Satellite, cable and connected TV in Europe and USA

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What are the major trends in television distribution? How could they influence and somehow predict the development of connected TV?

• Terrestrial reception which brings free TV to homes (i.e. paid by taxes and or advertising) is declining. Its level in the USA is now at an all time low: less than 10% of US TVHH (TV households) among which there are probably also many Netflix, iTunes or Hulu customers.

• Satellite and cable
• In Europe, television comes to homes mainly through direct satellite (DTH: 33,7%). (Source: SES, Satellite Monitor, 2012).
• In the USA, satellite increases its market share. Alternative Delivery Systems (ADS, i.e. telco + direct satellite) reaches 31.1 % of American TVHH). According to TVB, paid TV is already delivered mostly by ADS in 34 DMA.
• Cable is king in the USA, despite all talk about cord-cutting (60.4 % in 2011, 10% less than ten years ago).

Marketshares in %, 2011, TVHH.
ADS = telcos + satellite

• Digitalization takes over, in both Europe and the USA, making room for broadband, HD, DVR and some interactivity.
• Already 75% of European HH are digital. More than 90% of TVHH in Spain, UK, France and Italy, but only 76% in the Netherlands, 71% in Germany, 58% in Switzerland, 54% in Portugal. (Source: SES, Satellite Monitor, 2012).
• In the USA, digital TV is almost everywhere. Digital penetration in basic cable reaches 79.4%. (Source : NCTA, 2011).

Gatekeepers ?

On the one hand, digitalization makes connected TV possible. On the other hand, cable and satellite operators and now phone operators (Orange, Verizon, AT&T, etc.) may want to keep companies like Yahoo, Google or Apple from accessing the television set and its set-top box. Interactivity is becoming the USP of cable/telco/satellite multi-system operators (cf. tablets, multiscreentasking, social TV,VOD, TV EveryWhere, XFINITY, UltraViolet, etc.). Smart TV is their business. And, of course, smart advertising.

• N.B. This opposition concerning connected TV is exactly in line with what we have seen when the SOPA was debated in January 2012.

Major operators are powerful in the USA where they can act as gatekeepers: Comcast, Time Warner Cable, DirecTV, Dish Network hold more than half of the paid TV market; some of them are closely related to studios and national networks (Comcast / Universal), Time Warner Cable). They work with DVR (TiVo, etc.). These operators not only bring TV but also broadband to households.
Connected TV will not happen without them.

Europe, where terrestrial TV is digital and still strong (32%), is the market most vulnerable to newcomers like Google, Apple or Yahoo! That's where HbbTV (industry standard for Hybrid Broadcact Broadband TV) will be so decisive. The list of its members is impressive and counts, among others:

• satellite companies : Eutelsat, SES ASTRA
• major TV companies : Canal+, TF1, RTL, BBC, france televisions, SRG SSR, EBU, Mediaset, etc.)
• software companies or STB manufacturers like Opera, Cisco / NDS, Ocean Blue, etc.

Will HbbTV consortium be strong and determined enough to resist Web companies such as Apple, Google, etc.?
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The End of Disconnected TV

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Updated June 26, 2011
TV is still disconnected from the Web. Not for very long. This is probably the end of its insularity. 16 years after the beginning of the Web, TV joins the new digital world. The idea is not new: Thomson Multimedia tested it in 1999 (Tak), but it was too early, too complicated and it failed. Today, Google TV is only one year old and has still a long way to go to become the OS of TV devices (following the android model). In Europe a consortium is developing a standard (Hybrid Broadcast Broadband TV).
The following post only describes what connected TV brings. What reamains to be seen is how and wether people will use it: once TV sets are connected, will TV viewers use the connection capacities? We do not know, we cannot know, until households are equipped with new TV sets. Research done at the time of Tak (cf. Sandrine Medioni) showed that people were reluctant to interact, that they were happy to remain inactive viewers. Content to be disconnected and lazy! So, let's be prudent.

What is at stake with this convergence?

• There is a battle to control the living room: the only place where all the family meets in front of a screen ("audience conjointe", as TF1 says). To win this battle, the product has to be cheap and simple. TV viewers are not going to fiddle with software before watching a movie. Apple TV does not require an external  keyboard. For iTunes users, it is now a nobrainer (how about an Apple-branded TV?). See another example: GlideTV.
• It is time to rejuvenate the TV experience. Networks wonder if teenagers and young adults still like TV since they declare they would not miss it if TV were taken away from them. But do we know anything about their intimate experience when watching TV? We only know, vaguely, how much time is spent watching.
• When it comes to advertising, TV is by far the biggest and priciest media: what effect will the Web have (price, marketshare)?
• TV manufacturers (Sony, Samsung, Panasonic, etc.) need connected TV in order to renew the demand for TV sets. 5 million connected TV sets sold in 2011, according to Consumer Electronic Association. Connected TV will become cheaper, but there will always be a gap between equipment and uses. 
• Tablets are already connecting TV and the Web (cf. L'iPad dérange la TV américaine), threatening TV sets.

What does "connected TV", or "hybrid TV" mean for TV viewers and for advertisers? What can they expect?

TV viewing has always been connected to other media, especially the press (TV guide) and the phone. According to Nielsen, in 2011, more than two-thirds of tablet or smartphone owners use their mobile device while watching TV. TV represents 20 to 30% of the time spent with these devices. Facebook and Twitter are used to sharing TV ideas.
But these connections are all but seamless. TV viewers have to juggle with remotes, screens, a keyboard...  Magazines are not convenient anymore for a TV market where there are many hundreds of channels and so many time shifting possibilities (VOD, catch-up TV). 

What's new with connected TV?

• For TV viewers: TV was dumb, it now becomes smart
• Seamless connection with the web; TV becomes part of the Web. Everything which works with the Web will work with TV. You want to know what's on (content discovery)? Type a word or two in your search engine and find out. And of course, there are many apps for that. 
• An app in your smartphone works as a personal remote control.
• Search works with video (speech-to-text): Google, blinkx, Soku, Baidu, etc.
• Multitasking is so simple, so seamless you do not even know you are multitasking
• Old-fashioned linear TV networks are just one click away from YouTube, Youku, Facebook, on-line press, etc. And vice versa. Cf. YouTube Leanback
• Browse, click, search, fling, subscribe, share... Same gestures (habitus) :for all digital screens. 
• One single User Interface (UI), one single homepage personalized with apps, synchronization across all screens (homogeneity of contents). Satellite and cable operators will not control the UI anymore (they will try, however: cf. Rovi Corporation and TotalGuide xD.
• Web sites will be optimized for TV (Google has already started)
• No need for a set-top box anymore
• Connected home: more and more devices in the house will be IP based and inter-connected
• For advertisers
• Google TV, blinkx help users to find what they want: there will be search engine TV marketing 
• Cookies for TV programs and uses
• New measurement: site-centric and people-centric? GRP's for all?
• All the advertising and targeting tools will adapt to TV: marketplaces, adnetworks, adexchanges, Real Time Bidding, creative optimization, capping, behavioral marketing, self-serve, yield optimization, you name it... and finally data marketing
• Cross channel optimization (mobile, video, TV, etc.)
• One single media world: one single transaction to buy both media. More inventory for sale
• Localization of the viewers /shoppers: retail advertising, local advertising all the time
• How to synchronize commercials on two screens, online ads and TV spots (TV, tablet smartphone or PC), in order to monetize socialized TV? Cf. Second Screen Networks.
• Usual risks: clutter, privacy, brand safety?
• For content providers
• All contents created equal: long-tail and mid-tail TV contents (ad networks)
• Indexation, propensity to be found: Google encourages TV show owners to tag their online video
• More interactivity

Questions

• Which regulation applies to what?
• Connected TV requires a very high speed connection.
• Will people pay for new TV set, and if, when? How many years before a kind of connected TV succeeds?
• Will TV become even more social? Examples:
• shelby.tv: recommendations based on user's social graph using Facebook and Twitter
• IntoNow bought by Yahoo! (April 2011) for sharing on Twitter and Facebook
• Twelevision in Australia (TV + Twitter) for sharing and chating (auto-hashtags)
• Redux: for sharing personalized and "friendsourced entertainment"
• Comcast, the major American cable-operator, tests social TV with apps, Facebook (Friends Trends), etc.
• Alertes via Faebook, Twitter, courrier : Yidio est une guide de programmes socialisé, socialisant

Canal 20, un média à inventer

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Canal+ lancera en fin d'année une chaîne nationale grand public. Si l'on n'en sait pas beaucoup plus, au moins peut-on que se réjouir d'un surcroît de diversité médiatique. Si Canal+ crée une chaîne originale, de qualité, les annonceurs seront présents : ils n'attendent que cela. Pour peu que l'on porte le regard au-delà des bizarreries du petit microcosme télévisuel français ("canal bonus", etc.), on peut escompter des effets positifs de ce lancement. Canal Plus a déjà prouvé qu'il savait réveiller un marché.

Tout le secteur télévisuel pourra bénéficier d'une véritable innovation. L'image de la télévision en a besoin car elle pâtit de la concurrence du Web. A quelques exceptions près, les entreprises de média, et notamment de télévision, n'ont pas encore pu tirer profit du Web, traité simultanément en média "de complément" et en gadget technologique. Or Canal 20 sera lancée à un moment favorable : la couverture numérique du territoire s'achève tandis que la télévision connectée à Internet voit le jour, menée par des acteurs entreprenants et puissants : Google TV, Apple TV, HbbTV (dont Canal+ Group est partenaire), Amazon VOD. Canal 20 ou pas, le marché télévisuel n'échappera pas au défi de ces forces de conquête, porteuses d'innovations dans les programmes mais aussi dans la publicité. Une partie de la population s'éloigne de la télévision, les plus diplômés, les plus jeunes des plus actifs : Canal 20 peut les y ramener.

Canal+ a maintenu, depuis plus de 20 ans, contre vents et marées, une fenêtre en clair avec publicité. Cette fenêtre promotionnelle a constitué un laboratoire publicitaire, parfois anticonformiste, souvent brillant. Canal 20 pourra profiter de cette expérience pour dynamiser le marché publicitaire, en secouer les pratiques un peu désuètes et stimuler les agences média. Touchant deux moments de la chronologie des médias, au début et à la fin, Canal+ pourra exploiter la synergie entre télévision payante et télévision gratuite, atout exclusif. Mais, surtout, Canal 20 pourrait inventer le nouveau média, né de la convergence sur un même écran, du Web et de la télé, et qui ne sera ni l'un ni l'autre. Un potentiel d'audience existe pour ce média différent, qu'il faut imaginer social comme Facebook, pratique comme Google et passionnant comme toute bonne télévision avec, toujours, en prime, la douce passivité, qu'un peu de culpabilité pimente.
Cette fois, il ne s'agit plus pour Canal+ d'imiter HBO, dette des origines, revendiquée. C'est à Canal+ d'inventer car HBO, qui perd des abonnés, n'a pas encore imaginé la télévision de l'époque numérique.
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Remote controls

Screenshot of  Google TV remote

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In a TV household, the power is at the end of the remote control. The closest person to the remote is the TV boss. Google TV has published an app which transforms your smartphone into a remote control. It is available for your android phone as well as for your iPhone. Nice app. Backlight, voice command, etc. And everyone in the family can have his or her own. Another family war can start, the one who shoots first wins...

Remotes are outdated: too many buttons. Confusing. Level zero when it comes to ergonomy. And there are also too many remotes for the same screen: for the TV set, the VCR, the DVR and the set-top box, (not to mention, for the panelists, a remote controlling the "people meter"). They are not always synced, contradict each other. It is a mess. Today's remote is a lost cause.

To win what is described as the "living room battle", Netflix has managed to have a Netflix button installed on remotes operating Blue-ray disc players , Internet-connected TVs (Sharp, Sony, Toshiba), Boxee or Roku set-top boxes, etc. Netflix claims to have 250 "Netflix ready" devices. Comcast has released an iPad app and one for android devices. Subscribers can customize their TV listing (synchronized with the website).

Demand side TV instead of supply side. In fact, the remote control as we know it cannot handle a TV market with hundreds of channels, VOD, teletext, DVD player, PVR, all kinds of consoles and, now, the Web. The so-called connected TV sets with Google TV, Apple TV or HbbTV interfaces are like a media marketplace; they need a browser, a search engine. Tablets and smartphones are the best solution, providing remotes and TV guides all at once. The viewers are getting used to this new kind of ergonomy. Nowadays, TV viewers are trained by the Web : they want to click, to personalize their homepage with apps, fling a file, save and share their favorites, they want to be localized, recognized (cookies !), they want to subscribe, unsubscribe... In 2008 Apple already published an app called "Remote", working via Wi-Fi, which uses iTunes to control music stored on a computer.
From the Web to TV, we observe the progressive transfer of habits, of know-how, of habitus. In the mechanism of digital media inheritance, the Web seems to become the dominant gene, TV the recessive one (for the purist, think "allele" instead of "gene"). This approximative metaphor suggests that the Web is now the form in which TV appears.
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