Today's Top Stories
1. Apple's new $100B business? Connected Apple TV, home automation
2. APAC to drive IPTV growth through 2016, to 155M global subscribers
3. Research points to minimal STB market growth
4. Study says OTT service market to reach $16.4B by 2016, pinch pay-TV operators
5. Bloomberg: Cisco to cut 10,000 jobs this year Editor's Corner: Netflix's 'anti-competition' charges against telcos a lot of hooey Also Noted: Spotlight On... Netflix content acquisition costs to soar in 2012
Soap operas finding new life online; Netflix isn't among Hulu suitors and much more... News From the Fierce Network:
1. Cisco looks to rebound with overhaul of core switching system
2. 138M connected TVs forecast to ship in 2015 as global demand grows rapidly
3. Pairing Google with Hulu gives studios a strong alternative to Netflix
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Netflix's 'anti-competition' charges against telcos a lot of hooey
It's been a busy month for Netflix (NASDAQ:NFLX), and we're not even halfway through it.
The company Monday saw its stock price top $300 for the first time ever, despite news that the company could pay up to nearly $2 billion in content acquisitions costs by 2012, more than 10 times what it currently pays. Over the weekend, the company revealed it wouldn't be in the bidding for Hulu, which confirmed this month it was looking for a buyer. Friday, Netflix's General Counsel David Hyman, in a Wall Street Journal op-ed piece, wrote that the recent adoption of bandwidth caps by some operators in the U.S. was "bad news" for consumers and that it would throw a wrench into the "innovation powering today's Internet economy." Pay-TV operators, Hyman, wrote, claim bandwidth is a scarce commodity, one that needs caps and usage charges to help ease network congestion. And he calls operators' arguments bunk. "Wireline bandwidth is an almost unlimited resource due to advances in Internet architecture," he wrote. "Adding more capacity is easy. The marginal cost of providing an extra gigabyte of data--enough to deliver one episode of ‘30 Rock' from Netflix--is less than one cent, and falling." AT&T's (NYSE:T) new excess charge for its U-verse and DSL customers, about 20 cents per gigabyte, is "20 times the price of providing the service," he wrote. To a point, Hyman is correct, although he chooses to ignore that AT&T and other operators do have associated costs with providing the service. But where his argument starts to go awry is when he describes consumption-based billing as anticompetitive. "With online-content delivery providers like Netflix and voice services like Skype experiencing explosive growth, competitors see consumption-based billing as a convenient way to slow that growth by making the use of online services more expensive," Hyman contended. What AT&T and other pay-TV providers are doing by raising fees for data usage is simply recouping their investments in their networks and making sure revenue--at a time when subscribers are becoming more fickle and content costs are rising--continues to increase. As Netflix's content costs continue to rise and they institute tiered-programming rates, it's doubtful that anyone in the service provider segment is going to make a ruckus and call the tiers anticompetitive. They're going to simply call it what it is: business.--Jim Read more about: AT&T, NetFlix, editor's corner, bandwidth caps
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Today's Top News 1. Apple's new $100B business? Connected Apple TV, home automation
With sales of the iPhone 4 softening, the time might be ripe for Apple (NASDAQ:AAPL) to jump into a new venture, and none has as much promise as its rumored Apple connected TV platform. Maynard Um, an analyst with UBS, joined a growing chorus of pundits who believe Apple is poised to launch a smart TV that will deliver IP content direct from its iTunes store, based on a new chip from Intel that's scheduled to debut in 2012. The chip is designed specifically for TVs and, Um said, is robust enough, with adequate processing power, to deliver both content and Web-based apps to a television. Um said Apple could see market cap increases of between $50 billion and $100 billion with an Apple smart TV success. "We believe Apple will have to build out its own content ecosystem such that a set made by Apple could be differentiated enough from a content perspective to potentially lead to ‘cord-cutting,'" Um said. "However, we do not believe the market is ready for cord-cutting nor do we believe the content is robust or cheap enough." But Apple, Um said, is taking its platform further than just a TV screen. In a recent research note he said that in addition to delivering content to an Apple TV, it could tie into iPhones and iPads, along with software for home automation, like controlling lighting and energy management from an iPad. He also said Apple, à la Best Buy (NYSE:BBY), would offer professional installation by its own "Genius Squad." "We say this must follow on to a Genius Squad service as the installation of home automation products is likely to be too complicated for the average (and possibly even the above-average) consumer to install," Um said. For more:
- see this ChannelNews article
- see this AllThingsD article Related articles:
A connected Apple TV could make hay where Google TV, others made mistakes
Morgan Stanley analyst says Apple working on Smart TV prototype
Apple seeking engineer for standalone display and television project
Connected Apple TV could earn $6 billion for company by 2014
Rovi rolls out Apple iPad universal TV viewing guide Read more about: IP Videos, connected tvs, Apple television
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2. APAC to drive IPTV growth through 2016, to 155M global subscribers
According to a new report from Digital TV Research, the Asia/Pacific region will drive IPTV expansion through 2016, adding an expected 85 million new subscribers; worldwide IPTV subscriptions are forecast to increase by 120 million, from 35 million to 155 million.  |
| Click here to see a larger chart of IPTV growth broken down by region. |
China will make up the bulk of new adds, with a predicted 70 million customers signing up. As in the U.S., most users will take bundles of services. Report author Simon Murray said 83 percent of IPTV customers worldwide will opt for triple-play bundles of TV services, Internet and telephony, 10 percent will take dual-play and only seven percent will pay for standalone TV subscriptions. Murray said global IPTV penetration, which currently stands at 2.6 percent of TV households, will quadruple to 10.5 percent in the same period. North America, Western Europe and APAC all will see rates of about 12 percent, he said. For more:
- see this article Related articles:
IPTV revenues forecast to hit $17B by 2016
Research projects $147B pay-TV, broadband market in APAC by 2016
Report: IPTV revenue doubling to $27B by 2014 Read more about: Triple Play, global IPTV forecast, Trends & Metrics
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3. Research points to minimal STB market growth
The sun may be setting on set-top boxes as the market matures after many regions wrap up the switch from analog to digital TV, but there's still some life left in the segment. Research from In-Stat forecasts that total shipments of IP STBs will increase by 1 million units in 2011, with only Latin America and the Middle East/Africa showing growth over 2010. In-Stat said Latin America will see STB shipments top 670,000. And, even though it expects North American STB revenues to grow 22 percent from a year ago, In-Stat said global revenues would decline slightly from 2010. In April, the company said STB sales volume was relatively flat in 2010. IPTV provided a bright spot as the segment saw STB shipments increase 3.7 million units in 2010, with Asia and Latin America leading the way. Norm Bogen, VP of digital entertainment for In-Stat, said service provider solutions to distributing content throughout the home were changing the market. "Direct TV, for example, supplies a satellite STB as the ‘big box' in the home's media center while providing IP STBs, now referred to as ‘thin IP clients', for delivering content to different rooms in the home," he said. "This is certainly impacting the IP STB market in a positive way." For more:
- see this release Related articles:
Global STB market flat in 2010
In-Stat says cable STB growth goes negative in 2010
Digital set-top box market to rise 10% to 226 million by 2015 Read more about: Set Top Box, In-Stat, Trends & Metrics
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4. Study says OTT service market to reach $16.4B by 2016, pinch pay-TV operators
Earlier this year, Shane O'Neill, Liberty Global's chief strategy officer, called over-the-top services "an existential threat" to cable operators during the told Cable Congress in Lucerne. "We need to innovate much more quickly than we have traditionally done," he said. "If we don't, OTT could be a big, big thorn in our side." That thorn has grown, according to a new report from IMS Research that predicts a world service OTT market of $16.4 billion by 2016, with a CAGR of 32 percent. And it predicts the growth will be led by subscription services like Netflix and Hulu Plus, which will account fro the largest share of OTT service revenues through 2016. Anna Hunt, CE principal analyst at IMS Research, said Netflix's just-announced expansion into Latin America and the Caribbean "illustrates the type of strategic initiatives we can expect from leading local OTT service providers" as they look to expand their market. "New deals for Spanish and Portuguese language content create a potential for Netflix to expand its market reach to the vast population of the whole Latin American region, as well as millions of Spanish speakers living in the U.S.," she said. It's not just subscription services that will see big gains in the next five years, Hunt said. She expects brick and mortar retailers like Walmart and Best Buy, as well as Hollywood studios and other content owners to benefit as well, as pay-per-view transaction revenues grow at a faster pace. IMS Research projects that retailers will grow their share of the OTT market, accounting for 13 percent of world OTT service revenues in 2016. For more:
- see this release Free eBook: The evolution of the OTT space and what it means to the industry
Related articles:
Evolving OTT delivery launching an online video revolution
North American OTT revenues to reach $20B in 2016, ad revenues to soar Read more about: IMS Research, ott delivery, Trends & Metrics
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5. Bloomberg: Cisco to cut 10,000 jobs this year
More woe for Cisco (NASDAQ:CSCO) as Bloomberg, citing two people familiar with the plans, reported that as many as 10,000 employees will be cut from the payroll this year. It said 7,000 would be let go by August and another 3,000 would be offered early retirement incentives. Monday, Gleacher & Co. analyst Brian Marshall said 5,000 jobs likely would be cut. The 14 percent reduction in its workforce is part of CEO John Chambers' efforts to cut $1 billion in expenses to stem the networking giant's bleeding. The company has seen its share of the switching market, which brings in about half of its revenue annually, shrink as competitors like Juniper Networks (NYSE:JNPR) and Hewlett-Packard (NYSE:HPQ) have increased shares and driven down prices. "The revenue trajectory hasn't been where it should be," Marshall said. "The company is not staffed on an appropriate level. They simply have too many employees." In May, Chambers said he would trim the company's workforce and cut underperforming units and products to help bring expenses in line with revenue. Cisco's revenue is expected to reach $43 billion this year, a 7 percent increase, but off the 11 percent pace it set in 2010. For more:
- see this Bloomberg article Related articles:
Analyst: Cisco could cut 5,000 jobs by August
Analyst: Cisco will have to lower prices to achieve turnaround
Cisco to offer Quad in hosted and managed deployment model
Polycom's buy of HP's visual comms business points to Cisco's strength in telepresence
Q1 report: Cisco continues to lose switching share
Rumor: Cisco looking to sell WebEx, Linksys businesses
Is Cisco spending enough on R&D to stay a leader?
Cisco CEO Chambers looks to chart a course back to success
Cisco launches new UC solution for SMBs
So, tell me, is Cisco really holding a fire sale? Why? Read more about: Cisco, Job Cuts, Juniper Networks, Hewlett-Packard
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Also NotedSPOTLIGHT ON... Netflix content acquisition costs to soar in 2012 Pay-TV operators may glimpse a glimmer of light at the end of the tunnel as they struggle to retain subscribers, and, for once, it's not the Netflix train bearing down on them. Netflix, often blamed for cable operators' steady subscriber losses and viewed as a threat by IPTV operators, is looking at some hefty content cost increases in the next two years, according to Michael Pachter, an analyst at Wedbush Securities... Read more More news from Fierce: > Soap opera fans may be dwindling in number, but at least one production company thinks that the fan base and advertiser support is sound enough to take some established properties to the Web. Article > Buyers potentially interested in Hulu will begin looking at the books in the next couple of weeks, but Netflix, the company's closest rival, isn't likely to be one of them. Article
> Global software security and media technology company Irdeto acquired BD+ technology for Blu-ray from Rovi Corp., allowing it to give Hollywood studios a more robust solution for content protection. Article
> Comcast favored its own programming over the Tennis Channel in violation of federal rules and should be forced to distribute the network on equal terms, regulators said. Comcast should include the Tennis Channel on a broadly distributed tier within 30 days on terms similar to its own Golf Channel and Versus sports networks, the FCC's Enforcement Bureau said in a recommendation to Chief Administrative Law Judge Richard L. Sippel in Washington. Article
And finally... Well, everything apparently really is bigger in Texas, as 24-inch long, 16 lbs., 1 oz. newborn JaMichael Brown proved when he entered the world last week. Article and video > eBook: Path to 4G In this eBook we will explore the current state of 4G deployments in the U.S., the role of devices in attracting consumers and more. Download this new eBook brought to you by FierceWireless. > New eBook: Building a Better Backhaul Network This eBook from FierceWireless we will look at how operators are designing better backhaul networks and planning ahead for the next round of capacity constraints. Click here to download today. > eBook: OTT Delivery: An Online Video Revolution That Changed TV Forever This eBook from FierceOnlineVideo, will look at which segment stands to benefit the most from this new delivery vehicle, and which stands to lose, as the nascent video revolution marches forward.Click here to download today. > New Fierce eBook: Cashing in on the Cloud Services Opportunity This eBook from FierceTelecom we will explore the trends, benefits and challenges service providers have in building a profitable cloud service business.Click here to download today. > Report Ranks IPTV Set-top Box & Middleware Vendors by Customer Size
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