Distribution

The new digital ways content was becoming distributed

ITV Buy Friends Reunited: Why?
The Digital-Lifestyles office is in a state of total confusion over major UK broadcaster, ITV, buying the Web Site, Friends Reunited (FR).
Our reaction when we initially heard of the deal was – What? Why? How much!?
It’s been widely reported that ITV is paying £120m + £55m in bonuses for FR. The site that has been running for four years, currently has 12m members and is expected to make revenues of £12.4m this year.
It’s not that we don’t think that businesses should appear to diversify. We’ve been clear that we think eBay’s purchase of Skype was genius. The major difference, beyond the value to the transaction, is that Skype is still growing.
What?
We think that FR has done an amazing sales job on ITV. It’s a site that would appear to be in decline rather than its ascendancy. Their expansion into Genes Reunited, Dating and Jobs Reunited would appear to point to them thinking the same.
If you look at why FR worked, we think it’s because there were generations of school leavers going their separate ways prior to the Internet, leading them a very limited means of contacting their previous peers.
The school leavers departing since the wide use of the Internet, will not have to resort to third-party services – the majority of them will have an online presence, allowing direct contact, if desired.
Why?
ITV are suffering. The business that, when it was launched fifty years ago, was described as a ‘license to print money’ has gradually slipped to a low grade, trashy set of channels. It’s widely thought of as a bit of a joke with appalling programming.
70% of ITV’s revenues come from Ad sales on its flagship channel, ITV1. The word in media circles is that ITV1 is now struggling to sell ads, as the audience generally drops off (the exception to this being their recent reality show, ‘I’m a celebrity, get me out of here’), and goes down market.
ITV do have a huge advertising sales department that has been merged across all of its regions. Bringing FR into this sales force will give better economies for ITV, letting them squeeze additional profits from FR. It will also give ITV the chance of selling adverts across TV and the Web – extracting additional cash from the advertiser.
Another benefit will be letting ITV have access to the 12m members of FR, allowing them to expose the online FR audience to promotion of ITV’s programming, if they’re UK based. Later this can be expanded to on-demand sales.
When we sat around at Digital-Lifestyles to come up with other reasons, one that came up was the possible creation of a programming strand or, heaven forbid, whole channel covering the now-various services of FR. eg reality programming following a group of FR subscribers going through the steps to ‘reunited’, with the trial, tribulations and toe-curingly moments that it would entail.
The question we keep on coming back to is, Is this this really worth £10-£14.50 per FR member?
Even after ITV boss Charles Allen has tried to explain the deals advantages, we’re still not convinced.
This deal brings to mind ITV’s disastrous, misguided huge, £788m investment into ITV Digital – their attempt to take on BSkyB in the UK. The service collapsed in 2002, later to reborn as Freeview.
7 December, 2005
Vodafone Launches Global Mobile TV
Vodafone has started to roll out its global Mobile TV channels, serving up a feast of “world-class TV brands, pan-European sports coverage and leading entertainment and documentary programmes”.
The global Mobile TV channels will be widely available across Vodafone markets from this month and will include big hitting series like HBO’s “Sex and the City”, “Six Feet Under” and special mobile editions of the old favourite, ’24’ from Fox.
Sports fans will be kept amused on the move with Eurosport, UEFA Champions League and, err, Chilli TV (who?) channels, with the Vodafone service also carrying popular channels like MTV and Discovery.
“With a wide range of ‘good for TV’ handsets, an intuitive, easy to use service and a portfolio of instantly recognisable television brands and programming, the launch of global Mobile TV is a compelling proposition for our customers”, purred Peter Bamford, Chief Marketing Officer at Vodafone.
“Attracting world class content providers, such as Twentieth Century Fox Television and HBO, ensures the premium quality of this product and underpins our confidence in its widespread adoption,” he continued.
Vodafone say that their research into the market revealed that Mobile TV complemented television viewing habits at home and thus demonstrated a hearty appetite for the product amongst consumers.
Their study found that consumers want well-known TV brands and channels and like to “dip” in and out of television as a way of filling up free time (or skiving from work).
Sourced globally, the TV content will work with any 3G enabled handset and will complement existing domestic Mobile TV offerings in eight of Vodafone’s operating countries (namely, Germany, Greece, Italy, Netherlands, New Zealand, Portugal, Spain and the UK) as well as associate and partner networks in Belgium, France, Switzerland and Austria.
Vodafone
6 December, 2005
NTL Bids For Virgin Mobile: 1st Mobile Quad Play?
NTL is currently in talks to merge with Virgin Mobile in a deal that would create a potential rival to the now broadband-enabled BSkyB.
Virgin Mobile’s official word?
The Board of Virgin Mobile Holdings plc confirms that it has received an approach from NTL Incorporated that may or may not lead to a formal offer being made for the Company.
Shares of Virgin Mobile immediately climbed to a record high after NTL/Telewest announced its £835m ($1.44 billion) takeover bid.
If the bid is successful, it will create the first media group to serve up mobile and fixed-line telephony, broadband Internet access and pay-TV.
(Ed: It has a similar resonance as the deal between 3 Italia and Canale 7)
We’ve found that getting straight numbers of subscribers for each separate business is difficult. The figures that the Guardian are quoting for the merged Virgin/NTL/Telewest uber-company are impressive too, accounting for 10m customers, 3.3m television customers, over 5m mobile phone users, 2.5m broadband Internet customers and 4.4m fixed-line telephone accounts.
NTL/Telewest do have to do something pretty radical as they feel the pressure from other previously unrelated business getting in on their main business areas.
The new company will go under the Virgin brand, and would become the biggest Virgin-branded business in the world, outstripping the music retail business which launched Branson’s career and the Virgin Atlantic airline business.
In a fiercely competitive market, cable companies on both sides of the Atlantic are looking to outflank their satellite and phone company rivals by adding mobile phone services to their portfolio of voice, Internet and TV services.
NTL is the UK’s number two pay-TV operator after BSkyB’s Sky and is also the second-largest residential telephony provider after BT Group.
Long seen as a juicy takeover candidate, Virgin Mobile is the fifth-largest UK mobile phone carrier. The company operates on rented capacity on T-Mobile’s UK network.
Virgin Mobile current 4 million users (source Virgin Mobile) in the UK, puts them at less than a third of the UK market leader, o2’s, who have 15 million users.
NTL and Telewest have notched up around 5 million subscribers combined, next to BSkyB’s 7.8 million digital television viewers.
If the deal goes through, it won’t be the first time the two companies have worked together – in 1996 they launched the Internet service provider Virgin Net, which had an original owner ship of NTL with 49% and Virgin, 51%. The enterprise was fully taken over by NTL in 2000 but still trades under the powerful Virgin brand name.
Virgin Mobile
NTL
5 December, 2005
Digital TV: Confusion Over European Support For Move
The words European and Commission, when used together rarely equate to clarity. This is holding true with the mixed signals on the financial support that will be permitted in the transition to Digital TV across Europe.
Last week the EU ministers of Transport, Energy and Telecommunications met. They agreed on the need to accelerate the switchover, and a 2012 deadline for the move from analogue to Digital TV. Currently ten member states are expected to complete the switchover by 2010.
But this push to digital comes somewhat bizarrely against the background of a recent European Commission ruling. It subsidies the commercial broadcasters in Germany use of the digital terrestrial television (DVB-T) network, violating EC Treaty state aid rules. Subsidies valued at close to €4 million were granted to the German Land of Berlin-Brandenburg, with beneficiaries that included German broadcasters RTL and ProSiebenSat.1. The commission says they are illegal and the sums already paid (around €2 million) should be returned.
The Commission made clear that it supports the transition to digital broadcasting, and that Member States have a variety of methods to assist the digital switchover, that fits in with EC Treaty state aid rules.
Neelie Kroes the Competition Commissioner said, “The Commission is firmly committed to encouraging the transition to digital TV, which has many advantages for consumers and innovation. However, state support must be based on objective criteria, address specific issues where the market does not provide solutions and avoid distortions of competition, particularly between terrestrial, cable and satellite platforms.”
The single market in Digital TV would facilitate the economies of scale for both ‘head-end equipment’ (the digital gizmos that transmit the TV services) and domestic set top box makers that include European giants, like Pace and Phillips.
Europe could benefit economically and socially, by a concerted approach across Europe to the ‘liberated’ spectrum. The EC wants to see trading in radio wavebands (much championed by the UK regulator OFCOM) and believes that this could assist European firms in launching innovative products and services. A study commissioned by the executive indicated that the move to Digital would have potential benefits of around EUR 9 billion for community members through greater efficiencies.
Let’s hope that European bureaucrats can get their act together on this one.
5 December, 2005
Satellite Business Joins The Niche Club
The Legacy of Arthur C. Clarke, Review: IEE Lecture
Yesterday evening saw a celebration of The Legacy of Arthur C Clarke at the IEE in London.
Rightly so. His fame not only stretched across the globe, it spanned fathering the communication satellite, to great fiction. Who can forget the seminal Sci-Fi classic 2001- A Space Odyssey?
During the addresses given by the assembled industry heavyweights, pontification was rife as they pronounced on the effect of satellite technology advances and where the industry stood in the communication world today.
To boil it down – satellites would be an important part of the communications mix, but it was unlikely to be as dominant as it was once thought.
Getting stuck right in was Olof Lumberg, formerly Chairman of Inmarsat, remarking on how the cabling of the planet was making some uses of Satellite technology passé.
Seeing quite how far Skype is disrupting businesses was interesting as key figures from the satellite industry noted that customer expectations brought about by Skype and similar VoIP technology had meant that the business model that ‘costs in’ the launching of huge satellites was becoming increasingly redundant.
Professor Barry Evans of the University of Surrey considered the 1980’s and 90’s were probably the golden age for communication satellites and predicted their future as an infill technology. Working alongside terrestrial delivery systems, with the possibility of satellite providing TV connectivity to mobile devices outside the fibred home.
Marcus Bicknell, Commercial Director of SES Global the satellite giant spoke about the importance of niche markets and revealed a new low cost satellite mobile phone designed to help parents locate their children.
Some were more optimistic. Sir Martin Sweeting, who heads Surrey Space Technology, a world leader in small satellite development, saw a future with far less expensive launches. This could lead to the creation of ’clouds of small deployable satellites,’ configurable to provide focused communication at times of disasters.
Happily it wasn’t all business predictions. Arthur C Clarke’s brother Frederick spoke charmingly about his brothers’ early enthusiasm in looking at the skies.
The crowning glory of the night was a recorded message from Arthur C Clarke himself, from his home in Sri Lanka. Projected onto a large screen at the grand, historic setting of Savoy Place, home of the IEE, Clarke’s lucid speech belied his eighty-eighth birthday, only a few day away.
Reassuring to hear that his commitment to technology remains.
IEE – Institution of Electrical Engineers
1 December, 2005
3 Italia Buys TV Broadcaster: Now First Euro Hybrid Mobile TV Co
In a sure sign that TV to the mobile is the new European media battleground, 3G mobile operator 3 Italia have announced its plans to purchase the Italian national broadcaster, Canale 7. Reports have put the price of the acquisition at between €30-35m.
The addition of Canale 7, Italy’s fourth largest broadcaster, gives the company access to the country’s existing home TV business. Canale 7 currently broadcasts in analogue to around 40% of Italy, predominantly its north. More interestingly, it also has a terrestrial digital TV nationwide network operator’s license. This should provide coverage for over 70% of the country.
It is expected that 3 Italia will work to develop a Pay-TV and interactive services proposition for handhelds. We also understand their intention would be for Canale 7’s nationwide digital project to be integrated with 3 Italia’s UMTS mobile network to create a DVB-H network.
The company intends to offer a DVB-H mobile TV service from the second half of 2006. Indications are that there will be a minimum of 20 channels, although no line up has yet been decided. 3 Italia already carries Playboy adult entertainment and football via existing technology, and has worked with Mediaset and News Corp’s Sky Italia pay-TV operator.
Italy is already one of Europe’s leaders in mobile consumption and is considered to be a prime market for such services. Reports we’ve seen rather puzzlingly mention a “standard of video quality comparable to DVD” perhaps somewhat unlikely on the small screens that will be deployed for this sector – but we’re sure the picture will be absolutely bella.
3 Italia, which is owned by Hong Kong-based Hutchison Whampoa, has so far invested €9bn in its 3G network since obtaining a license from the Italian government in 2000. It currently has around 4.8 million Italian subscribers. Hutchison Whampoa also own 3G licenses in other countries including the UK.
3 Italia
Canale 7
29 November, 2005
UK Broadband To Peak At 60% Adoption: Datamonitor
Broadband adoption in the UK may soon be reaching its peak, according to a new report from Datamonitor.
The analyst firm says that although consumer adoption of broadband is at its fastest rate yet in Europe, it expects national broadband adoption to peak at around 60 per cent.
Broadband is currently used by at least half of all internet users in the UK, but looks set to follow the US market where broadband take-up has slowed sharply.
By the end of 2005, nearly eight million UK households should be hooked up to a broadband connection with report author Tim Gower predicting “a good eighteen months to two years of strong penetration increases across Western Europe before markets begin to mature.”
Although we’re nearly broadbanded out in Europe, the report sees excellent opportunities for growth in less mature markets.
“The current situation in many markets is best described as one of rapidly increasing penetration, where broadband has effectively entered its growth sweet spot,” observed Gower.
“With some markets potentially experiencing changes in the household penetration of broadband of up to 10 per cent in a calendar year, service providers must be well positioned to take advantage of the forthcoming penetration acceleration, prior to the inevitable slowdown,” he added.
The report found that DSL and ADSL were the most popular broadband technologies, with adoption being driven by cheaper access rates, marketing campaigns and the growing popularity of broadband-reliant applications like iTunes.
Datamonitor
28 November, 2005
MetroNet Bought By PlusNet in £1.7m UK Broadband Deal
MetroNet, UK broadband ISP, has been purchased by PlusNet in an all cash deal for £1.7m.
MetroNet, who came first in the most recent Which? survey of UK ISPs, happens to be the broadband provider to Digital-Lifestyles HQ. We’ve found them very impressive – the speed of the service is good, the customer services is rapid and responsive and their online software is solid.
MetroNet has grown since their start in 2003 to 16,000 subscribers, turning over £2.1m bringing an operating profit of £40,000 in the year ended 31 March 2005. They have net cash of over ~~£200,000~~ (update, final figures) £400,000. Bearing this in mind, we estimate that each subscriber has been valued at ~~£93.75~~ £81.25.
PlusNet have been running for over eight years, and were, out of interest, 7th in the Which? survey that MetroNet topped. They currently have 150k users.
Speaking to PlusNet about the future of MetroNet, we were told that short term nothing will change. But longer term, as the purchase sinks in, MetroNet subscribers will be moved over to PlusNet network and 24-hour support system. They thought that longer term translated to some time next year.
PlusNet offer a number of services that MetroNet currently don’t, including a SIP-based VoIP system called PlusTalk which connects to other open standard systems like SIPGate.
We, and we assume other MetroNet subscribers, hope that the high quality of service that we’ve received from them continues, without interruption, in the transition to PlusNet.
An interesting feature of the broadband market in the UK is that changing to another provider is relatively painless, which makes it all the more important that a consistently good service is delivered to the subscriber.
MetroNet
PlusNet
28 November, 2005
A Wi-Fi’d Welshman In New York
For techie-obsessives like the Digital Lifestyles crew, keeping connected when we’re away from home is right up there with finding a roof over our heads, so when we went off to New York, we made sure we packed our Sony laptop and Wi-Fi enabled smartphone – even on holiday.
We weren’t to be disappointed.
Unlike the UK, where the provision of Wi-Fi is often only seen as a revenue earner for landlords, café owners and telecoms companies, we had no problem hooking up for free all over New York.
Maybe it’s the fact that the apartments are so small in New York – or that the coffee keeps on getting refilled for free – but we were surprised by the popularity of cafes and bars serving up free Wi-Fi to their customers.
Wherever we went, a quick boot up of our laptop (or i-Mate JAMM smartphone/SanDisk wi-fi card) would inevitably produce a mile long list of networks available.
We successfully logged in for free all over New York – in the East Village, Williamsburg, Lower East Side, Central Park, SoHo, you name it! – and were able to fire off emails and download tunes for nowt while enjoying coffee and bagels in several fine hostelries.
One rather unfortunate side-effect of all this free connectivity was that once-bustling cafes turned into conversation-free libraries, with rows of transfixed surfers staring intently into their screens, with the silence only broken by intermittent bursts of keyboard activity.
The only prospect of striking up a conversation seemed to be when you’re ordering your cream cheese on everything bagel or if someone asked for help logging on.
Clearly, Apple’s promotional machine is doing its stuff in NYC – wherever we went we’d see a cluster of glowing Apple logos emanating from every dark corner, with only a few lonely Dells, Sony’s and IBM’s for company.
In the café demographic, there’s no denying that Apple rule!
In our Williamsburg ~~squat~~ apartment, we managed to find several open networks, and usually had no problem getting connected – even if it did mean sometimes holding the laptop at eye level in the far corner of the room.
One thing to remember when logging in to free Wi-Fi networks is to always have a good firewall and up-to-date virus protection installed – and do it discretely because in the US (like the UK), connecting to open networks can can get you into trouble.
On the street, one handset seemed to be stuck in almost every New Yorker’s hand: the Palm Treo 750. They love the phone!
We found ourselves looking enviously at Noo Yoikers barking into the Treo’s speakerphone or knocking out emails on its natty keyboard – if only Palm had delivered on their promise of a Wi-Fi card (or if we enjoyed the same kind of cheapo cellular data rates as the US) we’d have gladly joined the Treo Club.
Still, our i-Mate JAMM worked well enough, although the limitations of its ‘soft’ keyboard soon started to cut short planned long email messages home, although we managed to keep our New York blog updated using the freeware Blogs In Hand software.
We had no problem finding a mobile signal (via T-Mobile) throughout the city, although we’re fearing the arrival of our next bill.
Finally SMS is starting to make an impact in the US, long-standing network interoperability problems has resulted in texting being nowhere near as popular as in the UK – our messages to New York chums were the first texts they’d ever received!
After gorging ourselves on free Wi-Fi for two weeks (and bagels too, come to think about it), it has to be said New York kicks London’s ass when it comes to Wi-Fi connectivity, but it’s not all good news: have you seen the price of the beer out there? And the diddy mini-‘pint’ glasses they serve them in? Outrageous!
24 November, 2005
Analysis: Cisco Looks to Own Consumer IPTV
For a long time, Cisco was only focused on high-end corporate sales. This started to change with its acquisition spree. Back In June 2003 it acquired Linksysin order to attack the home and small business markets.
Under the Cisco banner, Linksys have madefurther acquisitions, including Kiss Technologies whoproduce DVD and media streaming solutions (at the higher end of the consumermarket).
Now Cisco have acquired Scientific Atlanta (SA), a massive company, who make set-top-boxes (STBs)mainly for cable companies, but more recently in the IPTV space (i.e.they have an Ethernet connection and video out/SCART socket or equivalent).
IPTV the future of TV
It’s now widely agreed that the future of broadband is what’s known as triple-play (the combinationof Internet, voice and video). In the past, cable companies have held avirtual monopoly on this market as CATV (cable TV) was the only technology thatcould deliver the bandwidths needed. However with the advent of new DSL (DigitalSubscriber Lines) technologies such as ADSL2+, they too can be usedto deliver triple-plays.
DSL is much cheaper to install as it uses existing phone cabling, ratherthan CATV which requires digging up the road, installing fibre tothe street and co-axial cable to the home (this may not be true forgreenfield sites, but in countries with existing infrastructure likethe UK it is).
In Europe, IPTV is starting to take off in a big way, broadband pricesare plummeting as operators offer the basic services for very low cost,hoping customers will take premium services.
In the UK, Sky acquired Easynet (a local loop unbundler) and they aregoing to launch an IPTV service next year (possibly more).
Cisco has a lot of clever people working there and as has seen the market grow. Now they want theirpiece of the pie. Hence the SA purchase.
Core networks
It’s not like IPTV is new to Cisco. They’ve have had an IPTV solution for several years, but theirs was aimed atthe enterprise customer (i.e. big businesses).
Cisco’s core business is, and will continue to be, selling high-endnetwork equipment to the telecoms and cable companies, ISPs, etc. All of this high-end network equipment can be IPTV-enabled.
Though Cisco have bought Scientific Atlanta, who manufacture the consumerpiece of the puzzle, by expanding the consumer take-up of IPTV they arealso expanding the core network business. Don’t forget, running IPTV servicesrequires a lot of investment in network infrastructure i.e. moreCisco kit.
Cisco are coming close to becoming a fully horizontally integrated company. After the SA purchase, there’s only a few bits missing. The actual content creation, which we think it is highly unlikely to get into – it’s far too messy, involves troublesome humans and is an unknown to them.
The other is the content encoding/delivery part. Who knows, that maybe another acquisition on Cisco’s horizon?
Cisco
22 November, 2005