Tesco hopes you won’t blink and miss the deals

British retailer Tesco has announced that it is to make its range of online films and TV programmes available to its Tesco Clubcard holders free of charge. Tesco bought 80% of Blinkbox in 2011 and will use the streaming service to reward customer loyalty. By uniting Blinkbox with its estimated 15 million Clubcard holders, Tesco is hoping to expand the current two million users of Blinkbox. Dubbed Clubcard TV, the new offer will provide access to family movies including Care Bears, Batman and Superman.

Tesco will have watched with interest as recent viewing figures revealed that House of Cards, the series streamed exclusively on Netflix, was the most watched content online over the Super Bowl weekend. Netflix is clearly gaining traction by making an entire series available exclusively all at once.

Making the most of exclusive premium content

Already in 2013 we are seeing premium online services providers exploring new ways to differentiate their services. If 2012 was all about VoD providers such as LoveFilm and Netflix striving to get viewers connected across an increasing number of devices, then 2013 is about the battle for exclusive content and how best to exploit it.

Netflix has exclusively made an entire new series available to its subscribers featuring Kevin Spacey whilst LoveFilm has agreed a deal to stream 11 original children's and comedy TV test pilots produced by the studios of its parent company, Amazon.

Netflix has come a long way in its first year in the UK, and by making a new series exclusively available all at once, it is changing the way that consumers consume content. Are the days of waiting a week for the next episode of our favourite drama coming to an end?

Smart TV Growth but North America Still Slow to Adopt

A recent study from NPD DisplaySearch points towards an encouraging increase in sales of connected TVs, with growth of over 15% predicted for Europe and Asia in 2012.   The picture in North America is slightly less rosy, however, with sales remaining flat at around 20% penetration. These forecasts for Europe and Asia seem reasonable, given that most large-screen TVs sold today are connected TVs.  But what’s happening  in North America?  I suspect that there are several different drivers behind the trend we’re seeing.

One opinion is that content remains king: the issue is one of how that content gets delivered to the end user.  The growth of free catch-up services in Europe helps drive the growth in smart TVs, because these services can easily be built into the TV.  Even support for paid content via the TV is growing: in the UK we’ve seen deployments from LoveFilm and Netflix, and Sky’s strategy of moving its content to other devices via Sky Go will undoubtedly pay off in time. Asia is seeing similar trends, but here, free content from the web is the main driver.  In both cases, though it’s access to free content that’s getting people hooked.

It’s a different story in the US, where you have on-demand services provided by cable operators through their set-top-boxes or through a separate device such as an Apple TV.  This means that these services are less of a differentiator for TV manufacturers, and so people are less likely to upgrade their TVs specifically for the connected TV experience.

Ease of use also plays a part, in a way that’s often overlooked: the need to switch devices.  If I have some services built in to my TV and others in a set-top-box, switching between them is more effort and inserts a mental barrier (albeit a small one) into the process of finding something to watch.  In my case, this reduces my use of iPlayer on a games console – I’m more likely to turn off my Sky box and pick up a book or use iPlayer on an iPad instead. If these services are built in to the set-top-box in American households, why will people spend the mental effort required to use them on the TV instead?

One other factor that may or may not be important is the adoption of HD TV.  Historically, North America has been at the forefront of HD adoption, with sales in Europe lagging behind.  This could mean that more European consumers are in the process of replacing their TV sets as analogue switch-off approaches, while the reasonably long replacement cycles for televisions (and the current economic climate) mean that many US consumers aren’t replacing their existing HD TV yet.  If this is correct, we may see an increase in the sales of connected TVs in North America over the next couple of years.

What impact will Amazon’s monthly option on Prime have on the movie rental market?

Amazon is testing a new monthly option for its video-streaming service, Prime.  Prime already offers free two-day shipping, free video streaming and access to Amazon's Kindle e-book lending library. The company is now offering a monthly option for the service on its website, which is more comparable to Netflix's streaming video subscription.

Whilst the move signals Amazon is stepping up the competition against main rival Netflix, it’s also a sure sign that much like the music market, streaming and digital downloads are coming to dominate the movie market. Given Amazon’s strong position in the online media market, it’s not surprising it’s added another string to its bow with its monthly Prime service. It’s thrown down the gauntlet to the likes of Netflix and Hulu and we’re likely to see an influx of similar services as the acceptability of digital rights management to both content owners and consumers grows.

But it’s not just about quantity. Broadcasters looking to capitalise on this digital trend would be wise to take a leaf out of Sky’s book. Content has always been king with Sky, and broadcasters need to do in the movie space what Sky’s done with sports. High quality content that consumers actually want to watch will persuade more viewers to subscribe to these online services. Not only this but it’s important to make them device independent so viewers can enjoy the movie experience on the go, wherever they might be.

The Sky’s the limit for brand new Now TV service

This week we have seen another contender enter the arena to battle it out for our on-demand attention. BskyB launched its own streaming service – Now TV – challenging the dominant players in the market, Netflix and LoveFilm. Now TV will be made available on PCs, Macs, smartphones, iPads and YouView. Consumers will be given the option to either watch unlimited films for £15 a month or pay up to £3.49 for individual films, with the "pay and play" option. With the launch of the new internet service, Sky is going beyond its pay-TV subscription roots. It’s a smart way of maximising its premium catalogue.

Having seen LoveFilm and Netflix make a huge splash this year, the launch of Now TV is a bold step for Sky to take. The move is a sign that Sky’s looking to get more from what it already has. More bang for essentially the same buck.

Whilst the launch is exciting news for consumers who don’t want to subscribe to Sky’s packages but do want access to Sky’s content, it’s also an interesting development for the digital TV industry overall. The launch is another sign that the market for on-demand services is rapidly growing.

New services needed to capitalise on connected TV sales boom

More than every third flat-screen TV set sold this year in Europe (37%) will be Internet-compatible, according to recent figures compiled by the European Information Technology Observatory. But with connected TVs now set to boom across Europe, manufacturers and retailers are constantly having to up their game. One way to do this is to offer the consumer market more innovative features so that they remain ahead of their competition.

These latest figures show that connected TVs are becoming increasingly popular, and as a result, everyone wants a piece of the pie. This year, we’ve already seen the entry of Netflix into the UK market, the launch of Google TV 2.0, and an Apple TV is rumoured to be hot on its heels. So in an increasingly crowded marketplace, manufacturers are having to become more savvy by harnessing developments in new technologies and offering consumers a greater range of digital TV services. For a glimpse of future connected TV services it’s worth tracking the connected set-top box market: with a shorter development cycle it’s often where TV innovation can be seen first.

Multiscreen TV is set to shape the viewing experience of the future, with connected devices talking to each other to deliver truly personalised TV. By embracing new services such as tablet and smartphone viewing, connected TV sales will continue to thrive.

By Simon Woodward, CEO of digital TV specialist ANT Software

Streaming kills the video star

It looks as though the tide is turning for connected TV services. This month for the first time ever, LOVEFiLM announced its members streamed more films and TV series over the internet than it rented DVDs. The number of films and TV episodes streamed online increased by 20 per cent over the previous month and increased by 400 per cent compared with the same month last year.

These services are currently offered over internet-connected devices such as games console, laptops and connected TVs. But we should start to see connected TVs and STB’s take the lion’s share as consumers become more aware of the benefits of plugging an Ethernet cable into the back of their TV’s and set-top boxes.

Amazon’s LOVEFiLM was the pioneer in online film delivery services in the UK and with over two million members it’s still the largest in Europe. But the marketplace is hotting up with competing offerings from the likes of Netflix, Dixon’s KnowHow service and Sky’s NowTV to be launched in the summer.

We hope to see these companies take movie streaming services to the next level, by not only offering great content but interactive features as well. Service providers need to consider what value added content they can deliver on top of programmes, such as social media interaction and recommendations.

The net neutrality debate, with a difference

In a twist on traditional discussions about bandwidth use, Korea Telecom recently restricted internet access for Samsung connected TVs. This isn’t a new discussion: the net neutrality debates in the US over the last couple of years are covering many of the same issues. However, what’s different this time is that it’s about devices rather than applications.

In the US, the discussion was largely about how VOD services such as Netflix were saturating the networks of many large ISPs – Netflix and YouTube between them account for over 40% of peak bandwidth use in the US according to a report last year form Sandvine. In Korea, it’s the devices running those services that are drawing the ire of the telcos. It may not seem like much of a difference, but this is a core shift in the discussion.

Traditionally, PCs have been the main platform for these services, but the action by Korea Telecom has shown that consumer devices are gaining enough market share for telcos to be worried. And it’s the type of IP traffic generated by these devices that’s causing this worry.

Unlike a PC, TVs and consumer devices are almost exclusively used for streaming video and audio. Use of VOD services is growing at a phenomenal rate, and so as consumer devices gain market share they will probably be one of the fastest-growing sources of IP traffic worldwide. The Sandvine report showed that PCs were only accounting for 45% of video traffic by volume in the US, and this is why the focus of the net neutrality debate has started to shift from services to devices.

It’s still not clear how this will play out – bringing the device manufacturers into the net neutrality debate can only complicate it, especially when (like Korea Telecom) a telco has their own IPTV service that could be seen to compete with the OTT services offered by smart TVs. One thing is sure – the issue needs resolving. ISPs and telcos need to find a business model that can cope with the changing way the Internet is being used.

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Update - 3 March 2012

Following up on this post, we see that it’s not just Korean ISPs that are suffering from traffic problems caused by streaming video. Be Broadband, a UK ISP owned by O2, admitted yesterday that demand for iPlayer saturated its available bandwidth and left many users struggling to access web sites and iPlayer content.

What’s different about this case is that the problem wasn’t caused by issues in Be’s network itself: in this case, the culprit was Be’s link to the Akamai content distribution network. The Akamai CDN is intended to accelerate delivery of web content belonging to its partners by transparently mirroring web sites on its own worldwide network of servers and intelligently routing requests for that content. So that end-users access content from servers that are closest to them, rather than always having to access the original version of the content.

The BBC uses Akamai to deliver iPlayer content in an attempt to avoid bandwidth bottlenecks – in this case, the bottleneck was Be’s connection to Akamai, which became saturated when there was heavy demand for iPlayer.

Be have partially resolved the issue by working with other network providers to act as peers for connecting to Akamai, but this is not a permanent solution. With a full fix not due until the end of April, Be customers may be looking at slow access to iPlayer for several weeks.

UK launch of Netflix likely to ruffle loveFilm's feathers

Netflix’s online film and TV subscription service was launched in the UK yesterday. While this will certainly ruffle LoveFilm’s feathers this month, it is what falls out of it, that will be interesting. I expect the entire connected TV market to be shaken up this year as viewers get a plethora of next generation TV services offered to them. TV technology is becoming increasingly sophisticated in response to consumer demand for a more interactive, on demand viewing experience and we expect to see a wealth of innovative TV services follow in the footsteps of Netflix.

The connected TV has been critically overlooked in the past; as viewers were buying these devices but not being educated on how to connect them and enjoy the connected experience. 2012 will no doubt be the tipping point for the connected TV - as viewers realise the opportunity to explore and discover exciting new applications and services through their TV set, whilst still being able to sit back and relax.

Is this the tipping point for connected TVs?

Netflix announced plans on Monday to launch its online movie streaming service in the UK and Ireland, in early 2012. The new service will put it in line with Amazon’s LoveFilm and the recently launched YouTube Movie channel. Netflix shelved the plans for a UK launch several years ago after an initial failed attempt. But, as we see a ramp up in activity surrounding connected TVs and STBs for 2012, a re-launch isn’t much of a surprise.

2012 signifies a tipping point for the connected TV market. Manufacturers and retailers have been talking about the connected TV experience for some time, but in reality, the benefits are yet to be realised by the majority of consumers. 2012 is the year where this is set to change – and we’re expecting a host of services like this one to be launched in the coming twelve months as the market responds to growing consumer demand.

As TV technology becomes more intelligent and more interactive, consumers are looking for services and applications that deliver opportunities to explore and discover richer content, while staying true to the traditional TV viewing experience. As consumers become more au fait with the potential of connected TVs to enhance their experience, services like this are set to revolutionise the way we consume TV – an exciting time for both the industry and viewers alike.

Video streaming drives data growth – but who pays for it?

Once again, we’re hearing reports that multimedia traffic and video in particular, will drive a massive growth in Internet traffic. ABI Research has calculated that Video and TV streaming could surpass web and internet traffic by 2015, driven by the increasing use of laptops, tablets and other connected devices.

While this isn’t anything new, the increase in the amount of services delivering over-the-top media (and more importantly, the upsurge in the number of devices that give consumers access to those services) indicates that this growth can’t be ignored.

Rising internet traffic will require increased investment from both data carriers and service providers. While the net neutrality debate isn’t yet over, it’s clear that consumers will end up paying for this investment in one way or another. However, who they pay will be an important factor and if service providers can’t monetise their content they will face an uphill struggle in the face of increasing costs for content delivery. We’re already seeing YouTube moving to provide pay content, and other service providers are likely to soon follow, but it’s unclear what will distinguish their services from the likes of Netflix and LoveFilm.

Services operated by broadcasters, such as Sky Player, often have an edge in the quality of content they can offer - not to mention revenue from broadcast programming that can help offset the cost of an online service. For this reason, pure online services will have to do more than simply provide video in order to convince end users to pay. Without offering something unique, these services will face stiff competition from traditional broadcasters and TV service providers offering online content.

TV gets connected

As I mentioned at the beginning of the week, connected TV and 3D TV have been heavily featured at CES this year. Today I spent some time looking into the various connected TV’s on show. What’s immediately apparent is that there is a great deal of similarity between many of the devices. This raises an obvious question which relates back to one of the main reasons that TV manufactures added connectivity in the first place – differentiation. If they all feature the same content they’re back to square one.

There are some good examples of VoD services such as Netflix and LOVEFiLM, where the revenue stream is clear. However, it’s harder to see how Sudoku style games will excite the consumer and generate revenue for an app developer or device manufacturer. Yahoo was demonstrating perhaps the most complete solution, confirming that its business model will rely on ad funding, although this was the one area that was not demonstrated.

There is certainly widespread acceptance of connected TV from device manufacturers, which is good news for the consumer. It will be interesting to see which of the device manufacturers will publically disclose its sustainable business model first.

Netflix build on VoD Strategy

Netflix and Sony’s announcement that US owners of PS3’s will soon be able to access the Netflix “Watch Instantly” service via their games consoles, builds on an existing strategy by games console providers to move TV content onto the console.

While the initial implementation isn’t necessarily the smoothest - the consumer must put a special disk into the console whenever they wish to access the service. It is another example of a Video on Demand service targeted at the TV.

Netflix already run the “Watch Instantly” service through Blue-ray players, TiVo and the Roku box.

The question is, how much of the VoD market can the game console providers grab?