Dish CEO Defends Auto Hop: Claims Online Video Threatens Pay TV

  • Charlie Ergen, Dish Network CEO, says the new Auto Hop feature that allows viewers to skip past commercials is “competitively necessary” due to the wide availability of cheap and free Internet video.
  • Broadcasters are making their programming available on the Internet through their own websites and other services like Hulu. This wide availability threatens the pay TV ecosystem.
  • Ergen would like to force the networks to develop “more meaningful” ads that people would want to see.
  • With his professional gambler background, Ergen sees his business as a big card game implying that he is well versed in bluffing with the networks to win his hand.
  • “If the ad is skipped, the consumer likes it, but it’s not necessarily good for me and it’s not necessarily good for the broadcaster because I’m in the same ecosystem as him,” Ergen said. “So we have to figure out how the broadcaster benefits, we benefit and the consumer continues to feel like he gets a fair deal. So maybe [the consumer] pays a little bit less for ‘retrans,’ his bill doesn’t go up by double digits every year… That’s an interesting conversation to have.”

Cisco Predicts the Internet will be Four Times as Large by 2016

  • By 2016, Cisco estimates that annual global IP traffic will grow from 369 exabytes in 2011 to 1.3 zettabytes (equal to a trillion gigabytes).
  • Similarly, the number of devices will grow from 10.3 billion in 2011 to 18.9 billion in 2016. This amounts to some 2.5 connections for each person on earth!
  • There will be 3.4 billion Internet users in 2016 amounting to 45 percent of the world’s population. Broadband speeds will increase from 9mbps to 34mbps.
  • Average global IP traffic is estimated to reach 150 petabytes/hour. Cisco says this is equivalent to 278 million people streaming an HD movie.
  • Consumer video is a major growth driver with Internet video users almost doubling to 1.5 billion by 2016. The amount of video will increase to 1.2 million video minutes over the Internet every second.
  • While PCs accounted for 94 percent of consumer Internet traffic in 2011, this will fall to 81 percent with the increased use of tablets, smartphones and TVs.

Android Leads Mobile-Unit Market Share, Apple Dominates Web Traffic

  • While Android has about 50 percent of the global handset market share, compared to less than 30 percent for Apple’s iOS, Web traffic for the two show a much different story.
  • Apple accounts for more than 60 percent of mobile Web traffic. Android has only 20 percent. Similarly, e-commerce sites report that most mobile buying comes from Apple devices.
  • Android users appear to be made up of a largely consumer mass market which is less interested in reading, using apps or buying. If true, the value of Android as a platform is less than its market share numbers suggest.
  • This may have long term consequences regarding which mobile development platform becomes dominant.
  • In a related Business Insider article, senior editor Jay Yarow suggests Android is suddenly in a great deal of trouble. He cites trends such as developers leaning toward iOS, the fact that Android has been an “utter disaster in the tablet space,” Verizon’s plans to back Windows Phones, and lack of interest in Android’s latest operating system Ice Cream Sandwich.

Crowdfunding: Kickstarter Evolving as Important Force for Tech Start-Ups

  • New York City–based Kickstarter was initially developed to support creative projects, but has emerged as a significant force in financing technology start-ups.
  • “Entrepreneurs have used the site to raise hundreds of thousands of dollars at a time to develop and produce products, including a networked home sensing system and a kit that prints three-dimensional objects,” notes MIT’s Technology Review.
  • Kickstarter has become a viable alternative to venture capital funding. Last year, it funded some $99 million, equivalent to 10 percent of all seed investment.
  • In April, ETCentric highlighted a report suggesting that Kickstarter funding was expected to triple this year to around $300 million. At that time, the top projects seeking funding involved film, music, design, art, publishing, games, and technology.
  • Typical requests for funding are modest, but some projects have attracted more than $1 million. Angel stakes are typically less than $600K. And through Kickstarter the founders retain creative control and attract committed followers and customers.
  • “If crowdfunding sites start offering equity shares, it will make a few dozen VC firms disappear,” suggests Paul Kedrosky, senior fellow at the Kauffman Foundation.

Viewership Trends in Digital Era: Is the TV Business Starting to Collapse?

  • Henry Blodget, CEO and editor-in-chief of Business Insider, describes how dramatically television viewing has changed over the past five years.
  • He notes that television shows are commonly recorded and viewed later. Ads are typically not watched except during live sports. With Netflix, iTunes or HBO, ads have become “intrusions.”
  • Other than sports, the only other time many consumers watch live TV is for news events. Additionally, consumers are increasingly watching TV on various devices including laptops, smartphones and iPads.
  • Blodget lists some implications of these trends: 1) TV advertisers are wasting their money since we don’t watch the ads, and 2) Cable subscribers are wasting their money since they are paying for live TV that is rarely watched. Most programs are available on iTunes, Netflix, Hulu, and Amazon.
  • How will this impact the traditional TV business? Blodget suggests that networks will be replaced by libraries of content from Netflix, iTunes, and uber-networks like NBCUniversal and Time Warner. These are also more efficient for content production, acquisition, and distribution.
  • Viewers may figure out other ways to get their sports and stop paying the $100/month for cable TV. They will eventually see no distinction between TV and other forms of video content. And cable providers may stop paying affiliate fees to networks.
  • Like the newspaper business before it, the TV business is destined to become more efficient due to these changes in viewer behavior. The change may already be taking place, as cable TV ratings are dropping.

Nintendo Unveils Wii U Gamepad Controller and More at Pre-E3 Event

  • During a surprising pre-E3 press conference, Nintendo unveiled its new Gamepad controller, which will include a pressure-sensitive touchscreen along with the traditional buttons and directional pad.
  • In addition, the device adds an NFC reader/writer and a gyroscope/accelerometer.
  • “This pre-briefing speaks to the confidence of Nintendo. These sort of details are generally reserved for Nintendo’s big E3 event,” comments TechCrunch. “Now that the Wii U hardware has been unveiled, Nintendo can spend even more time during its Tuesday morning press extravaganza showing off the games. Brilliant.”
  • Nintendo also showed a home theater remote app, which could possibly portend a larger home theater announcement.
  • According to a related article from AllThingsD, Nintendo is also introducing its social network called Miiverse that it claims will draw family and friends together.
  • The TechCrunch post includes a 30-minute video of the press conference.

D10: Mossberg Interviews Spotify CEO Daniel Ek and Investor Sean Parker

  • Walt Mossberg interviewed Spotify CEO Daniel Ek, and investor/adviser/board member, Sean Parker (also a co-founder of Napster and founding president of Facebook).
  • Spotify now has a catalog of 18 million songs, growing at 10-20,000 per day. Parker indicated that when he ran Napster, he had ALL the music including “music people didn’t know even existed.”
  • It required two years of negotiations with the music labels before they could launch in the U.S. The labels were afraid that Spotify would encourage people to stop buying music. But Spotify argued that many had already stopped and were pirating music. Spotify would “convert” the pirate to become a legal consumer.
  • Spotify allows users to discover music and build a playlist for free. But if users choose to get access via mobile or share their playlists, the only way they can do so is to become a paying customer.
  • The value of their service is that they have 700 million playlists.
  • Spotify is now the second largest revenue stream for artists in Europe. Parker says “there was some indication” that Apple wanted to keep Spotify out of the U.S.

D10: FTC Chairman Jon Leibowitz Discusses Privacy, Facebook and Google

  • Walt Mossberg interviewed Jon Leibowitz, Federal Trade Commission chairman, this week at the D10 Conference.
  • Leibowitz explained that there is no U.S. privacy statute, but argues that the FTC’s “broad prohibition against ‘unfair and deceptive acts or practices’ gives it a decent enough paddle with which to smack Google, Facebook and other companies that need to be reminded that our personal information is also our property.”
  • In the last decade, the FTC has brought more than 100 spam and spyware cases and 30 cases on data security. This includes major cases against Google and Facebook.
  • A fundamental tenant suggests that your information is your property, not that of the website or service. A Consumer Privacy Bill of Rights is being developed in Congress.
  • A Do Not Track option for third party apps is a modest provision and company executives have told Leibowitz that this would help address people’s concerns and is good for business. There has been meaningful progress by business.
  • Privacy is one of the few bipartisan areas of agreement in Congress. If business does not address this, there may be more regulations forthcoming.

Will Facebook Collapse and Take the Ad-Supported Web Down with It?

  • MIT’s Technology Review offers a provocative analysis of Facebook’s future and its potential influence on the industry.
  • “For all its valuation, the social network is just another ad-supported site. Without an earth-changing idea, it will collapse and take down the Web,” suggests the article.
  • Online ads are increasingly ineffective. Offline ad rates of $10 have now become $1 online and sites are trying to make up the difference by rapidly acquiring more viewers.
  • Facebook, which gets 82 percent of its revenue from advertising, has convinced everyone that it will be able to use social data and invent a new kind of advertising. Yet its social advertising is something that General Motors, for example, has said is just not effective. And the more users migrate to mobile, the more difficult advertising becomes on such small screens.
  • Google has become a facilitator between users searching for things and companies trying to sell those things. Facebook — which has the scale, platform and brand — also wants to become a facilitator. But it lacks the big idea to do so. It claims to know what people are thinking even before they do, but it does not have a way to take advantage of that fact.
  • “Absent an earth-shaking idea, Facebook will look forward to slowing or declining growth in a tapped-out market, and ever-falling ad rates, both on the Web and (especially) in mobile,” suggests Technology Review. “Facebook isn’t Google; it’s Yahoo or AOL.”
  • Eventually, Facebook will lower its per-user revenues — thus forcing others to do the same, putting all ad-supported sites into a downward spiral.

U.N. Considers Internet Regulation: Threat to Free Flow of Information?

  • Backed by developing countries and “exemplars of democracy” such as China and Russia, the United Nations is looking into proposals to regulate and tax the Internet.
  • The International Telecommunication Union, the U.N. agency that traditionally coordinates radio spectrum and satellite orbits, is considering expanding its scope to include the Internet.
  • “While the ITU may not have the authority to impose controls over the Internet here or inside other resisting nations, those following the process fear the establishment of a separate, regulated Internet regime that would disrupt the global free flow of information and commerce, as well as the development of such cross border technologies as cloud computing,” reports Fortune.
  • In the U.S., the prospect of U.N. control over the Internet has united the political right, left and center in opposition. The White House Office of Science and Technology has argued that the U.N. plan would “put political dealmakers, rather than innovators and experts, in charge of the future of the Internet.”
  • However, the public and business community has not engaged with this threat and may need to do so.

Digital Distribution: Canceled TV Shows are Given a Second Chance

  • A number of canceled television shows are getting a second life on alternative program outlets.
  • For example, Sony Pictures’ “Pan Am,” which aired on ABC last fall, may appear on pay TV and streaming services. Netflix ordered 10 new episodes of “Arrested Development” and is negotiating with CBS for the rights to “Jericho.”
  • “One of the reasons we were so excited about coming to Netflix is that’s where our fans are,” said Mitch Hurwitz, “Arrested Development” creator.
  • DirecTV has ordered 20 new episodes of “Damages.” Plus, it has run “Friday Night Lights” for three seasons.
  • “A potential buyer such as Hulu offers studios another incentive to keep their series alive. While Netflix and DirecTV run programs commercial-free, shows offered by Hulu are ad-supported,” notes Businessweek. “Industrywide, ad revenue for online video is up 22 percent, to $2.3 billion, this year in the U.S., according to a recent report from Pivotal Research Group.”
  • Companies such as Apple, Google and Yahoo may also be looking into “reanimating” TV shows.

MMO Game to Affect Plot and Storylines of TV Show, and Vice Versa

  • MMO developer Trion Worlds is developing a massively multiplayer game called “Defiance” whose plot and storyline will influence a TV show based on the game that will run concurrently on the Syfy network.
  • “We started the project in a more traditional ‘games-and-Hollywood’ way. They’re sending us scripts, asking ‘does this work’ — and it didn’t work,” Nick Beliaeff, head of development at Trion Worlds, told Ars Technica.
  • “They’re about characters and all that stuff, and for us… we care, but that’s not what we start with,” he said. “What’s the art, what’s the technology, what’s the gameplay style? Once we realized that, we took a step back and educated each other — here’s how you make a game, here’s how you make a show, this is what we need to do first, this is what they need to do first.”
  • The game (to be available on PC, PS3 and Xbox 360) will have been in development some five years when the show launches in April 2013.
  • “It remains to be seen whether Trion and Syfy can pull off this ambitious integration in a meaningful way,” notes the article. “Still, it’s nice to see someone trying to thread the cross-media licensing needle with something a little more substantial than characters and setting cribbed from an established film or TV universe.”

Nuance Integrates Rovi Entertainment Database as Part of Dragon TV

  • Nuance Communications announced it has licensed Rovi’s extensive entertainment database with plans to incorporate it into Dragon TV.
  • “Dragon TV is Nuance’s voice and language understanding platform for set-top boxes and connected TV devices,” explains the press release.
  • The collaboration will enable cable TV and connected CE device users to access Rovi-indexed content using voice commands.
  • According to the release: “The result is the ability to simply speak to change the channel, and browse, bookmark and search for content on both live and On Demand TV programming.”
  • Examples include: “Find comedies with Adam Sandler,” “Show me information on ‘The Big Bang Theory,'” and “Who plays Chuck on ‘Gossip Girl?'”
  • “Consumers want easy to use and simple ways for discovering entertainment that doesn’t require a remote control with as many keys as a keyboard. Voice brings this capability,” said Corey Ferengul, EVP of product management and strategy at Rovi.

Is a Generational Shift to Social Video Poised to Take On YouTube?

  • People spent 10 percent less time watching YouTube videos last quarter while spending 52 percent more time watching videos from mobile video apps, according to mobile advertising and analytics platform provider Flurry.
  • These numbers demonstrate people are spending less time watching online video and more time creating and sharing their own content. Social video apps such as Viddy and SocialCam make it easy to capture and upload video to share with friends and the world.
  • This represents a generational shift away from websites and PCs towards mobile devices that may eventually lead to “the downfall of companies as powerful as Google and Facebook,” suggests Eric Jackson, founder and managing member of Ironfire Capital.
  • “While older companies struggle to reinvent their legacies, Viddy, SocialCam and other startups remain focused on the technology people are quickly moving to today — in this case, mobile devices,” reports ReadWriteWeb. “This razor-sharp focus has led to Viddy and SocialCam amassing more than 60 million users. Meanwhile, the previous generation is reaching for the oxygen mask to try to keep up.”

BitTorrent Traffic Surges in Asia and Europe, Sharply Declines in U.S.

  • BitTorrent’s share of U.S. Internet traffic has declined significantly, especially compared to Europe and Asia. A recent report attributes the difference to the availability of legal alternatives.
  • In the U.S. BitTorrent now accounts for only 11.3 percent of peak Internet traffic. Last year, it represented 17.3 percent.
  • By comparison, in Europe BitTorrent and eDonkey make up almost 30 percent of traffic. In Asia, it accounts for 27 percent and other P2P services add 11 percent more.
  • “The MPAA is slowly starting to realize that consumers are not all out to steal content, they simply want to consume,” reports TorrentFreak.
  • “I believe it’s critical to find solutions to the challenges facing both these consumers and the people who create the content. Because at the end of the day, this discussion is about consumers and by consumers who love TV shows and movies. They want to be able to access them quickly and safely online,” wrote Marc Miller on the MPAA blog.
  • “The challenge for the entertainment industry in the years to come is not to invent ways to stop piracy but to make it less attractive, by ensuring that consumers get timely access to the content they want independent of their location, and on demand,” suggests TorrentFreak.