Drinking from a firehose; that is the feeling I get after attending a Parks Associates conference, particularly one of their focused seminars like the Digital Lifestyle seminar held on October 3 in Santa Clara. Read on to learn more about conference that covered everything from IPTV to home networking in the U.S, as well as Europe and Asia.
Kurt Scherf, Vice President and Principal Analyst for Parks Associates, gave a very nuanced definition for the various classifications of video services, from pure IPTV on one end to Broadband Video/Over the Top on the other extreme. As has been suggested by many independent telcos, Scherf indicated the motivation for telcos adding video is to retain the customer as he eloquently put it when he said, “if you lose the landline connection, you lose the lifeline.”
From a Media Adaptor category, Europe is quite interesting to Scherf, as providers there are giving away the adaptors for their hybrid direct terrestrial/IP offerings. The approach operators are taking in the European markets is to sell the value first and then offer differentiation. Interestingly, southern Europeans are much more receptive to paying for video and content on demand than the rest of Europe.
On-demand will be the primary interactive television service for which people are willing to pay. Scherf suggested that other types of interactive services, like Caller I.D. on TV, might also be popular. It is an art form for the operator to determine which services they can explicitly charge for and which should be bundled into service packages. Scherf was bullish on the home network and he cited Verizon’s success in selling 12% of its FiOS video customers on a $19.95 month multi-room DVR product. Scherf suggested that a, “Home network or home computer service will be the first thing that becomes a killer application.”
Culture plays into the adoption of new technology, according to John Barrett, Director of Research for Parks Associates. In Japan for instance, home computing is not as popular as say the U.S., because of the long commute (presumably spending time on the PC is too taxing after a long day of work and commute). In Taiwan, the computer is much more of an entertainment-centric device than in the U.S., which tends towards the television for entertainment. China has the largest revenue in online video downloads at more than $70 Million per month, compared to $40 Million per month for the U.S.
How much people are willing to pay for content varies from country to country and how they are willing to pay varies. For instance, people in China, France and Italy are much more likely to embrace free content in exchange for advertising than in other countries. Even the location where people watch content varies from country to country, with people in most markets tending for the social experience of theaters to view movies, while Americans are tending towards cocooning with their DVDs in their home theaters.
“$300 a Penguin,” is what Michael Cai, Director of Broadband and Gaming for Parks Associates, calculated the owners of the online virtual world/game, Club Penguin will receive if they meet all of the milestones as part of their agreement to be purchased by Disney. Gaming is huge, especially online gambling, and Cai provided data from around the world as to why this cannot area cannot be ignored by service providers.
To some extent, thanks to the rise of casual gaming, virtual worlds and the Wii, gaming is becoming a much more of a social activity. Cai called the Wii, “The new family time.” Cai pointed out that their research indicates that word of mouth is still the number one way for discovering content, regardless of what the content is. Along these lines, John Barrett suggested that, “Social Networking is dial tone for the next generation.”
