ESPN Takes a New Approach to 3D Production

  • Variety reports that ESPN remains enthusiastic about 3D technology, despite its slow adoption (and AT&T’s recent decision to drop ESPN 3D from its U-Verse TV service).
  • ESPN is pushing its 3D effort by focusing on combining 2D and 3D production (nicknamed “5D”), which the network says brings costs down substantially. 2D/3D production includes slower cutting and more use of robotic cameras. As the production crews gain more experience in shooting sports beyond HD, the equipment, camera placement and general approach continues to improve.
  • “Some innovations created for 3D have even made it over to the 2D side,” reports Variety. “For example, 3D cameras need to be closer to the action than 2D cameras, so the high 50-yard-line shots that are a staple of football coverage are problematic. To get closer, ESPN put a 3D camera on a 22-foot mast on a small vehicle that goes up and down the sideline.”
  • ESPN stands by the technology, explaining that Twitter feedback has been overwhelmingly positive. And some play-by-play announcers have even indicated they don’t want to go back to watching 2D.

Cord-Cutting: Record Numbers in Cancelled Pay TV Subscriptions

  • The six largest cable and satellite TV providers lost 580,000 customers in the second quarter. This marks the largest such decline in U.S. history.
  • The number of pay TV subscribers has declined in three of the past five quarters.
  • “Rising prices for pay TV, coupled with growing availability of lower-cost alternatives, add to a toxic mix at a time when disposable income isn’t growing,” explains Sanford C. Bernstein analyst Craig Moffett. “For younger demographics, where in many cohorts unemployment is north of 30 percent, and especially for those with limited or no interest in sports, the pay TV equation is almost inarguably getting less attractive.”
  • Netflix and Hulu provide lower cost options. Competition from AT&T and Verizon is also having an effect.
  • Providers are struggling to deal with the trend. Dish, for example, is re-positioning itself away from lower income customers. Instead, the company plans to focus on more expensive offerings to increase average revenue per user.

Unlocked iPhone Could Impact the Subsidized Carrier Model

  • While Apple has been working on the design elegance and overall quality of its iPhone, the existing business model with carrier partners has allowed the company to hide the true cost of the device in two-year contracts. Apple’s upcoming iPhone 5 launch may change this model.
  • The company is rumored to be considering a $350 price point for an entry level unlocked iPhone.
  • T-GAAP reports: “The main purpose for such a device is to penetrate China and other regions which are not fond of subsidized programs. If Apple can deliver an unlocked iPhone starting at $350, the impact in China will be stunning, and send U.S. and European carriers scrambling.”
  • If this is the case, consumers would be able to purchase an iPhone from the Apple Store and select any prepaid plan of their choosing (such as an “all-you-can-eat $50 month-to-month T-Mobile or Cricket or Boost plan”).
  • Carriers would most likely push other phones, but it may be too late for that based on consumer demand. Their next move could be lower entry prices for the iPhone.
  • “Plan on AT&T, Verizon and Sprint offering two-year contract plans for the iPhone 5 starting at $149,” suggests T-GAAP. “Carriers wil be scrambling to protect a model that has done them so well for the past 15 years. However, Apple is about to pull it all apart with a single product launch.”

Update: Apple Considering a Bid for Hulu Video Service

  • In the latest installment of the ongoing Hulu saga, Bloomberg reports Apple is “considering making a bid” for the online video service.
  • Apple would join Google, Yahoo, AT&T and others who have expressed interest (Microsoft has reportedly dropped out of the bidding).
  • With $76 billion in cash and securities, an expected $2 billion bid would not be too difficult for Apple. If so, analysts suggest this would give Apple a leading subscription service that would rival, if not surpass, the Netflix service.
  • “Part of the ecosystem of Apple’s future is to include more video,” said Scott Sutherland, Wedbush Securities analyst (who recommends buying the stock). “It’s something they are focused on.”

Update: Microsoft Drops Out of Auction for Hulu Service

  • Microsoft has reportedly dropped out of the bidding for Hulu and would not continue into a second round, according to “a person with knowledge of the matter.” (Although the individual did not rule out the possibility of Microsoft re-entering in a later round.)
  • Google, Yahoo, AT&T and as many as eight other companies remain interested in the online video service.
  • According to Business Insider, Yahoo is willing to spend up to $2 billion if it can get content rights for the next four or five years.
  • It has been reported that Hulu plans to offer five years of access to content from its media company owners (Disney, News Corp. and Comcast’s NBC Universal), including two years of exclusivity.

Sony to Release its First Two Tablet PCs this Fall

  • Sony offered up some additional details about its first two tablets in a New York press event this week. The S1 and S2 were initially introduced in April in Japan.
  • On Wednesday, the company announced that AT&T will serve as the exclusive U.S. cellular-data provider for the S2 model.
  • The foldable S2 features dual 5.5-inch screens and will operate via Wi-Fi as well as AT&T’s 3G and HSPA+ 4G networks. According to TWICE: “When the S2 is held vertically like a book, each screen can display separate pages from a book downloaded from Sony’ e-book store.”
  • The S1 model will be Wi-Fi only and feature a 9.4-inch screen. Both tablets will include preinstalled Adobe Flash. Sony execs explained that additional technical specs are being saved for the fall launch.
  • Both models are based on the Android Honeycomb OS. Prices, however, have yet to be announced.

Verizon Wireless Dumps Unlimited Data Service Plan

  • After weeks of speculation, Verizon Wireless has announced it will no longer offer customers unlimited data service plans, but will instead introduce service tiers at varied price points.
  • Verizon joins AT&T and T-Mobile in offering tiered service models. Sprint Nextel remains as the only major carrier to offer an unlimited data plan.
  • Verizon’s current unlimited data model is $30 on most plans. Moving forward, customers will get a maximum of 2GB/month for that price. Customers who use up to 10GB will pay $80/month.
  • Customers with an existing unlimited plan will be grandfathered in and will not have to change to a tiered plan, but any change in service will terminate the unlimited data plan.
  • ETCentric contributor Phil Lelyveld comments: “It will be interesting to see if this becomes a competitive differentiator among services, and whether consumers hit the limits and start caring about limits on their wireless data plans.”

ISPs Agree to Voluntary Copyright Enforcement Plan

  • Hollywood studios and music recording labels announced an agreement with major ISPs including AT&T, Cablevision, Comcast, Time Warner Cable and Verizon in which the ISPs agree to send “copyright alerts” to consumers who have accessed pirated content.
  • The intention is to educate, not punish.
  • A 2007 study showed that a “large majority” of those who receive alerts will stop the illegal activity.
  • If the alerts have no effect, mitigation measures may be pursued. Consumers will have the option of an independent review for a $35 fee.
  • Mitigation measures begin with the fifth or sixth alert, and may include: “temporary reductions of Internet speeds, redirection to a landing page until the subscriber contacts the ISP to discuss the matter or reviews and responds to some educational information about copyright, or other measures that the ISP may deem necessary to help resolve the matter.”

AT&T Expansion: LTE 4G Network and T-Mobile Acquisition

Last week, reporters toured the AT&T Foundry facility in Plano, Texas and conducted a group interview with Jon Summers, SVP of application and service infrastructure. During the tour, GigaOM was treated to a “real-world situation” demo of AT&T’s Long Term Evolution (LTE) network and was impressed with the results.

According to the GigaOM post: “The speeds provided on the download side were about 28.87 Mbps and were about 10.4 Mbps on the upload side. This compared to speeds of 3.77 on the download side and 1.21 Mbps on the upload for an iPhone that was capable of maxing out on AT&T’s 7.2 Mbps HSPA network. So it’s fast, but sharing those speeds with others on a cell tower will bring them down. For comparison, Verizon has promised customers speeds of 5-12 Mbps on the download side and speeds of up 5 Mbps on the upload side.”

Additionally, AT&T’s spectrum may increase as early as next year. In March, the company announced its plans to acquire T-Mobile for $39 billion ($25 billion in cash and the rest in stock). The deal is presently undergoing a regulatory-approval process. If approved, by next year AT&T could solidify its position as the largest carrier in the U.S. with about 130 million subscribers.

The merger would also help bolster AT&T’s ongoing growth. According to GigaOM, “In the last four quarters, it has reported $125 billion in revenue, and billions of dollars in capital investments in its network.”

Related New York Times article: “AT&T’s LTE 4G Speeds Could Blow Away Verizon” (5/20/11)

Related MobileBeat article: “AT&T to acquire T-Mobile for $39B” (3/20/11)

Related CNET article: “AT&T, T-Mobile customer satisfaction on the decline” (5/17/11)

DirecTV CEO Sees iPad App as Winning Strategy

Michael White took over the reigns of DirecTV the beginning of this year as the new president and CEO. During a recent three-day retreat with senior executives, White outlined the company’s strengths and weaknesses, and shared his vision for future growth, especially in regards to possible expansion in Latin America and reaching out to customers who use mobile devices. Investor’s Business Daily reports that DirecTV “is the world’s largest pay TV services provider with more than 28 million subscribers in the U.S. and Latin America.”

White emphasized that DirecTV is in excellent shape, but that an effective strategic plan would help steer the company into the future. His immediate focus is on recent deals with AT&T and Verizon that allow DirecTV to sell broadband services over fiber networks, the next phase of DirecTV’s recently launched free iPad application, and expanding the number of customers in Latin America (currently at 9 million).

“I was convinced that Latin America was still the best growth opportunity, and we should really expand more aggressively in Latin America,” White said. “In the U.S., we had a terrific core business, but we needed to address the ‘anytime, anywhere’ TV evolution and we needed some other revenue growth opportunities to help drive the top line while we were wrestling with higher programming costs.”

DirecTV’s first iPad app has some interesting features, yet is somewhat limited in its functionality for those truly on-the-go. It can serve as a remote control to change channels, browse channels without interrupting what’s on TV at the time, record to a DVR, and create a home screen with access to favorite channels. Users can use the app outside the home to schedule programs, but cannot currently use it to view programming. This may be the biggest obstacle for mobile device enthusiasts. White explains that phase two will enable users to import DVR content that has already been recorded to the iPad for remote viewing.

White says that DirecTV’s strategy to increase market share in Latin America involves a segmented approach by focusing on the quality of HD and DVR offerings — in addition to offering lower-priced packages, specifically targeting the middle-class who have so far been reluctant to take the plunge with paid services.

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