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Connected Homes May 2016 Viewpoints

Technology Analyst: Michael Gold

Set-Top Showdown

Why is this topic significant?

In the United States—the world's second-largest national market for consumer electronics—some 99% of multichannel pay-TV set-top boxes are bundled with services. A move to competitive, unbundled markets for the boxes could stimulate innovations in entertainment electronics.

Description

Of the some three-quarters of US households that have multichannel pay-TV from cable, telco, fiber, or satellite service, nearly all pay their service provider monthly rent or an equivalent fee for set-top boxes (STBs). During February 2016, the US communications regulator proposed to order multichannel pay-TV services to deliver their programming via STBs that any manufacturer could provide, fulfilling the terms of a 20-year-old law. In 1996, Congress and the US President eliminated price controls on cable rates and disallowed state and local regulation of cable services. In exchange, the legislation required cable-TV and telco-TV services to support competing brands of STBs, home-networking gear, and home-automation gear.

During recent months, new services have increasingly allowed some customers to receive TV without a dedicated STB, as in the cases of HBO Now and PlayStation Vue. During April 2016, the second-largest US multichannel pay-TV service, Comcast (which owns NBCUniversal), voluntarily started to allow manufacturers (notably, Samsung) to build TVs and STBs containing decoders for its service. Another large service that is rolling out options for households that don't want to rent a box is Charter (which is set to merge with Time Warner Cable). Nevertheless, Comcast and Charter joined with other cable services to warn that they would initiate a lawsuit against regulators if the current proposal becomes a rule. Other organizations that objected or raised concerns about the regulators' plans include AT&T (which owns satellite service DirecTV and is the largest US operator of multichannel pay-TV services), as well as Dish Network, Verizon, and the Walt Disney Company. Many organizations support the regulators' plans, including the Consumer Electronics Association, Google, and TiVo.

Implications

In an ideal case, smart TVs and game consoles could receive the most popular live sports and news. Manufacturers would be able to provide a unified user interface and search tool, and a single remote control that summons all of the free and pay broadcasts, streams, and movie discs that a user has access to, without exception. Open markets for multichannel pay-TV STBs could help establish a cloud- and app-driven economy of TV-centric services, revitalizing the home electronics industry in a way that's comparable to the burst of innovation that's occurred in mobile communications. And new competition might drive down the prices of STBs and TVs that incorporate speech recognition, integrated video servers, security and baby-monitoring systems, controllers for lights and appliances, and wireless video and surround sound.

Impacts/Disruptions

Entertainment studios' moves to support streaming could reduce market shares for multichannel pay-TV services. Reductions in the share of advertising that go to pay-TV services and broadcasters could undermine the business models for these services, perhaps leading to their ultimate demise. Pay-TV services have also raised concerns about the possibility that Google or other parties could insert their own advertising into streamed versions of multichannel TV. Ad-blocking software for STBs and smart TVs might cause even further market turbulence.

Alternatively, competition might fail. Politicians could rein in regulators. Rights holders could frustrate efforts to offer unified media-discovery interfaces. And STB brands could deliberately introduce incompatibilities in bids to dominate home electronics.

Scale of Impact

  • Low
  • Medium
  • High
The scale of impact for this topic is: Medium

Time of Impact

  • Now
  • 5 Years
  • 10 Years
  • 15 Years
The time of impact for this topic is: 5 Years

Opportunities in the following industry areas:

Video distribution services, electronics and semiconductor manufacturing, film and TV production, Internet of Things, cybersecurity software and services, displays, loudspeakers, home-security services, illumination, speech agents

Relevant to the following Explorer Technology Areas:

360 and VR Video Streaming

By David Strachan-Olson
Strachan-Olson is a research analyst with Strategic Business Insights.

Why is this topic significant?

Viewing 360-degree videos allows users an opportunity to explore places and events in a new, immersive format. Compelling 360-degree videos could help drive the adoption of VR beyond the video-game market.

Description

Whereas conventional videos image a single aspect of a scene, 360-degree videos (or 360 videos) image a scene as a continuous, spherical panorama. During playback, special software allows 360-video viewers to control the portion of the video scene they view by rotating the frame of reference left and right, as well as up and down. 360 videos can be viewed on computers, but mobile devices or virtual reality (VR) headsets provide a more immersive experience by allowing users to change perspective by moving the device. To ensure high-quality playback, the resolution of each frame of a 360 video can be many times that of a conventional video, meaning that video file sizes (and data consumption for streaming) can also be many times greater than those for conventional videos. Resolution requirements can be even higher for 360 videos for playback on VR headsets, and 360 videos for such headsets may also need to have higher frame rates than 360 videos for conventional devices.

In 2015, Facebook and YouTube began supporting 360-video playback for their respective websites and applications. Both companies have been working on novel ways to reduce file sizes for 360 videos. For example, Facebook's method involves transforming 360 video from equirectangular (the layout used to project the Earth onto a 2D map) format to a cube format, which reduces file size by up to 25%. For VR headset viewing, dynamic streaming can reduce the bit rate required to stream the video by up to 80%. The original video is prerendered into 30 distinct videos, and motion-tracking information from the VR headset is used to dynamically determine the appropriate video to stream to the headset.

Implications

Because 360-video files can be significantly larger than HD video files, new video encoding formats that reduce file size will make it easier for viewers (especially those with low-bandwidth connections or monthly data caps) to download or stream 360-video content. Video streaming content is already responsible for a large portion of internet traffic, and without novel formatting and streaming techniques, 360 and VR videos could significantly increase video streaming traffic.

Feature length 360 films might be too large to distribute on physical media such as Blu-ray discs, and large enough that downloading the entire 360 video would take a significant amount of time. If dynamic streaming can prove to consistently provide a good experience for viewers, it is possible that it will become the primary method of distributing VR videos because of its limited required bandwidth.

Impacts/Disruptions

Currently, VR headsets are primarily marketed to video gamers, but average individuals will need a compelling reason to purchase a VR headset. Video content has a universal appeal and already drives the majority of homeowners to purchase home-theater equipment and subscribe to cable or internet streaming services.

Facebook and YouTube have distributed 360 camera systems to specific content creators—to spur 360-video production—but it will take time for directors, producers, and other content creators to master the art of creating 360 videos. VR headsets are the best means by which to view 360 videos, and therefore, releasing innovative and immersive video content such as movies, sports, and virtual tourism, could be the key to creating mass-market appeal for VR headsets.

Scale of Impact

  • Low
  • Medium
  • High
The scale of impact for this topic is: Medium

Time of Impact

  • Now
  • 5 Years
  • 10 Years
  • 15 Years
The time of impact for this topic is: Now to 5 Years

Opportunities in the following industry areas:

VR-content development, video streaming, consumer electronics, entertainment, telecommunications, cloud computing, content-delivery networks

Relevant to the following Explorer Technology Areas: