It is the first time ever that Pay TV loses subscribers quarter on a quarter, as the Business Insider chart shows.

A previous post on “spotting disruption before it happens” shows the 3 phases that can be spotted before a disruption actually occurs, exemplified with the postal service.

A lot have been said about how Internet TV offers like Hulu can lure people to cut the cord and drop their Pay-TV subscriptions. Still data so far only showed that Pay-TV rather than declining was actually growing. Up to Q2 2010. For the first time ever, Pay-TV loses subscribers. Does it resemble the 3-phase pattern of the postal service fall?

Is the drop just due to the recession? or are the cord-cutters finally here?

If reports from Engadget are correct,  Apple could be soon “re-inventing” the TV too. The new Apple TV could be announced on the next  Steve Jobs keynote on June 7th, together with the iPhone HD (not according to Engadget)

New Apple TV highlights, according to Engadget:

• Very small device, with only power and Audio-Video ports. No display
• Based on iPhone OS 4
• A4 CPU, capable of displaying 1080p HD video
• 16 GB of flash storage
• Wifi-n
• Price $99

Speculating on what it could also do:

• Runs all iPhone and iPad Apps on the AppStore, plus an specific SDK for Apple TV Apps
• Includes a Safari browser with HTML5 support
• Plays any content from any iTunes library at home
• Extend iAds to video
• Can be controlled with a new iPhone-iPod Touch Remote App, that allows remote Multi-touch controls of the TV screen
• The new iPhone HD (the one previewed by Gizmodo based on  a prototype)  will sell with a dock station to connect to a TV screen and behave just as the new Apple TV
• Does not support Flash

Can you imagine all that for $99? Is the ultimate set-top-box finally arrived? Is GoogleTV dead-on-arrival ? Can you imagine the App Store model also on TV? Netflix, YouTube, all existing video apps, all games!, and all HTML5 online video that is coming…

Will Apple re-invent the TV too, based on the same iPhone OS that reinvented the phone and the tablet?

1984 might be closer than we ever thought…

Google TV, as described by Google is about:

• Less time Finding More time Watching
• Control and Personalize what you Watch
• Make your TV content more Interesting
• More than just TV

Google TV is built on Android 2.1 and Google Chrome and Flash 10.1.

It runs all Android Apps that do nto require a phone hardware. A Google TV SDK will be available to apps developers, including tools for an IP remote control.

A version of YouTube adapted for Google TV: YouTube Leanback

Partners:

• Sony will launch Connected TV sets  and Blue-ray players integrating Google TV
• Logitech will build a Google TV Set-top-box (companion box)
• Intel Atom chips will power the devices with hi-performance video handling
• BestBuy will distribute those products
• Dish Network will have an advanced integration  with Google TV

All coming this fall in 2010. TV meets Web. Web meets TV.

Watch the Google TV keynote on YouTube.

From TechCrunch: Google TV Unveiled. It’s All About The Ad Reach

Google makes $18 a year for each unique visitor. Facebook makes roughly $3.

Three observations from the chart:

1)  Google is far ahead of the others in monetizing their visitors. A sign that search advertising is much better paid than display. Facebook will need to invent something to market their ads more valuable.

2) Recently a tier-1 telco CEO demanded that Google should pay telcos  for the business they do on their networks. The yearly revenues per broadband subscriber for a telco can reach $240-$400. What Google or Facebook gets from a single user is peanuts compared with what the telco gets. What portion of Google’s revenue they want to get?

3) By chance the revenue per user for Internet giants look in the same range as what a traditional  ad-funded broadcast TV channel makes per average viewer in a year.

It would be interesting to see how Hulu would do on this chart. According to Bloomberg, the Simpsons on Hulu command a $60 CPM, while on prime-time TV the same ad would cost $20-$40 per thousand viewers. If Bloomberg is right, considering that Hulu aggregates much more content than a single broadcast TV channel, with a higher CPM, we should see Hulu go off the chart!  Assuming it could reach $100-$200 revenue per user per year, that starts to look something on which the telcos might want to ask for a share…

Internet and the Digital Revolution has transformed Media… and this is just starting. If not convinced, see the clip above.

Google has announced the acquisition of On2, the company that owns some of the video compression codecs widely used in online video, but that were recently losing ground in favor of h.264.

Why is Google spending $106 million in purchasing the owner of  decaying codecs?

1) Google has high hopes for HTML5, a standard set to handle video natively (i.e. there will a a <video> tag, as there is a <img> tag for pictures now, and no plugin will be required for the browser to play a video, unlike the plugins required now for flash, Windows Media or Real Audio). If Google open-sources the coming VP8 codec from On2, and forces it into  HTML5,  it would seriously hit Adobe Flash and Microsoft Silverlight proprietary strategies in favor of an open HTML5. Google can put a lot of pressure by incorporating VP8 into Chrome and migrating YouTube to support it.

2) Owning a video codec technology, as online video becomes King in the Web. Although h.264 is an open standard licensed by MPEGLA, Microsoft owns their own propriety Windows Media codecs. Imaging Windows introducing ad insertion, or search within videos, or interactive video objects within the video coding technology ahead of others. What would be the effect to Google’s search and advertising “bread and butter” in a video-centric Web? Can you imagine Google paying licenses to archrival Microsoft?

3) Is $106m too much? Google might be making the simple maths? What would be the impact on their market cap, if Microsoft releases a video codec with ad/search features? What would be the impact on Microsoft stock if Google is able to master the video codec technology and do that first? Note that just the announcement of this acquisition make Adobe shares drop 3.5%!!

It is not the saving in licenses or bandwith what drives this acquisition. This is about strategy, defending from Microsoft, and taking control of its own future. Google will not make direct revenue from this $106m acquisition, but if it succeeds in getting VP8 widely adopted into HTML5, they are going to be better positioned that anyone to defend their Advertising and Search business in video too.

Online 3D video, interactive objects within video, search within video contents. All that will come and Google wants to be the one to bring it and not depend on standard bodies, or worse,  its major competitor.

Coverage of this news by other blogs:

TechCrunch, Google Acquires Video Compression Technology Company On2 For $106 Million

GigaOM, Google: You Buy Some, You Sell Some

NewTeevee, Watch Out, Flash; Google Buys On2

StreamingMedia.com, Google’s Acquisition Of On2 Not A Big Deal, Here’s Why

It is more than one motnh ago that I was in CommunicAsia  for a Mobile TV panel. Here are the main points we discussed about how to make the business case for Mobile TV work.

• Free-to-Air channels are a must to drive adoption of Mobile TV into the mainstream, as Japan One Seg, Korea T-DMB and even the DVB-H Italian case show. More than 20 million Japanese watch TV on a phone. As of today, 85 % of the new handsets sold in Japan have a One Seg tuner. Even the iPhone has an One Seg tuner accesory (see picture)
• “Free” creates a large audience that can be monetized through subscriptions, advertisement and transactions (VOD, Catch-up TV, cross-selling). It is the economics of free, common in Internet and Software, applied to Mobile TV.
• There is a need for a next-gen Mobile TV that puts together Broadcast and Unicast technologies. Broadcast enables FTA channels at zero marginal cost (it is the same cost to serve one customer than one million) and it is efficient for premium mass audience channels like sports channels. Meantime, Unicast provides unlimited number of channels for premium, niche/long tail, VOD and catch-up TV that can be monetize as subscriptions or pay-per-download. The 3G network also enables interactive services, like EPGs, audience monitoring, interactive ads, or interactions with social network (see what my friend watch, or “watch and chat”), that give extra chance for monetization.
• Focus on high-end devices, like iPhone or ones with TV tuners. Early adopters of these devices are the same early adopters that will watch TV on a mobile. It is a waste to support a large number of mid-range or low-end devices. Mobile TV has not crossed the chasm yet.

Some other curious facts and learning from the Japanese One Seg: Mobile TV experience:

NHK Study: Where people watch mobile TV?
1) At home in a room wo TV 38%, 2) At work/school 26%, 3)While bathing 24% – On train goes in 7th place (17%) tied with at home in a room with a TV!
=>  There are more use cases than just watching TV on the train…

DIMSDRIVE research for Japan:
What people like about Mobile TV: 1) Anywhere, 2) free, 3) simple
What they do not like: 1) Battery, 2) don’t need to watch TV outside, 3) do not want to watch TV on a phone

The Silicon Alley Insider Chart of the Day (above) shows the great curve of DVR (Digital Video Recorders)  adoption in US, where almost one in three households already have one. This poses a threat to the advertising model of broadcast TVs, as DVRs are commonly used to fast-forward ads.

DVRs are clearly growing, but for how long? Take the analogy of answering machines. In the 80s and 90s, everyone had an answering machine at home. Then Voicemail Service arrived, managed by the telco, and now answering machines are not sold anymore.

Similarly network PVRs, or even further, Catch-Up TV, make the DVR at home irrelevant. Why program the DVR to record a show, when you can have it from the Catch-up catalog when you want and where you want, accessible from a laptop or a mobile handset?

And the good news for telcos and content owners: with a Catch-up TV service, you take back the control of ads.

It is the Hulu model taken to the three screens (TV, PC and mobile). If you have Hulu, why would you want to record a show in your DVR? why would you want a DVR at all if the content is always there available?

I guess that by now, all music labels have already realized that music downloads and subscriptions are the only way forward to distribute music. CDs are dead, and rightly so.

Maybe because we just finished unpacking the shipment from KL in our new home in Shanghai, I just happen to realize how I hate CDs. I have hundreds of CDs purchased before the MP3 era, and while unpacking them, I could only feel  how useless was the task of putting them on the shelves in my study room.

For my next move I only hope I will have already got rid of all the CDs after ripping them all to my music library, (or alternatively legally download private copies of them with Bittorrent).

I do not think I will ever buy a Music CD again. The last music CD I bought was played only once while ripped to my library. 

R.I.P. Music CDs.