Learning from Scarborough

You can take it with you

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

February 21, 2010 | Opinion

EYE ON THE SUPPLY

Cue Supply Chain’s Bob Auger takes a look at the week’s events in the mobile world and discovers that you can take it with you.

Fans of “Star Trek” and the tricorder medical scanner (pictured) used by “Bones” McCoy might have missed the news on BBC this week announcing the Vscan from GE Healthcare. A handheld device the size of a mobile phone, it was described as “a rapid diagnostic aid for cardiac patients” that revealed a long-standing heart condition in a volunteer by simply being held over a patient.

“Star Trek” has played a pioneering role in the world of portable phones ever since Martin Cooper made the world’s first mobile call in 1973. He has said often that television show’s device was the inspiration behind his invention.

Handheld devices have dominated the news this week as the Mobile World Congress (MWC) held its annual gathering in Barcelona. Although the makers of the world-leading iPhone did not turn up in Spain, those who did had a lot to talk about, not least the continuing advance of applications.

For those who wish to plan their evening’s entertainment, Lovefilm has introduced a free-to-download iPhone app that catalogues 65,000 DVD titles and allows registered users access to their rental lists. Grand Union Communications launched the HD TV Guide for iPhone offering instant access to Freeview and BBC HD. In the United States, Blockbuster On Demand announced the video rental service’s first foray into smart-phone applications in a deal with T-mobile to supply content for a new “HD smart-phone” with a screen almost 25% bigger than the iPhone.

The BBC introduced two new apps for news and sports content and immediately met opposition from the Newspaper Publishing Association, which said they would “damage the nascent market” and called for the BBC Trust to intervene. The apps are intended not just to receive audio and video but also to contribute directly to the newsroom: Stand by for on-the-spot reports from the Clapham omnibus.

Meanwhile in Barcelona, Hugh Bradlow, Chief Technology Officer of Australian operator Telstra, told MWC delegates, “Developers are still struggling with the handset environment, testing their software on up to 1,000 different handsets to ensure compatibility. I believe there will still be at least six to 10 mobile operating system offerings on the market in the coming years.”

Authoring for packaged media is straightforward – it’s either Blu-ray or DVD – but in the world of mobiles the multitude of incompatible formats presents an expensive challenge for developers. As 3 billion iPhone downloads testify, it is easy when there is only one player, but the single standard has vanished in the scramble to come up with competitive products.

The challenge of multiple incompatible platforms has been faced already by iPlayer, which supports more than 23 different formats. Perhaps the BBC can use licence payers’ money to develop versions for every possible device but it’s not something that content owners can contemplate, particularly independents that might otherwise enter the mobile market.

Not every smart-phone is an Apple. Nokia, LG, Samsung, Sony Ericsson and many others are finally catching up, so will retailers have to develop an app for every handset? Last week, Tesco introduced its innovative Clubcard app, Ocado. It is already on iPhone and Sainsbury’s reportedly has an app in the pipeline. Wal-Mart has offered iPhone apps since December 2008 although Asda, the UK part of the family, has yet to join in. Will the complexities of catering for six or more formats delay further developments?

Faced with this problem, 15 of the largest mobile operators announced in Barcelona that they have come together to form the “Wholesale Applications Community” (WAC), intending to create a single point-of-entry for developers. Instead of content owners trying to hit a moving target, these phone companies plan a unified format, as happened (eventually) with Blu-ray.

Even though Apple and Microsoft are unlikely to participate, at least in the early stages, several handset manufacturers have already signed up, no doubt with an eye to the potential revenues at stake. The WAC group serves an astonishing 3 billion mobile phone users around the world and so could have a significant influence on the future smart-phone market.

In a parallel universe, Apple has doubled the limit for app downloads when iPhone users are on mobile broadband. Developers have struggled to stay under the 10Mb limit in the past, but iPhone apps will be able to reach 20Mb, putting an increasing strain on an already overloaded network.

The tech talk in Barcelona was about “long term evolution” (LTE), the potential successor to today’s 3G mobile networks. Scandinavia already benefits from the higher bandwidth and performance of LTE but some doubt the investment will pay off.

Motorola Senior VP and General Manager of Networks Business Bruce Brda told Reuters, “LTE will buy a carrier two to three years of relief, but then it runs out. Carriers have been very consistent – they do not increase capital expenditure.”

US operator AT&T Chief Technology Officer John Donovan said, “We’re seeing advanced smart-phones like the iPhone driving up to ten times the amount of usage of other devices on average”.

It’s a problem that bedevils mobile phone companies around the world: the more successful they are in selling product and services, the more they have to invest in network infrastructure. Better bandwidth cannot be turned on overnight even if the investment could be justified, as fixed line operators have discovered.

In some countries, mobile data access is already eating into landline revenues. A report released this week by the consulting firm Capgemini, “Mobile broadband in Europe”, said that 35% of subscribers in Austria use mobile devices as their main or only internet connection. In other words, one subscriber in three there is no longer tied to a landline.

While Austria heads the table, Ireland is in third place. Almost a quarter of broadband users there rely on mobile data as the substitute for fixed line broadband, not an addition. In Britain, just 11% of all broadband connections are mobile, putting a severe strain on existing 3G networks.

The problem for mobile operators is identified in the Capgemini report. The capital expenditure required to improve the network infrastructure must triple, even to allow for monthly data usage to increase by 0.6GB per subscriber. At current pricing, business models become unsustainable for usage over 1 GB per month – that’s three episodes of "EastEnders" on iPlayer.

So if “unlimited broadband” offers are unlikely to continue, what other strategies are available? Estimates from the US show that 2% of mobile broadband users there account for over 50% of data consumption. Differential pricing, moving large downloaders to off-peak periods might accommodate this relatively small number of unprofitable customers, but it doesn’t address the fundamental problem. There’s just not enough bandwidth to go round.

The hottest news from Barcelona is that more next-generation handheld devices like the iPad will become available soon. Products called provisionally “super-smarts” will appear, for which voice communication will be peripheral.

Sony CEO Howard Stringer was at MWC to tell delegates that Sony Ericsson smart-phones will in future incorporate the PlayStation Network, noting that PSN has “over 40 million registered accounts”. The new Windows Phone operating system from Microsoft will integrate Xbox Live and the Zune music player from lift-off. And Nokia and Intel announced MeeGo, a system for “pocket computers, smart-phones, connected TVs and in-car infotainment”

Two centuries before the fictional “Star Trek” adventures, Gene Roddenberry’s 1970s dreams are becoming reality. All that’s needed is the bandwidth. As Captain Kirk says, “Beam me up, Scotty”.

 

The packaged media landscape

FEBRUARY 5, 2010
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This week’s news really started last week with the announcement that Thomson, darling of French new media at the start of the millennium, is in future to be known as Technicolor, a business that dates back to 1915. It didn’t set the markets on fire.

Thomson had filed a restructuring plan in early December, which was approved by shareholders only on Jan. 27, and so good news was more than overdue. When it came, the company’s share price on the Paris Bourse climbed by more than 8% but it drifted downwards later in the week.

Technicolor was acquired in 2001 when Thomson paid British media company Carlton Communications $2.1 billion for what was then perceived as a declining business. (Another of this week’s headliners, a certain David Cameron, was Carlton’s Head of Corporate Communications at the time.) Technicolor-Thomson became a hyphenated hydra under its Paris-based management and struggled to generate profits ever since.

The change of name, coupled with the disposal of unrelated businesses and the subsequent consolidation of the remaining divisions, marks a shift from old-school thinking in France to the rejuvenated realms of “old Hollywood”. The name Technicolor might forever be associated with classic films such as “A Star is Born” and “The Wizard of Oz”, but today it is the world’s largest replicator of DVD titles and the biggest Blu-ray manufacturer after Sony DADC.

Technicolor’s activities beyond the cinema, however, are a mystery to many consumers although under Franco-American Chairman and CEO Frederic Rose the re-branded conglomerate has concentrated on the Communication, Media and Entertainment sector. The name will be prominent in the high street from now on and the message “Powered by Technicolor” is expected to appear on web video and CE devices later this year.

Futuresource Consulting Managing Director of Corporate Development Jim Bottoms says, “Under the leadership of Rose, the company is investing heavily in digital distribution. Technicolor is a pioneer in digital technology, and partnerships they are putting in place with leading media companies will prove invaluable in the future.”

While the name Technicolor is known to anyone who has ever been to the cinema, public awareness of Cinram is probably zero despite the fact that many of the DVD and Blu-ray Discs they own are likely to have been made by Cinram. The Toronto-based company has been a major replicator and distributor of DVDs since the format’s launch. More recently, Cinram has invested heavily in Blu-ray, buoyed by the security of an exclusive contract with Warner Home Video, which contributed 28% of the company’s revenue last year.

In 2003, when Time Warner was looking for a buyer for its WEA manufacturing operation, Cinram stepped in with a $1 billion-plus bid on the understanding that optical disc production and distribution for Warner Home Video would be part of the deal. Six years later, the agreement is near its end but it was still a major blow this week when Cinram learned that all Warner Home Video work would go to Technicolor from August onwards.

Several competitors reportedly were involved in the bidding process with one said to be: “Gutted not to win the business”. But it is at Cinram that the disappointment will be most keenly felt.

Jim Bottoms says that Cinram fought long and hard to keep the Warner work. “They put up a very strong team and maybe they would have retained the contract if the team had been in place longer or, given the announcement that Warner and Technicolor are to form a technology partnership, had established their mark in digital distribution as well as disc replication,” Bottoms says.

“The news came out of the blue, like an ice-cold shower,” said a union representative at one of the larger Cinram sites in Europe, near Rouen in France. The company employs 17,000 at plants in North America, Mexico, Spain, Germany, France and the UK and the decision will have a significant impact on the prospects of the work force.

A Warner representative said, “We’ve had a long affiliation with Cinram and thank them for their years of service to our company. As part of our standard practices, we are constantly looking at the systems we have in place and evolving them to meet our changing needs. The decision to change our video replication and distribution vendor, while difficult to make, is the right one for us at this time.”

Screen Digest Chief Analyst Ben Keen says the transformation of Technicolor under Rose is at the heart of the Warner decision. “This hugely valuable contract is a vindication of Frederic Rose's strategy to build Technicolor into a broad-based media services company, a proposition that competitors obviously struggled to match,” Keen says. “It’s no coincidence that this deal announcement – under negotiation for at least 12 months – was timed just after Technicolor was able to confirm its debt restructuring. Warner clearly wanted comfort over their new partner's long-term financial stability.”

Time Warner issued its fourth-quarter numbers on Wednesday, revealing that operating income for Warner Bros. was up $165 million in Q4 compared to 2008, bringing the year’s total to $1,084 million, a 32% increase. Tucked away in the Appendix, the company posted figures for home video and electronic delivery of theatrical content, which showed that revenues for 2009 declined year-on-year by 15% to $2.82 billion. Revenues from delivery of television content fell by almost 5% from $814 million in 2008 to $777 million last year.

So even with electronic delivery factored in, Warner’s home entertainment revenues declined substantially in 2009. Faced with the need to recover from this situation in 2010, perhaps the switch to a supplier with a stronger track record in digital delivery is no surprise.

Time Warner Chairman and CEO, Jeff Bewkes hinted as much in his commentary on the annual report. “We’ll build on this foundation in 2010 by continuing to leverage our brands and scale to make the most compelling content, improve our efficiency, expand internationally and accelerate the digital transition in our businesses,” he wrote. “To help evolve new business models that enhance our profitability and extend our brands, we’re leading such industry-wide initiatives as ‘TV Everywhere’ and a digital storefront to provide magazine and other content for portable digital devices.”

When James Cameron’s 3D opus “Avatar” reaches retail shelves later this year, it is Cinram that will supply Twentieth Century Fox with the packaged media needed to break home video records as the $2 billion grossing film did at the box office. Aside from Fox, Cinram has long term contracts with Universal, Lionsgate Entertainment and MGM that will ensure that its DVD and Blu-ray wheels keep turning for a while longer. Cinram will survive, for now, but without a convincing digital delivery strategy in place, further defections could be on the cards.

Can the internet meet the demand?

JANUARY 31, 2010
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Most of the time, the internet “just works” but when the demand for streaming video peaks, the supply can dry up rapidly. That’s what happened on Wednesday when a new electronic gadget was showcased in San Francisco and millions of people around the world tried to watch the event live on their Macs. “Apple’s iPad Event Broke the Internet,” reported PC World.

Major news organisations trailed the event all day and then discovered a blockage in the data pipe as soon as it started. Even bloggers were unable to file their reports, as the software that powers live-blogging of major events clogged up for nearly 20 minutes. By the time the internet plumbers had sorted it out, the event was over and internet services around the world were at a standstill. It was a warning of things to come, whenever too many people try to access the same data at the same time.

In 1881, Clément Ader placed 80 telephones along the front of the stage at the Paris Opera, ready to relay performances to astonished listeners miles away at the Exposition Universelle. It was so successful that the Théatrophone company was soon providing live audio on demand from events across the city to telephone subscribers in their own homes. The business prospered until the arrival of free-to-air radio killed it off in 1932. In the face of broadcasting technology, which is virtually unaffected by the size of its audience, dedicated connections stood no chance. Are things really going to be different this time around?

What used to be called Project Kangaroo emerged into the daylight this week as the almost fully formed SeeSaw online TV service from Arqiva. The invitation-only beta trial describes itself as “a great place to watch TV” and reports suggest that it is working well, even at relatively low bit rates, although beta content is limited to programmes from BBC, Channel 4 and Five. The secret to the success of the SeeSaw service, which is currently advertising-supported, may not rest on the tried and tested Adobe Flash video technology, however, but on how easy it is for users to locate content they want to watch.

Early users with access to the “tons of free TV” already on line – ranging from the 1967 black and white Doctor Who adventure “Tomb Of The Cybermen” to current editions of “Deal Or No Deal” – will probably have no problem finding interesting programmes from the 2,000 hours available. For SeeSaw TV to be a success, however, it will have to look at the way content discovery is developing elsewhere; the beta interface is far from inspiring.

To assess the strain being placed on the internet, consider also some other events that took place this week.

BSkyB delivered its half-year results, revealing that the customer base is nudging 10 million. Sky-HD produced some notable numbers, with net additions of 482,000 taking the total to more than 2 million households. The growth in that area more than justifies the company’s decision to sell only HD-enabled boxes in the future, making customer conversion to high-definition just a phone call away.

The company also hit the headlines with the news that the weekend Premier League clash between Arsenal and Manchester United would be a world first: delivered live in 3D to selected pubs in the UK and Ireland. A regular service follows from April onwards, and because it works with existing Sky+HD boxes, the potential 3D market opens at 2 million so long as viewers are willing to buy a 3D TV set with glasses to match.

In the US, cable operator Comcast is also planning “a persistent 3D offering,” according to Senior VP and General Manager of Video Services Derek Harrar. “Much like we did in high-def, it will start relatively thin and then, much like high-def, we will have more 3D content than anyone else as it becomes available,” he said in an interview on the website HD Update at the start of the week. At a guess, Sky’s pro-active approach places it well in the foreground of this particular game.

Acquiring content and the rights to broadcast in both HD and 3D is far harder than simply announcing plans in the media, as the BBC recognised in its submission to Ofcom for a variation in the terms of the Freeview HD licence. Although reported as a request for a change in anti-copy technology, the underlying motive is to ensure that high quality content will be licensed on the Freeview HD platform.

“Rights-holders are generating appreciable revenues from Blu-ray and pay-TV rights sales,” the BBC wrote in its letter to Ofcom, which pointed out that illegal copying from Freeview HD receivers would limit the availability of films and TV programmes for the service.

A decision is expected by April 2, and if Ofcom agrees as expected, the BBC will be able to acquire HD content “On similar commercial terms, and in similar time-release windows, to those on alternative platforms such as Virgin Media, Freesat, Sky, or BT Vision.”

April could yet be the hottest month for broadcast news.

Back on the ground (or under it, in most cases), Akamai published their latest “State of the Internet” report, a global review of broadband adoption. Today’s successor to the Théatrophone company, Akamai boasts an international network of servers aimed at ensuring reliable content delivery for many leading online brands, putting them in a good position to comment on the growth of broadband use.

The United States retained top spot for the number of internet connections with nearly 120 million unique addresses accessing the Akamai network, a year-on-year increase of 17%. China took the second spot with just under 50 million unique users, a 30% year-on-year growth, while the UK came in sixth, below Japan, Germany and France, with 19,426,576 different connections, up 12% compared with last year.

South Korea retained its world number one position for connection speed, offering an average of 15 Mbps to broadband users while consumers living in the state of Delaware benefited from an average connection speed of 7.2Mbps. Significantly, 63% of connections to Akamai in Delaware were at 5 Mbps or higher. Compare that to the UK government’s intention, declared in its Digital Britain report, to deliver broadband access of at least 2Mbit/s to virtually all UK households by 2012.

According to Akamai, “A connection speed of 2 Mbps is arguably sufficient for standard definition TV-quality video content and 5 Mbps is needed for standard-definition DVD quality.” (That’s for each stream coming into the house.) No estimate is given in the report for the bandwidth needed for HD video streaming although Akamai notes that Blu-Ray 1080p video content has a maximum video bit rate of 40 Mbps.

Some folk talk of moving all our radio and TV connections to the internet using the copper wires that Clément Ader would have recognised in 1881. There’s even speculation that broadcasting could become a thing of the past, once fibre optic data pipes spread across the country. Before we decide to switch off the wireless, though, we should reflect on what happened when Steve Jobs tried to speak to everyone in the world at once.

Put hardware first to meet forecasts

JANUARY 23, 2010
For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment

There’s been a surfeit of statistics this week as a combination of December data and forecasts for 2010 converged to confuse us all. Pity poor home entertainment consumers trying to make sense of the glut of new technologies on offer at almost every price-point, when all we want to do is escape the economic downturn, sit back and enjoy a good film.

Keeping up with technological trends is rather like ordering a Chinese meal – in more ways than one, given the origin of most consumer electronics equipment these days. Fundamentally, you are hungry but the menu has so many options, combinations and side dishes that you end up choosing Bat Col Sui Mai with extra meatballs and gelatinous rice. And then you wonder how to eat what’s on your plate with just chopsticks.

The point is that customers must find buying content – let alone a Chinese meal – a satisfying experience or they’ll be back to demand a refund. Where once a simple television set kept the whole family amused for hours, setting up a “connected home” has today become a job for a specialist installer. Getting one remote control to work with another manufacturer's hardware can be almost impossible and for something like 3D there’s no guarantee that one set of glasses will work with another screen.

After years of raised expectations, convergence has arrived. CE retailers offer more types of hardware than ever before, so it is no surprise that problems arise from the vast number of possible inter-connections. Instead of making things easier, the combinations of phone, media player, games console, screen and computer stretch half way to infinity. “Do you want active or passive glasses with that, sir? And perhaps a little BD Live for madam?”

Faced with so many mystifying media options, the softly, softly approach to 3D that Sky is planning might prove to be very wise. Both in hardware and software, the company has chosen to take the simple route at the expense of a slight loss of quality. Sky has been evaluating 3D in-house over the past 18 months and has opted for an easy-to-understand solution that will allow many existing customers to retain their current Sky box.

For owners of other hardware, things might not be quite as simple. The Blu-ray Disc Association has agreed on a 3D standard although it seems that many current Blu-ray owners will have to buy a new box when 3D discs start to arrive – apart from PS3 owners of course. For subscribers of IPTV and cable services, their current set-top box (STB) is unlikely to work and in nearly every case, a new flatscreen TV will be required.

Just when the HDTV market for 2010 was looking good, consumers might decide to wait until mid-year for 3D to arrive. When it does, there is no certainty that the hardware will sell in any great quantity, which places CE retailers in a difficult position, since conventional flatscreens have been good news for the whole industry.

Market research released on Tuesday by the European Information Technology Observatory (EITO) predicts 2010 sales of more than 50 million flatscreen TVs in the EU. More than 10 million will be delivered to British homes, the largest market in Europe, up 5% from 2009. The love affair with HDTV is forecast to continue in every country in Europe (apart from Italy), as consumers fall for the charms of World Cup Football and the Winter Olympics on ever-bigger 2D screens at ever-lower prices.

Technology has been kind to the domestic budget when it comes to flatscreens. The EITO report reveals that the average price for flatscreen TVs has almost halved over the past four years, from €1,000 to €530, with an anticipated fall of 8% over 2010. Specialist CE retailers may view 3D as a chance to enhance margins but it is a speculative gamble. The ability to sell 3D content this year is heavily dependent on the CE industry’s ability to manufacture and supply sufficient units into the retail chain to meet anticipated demand. CE retailers face dealing with the risks associated with the launch of high-cost 3D screens when conventional 2D HDTVs continue to be so successful.

DSG International, owners of Currys, said that sales were “better than expected” over Christmas, up by 8% and easily beating analyst predictions of less than 3% for the period. But CEO John Browett also revealed that gross margins were “largely flat” at the moment, with a “relatively subdued time of it” for electricals, both at Currys and at competing supermarkets. He claimed there’s a risk that UK demand could weaken again and said that issues within the economy mean that DSG is not expecting strong economic growth.

Over at Comet, which reported a decline in seasonal sales of just less than 4%, CEO Thierry Falque-Pierrotin blamed Tesco’s presence in non-food retailing for the increasingly competitive UK market for low-priced electrical goods: “It is putting some pressure on entry price products,” he said.

A report from Verdict Research this week noted that retailers were “very cautious” with stock levels, which reduced the need to mark down prices and led to shoppers buying the same quantity of goods as last year while paying more for them – and this despite the reduced VAT rate. Verdict forecasts low growth rates for several years to come with retailers having to work harder to win a share of consumer spending. It doesn’t sound as though 2010 bodes well for investment in stocks of high-ticket and complex entertainment hardware.

Some companies have reason to celebrate Christmas 2009, however, which managed to be a success for many e-tailers, as research this week from the Interactive Media in Retail Group (IMRG) shows. Consumers continued the trend to spend more online than ever before, parting with more than £5.5 billion in December, a 17% year-on-year increase.

As for the Italians and their apparent reluctance to buy flatscreen TVs, could it be that they have a life beyond home entertainment? Maybe the “slow food movement” in Italy is part of the same relaxed approach to life that makes them least likely to stay indoors and watch TV. Never mind Chinese, if you are hungry, few things are more satisfying than a plate of pasta on a Tuscan terrace as you watch the sun go down.

Snow Deliveries

JANUARY 18, 2010
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The recent delivery disruption caused by snow in the UK has highlighted the importance of reliable fulfilment of online and mail order purchases with several e-tailers warning customers of potential delays and stock shortages.

Royal Mail parcels service has played its part in getting goods to customers whatever the weather, but concerns over last year’s industrial action have prompted potential competitors to launch new services aimed at the lucrative logistics of internet shopping.

Home Delivery Network Limited (HDNL) has been snapping at Royal Mail’s coattails since 2005 and today delivers to all 1,760,000 UK postcodes. The company claims that two-thirds of the UK population receive at least one HDNL delivery each year, with over 2 million items delivered in Northern Ireland.

At the start of 2010, the parent company announced that it has acquired the UK arm of the DHL Domestic business from Deutsche Post. HDNL claims that the combined operation will be “capable of withstanding intensifying competition from a wide range of traditional B2C and B2B carriers, as well as challenging the Royal Mail more effectively”.

HDNL Chief Executive Brian Gaunt forecasts that the combined businesses will have annual sales of more than £600 million and will deliver more than 180 million parcels each year. The acquisition follows the launch last Autumn of HDN Lite, which is aimed at businesses sending large volumes of parcels under 2Kg, such as entertainment products and books, and is in head-on competition with Royal Mail parcels.

PayPoint, the payment collection network that has over 23,000 outlets in retailers across the UK, launched Collect+ (pictured) in September 2009. A joint venture company with HDNL, it uses more than 4,000 convenience stores and small businesses in the PayPoint network to address the problem of “failed deliveries”, which Collect+ Head of Corporate Affairs, Peter Brooker, identifies as a significant obstacle to the growth of online shopping.

“Every year between 10% and 15% of all deliveries from conventional carriers – that’s 120 million packages – cannot be completed and a card is pushed through the letterbox,” says Brooker. “The result is a journey of up to 10 miles to collect the goods from the nearest distribution centre, leaving the customer unhappy with the entire e-tail shopping experience.”

Collect+ offers a fixed-price service that allows consumers to collect, return and send internet acquisitions from PayPoint retailers enrolled in the scheme. Urban customers are usually within a mile of the nearest collection point, according to Brooker, while rural residents will find a Collect+ location under five miles from home.

Customers can nominate their most convenient outlet, which could be close to a station or their place of work, and they are sent a text message when the goods are ready for collection. “Not only is the service convenient for buyers, because there is full track and trace, but also the seller can have complete confidence that the parcel reaches the right person,” said Brooker. “The service is ideal for high-value deliveries of parcels under 10Kg and it’s already being used by large and small retailers alike.”

Another recent challenger to Royal Mail parcels is Shutl, which launched in London in December and has ambitious plans to cover the rest of the UK within the first quarter of 2010. “Why wait for it? Shutl it!” is the company’s slogan, backed by a partnership between retail outlets and local courier services that aims to reduce waiting times for deliveries from days to hours.

Shutl matches the carrier best suited for each delivery with the nearest retail stockholder, using its database of local services. Goods ordered online can be delivered direct to home or office within 90 minutes, or in any 24-hour window after that, according to founder Tom Allason, who secured £500,000 of VC backing for Shutl at the end of 2009 and anticipates further funding in the future as the operation expands to the whole of the UK and beyond.

The shift to online shopping has certainly changed consumer expectations in a society that more than ever “wants it now!” While the pack of private operators dogging the heels of Royal Mail parcels grows on an almost weekly basis, the leader remains profitable and is determined to win new business in the face of the competition, according to Royal Mail Senior External Relations Manager James Eadie.

“New products and services give us the very best chance of winning packets and parcels business in an intensely competitive marketplace,” says Eadie. “Our network is unrivalled, there are 1,400 delivery offices and a network of local Post Offices numbering over 11,000. Although the snow and bad weather affected all delivery services, our postmen and women managed to deliver to most addresses on time.”

Eadie said that the scale of the Royal Mail operation is often overlooked with 155 million items delivered for Christmas 2009, an increase of 10% on the year before. While acknowledging that failed deliveries do occur, Eadie is confident that Royal Mail customers are offered more options to collect their parcels with free redirection to another address in the same Post Code area or any local Post Office.

He dismisses reports in some newspapers that businesses and consumers are dissatisfied. “Last year we announced £120 million investment in modernisation with 9,000 additional handheld tracking devices to handle the packets and parcels generated by the increase in internet shopping,” he said. “Royal Mail operates throughout the UK and inevitably we suffer delays and hiccups on an average working day but we intend to win and retain business.”

In a fiercely competitive market, Royal Mail is not taking business for granted despite the competition. Christmas online sales this year were up by 29%, according to e-tail research group IMRG Director of Operations David Smith. That’s a big market opportunity for delivery services whatever the weather.

The Digital Ecosystem

JANUARY 19, 2010
For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment

We enter 2010 with the prospect of rising Blu-ray sales and the launch of 3D to spice up the New Year, so it is worth reflecting on the changes in home entertainment that imminent advances in consumer electronics will bring.

It’s not just the onward march of broadband that will shape the year ahead; there has been a fundamental change in the black and silver boxes that once lined the shelves of Dixons. What we know and understand about audio-visual hardware is about to alter significantly as the legacy of one box per task finally gives way to multi-function devices.

The announcement week that Tesco has joined the cross-industry Digital Entertainment Content Ecosystem (DECE) shows that Tesco Category Director for Entertainment Rob Salter has grasped what’s ahead. The membership of DECE includes studios, distributors, retailers and other parties interested in ensuring that digital deliveries of entertainment content will work any time, any place and anywhere in what has inevitably been called the “Martini moment”.

Consumers have tired of buying the same title over and again for each new format, and DECE members – currently numbering 21 – have united to set a common standard for digital distribution. Disney, which at one time was thought to be going it alone with its Keychest digital rights management (DRM) initiative, has stressed that its proposals are completely compatible with those of DECE. Format wars have no place in the coming decade, so full marks to Tesco for encouraging other retailers to get on board.

Inevitably 3D captured most of the headlines at the Consumer Electronics Show 2010, which opened in Las Vegas, but the impact of stereoscopic content on packaged media sales is likely to be insignificant until 2011 and beyond. The fact that we now have an agreed Blu-ray 3D standard is welcome news but the most important announcements to come from the show are about hardware: after many years in which convergence was little more than a buzzword, technology has finally converged.

The audio-visual landscape was reassuringly simple for most of this century with little change from the final decade of the 20th. The television set dominated the living room, a dumb box that received a regular supply of content from broadcast programmes and packaged media. Into that was plugged a recorder, a player and a set-top box for watching subscription programmes from satellite TV. Broadband added a connected computer to the mix, usually in a different room and always restricted to web browsing and low-res streaming video.

It was easy to label the function of each element in the chain – the TV, the DVD player, the PVR and the Sky Box – without having to look under the hood and understand what was inside. Even though the public eagerly accepted the flat screen, for most of the 13 years since it was first shown at CES 1997, it remained a dumb TV set.

In the same way as “go-faster stripes” were a must-have motoring accessory that concealed the fact that your budget hot-hatch was little different from a standard saloon, external appearance has been the biggest differentiator for entertainment hardware for many years. Chrome, stainless steel and polished wood defined the product’s place in the market; designer flat screens costing thousands sometimes housed the same small number of standard components to be found in much cheaper devices.

After several false starts, computing, communication and entertainment are now to be found in a single box together with a wide screen and a wireless connection to the world outside. It began with the Apple iPhone, which combines all of the above along with GPS, in what we once referred to as a mobile phone. The Nexus One from Google adds a camera with more megapixels and an organic LED (OLED) screen to the mix to compete with the many other devices with similar innards launched at CES.

At the Sony presentation on the eve of the show, CEO Howard Stringer announced that later this year any PlayStation 3 will be able to play Blu-ray 3D content through a simple upgrade. What was once a games console is now positioned at the heart of entertainment in the home, streaming content from the PlayStation Network (PSN) and delivering full HD 1080p to the TV.

The TV set, too, is no longer the single-function box it once was. Every major CE manufacturer at CES including Samsung, LG, Toshiba and Sony, is offering internet-connected TVs that link directly to catch-up services such as iPlayer and Hulu, stream Video On Demand and support web browsing. They are 3D-ready as well, as viewers of BSkyB will discover when the Sky 3D service launches later this year.

Another indication that the TV is no longer “just a TV” comes from LG, Panasonic and internet phone company Skype. What was once a free phone service on your computer has become a “1080p video communication centre”, bringing life-sized images to the living room TV. Of course, if you own the 152-inch 3D HDTV screen from Panasonic that was announced at the show, the prospect of conversations with larger-than-life relatives may drive you back to your desktop PC.

Portable phone handsets now include advanced GPS features that are the equal of dedicated satnav units, which have to be removed from the car every time you park. What does the future hold for companies like TomTom when an iPhone or a Nexus One can offer as much in navigation and a lot more besides?

Since most of us spend a lot of time on the road, it is no surprise that Sony, Ford and Microsoft are planning to include the car in the converged environment. They came together for the keynote address at CES 2010 to present their view of the automobile of the near future.

Get ready for cars with interactive dashboards, full satellite navigation, in-built web browser and content downloading direct to the in-car entertainment system. Thankfully, the driver’s screen is disabled except when parked, so conversations with relatives on Skype are restricted to sound only. Ford claims that it is the first car company to have the equivalent of the Apple App store onboard, allowing drivers to tailor their vehicles to their needs.

Perhaps now is the time to take off those go-faster stripes and acknowledge that the future has arrived.

Blu-ray Standards

DECEMBER 18, 2009
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Consumers are easily baffled by technology, as a BBC report on HD adoption confirmed this week. Although more than half of UK households have HD-ready screens, 91% still watch standard definition video, whether from DVD or broadcast TV. So the news that the Blu-ray Disc Association (BDA) has agreed a new standard for 3D could prove a mixed blessing – do we really need another standard for home entertainment or will it just cause confusion? The fact that the decision on Blu-ray 3D was illustrated in some reports by a pair of red/blue glasses shows just how perplexing the news could be.

The nineteen directors of the BDA, including representatives of Apple, Panasonic, Sony, 20th Century Fox, Walt Disney Pictures and Warner Bros. Entertainment, have learned from the drawn-out format battle that ended with Blu-ray’s victory in February 2008. This time we are to be spared the spectre of incompatible 3D discs and players; the BDA has listened and come up with the right answer.

Toshiba is on-board as a BDA member this time and the leading CE manufacturers are now free to follow their technical inclinations with the certainty that any combination of disc, player and screen will work together. Not only that, 3D discs bought next year will be playable on the Blu-ray players acquired this Christmas.

Stereoscopic screens without glasses will not be available for 2010, however, nor for several years beyond that although the BDA standard allows for their introduction if and when an affordable option is developed.

One interesting product differentiator that will remain will be visible when the trade marked “Blu-ray 3D” products start to appear in the shops. The 3D glasses supplied with the screens will be either “passive”, as currently used in most cinemas screening 3D films, or “active” and electronically controlled by the TV screen. The two systems are not interchangeable and that could have been a stumbling block in setting a single standard but, fortunately, the BDA appears to have steered around the problem.

Both types are a long way from the cardboard handouts included with earlier “anaglyph 3D” releases on DVD. Lightweight lenses are used in both active and passive glasses and they can be worn easily over existing eyewear. Active glasses incorporate an electronic “shutter” that blacks out each eye for a fraction of a second while the other lens lets light through. That is the system proposed by manufacturers such as Sony and by Panasonic, who are currently touring UK venues with their “Full HD 3D Roadshow” (pictured).

Most consumers will be accustomed to the passive glasses handed out in cinemas, which work well with large screens but may be less effective in the home. The difference can be summed up as “cheap glasses, expensive screens” or “expensive glasses, affordable screens”, and both options are now open to manufacturers of TVs and the projection systems used in home cinema installations. Thanks to the BDA agreement, the relative merits of the hardware will now be fought out by marketing departments secure in the knowledge that any Blu-ray 3D title will play without problems on any screen in the home.

By the miracle of what is known as “backward compatibility”, there will be no need for separate 3D and 2D SKUs when titles are released. The BDA has sidestepped potential issues by coming up with a standard that means all Blu-ray players manufactured to date will play 3D titles – although only in 2D. Similarly, the new generation of Blu-ray 3D players will accept DVD and Blu-ray 2D titles, some even generating the illusion of 3D from existing content. This will ensure that retailers will not have to segregate display racks according to format, or worry about consumer returns of “unplayable” discs.

There is particularly good news for those lucky folk who opted to buy a PS3 for its Blu-ray potential, rather than as a games machine. All they will need to enjoy Blu-ray 3D at its high-definition best is a new screen since the processing power to deliver perfect stereoscopic pictures is already installed.

Disc manufacturing for Blu-ray 3D is little different from today, the challenge lies with title design and authoring, so capacity is assured. Technicolor clearly knew that the news from the BDA was in the offing when they announced on Dec. 14 that they have the technology in place to deliver Blu-ray 3D discs in the first half of 2010. Sony DADC will undoubtedly follow suit, particularly in view of the boost to PS3 fortunes that the BDA agreement will bring, and Deluxe cannot be far behind. Independent replicators, such as MPO and Arvato, are also likely to benefit from the increased demand..

Other pieces of the 3D jigsaw are falling into place, too. The announcement by NXP Semiconductors of a one-piece silicon chip for flat TV screens that supports all 3D standards, including the half-resolution 3D system that Sky will launch next year, means that affordable 3D screens are in prospect. While the introduction of 3D by Sky is great news for consumer awareness, there is still clear blue water between low bit-rate broadcast TV and Blu-ray discs.

“No one’s expecting Blu-ray quality,” said a caller to the BBC’s “You and Yours” programme this week, complaining about poor pictures on HDTV, so the message that Blu-ray is better is getting across. The recent reduction of the BBC broadcast bit-rate to less than 10 Mbps will increase the quality divide for the 9% who actually watch in HD. Now the packaged media industry must convince the remaining 91% of HD-ready viewers that not only is Blu-ray quality worth watching but it is a future-proof source of home entertainment in any dimension. All they have to do is buy the discs …