Connected TV a hurt locker

January 16, 2011
For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment 

Take home an internet connected television this year and you’ll find it easy to link it to your home entertainment network. Moments after you switch it on, the media-hungry TV will beg you to feed it entertainment content, not just from the many other devices it will find in your home but also from digital broadcasters and online services.

Research firm BTIG, however, warns that internet-enabled TV opens a Pandora’s Box to IP theft thanks in part to the increased use of anonymous digital storage lockers that can contain anything from stolen versions of new feature films to pornography.

Connected TV promises to deliver the world of home entertainment at the touch of a tablet remote control and at this month’s International Consumer Electronics Show (CES) Las Vegas, many companies vied for recognition in this category. Google, Apple, Sony, and Boxee were among those who jostled for position while Yahoo, with an 18-month history in connected TV, announced the launch of what the enthusiastic press release calls “second generation broadcast interactivity”.

Along with the likes of HbbTV in Europe and YouView in the UK, the nascent industry must overcome several obstacles, not all of them technical, before the potential of connected TV is fully realised.

For many years, the common thread in both North American and European TV broadcasting has been “control” over every link in the chain. The ability to control the commercial messages wrapped around prime time programmes – and to price them accordingly – has been non-negotiable.

The intrusion of upstart internet entrepreneurs who target the primary screen in the home threatens to break the link and that has led the film and television establishment to close ranks and withhold the one thing needed to make connected TV a success: content. The incumbents are unlikely to give up their assets without a fight.

At the Driving Digital Content conference in London in July 2009, Yahoo Connected TV Chief Patrick Barry spoke enthusiastically about the imminent launch of Widget TV. Along with the usual optimistic forecasts, he told Cue Entertainment about the opposition from TV operators in Europe and many of commercial channels. “We’re working with the BBC and regulators on these issues,” he said.

The obstacle, then and now, was the ability of third parties to insert commercial messages independent of content owners, particularly when the original channel is ad-free.

Eighteen months later, Barry has moved on and Yahoo tried again to launch its “Connected TV platform” at CES. This time the company has negotiated in advance with CBS, ABC, Home Shopping Network and Showtime to secure content and with brand advertisers Ford, Mattel and Microsoft to deliver interactive advertising. What the company calls a “pilot programme” will run for the first half of 2011.

Yahoo promises 50,000 film and television for Video On Demand together with access to the full range of web content from shopping and games to social networks and user-generated video. Toshiba, Samsung, Sony and LG are among the major consumer electronics brands that will supply 70 different models of connected TV, starting at $299.

Meanwhile, Google TV withers on the vine as American networks block access to connected TV even as they license the same content for computers and smartphones.

There is no shortage of customers in the queue to watch programmes over the internet. Research organisation ComScore reports that four out of every five Americans watched online video content at some time during November 2010. Despite this enthusiasm and the evidence from CES that it will be hard to buy a “disconnected” TV by year’s end, an early resolution of Google’s dispute with content owners seems unlikely.

BBC iPlayer is an undoubted success story with remarkable viewing figures where it is available on the main screen in the home – from Virgin Media, for example, The BBC policy of supporting nearly every proprietary video platform at the licence payer’s expense has been criticised in the past and a report in Broadband TV News suggests that the BBC Trust will require full reimbursement for all development and maintenance costs of custom versions.

This is a welcome decision. There is a move towards open standards, and although the BBC has an obligation to make the iPlayer available to all UK residents, it should be under no compulsion to underwrite the technical whims of every commercial operator. By that logic, BBC Worldwide should have supported both Blu-ray and HD-DVD together with VMD, holographic and a multitude of other disc formats as well. Format wars are about the survival of the fittest and video platforms should never be able to tap into the licence fee simply in order to ensure survival.

Google has just arrived at a similar conclusion. Faced with the mounting costs of encoding multiple formats for YouTube, the company has announced that it will withdraw support for the H.264 video format in its own Chrome browser. Although use of H.264 video is currently free, the MPEG Licensing Authority (MPEG LA) could impose a charge at any time. Google is keen to promote its own “Open Source” WebM video format and thereby reduce the overhead of storing millions of Gigabytes of duplicated data.

The only snag is that Apple video devices are almost exclusively dependent on H.264, which raises the possibility of YouTube online videos being unplayable on the Mac platform, which already spurns the attractions of the Flash media player from Adobe. This is the first skirmish in a format war that could run for years.

Perhaps the most thought provoking report of the week, “On-line Piracy and Counterfeiting”, comes from the American research organisation MarkMonitor. The company promises “enterprise brand protection” and claims to provide “real-time prevention, detection and response to unauthorised distribution channels”. The company estimates the worldwide economic impact of online IP theft and counterfeiting at $200 billion annually and blames easy access to online storage lockers for the “lion’s share” of digital losses.

Online storage lockers are secure and anonymous data bins that might contain personal archives, photographs and documents or the entire business records of a company that are stored offline for disaster recovery purposes. Since the operator has no way of accessing the information deposited by its customers, the data could equally be a stolen high definition video version of the latest Harry Potter film or the ripped master for the entire works of “Take That”.

The MarkMonitor report claims that online storage lockers operated by rapidshare.com, megavideo.com and megaupload.com together generate more than 21 billion visits per year. The report’s authors then proceed to make allegations that have prompted the operators to threaten legal action.

Swiss-German firm RapidShare calls the MarkMonitor comments defamatory and absurd. In a statement it says, “RapidShare is a legitimate company that offers its customers fast, simple and secure storage and management of large amounts of data via our servers. We reserve the right to take legal action against MarkMonitor.”

RapidShare is no stranger to legal action. A litigious adult entertainment production company, which has previously taken on Google, Microsoft and Amazon, had its case against RapidShare rejected in a California court last May when the judge ruled that the company had not shown that it was likely to win any of its claims for copyright infringement or unfair competition.

In the first week of January, a German appeal court overturned an earlier ruling in favour of Atari Europe and said the procedures that Atari wished to impose on RapidShare were “unreasonable or pointless”.

The American House of Congress currently has under consideration a proposal to deny public access to any “foreign” websites that might “enable or facilitate” copyright violation, without the need for a successful prosecution. The bill, which has passed its early stages, also includes measures to ban companies from advertising alongside such sites, penalise any credit card company that processes payment for them, and prevent the transfer of funds to any such companies that appear on a blacklist compiled by the US Attorney General.

To defend itself against this onslaught, RapidShare has sought the services of Dutko Worldwide, a high-powered Washington firm of lobbyists that includes Google, Motorola and Level Three Communications among its clients. Dutko Worldwide is part of the Huntsworth plc group, based in London. 

The international ramifications could be considerable.