• Ever since the TV makers’ disastrous attempt to get us all watching 3D TV at home, 3D outside of the cinema has been plagued by the question of whether it is a solution looking for a problem.
• The notion of wearing 3D glasses at home is well and truly over meaning that if it is going to work, it will require a technology that does not require glasses.
• 10 years ago there were only two companies developing for this space but now there are many more which has ignited a debate as there are two possible technology choices to be made.
• To get this to work without glasses one needs to create viewing zones where one group of pixels goes to one eye, and another group goes to the other eye creating the stereopsis effect which tricks the brain into seeing in 3D.
• One approach is to create many such zones so the effect can be seen from many angles while the other is to create one zone but use eye tracking to find out where the viewer is and direct the pixels in that direction.
• The problem with many zones is that it is a massive pixel hog meaning that the picture that is sent to each zone is lower resolution.
• However, it does mean that for a TV, many viewers can see the 3D effect all at once and with an 8K panel, there are plenty of pixels to go around.
• In my experience, using eye tracking the user gets a more pronounced and superior 3D effect but it means that only one user can use the device at any one time.
• Hence, I suspect that for use cases where only one user views the device, eye tracking is superior but where there are likely to be multiple viewers, the multiple-zone approach will work better as long as there are enough pixels to go around.
• This is a great use case for an 8K TV where the user at a 9-foot viewing distance (USA Average) will not be able to tell the difference between a 4K image and an 8K image.
• 8K has 4x the pixels of 4K meaning that one can create 4 viewing zones at 4K each which is probably enough for almost all use cases.
• However, for smartphones and tablets where almost all the time, there is one viewer, eye tracking is probably better although it does add to the build cost as one has to add the eye tracking technology on top of the 3D components themselves.
• In the eye-tracking space, I am aware of 2 players which are Leia Inc and Dimenco while in the non-eye-tracking space, there is StreamTV Networks / SeeCubic and PSHolix.
• Market adoption has yet to be proved but there is plenty of speculative interest as Leia was able to raise $125m from Aon’s venture arm In November 2022 which I would estimate was done at a valuation of $500m which is a big number for a company with no real revenue.
• I suspect that the non-eye trackers will do better in TV while the eye-trackers will see adoption in smartphones and tablets.
• The demonstrations are generally excellent and so it now comes down to execution as always.

Wireless Power – Finally to market?

• Wireless power continues to chug along with its biggest challenge now being getting to market and convincing consumers that transmitting energy over the air is safe.
• This use case has been impacted by wireless harvesting (see here) which harvests tiny amounts of power from WiFi but this has very limited use cases and doesn’t work if the device is completely dead.
• There are a number or different solutions available and each appears to be better suited to a different use case.
• The remote charging of smartphones use case is now obsolete as battery life and user behaviour of charging every night has meant that there is no demand for it.
• This leaves smart home for consumer and sensing for enterprise as the best use case.
• This will relieve smart home devices of the power constraint that has limited their ability to add functionality in order to preserve battery life.
• It also means that installation is much easier as one does not have to put wires everywhere in order to power the sensors if one does not want to use batteries.
• I still view Ossia as the leader in this space where the technology is ready for deployment with regulatory approvals in over 50 countries and it should see some initial deployments in 2023.
• Behind Ossia is Powercast which specialises in short-range (such as charging devices on a desk) and has had devices in the market for quite a long time.
• Back of the pack is Wi-Charge which uses infrared to transmit power and has the advantage of being able to transfer quite a lot of power but seems to still be quite far from getting to market.
• I have been a long believer in this technology which for a long time has been long promises and short delivery.
• My sources indicate that Ossia has recently been able to raise a lot of money at a good valuation and so there are obviously some out there who believe that finally, the time is right for this technology.
• We shall see.

• If CES and Samsung are anything to go by, the 8K product cycle looks set to be a financial disaster as the lack of a use case seems to be causing the price of the TVs to fall far faster than previous generations.
• TVs are like any other piece of consumer technology in that their prices steadily fall over time and then recover sharply once new technological innovation is introduced that users are willing to pay for.
• The problem since the 1080p generation has been that television’s biggest feature (resolution) has been making a smaller and smaller difference to the user experience.
• 8K takes this to another level where the improvement to 8K is indistinguishable to the user when he is sitting at a normal viewing distance.
• The problem is that with each successive jump in resolution, one has to sit closer and closer to the screen in order to be able to appreciate the difference.
• For instance, with a 65 inch TV, one has to sit within 4 feet of the panel to really appreciate the full benefit of 4K resolution and the difference is indistinguishable from 1080p at distances greater than 8ft (see here).
• I have an 86 inch TV and when sitting 9 ft from the screen, the difference between 4K and 1080p is only slightly noticeable.
• The average viewing distance is around 9ft in the USA and I would estimate around 7-8ft in Europe and other parts of the world.
• This is a physical problem that relates to the biological system of human vision meaning that there is very little that one can do to fix it other than buy a bigger TV or sit with one’s nose pressed up against the screen.
• 4K managed to escape this problem by adding all sorts of other enhancements like HDR, wide colour gamut, better contrast and so on which were deliberately made not available on 1080p TVs.
• Consequently, the picture quality on 4K was deemed to be much better thanks to these other features and 4K was able to escape from the fact that one could hardly tell the difference when it came to resolution.
• Fast forward to 8K and the problem is much more severe in terms of noticing the difference but this time, there are no other visual tricks that can be used to improve the picture over 4K.
• Consequently, when the user goes to the showroom or (increasingly now) looks online, he will wonder why he has to pay a huge premium for a feature (8K) that makes no difference to his viewing experience.
• This is already being reflected in pricing where Roku launched an 8K 85-inch panel at CES 2021 (with its streaming box integrated) for a staggering $2,700.
• Samsung has not come down to this level but its 85 inches 8K with all sorts of backlighting bells and whistles is at $9,000 with the 65-inch version at $5,000.
• Given the brutal competition that the premium makers are going to experience from equivalent TV’s at less than half the price, I suspect that this price is not going to hold very long.
• Hence, there are plenty of signs that the price declines in 8K are going to be far faster than they have been in previous generations as there is little to differentiate them from their 4K counterparts.
• This is very bad news for the panel makers and the TV makers, and there could well be another shake-out in this market-leading to greater concentration at the top.
• I would not want to be anywhere near any company that has a large exposure to TV pricing for the foreseeable future.

• It has been clear for several years now that the only 3D visual entertainment system that is going to work in the home environment is one without glasses.
• Even taking the successful 3D system in the cinema that uses cheap disposable glasses and using that in the home has failed to produce any traction at all.
• Going to the cinema is an event where the consumer is prepared to do things to maximise the experience that he is not prepared to do at home.
• The fact that he has also paid a premium for that experience provides further incentive.
• Work has been ongoing for years to crack the 3D TV / PC monitor / Tablet / Smartphone-without -glasses problem with the only technology that has any real prospect originating from Philips.
• Philips’ exit from this development spawned two companies, Dimenco and Stream TV Networks, whose IP is based on the same Philips foundation.
• The problem is that end-market demand for this technology remains unproven and it is only with 8K, that the technology becomes really eye-catching.
• This is because the technology uses a massive amount of pixels in the panel to create the 3D effect meaning that the more pixels that there are in the panel, the greater the 3D effect that can be created.
• This is why 3D and 8K go well together because for almost all intents and purposes telling the difference between a 2D 8K picture and a 2D 4K picture at a normal viewing distance is almost impossible (see here).
• The promise of 3D is to use 8m pixels to provide a 4K picture and the remaining 24m to create the 3D effect.
• Thus, a substantial difference between an 8K panel and a 4K panel can be discerned under normal usage.
• This is crucial for panel makers who desperately need to find a use case for 8K in order to keep pricing high enough to make a profit.
• This is why there is significant interest in the technology from panel and device makers despite the fact that the end market size remains uncertain.
• Because of this, both companies have had a difficult few years but it now looks as if Dimenco is out of contention.
• This is because its current owner Kangde Xin Composite Material Corp (KDX) is currently at the centre of an accounting scandal where its controlling shareholder appears to have embezzled RMB53.1bn (see here) resulting in the company defaulting on its obligations in January 2019 (see here).
• For some reason, its auditor failed to spot the irregularity allowing the fraud to persist for a few years before coming to light.
• The net result is that of all the attempts at cracking the 3D-images-without-glasses problem, there is now only one game in town with a working and viable solution.
• Hence, if 3D is going to make a comeback into the living room as well as be present on smartphones, tablets and other displays, it looks almost certain that it will be Stream TV Networks that provides the solution.
• Content is not a huge problem as the technology can convert 2D content to 3D in real-time but the best effect is produced when content shot or created in 3D is used.
• Games also work well as most console-quality games are already produced in a 3D environment by default.
• I suspect that there will also be substantial interest for smartphones as 3D could provide some differentiation in Android handsets which is harder and harder to find.
• Whether or not consumers will be wowed and be willing to pay up for 3D remains to be seen but I have seen the image quality and it is very impressive.
• The industry will need to get devices into the hands of users and see what they think of them to really find out what demand will be.

• The most abused term award at CES 2019 goes to artificial intelligence where almost everyone is using it but almost no one seems to know what it means.
• Senior execs are looking rather foolish at their press conferences having been told by their PR and marketing departments to ensure that they claim to use AI when, in reality, they are simply crunching statistics like almost everyone else.
• The real world of AI has been a lot quieter this year as progress against RFM’s three goals of AI (see here) has been extremely slow meaning that creating algorithms remains a slow and painful process.
• Furthermore, attempts at faking training data using simulations have been largely unsuccessful highlighting once again how fundamental the limitations on AI remain.
• Hence, almost all companies that say that they are using AI are in reality just using statistics meaning that they are not raising barriers to competition.
• Google, Baidu, Yandex and to some degree Microsoft have some real AI assets and are keeping their lead but even these companies continue to fall woefully short of something that could make their products groundbreaking.
• Hence, AI will continue to be a buzzword used by almost everybody, understood by almost nobody and delivers very little.
• AI has a long way to go before it will be a real differentiator in consumer electronics and services.

Digital Assistants: Amazon 2 – Google 1.

• The battle for supremacy in digital assistants enters its third CES and while Google has the upper hand in terms of numbers and advertising, Amazon wins CES 2019.
• Google’s stand is bigger than ever and there are more white-suited agents than last year, but Amazon is just everywhere.
• In 2017 and 2018 one could find Alexa on the stands of the exhibitors in the Sands and the South Hall where the smaller start-ups are to be found.
• This year, Alexa has made it to the big halls with all the device makers.
• Anyone buying a suite of white goods from Haier or many other major vendors will end up with more instances of Alexa than they could ever possibly use.
• Furthermore, many users who are buying a new vehicle will find Alexa integrated into the dashboard of the vehicle although not into the vehicle systems themselves.
• Only Byton drivers will be able to ask Alexa to roll down the windows, turn up the ac or set cruise control.
• This is important because although Google has a better product, Alexa is becoming more widespread, opening up the possibility of a repeat of the JVC / Betamax battle where the inferior product won out at the end of the day.
• I wonder what lengths Google will go to in 2020.

8K & 3D – 1-foot wonder.

• 8K TVs are finally here in volume but why anyone will pay a premium to own one is a big mystery.
• This is because unless one is 12 inches or less away from the panel it is almost indistinguishable from 4K.
• At 12 inches, 8K looks incredible but the average viewing distance in US is 9 foot from which I could not tell the difference.
• At 9 feet, even the difference between 1080p and 4K can be pretty marginal.
• Furthermore, the industry has already used its wide colour gamut and HDR tricks to sell 4K meaning that there is no meaningful difference in overall picture brightness or quality when comparing it to 4K.
• Consequently, I think that the TV makers are going to have real trouble selling 8K at a premium to 4K meaning that profitability is going to be a major problem.
• This is where 3D becomes interesting again because the extra pixels in 8K can be used to create an effective 3D image without glasses.
• Stream TV Networks is a technology that I have long watched and the more pixels that are present, the greater the 3D effect it can create without glasses.
• The 3D images it is creating on panels using 16m pixels (6K or 8K-lite) are a huge improvement on what it can do with 4K, meaning that true 8K should be even better.
• This is a valid use case as to why a consumer might pay up for an 8K TV but that will depend on consumers becoming excited about 3D TV once again.

Nightmare on pixel street.

• With 4K panels now being in the mainstream, the technology discussion in the panel industry has now turned to 8K which on the surface looks like a technology with very little future.
• Sony, Samsung and LG all demonstrated at CES 2018 new large panels (80”+ size) featuring 8K resolution.
• 8K refers to a resolution of 7860 x 4320 at a 16:9 aspect ratio which is made up from 33.96m pixels.
• This is 4x the current standard of 4K (3840 x 2160 at 16:9) which has a total of 8.29m pixels and already takes the user way beyond what one would consider a discernible difference in resolution.
• There is only a certain amount of detail that the human eye can see which can be used to calculate the distance from the screen that user needs to be positioned to see the benefit of higher resolution videos (see here and here).
• For instance, to see the difference between 1080p (regular HD) and 720p on a 50” screen, the user needs to sit no further than 9.8 feet (3.0m) from the screen and will see the full benefit of 1080p at 6.5 feet (2.0m).
• With average screen size now closing in on 50” and a living room viewing distance of 8-9 feet, it is obvious why 1080p is now a complete necessity when it comes to selling TVs.
• However, the same case cannot be made for 4K.
• To see the difference between 4K and 1080p on a 50” TV the user needs to sit no less than 6.5 feet (2.0m) from the screen with the full effect being noticeable at 3.0 feet (0.9m).
• I have long believed that anyone with a room large enough to accommodate a 50” panel is going sit much further than 6.5 feet from the screen rendering the improvement in resolution unnoticeable over 1080p.
• However, 4K TVs have sold reasonably well and I think that this is because of the picture quality innovations other than resolution that have been offered on newer TVs.
• These include high dynamic range, better contrast, faster refresh rate, improved colour gamut and so on.
• These have allowed 4K panels to produce brighter, more vibrant images than 1080p panels which has greatly driven their appeal.
• The problem for 8K is even more pronounced as the user needs to sit no further than 3.0 feet (0.9m) from a 50” panel with the full effects being noticeable at 2 feet (0.6m).
• Unfortunately, all the picture quality tricks seem to have been used to sell 4K leaving 8K with very little with which to sell itself.
• This is why Sony was touting its panel more on the basis of brightness rather than picture quality.
• Furthermore, another big problem for 8K is content which has to light up 19.3x more pixels than 1080p at its native resolution.
• This means that for a barely discernible difference in resolution, nearly 20x more transmission or streaming capacity will be needed to deliver the picture assuming no improvement in compression.
• This is completely unfeasible as there is no way the user will pay 20x the price to stream or receive 8K compared to 1080p leaving 8K in a quandary.
• There is only one use-case that I can think of which is to use the extra pixels to generate a 3D-without-glasses effect.
• This is an idea that was first created by Phillips and it works by moving the focus point of pixels from a simple 2D plane into a 3D block.
• This can then be used to create what is known as a light field which has been demonstrated to produce compelling 3D images without having to use glasses.
• The higher resolution of the panel, the more pixels can be used to create this effect and the more pronounced it becomes.
• Even a doubling of pixels to 16m (6K resolution) creates a huge improvement (over 4K) in both the image and the 3D effect and I suspect that this will only improve as the pixels available for the light field continues to increase.
• This creates a use case for 8K as using pixels for 3D instead of resolution will mean much lower transmission or streaming requirements as well as create a discernible difference for the users.
• Whether users will pay-up to have 3D on their TVs has yet to be proven, but this technique does solve almost all of the horrible limitations that hobbled 3D TV when it was first tried 5 years ago.
• However, I do see a strong use case in digital signage as the 3D effect still works when users are moving and test panels have been shown to be far more effective at grabbing users’ attention.
• As it stands today, there I see no other application that is likely to drive adoption of 8K which explains the steadily increasing level of interest that is being shown by the panel makers who badly need something new to keep prices high for the next panel generation.

Flexible screens back for another press cycle.

• With the success of the Samsung Galaxy Edge, it looks like Samsung is thinking of having another go at bringing flexible displays to the market in a meaningful way.
• This is the third or fourth time in 6 years that Samsung has considered launching these products.
• The technology for flexible screens is not the problem as fully bendable displays that can withstand a beating with a hammer have been around for more than 6 years.
• The main issues are manufacturing yield which determines the price of the display and end user demand.
  • Yield. The economics of LCD and OLED panels depends on very high volumes with only a tiny percentage of devices being defective and having to be thrown away.
  • The encapsulation of flexible displays has long been a sticking point in the manufacture of these products causing far too many panels to be defective.
  • This has had the effect of making the panels prohibitively expensive which would make the phone or tablet so pricey that no one would buy it.
  • Demand. The problem with flexible displays is that beyond one obvious use case which has its own problems (see below), no one really knows what to do with them.
  • The Samsung Galaxy Edge is a case in point as the curved part of the screen has no real function other than for offering alerts.
  • Consequently, it is a nice looking, cool to have but otherwise pointless gimmick.
  • In the mobile phone market, pointless gimmicks have time and again been shown to sell devices in huge volumes at the high end and the Galaxy Edge has been no exception.
  • Unfortunately this will make bringing flexible screens to the main stream very difficult and Samsung has had great difficulty in finding buyers for these screens in the past.
• I have long believed that the one use case that makes sense for a flexible screen is the ability to have a tablet that folds or rolls up into a phone form factor when not in use.
• This is because these days a tablet is little more than a phone with a large screen as all the other components and the software is almost exactly the same.
• This comes with its own caveats which is that the screen when unfolded into the tablet form factor, it needs to be rigid to make it useable.
• That is likely to prove to be easier said than done and I suspect that this use case is unlikely to make an appearance for quite some time.
• The net result is that with no real use case in sight for these devices, I suspect that Samsung may decide to hold off launching them in earnest until it can figure out what users can do with them.
• Hence, I suspect this theme, like every time in the past, will have a quick press cycle and then disappear into obscurity until someone really works out what to do with these screens.
• I still see upside in Samsung and Microsoft and prefer both to Google. Apple is still looking very attractive for the long-term.

Flexible displays are hard to make and mostly useless.

• The latest innovation around flexible screens has been announced by the Queen’s University Human Media Lab in Canada which uses the flexing of the screen as a method of command input.
• A flexible LG OLED display has been combined with sensors and can detect to what the degree the screen is being flexed.
• The headline example is using the flexing of the screen to flick through the pages of an ebook which is very similar to what a user would do with a paperback.
• The paperback has the obvious advantage being readable in bright sunlight and infinite battery life.
• The researchers also demonstrate using the device as a regular touch screen smartphone.
• This is all well and good but I suspect that we are still very far from seeing flexible panels hitting the mainstream.
• Samsung and LG have had fully flexible, virtually indestructible panels for years but to date, only the most basic curved and flexible panels have made it to the market.
• There are two main reasons for this.
  • First. These devices are quite difficult to make meaning that a meaningful number of the panels fail quality tests and have to be thrown away.
  • This makes mass production prohibitively expensive and the premium that the maker would have to charge for the panel is so high that the user won’t pay for it.
  • RFM research indicates that Samsung and LG are continuing to wrestle with this problem but that little progress has been made.
  • The fact that there is no demand in the market for these devices (see below) has also not enticed them to expedite solving the mass manufacturing problems.
  • Second. No one has really come up with a decent use case for a flexible screen to date.
  • This problem is so acute that I understand that even Samsung had problems in rustling up interest for its curved and flexible displays from device manufacturers.
  • I have long been of the opinion that a major use case for this technology is a display carried on a phone form factor that can be unfolded or unrolled to give a display of 10-14 inches.
  • This would obviate the need to ever have a tablet and I think could kill the market overnight.
  • Unfortunately, the technology to make screens to this specification is still not ready and while simpler versions languish, I suspect that this will remain on the shelf.
• The net result is that flexible displays are cool to see for the first time but do very little to improve the use case of the device.
• Consequently, I suspect that flexible displays will not be making any impact on the device or ecosystem economics anytime soon.

The PC market is likely to offer the biggest surprise in 2015E

Wearables

• The technology industry is likely to continue scratching its head over what to do with wearables.
• It is a segment where there is a clear opportunity but nobody seems to have any idea what the real use case for these devices is.
• Even Apple, which is legendary in its innovative capacity, has produced a device that is little more than a remote control for a smartphone.
• Most of the noise at CES 2015 is likely to centre on these devices but the criteria for success have yet to be met.
• These criteria are:
  • Small OS optimised for device function.
  • Battery life measured in months not hours
  • Bluetooth Low Energy (BLE) radio only.
  • Small, fashionable and unobtrusive form factor.
  • Robust and reliable.
• The only device that I have seen that comes close to meeting these criteria is the Misfit Shine pedometer and sleep tracker.
• It comes as no surprise that this device sells in reasonable volumes and is the only one that actually makes money.
• For wearables to take off an exciting use case needs to be combined with these criteria.
• I fear that the real growth in 2015E will be in the population of the wearables graveyard.

Xiaomi

• Xiaomi rocketed into the general consciousness with 61m units shipped in 2014A and a fundraising at a crazy $45bn valuation (see here).
• However, despite significant scale, the company is probably still only making EBIT margins of around 3%. (see here)
• People are assuming that it is the next Apple, but being a commodity Android maker outside of China is going to put pressure on profitability.
• This, combined with a great need to invest in developing its ecosystem in China, will mean that investments will have to continue growing.
• Consequently, I can’t see margins expanding until its ecosystem is wildly successful and Xiaomi can start raising the prices of its devices.
• This will take time and money which will not be what its new shareholders will want to hear.

Ultra HD TV

• One of the highlights of CES 2015 is likely to be bigger and bigger TVs with higher and higher resolutions.
• 4K or UHD made all the running last year and this year I am expecting to see 8K prototypes demonstrated.
• This is yet another attempt by the TV industry to halt the ravages of commoditisation and competition which has caused the prices of TVs continue to collapse.
• For example, Samsung is currently selling a 55 inch 4K TVs for $980 upon which I doubt it makes any money at all.
• Furthermore, 4K does nothing for the consumer because in order to even begin to see a difference between 1080p TV and 4K the consumer needs a 70” TV at the normal viewing distance of 9 feet.
• The average TV size in the US is 36”
• To get the full benefit of 4K the user needs to sit 5 feet away from a 100” TV.
• In my opinion this renders 4K next to useless for almost all consumer applications.
• This will make user unwilling to pay for the TVs and broadcasters unwilling to bear the huge increase in transmission costs that 4K requires.
• I do not see any real recovery in profitability in the television industry this year.

PCs

• 2015E should see the beginning of a replacement cycle of the obsolete laptop form factor.
• The Surface Pro 3 has shown the way for where mobile computing needs to go but the Intel Core M family should take this one step further.
• This will enable a tablet weighing 650g (1.4lb) to have the power and utility of a desktop computer. (see here)
• This is 200g less than the superb Surface Pro 3 currently weighs.
• This enables the user to have a far better user experience offering the full ergonomics of a desktop while out of the office.
• The device can also be used as a tablet when needed without having to compromise either function.
• The problem is marketing, as the marketing departments of Intel and Microsoft do not yet seem to have realised the opportunity that their R&D has created.
• Until the user is properly informed, the replacement cycle of laptops will continue to disappoint my ambitious hopes.

Mobile Payments

• Mobile payments have languished for years.
• The combination of vested interests and proprietary systems has meant that the user experience has been ignored.
• The result has been a series of attempts at offering payments with mobile phones that have been more cumbersome and awkward than digging in one’s pocket for a credit card.
• The launch of Apple Pay has given this fledgling industry a wake-up call as this system is a cinch to use and everyone who uses it, loves it.
• In order to preserve the exclusiveness of its hardware (and its margins), Apple will only make Apple Pay available on its devices leaving 87% of the global market for everyone else.
• As is did with the smartphone, Apple has shown the industry the way forward but has also left plenty on the table.
• Consequently, I suspect that 2015E will be a scramble to offer an Apple Pay like experience on Android and other devices. 

The cable companies and the console makers have the advantage.

• Not to be outdone by Amazon, Google is also having another stab at TV with the release of another entertainment offering called Android TV.
• The biggest change that Google has made is that it has given up trying to make a unified user experience across all devices but instead has optimised the UI for the TV itself.
• Google has taken away the fancy features such as telephony and cameras and focused solely on the delivery of content to the user.
• This basically puts Android TV in line with all of the other, increasingly numerous and difficult to distinguish offerings such as Fire TV, Apple TV, Roku and so on.
• All of the usual suspects such as Netflix, Amazon Prime, Pandora Hulu etc will have their apps on the device and Google is encouraging developers to write apps for this new platform.  
• How this fits in with Chromecast is uncertain as Chromecast runs entirely on the web with no need to write apps.
• I suspect that Google will keep both going in parallel as Chromecast has already sold a lot of units and Google will need to know which offering users prefer.
• At the end of the day Android TV is very similar to all of the other offerings out there which means that none of them will be able to really differentiate.
• Only two camps are capable of doing this: the cable TV companies and the console makers.
• The cable TV companies still have a vast share of the audience on their platforms and consequently I suspect that the opportunity for them is to incorporate this functionality into their boxes.
• This will give the user the ability to have all of his services in one place with one remote control.
• The cable TV companies have, until recently, been in denial with regards to Internet TV but they are now looking at ways of upgrading their boxes to allow the other services their users love.
• This will put their offering head and shoulders above a new entrant requiring another box and another remote control.
• The cable user base is both sticky and not very well informed.
• The console makers also have an edge as their boxes offer something that none of the others do which is high end gaming.
• I suspect that this will appeal only to gamers but with 80m XBox users already out there, this is an opportunity big enough to be of significant value.
• Hence, I think that the Internet TV offerings are going to struggle without something differentiated to sell to the user.
• Amazon has its Prime users but these are reasonably small in number
• Hence, I suspect that all Google will have to compete with will be price but I can’t see it making the content cheaper to get a few users in the door.
• Hence, I suspect that this offering will languish just as its predecessor did.
• It is clear that the value remains in the ability to offer some degree of exclusive function or content and I do not expect success of any offering that cannot live up to that minimum standard.

BT’s win over Sky for the champion’s league highlights the crucial nature of sports.

• The value of broadcast rights is rapidly declining as many users are quite happy to consume content that has been time shifted.
• There are some emerging exceptions to this rule (see here) but the one real exception is sports.
• Users are unwilling to watch sporting events that are not occurring in real time and because of this, the broadcast rights for live sports are likely to continue gaining in value.
• The over-the-top plays (OTT) like Netflix are banking on the new trend of consuming TV series all in one go (binge viewing) but there is no way that this can happen with sports.
• Hence, OTT has nothing to add to sporting events meaning that they will become more and more valuable while the rights for other types of content will become less and less.
• This was highlighted strongly yesterday with BT’s willingness to pay £299m ($478m) for the rights to broadcast the Champions League.
• The last time these rights were auctioned Sky paid £160m which shows that BT’s ambition to break Sky’s stranglehold on the UK market is almost without limits.
• It also clearly demonstrates where the value of content is moving to and what users are likely to be willing to pay a premium for.
• This is an ominous sign for mid-2015 when the rights for the Premier league come up for blind auction.
• The Champion’s League is the second most popular reason for subscribing to Sky Sports with the Premier League by far the biggest reason.
• This is an absolute must win for Sky as it will lose its differentiation if it fails to secure these rights in 2015.
• This is a trend that I expect to be repeated in other parts of the world and the broadcasters must secure these rights.
• Failure to secure these rights will see an acceleration of households cutting the cord and the end of the broadcast monopoly as we know it.
• This is going to place pressure on the margins of the broadcasters and further enrich the professional sports industry.
• If the broadcasters can hold onto their subscribers via exclusive sports and be smart about how they offer catch-up television and on-demand (see here), they might just survive.
• The broadcasters have time to act but their current position of denial is not helping their ability to adapt to meet the inevitable change in their industry.