisors re ITV Digital

    The UK Football League is preparing to sue the law firm that acted as their legal advisors in the now-collapsed ITV Digital deal.

    Hammonds Solicitors, which at the time of the deal traded as Edge Ellison, have been accused by the Football League of failing to protect their interests, being negligent and being in breach of contract. Hammonds tell us “The proceedings are without merit and will be vigorously contested.”

    The Football League is not disclosing the size of the claim beyond saying it is looking for “substantial damages”. The Guardian Newpaper estimates that they are out of pocket by £119m (~$214m, ~€174m)

    “The league ended up £119m out of pocket after agreeing a £6m settlement with ITV and selling its rights to Sky for a vastly reduced figure of £95m over four years”

    ITV Digital, or OnDigital as it was originally known, was an attempt by Carlton and Granada to take on Sky’s dominance. It failed and ended up cost them £1.1Bn (~$1.98Bn, ~€1.61Bn).

    Back in early 2002 the ITV companies were taken to court by the Football League in an attempt to extract the money they felt had been promised to them. The Judge found in favour of the ITV companies, as the signed contact between them did not have a crucial “parent guarantee” clause.

    Many in the legal profession see the recent action as a last resort action by the Football League. Negligence and breach of duty of care requires a clear basis of proof. It would appear that the quantifiable loss that would also required in such a case, shouldn’t be too hard to prove.

    It will be a bean feast for lawyers as Hammonds insurance company calls in another set of lawyers to act in its defence. Hammonds tell us that London-based Barlow Lyde & Gilbert have been instructed to act on its behalf.

    “There will be a lot of people running around looking back at their notes, advice and busy preparing affidavits” said Paul Hosford, partner New Media Law, “It will definitely be one to watch.”

    The Football League

    Hammonds

    New Media Law

  • Warner Bros license films to Netflix VOD partnership

    Netflix are doing a trial run of their movie-download service, and Warner Bros. have joined in the fun by agreed to license some of its films to Netflix for that very purpose, reports CNet.  This move adds strength to the rumour that Netflix and TiVo are poised to team up for a movie download service. 

    What this means for the ordinary punter is a video-on-demand service (VOD), which would allow consumers to rent and download films from Netflix. This is where TiVo comes in. The downloaded film would then be accessible on TiVo’s personal video recorders for viewing on a regular television set.

    While this may be a new venture for Netflix, it is not a new one for Warner Bros, who along with four other studios is currently a partner in Internet movie-download service Movielink.  It has also licensed films to competing Web service CinemaNow.

    Apparently the agreement does not yet constitute a deal between Netflix and Warner Bros. and anyway, the video-on-demand service from Netflix is still only in the rurmour/planning phases.  Furthermore, TiVo has not actually announced a video-on-demand service. 

    For the moment though, everything is unconfirmed, but quite often there is no smoke fire.  Enough clues have been given out to make the average reader pretty confident that something is going to happen soon. 

    Netflix, for example has already said that it plans to launch an Internet download service next year, while TiVo has announced features that would support the download service, although it has not specified a time frame. But then on the other hand, representatives from both Netflix and TiVo have said in the past that they didn’t expect an Internet service to form part of their revenue earning strategies.

    Netflix