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USA Today Discovers It’s a Good Time to Buy a TV

USA Today, the US’ national newspaper, has discovered what we’ve been calling the Golden Age for buying a TV set. In an article called “TV bargains abound this holiday shopping season,” reporter Mike Snider says the hunt for a low-priced HDTV should be as easy as shooting fish in a barrelthis shopping season.

He credits several factors for creating a confluence of market pressures that make this a great time to buy a TV set:

- Economic woes made consumers hesitate so far this year about buying big-ticket items.

- Inventories are high.

- The era of TV sets as we’ve known them has ended. The 2012 models that are coming are mostly smart TVs, and consumers will soon no longer want to buy “dumb” sets that don’t connect to the Net for entertainment, information and social networking.

To Martin’s list we add a) TV set makers until recently have not reduced the quantity of sets that they are making to meet the reduced demand, b) 3D sets have not been the boom market — the must-have product that set makers and studios expected, c) store-front retailers have found they have to cut prices sharply and offer free shipping to the home to compete with the online giant Amazon and d) consumers want to upgrade their flat panel set to a larger size. (Ever hear anyone complain that the size of the TV screen was too big?)

We expect the pricing pressures to cause one or more of the well-known TV makers to opt out of making TV sets in the next 12 to 18 months.

Bargains abound, the article points out:
- Best Buy, under intense pressure from Walmart and Amazon, has a 42-inch Sharp 1080p LCD set at $199.99, a Dynex 24-inch LCD TV for $79.99 and a 55-inch LG 1080p LCD display with LED-backlighting for $897.99.
- Target has a 40-inch Emerson LCD HDTV for $265 and a 46-inch Westinghouse LCD TV for $298
- Walmart has 32-inch and 40-inch Emerson LCD HDTVs for $188 and $248, respectively, plus a 43-inch Samsung plasma HDTV for $398.

As to quality, the article quotes Al Griffin, technical editor for Sound & Vision magazine, as saying, “Plasma still retains an edge over LCD” when it comes to brightness of even the darkest images and uniformity of the picture. However, the best LED-backlit LCD displays “can give plasma a run for its money” — usually the expensive ones with a full-array backlight. Plus LED LCD sets use much less power than plasma sets.

The average selling price for a flat panel TV has fallen from $935 in 2007 to $545 now, according to the Consumer Electronics Association.

Now is the time to buy a TV! If it’s not a smart TV, then get a smart TV adapter like Apple TV if you want to play the tunes and playlists that are on your PC, a Logitech Revue to add Google TV technology to the set, an LG Upgrader that offers all the popular apps or any one of several others.

Broadcom Brings DOCSIS-Based EoC to China

- Lands 2 Major Trials
- Partners with Gear Makers ZTE and Sumavision

Surely you didn’t think the DOCSIS crowd, led by DOCSIS chip making king Broadcom, was going to ignore the Ethernet over coax (EoC) market that is about to boom in the BRICs, especially China.
Ernie Bahm, who is in charge of Broadcom’s DOCSIS-based EoC solutions, said the company expects to fare well in markets like China that have a different network-to-the-residence architecture than the States or most of Europe. What makes it different is that:

a) Most people live in buildings that are multiple dwelling units (MDUs) with anywhere from 20 to 200 or more residences. Fiber from the pay TV service runs deeper into the network (hence the term “deep fiber”), all the way to the side of or in the basement of the building. It terminates there in the equivalent of a head end.

b) Residences within the building are connected to the external fiber in several ways: copper wiring, Ethernet, fiber but mostly coax.

c) Traditional DOCSIS is too expensive because it’s designed to support long runs of coax, upwards of miles, to up to 20,000 residences. It’s overkill in China and Asia where a “last 100 meters” solution is needed, not a “last mile” solution.

d) By and large the pay TV services’ networks are in stage one, which is one-way analog and only for video. Prodded by the Chinese government, they want to upgrade their networks to two-way digital, which will bring affordable broadband to millions of consumers.

The DOCSIS-based Ethernet over coax (EoC) technology that Broadcom has developed substantially reduces the cost of the head end gear that’s in the MDU where fiber and coax meet. It’s lowered to the point that DOCSIS-based EoC can compete pricewise with other EoC technologies whose roots are in home networking: HomePNA, HomePlug and MoCA chipmaker Entropic’s MoCA EoC, which is called cLINK.

EoC Technologies
Name Chip Maker
HomePNA EoC Sigma Designs
HomePlug EoC Qualcomm Atheros
MoCA-based cLINK Entropic
DOCSIS-based EoC Broadcom

DOCSIS-based EoC has speeds up to 800 Mbps, which can be divided up among the residences in the MDU.

Bahm says DOCSIS-based EoC is better because it’s using an industry standard that is so popular with cable TV services that it’s deployed worldwide. The cablecos’ non-profit CableLabs oversaw the development of DOCSIS to make sure it had the highest quality of service (QoS). DOCSIS-based EoC is fully compatible with the traditional DOCSIS, making it possible for the pay TV services to offer interoperable services.
CableLabs and CableLabs Europe are the organizations that certify all DOCSIS and EuroDOCSIS gear to ensure 100% interoperability and consequently very high QoS. HomePlug and HomePNA do not have a certification authority with the industry respect that CableLabs has — such as the IEEE might be.

The fiber that runs to the MDU can also be used to connect individual homes that are nearby.

The Chinese Market
The cable TV industry is much more fragmented in China than the US and Canada. There are upwards of 2,000 cable TV companies but what they all have in common is the Chinese government’s involvement — as a means to “enlighten” the population.

The State Council of China wants to accelerate the country into universally available broadband. To that end it has designated 12 cities for the cablecos to deploy trial installations of triple play — voice, pay TV and broadband — in the 2012-2013 time frame. It’s expected that after that, it will push deployment even further, possibly by consolidating cablecos into one for each of the country’s 31 provinces. It may even consolidate them into one cableco for the entire nation, which could ultimately have as many as 300 million subscribers. By comparison, North America and Europe combined have less than 200 million residences with broadband.

The Chinese Next Generation Broadcast (NGB) initiative is prompting the pay TV services to increase significantly their capital expenditures. DigiTimes Research says the expenditures could exceed $100 billion over the next three years.

Jiang Wenbo, president of academy of broadcasting planning at China’s State Administration of Radio, Film, and Television (SARFT), said, “Next-generation broadcasting and TV network is a major technical measure for the radio and TV industry to promote network convergence. First, it will be deployed in cable TV networks in a bid to promote the interconnection of cable TV networks in China, build a nationwide two-way business and technology platform, provide technical support for operators to deliver cross-field businesses, offer users richer radio and TV programs as well as diversified services, and push forward cable network integration in the country. Among them, access technology is key for NGB. Technology based on CableLabs’ DOCSIS specifications and PON+EoC are both technical options for NGB and meet the cable TV network technology system that will achieve wide applications in current two-way cable TV reconstruction.”

The government wants the cablecos to be a competitor to the telcos such as China Telecom and China Unicom that currently dominate the broadband market.

The designation of the 12 cities got Broadcom’s attention. There’s also the fact that in 2008 China had almost 45 million wireline pay TV subscribers, all of whom could within three years become broadband subscribers. That’s a lot of cable modems, which means that’s a lot of DOCSIS-based EoC chips.

The goal with DOCSIS-based EoC is to provide operators with a technology that provides strong QoS with vendor interoperability for providing broadband in each residence. A fiber EPON network to a coax media converter (CMC) in the MDU could support up to 200 broadband subscribers, not only the 40 or so residences that limit other EoC technologies. More CMCs could be added as needed.
DOCSIS-based EoC is a very controlled network in that there is no need for collision detection that other EoC technologies need to keep neighboring apartments from interfering with each other. Because it is DOCSIS, it does not have the speed and throughput restraints that home networking technologies have.

The version of the head end gear for DOCSIS-based EoC that performs CMTS (cable modem termination system) functions, is much less expensive than traditional DOCSIS because it is designed to connect to fewer residences. It is installed in the MDU, not in the cableco’s remote location. Yet, all the DOCSIS back office functions can still be performed. Low cost cable modems for the residences coupled with lower cost CMTS functions make DOCSIS-based EoC price competitive with HPNA and Home Plug — and, according to Broadcom, functionally superior.

Broadcom’s DOCSIS-based EoC for fiber (EPON) has the standards based benefits to the cablecos: multivendor interoperability, standardized and proven QoS for voice, lowest cost and wide availability of cable modem and set-top-boxes. Broadcom provides a development kit that offers schematics, software and hardware components.

Two of the 12 cableco trials, Topway in Shenzhen and Gehua Cable in Beijing, are using DOCSIS-based EoC gear that has Broadcom’s chips. Gehua Cable covers all 16 of Beijing’s districts and transmits more than 100 channels to more than 4 million subscribers.

Broadcom has been working with network gear makers ZTE and Sumavision, which are building the infrastructure that is expected to be completed in about 12 months. Dr Jigang Ru, VP of Sumavision Technologies Group, which got the equipment order at Gehua, said, “We believe that Broadcom’s DOCSIS-based EoC solution will become mainstream for cable operators. This standardized solution will drive the pace of building in China’s NGB and accelerate the process of China’s triple play. Based on Broadcom’s progress, we will accelerate the product commercialization, and make the final product scale deployment in Gehua and the other cable operators in China.”

India has similar needs, Bahm said, but is a much more fragmented market with 20,000 or more pay TV services. Brazil and Russia also look promising, he said, but it’s China where the action is now because of the government’s insistent pushing.

Bahm said Broadcom is confident that DOCSIS-based EoC is the leading EoC technology because of its speed — an aggregate of 800 Mbps, low-cost and, well, because it’s DOCSIS, the same DOCSIS that the cablecos outside of China have selected.

Dan Marotta, executive VP and general manager of Broadcom’s broadband communications group, said, “These trials demonstrate the strong momentum for our standardized and high quality DOCSIS-based EoC cable infrastructure technology as the preferred solution to drive China’s NGB efforts and accelerate the deployment of three network convergence.”

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Video Ads Are Coming to LG Smart TVs

The TV networks and pay TV services are not the only ones that can make billions selling ads.

LG is using YuMe’s video advertising platform and network to add an advertising capability to its smart TVs, and Toyota has already signed up to advertise its 2012 Toyota Camry. Toyota says it’s part of what will be its largest marketing campaign.

Viewers will see the Camry ads when they look at the apps or do a search on LG smart TVs, Blu-ray players and dumb TVs that are connected to the LG Upgrader smart TV adapter.

The TV networks and pay TV companies are not involved and get none of the ad revenue. LG is thought to be third to Samsung and Vizio in smart TV sets in the States. It is on a campaign to be a sales leader in 3D sets, which are always smart TVs.

We estimate that over half of American homes have a smart TV or a dumb TV with a smart TV adapter like a Blu-ray player, game console or STB like Apple TV. We expect Europe to follow as more OTT content becomes available. And ads follow eyeballs as sure as night follows day.

Smart TVs are now ubiquitous. By this time in 2012 almost all the TVs in stores that are 40-inches or larger will be smart TVs. Based on what LG is doing, they’ll all be showing their own ads.

Last week Amazon was selling an LG 42-inch LED smart TV for $645 — including delivery to the home. Why not get a smart TV at that price because the price differential between smart TVs and dumb TVs is now less than $100.

YuMe SVP for emerging platforms Frank Barbieri told the New York Times that his company and LG intend “to target ads so they’re more relevant” to viewers, using the experience YuMe has accumulated in operating “an ad platform that serves 1.5 billion video ads a month for online and mobile.”

Barbieri called it “the power of Internet advertising with the impact of television advertising” and said it was “one of the biggest technological evolutions for television advertising since there was television advertising.”

YuMe will sell the ads and the revenue will be split three ways: LG, YuMe and the app developers.

Samsung Venture Investment is about to invest in YuMe. Samsung is the global leader in sales of TV sets and LG is second. Intel Capital is also an investor.

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Google TV 2.0 Arrives

As November starts, Google is launching “new” Google TV 2.0 software that uses the same hardware but includes a newer, but not the newest, version of Android. It had originally promised the upgrade for September but what are a few months between friends. Having screwed up the first Google TV version, it’s more important to get the second one right than to have it out on time.

Google TV is a technology that allows TV sets to access Web sites, OTT apps and browse the full Web. It can be embedded in TV sets and Blu-ray players like those from Sony or in smart TV adapters like the Logitech Revue.

What makes Google TV different from other smart TV platforms is:

- It includes a full browser that can access any Web site and play any online videos — well except where it is barred such as on the Web sites of NBC, CBS, ABC, Disney, Fox, Hulu (the free one) and Viacom, which owns a number of pay TV channels like Comedy Central and MTV. There is also the Google brand and Google’s ability to deliver YouTube videos in a way that’s suitable for a TV set.

- Google search that can find content on any live TV channel, any OTT site and the user’s home network. Google TV includes apps for the most popular OTT services with the exception of Apple’s iTunes.

Google TV is a direct competitor to the smart TV platforms that have been developed by TV set makers like Samsung, LG, Vizio, Panasonic and the proposed industry-wide standards HbbTV and YouView. Samsung and Vizio have talked about making TV sets with the Google TV technology but have not announced a shipping date. Google TV is also a direct competitor to Apple TV and other smart TV adapters plus it would compete against any smart TV sets that Apple may be thinking about making.

A major difference between Google TV and other smart TVs and smart TV adapters like Roku and Apple TV is that it has a full browser, Chrome of course.

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Netflix Growth Slumps, But Don’t Fret

Netflix posted a third-quarter subscriber loss on Monday, and the Web and Wall Street have called for CEO Reed Hastings’ head. He won’t, and shouldn’t, give himself up to those in the black hoods.

Losses were worse than its September forecast and the company has predicted further users jumping ship over its pricing and attempt to develop a separate DVD service. While expecting to lose 600,000 customers, the company ended up with losses of 810,000. The company’s stock was already down 60% since the company announced the devastating price hike in July, and dropped another 35% by Wednesday.

Netflix’ domestic users fell to 23.8 million as of September 30, down from 24.6 million three months earlier. Netflix said that it will continue to lose some existing subscribers but overall customers will increase in Q4. For the third quarter, Netflix’ net income rose to $62 million and sales rose 49% to $822 million, beating expectations of $812.8 million. So, the price hike did work out somewhat for the service.

The decline in Q3 likely means that Netflix will not hit the 25 million subscriber mark this year, a milestone that even the more conservative estimates analysts had set for Netflix back in Q1 and early Q2.

The (thankfully) cancelled plans to push DVD subscriptions to Qwikster and the price increase are being blamed equally for consumer reaction. Because of them, Netflix projects streaming subscriptions to decline somewhat in October, level off in November and then pickup in December; while DVD subscriptions are expected to fall “sharply.”

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Android’s Window Is Narrowing

The iPhone 4S from Apple wasn’t what anyone in the tech industry predicted, leading to a very mixed set of coverage with one resounding thought: “that sure wasn’t an iPhone 5!”

That let-down, in spite of the iPhone 4S’ amazing early sales, has given Android an opening into more consumers’ hearts and more techies’ minds, but the window is narrowing almost immediately after opening. The latest update from Android could be its last chance to grab the influential voices in the market all at once.

Android 4.0, Ice Cream Sandwich, has been a big hit with developers for all the things it can do down the road and the promised spread of the platform to devices running older versions.

Google is stuck, however, because it lacks the credibility to convince customers, developers, carriers and manufacturers that it is not only ready for prime time, but that it’ll make sure all device get on stage before the curtain goes down.

Fragmentation Woes
Android has had fragmentation troubles for quite some time, and these don’t appear to be going away, but they need to, immediately.

Google pledged to address the fragmentation problem with the formation of the Android Update Alliance back in May. Google said it would be working with carriers and manufacturers to deliver quicker updates and make sure handsets would receive updates for at least 18 months after their launch. This was great news and got a lot of people excited.

So far, the service has yielded a few small fruit, but it hasn’t been nearly the harvest Google promised.

So far, for phones covered by the Update Alliance, there are still six running Android 2.1, 23 running Android 2.2 and 32 running Android 2.3, and not all of these devices running Gingerbread (2.3) are running the versions with the latest patches (2.3.3 and higher).

Of the Android manufacturers that have publically spoken about being part of the Update Alliance, HTC has the most mobiles running Gingerbread (2.3), with 13 different models. That, however, contrasts to four of its models covered by the Alliance still running Android 2.1.

Gingerbread was released in December 2010, but it wasn’t until this month that Froyo (2.2) dropped below 50% penetration of Android handsets for the first time. Google is getting good at defining slow burn.

There were also many delays along the way. Android Cupcake (1.5) was delayed on all T-Mobile devices. That was followed by Donut being delayed for Samsung’s devices; Éclair being delayed on HTC devices; Froyo getting an overall delay; Gingerbread was delayed on some models and even caused the Nexus S to push its launch date back; Honeycomb forced tablets to launch very late (many were planning launches directly after the 2011 CES); and Ice Cream Sandwich was delayed a week and its SDK slightly longer.

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TVGuide.com Breaks through the Social TV Barrier

There is a major phenomenon taking place under the radar of most industry observers. It’s called social TV. The youngsters are taking to it like a frog to water. They are using tablets, smartphones and PCs, not for the purpose of just watching a TV show or movie, but as companion screens to chat, get information and rate the shows as they watch.

TVGuide.com has been at the forefront of social TV with a record 24 million unique visitors in September. Its app for mobile devices has been downloaded an amazing five million times.

This week it signed up ION Television as its 50th sponsor of Social Spotlight for the “Flashpoint” TV series. Social Spotlight provides information that fans need to engage in “companion screen” discussions through Facebook, Twitter and TVGuide.com

“Both users and advertisers have embraced social TV on our site, and we’re happy to share the milestone of our 50th social sponsorship this year with ION,” said Christy Tanner, EVP and general manager of TV Guide Digital. She said there is no direct one-to-one competitor to TVGuide.com. That’s despite the fact the pay TV companies and their STB makers are talking about deploying their own social networking and that a number of start-ups have similar aims. Tanner said the company does not have any announced plans to embed its app in the pay TV companies STBs.

The TVGuide.com Strategy
Tanner said TVGuide.com has a big jump on potential challengers:
- A great brand name — everyone is familiar with TV Guide and what it does.
- Consumer trust.
- Authority that comes from its 10+ years of experience and enormous database.
- Two-year lead time developing apps for mobile devices, which the young like to use while watching TV.
- Growth from four million to 24 million unique users.
- Access to data about shows from over 120 online video services, DVDs and Blu-ray discs, national TV networks and the pay TV networks.
- Revenue that comes from advertisers attracted by its users’ demographics.

TVGuide.com has an app that’s available on new TV sets from Vizio, the US’ largest seller of LCD TV sets. The app does not include the guide grid but has other TVGuide.com services such as finding the sources for shows and social networking. We expect the smart TV app will start appearing on other smart TVs, Blu-ray players, game consoles and smart TV adapters.

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Sony’s Bad Luck Comes in Threes

They say bad luck comes in threes and Sony might agree.

First, Microsoft delivered the PlayStation 3 a blow by making deals with content providers to offer their wares to Xbox Live subscribers. The move might have caught Sony by surprise with the worldwide width and depth of content Microsoft is offering. Four weeks earlier Sony had announced it was unifying its online services but has not yet provided specifics.

Second, hackers exposed Sony’s PlayStation Network (PSN) vulnerabilities again by cracking into the accounts of 93,000 subscribers that used the same user name and password at other sites. Sony reacted by locking the 93,000 accounts.

Third, Sony said 630,000 units of eight models of its Bravia LCD TV sets in Europe and 1.3 million worldwide used a component that may be faulty and could, in rare cases, overheat and start a fire. It did not issue a recall but warned about being alert for smells, sounds and smoke. It offered to send out a technician to check affected models for free.

Sony’s tragedies are diminishing. Previously there was a total shutdown of the PlayStation Network because of hacking, the major earthquake/tsunami in Japan and the UK warehouse that was torched.

Microsoft, Samsung, HTC to Increase Windows Phones Ad Budget

On the same day that Apple said it had sold an all time record one million its new 4S iPhone, rival Microsoft said it and the handset makers Samsung and HTC that use its Windows Mobile OS are putting up lots more money to sell handsets. Handsets with the new Widows Phone 7.5 (Mango) will be available next week. There are reports that Microsoft continues to miss its sales target for Windows Phone handsets because Apple and Google’s Android are taking the market. Meanwhile, it’s Fall 2011 and Microsoft still doesn’t have an OS for tablets!

Hello, Hulu!

Why hasn’t someone yet bought Hulu? Or, should we ask, why haven’t the three TV networks that own it been able to sell it? Here’s betting it’s the terms for their content: Which shows? How much? For how long? Microsoft’s TV deals announced this week diminished its need for Hulu. The badly mismanaged Yahoo is itself up for sale. Dish could use Hulu if it gets some content deals with it to help it launch its Blockbuster OTT service. Google, which is putting up $100 million to get original content for YouTube, could use Hulu to re-launch its ill-fated Google TV. Ambitious Amazon would welcome more contrent to feed its $200 Kindle Fire tablets. Then there’s Apple, which could use Hulu to augment its iTunes service, possibly replacing Netflix on Apple TV and, who knows, perhaps launch a line of TV sets. Or maybe the TV networks, minus Comcast’s NBC Universal, will decide to keep Hulu and control their own Internet destiny.