Jennlog

This proposed service has so many vertically integrated layers of wrong it is nearly impossible for me to believe HBO is the creator of this service.

I suspect the real brain trust behind this service is Time Warner and I suspect HBO was selected as the Cable Producer-Programmer launch partner because of its familial relationship with Time Warner Cable and an obligation to participate in corporate-mandated “innovations”.

Time Warner Cable and the other cable operators who could sign on to this service have the most to gain if this this service becomes successful. It will enable cable operators to extend the influence of their walled garden infrastructure onto media distributed over their Internet services.

In the world of cable television media production and distribution, there are five roles that “touch” a piece of media before the consumer sees a picture in their home:

1. Producer - creates the content for a
2. Distributor - sells the content to a
3. Programmer - orders the content into linear channels for a
4. Packager - prices the channels for distribution by an
5. Aggregator - sells subscriptions to consumers

HBO is the Producer of its own award-winning shows and series and also the Programmer that positions these shows amongst the many channels it operates between films and other content it purchases from Distributors.

Time Warner Cable packages the HBO channels into tiers and aggregates the content in the tiers to set top boxes leased/owned by subscribers.

The Time Warner Cable subscribers who will be eligible to receive this service are required to also subscribe to the Time Warner-owned HBO premium pay TV package and pay for the Time Warner-owned Broadband Internet service.

This announcement is less about a customer facing media product and more likely the proof of concept for a middleware solution created for cable operators, enabling them to tie the monetization and delivery of Internet media to their legacy conditional access/CRM databases.

In an optimized Internet-based media production and distribution ecosystem, there are fewer roles:

1. Producer

There is no need for ordering and positioning of media as these are roles assumed by the consumer and the distribution of media is negotiated at the transport layer like all Internet communication.

There is no reason why an Internet-focused service should demand a subscriber presence and investment in a non-Internet infrastructure. A small number of highly technical HBO subscribers may find this service useful, but with so many restrictions and conditions on the media, the average family will probably just rather find media through the Internet with the least resistance.

Why is this service ultimately going to fail? It relies upon obfuscating the efficiency of transport-layer distribution with application-layer legacy cable conditional access technology (and infrastructure). The service is marketed to cable systems rather than consumers as a solution to reduce the churn of premium HBO subscribers. Ultimately, this service requires that a “Packager” role be reconstituted by MSOs on the Internet, and that’s just messy.

I predict this service will die within a year.

During the last few days, much has been written in the popular tech blogs about the throttling actions of Comcast vs. the proposed metering actions of Time Warner — suggesting that metering might be the preferred and fairer approach to restricting subscribers’ growing bandwidth usage habits. That discussion only focuses on a small part of the bigger picture, however.

From the network operator perspective, degrading service and metering service are mutually exclusive actions that create opportunities for monetization on each side of their operation at the application layer.

In the media distribution food chain, cable companies and telcos have always monetized either side of the communications relationship they are facilitating — at the application layer. Connectivity and access at the transport layer are not monetized by legacy communications infrastructure as it is with IP networks.

Cable companies charge, demand ad revenue opportunities or otherwise negotiate remuneration from television networks requesting availability to their subscribers and then turn around and charge subscribers for access to the television networks.

“Network Availability” (what AT&T and others are suggesting they need, in opposition to “Network Neutrality”) is about restricting and monetizing media availability to subscribers.

“Conditional Access” and DRM are about restricting and monetizing subscriber access to media.

In an application layer monetized world, if an operator can’t negotiate a revenue stream from a media producer or aggregator, availability of the media producer’s product is degraded or disallowed — If revenue can’t be obtained as a result of a subscriber request of a media product, access is prevented.

With the Internet, network operators have been left out of the media delivery monetization pie, other than deriving income by supplying “Naked” transport in to and out from their infrastructure.

Comcast and Time Warner are approaching the monetization of Internet-delivered media completely differently.

If Comcast can successfully negotiate frees from media producers and aggregators in exchange for not degrading their Internet-delivered media, Comcast has successfully generated a huge stream of perpetual income that didn’t exist until that deal.

If Time Warner can successfully implement fees from subscribers in exchange for delivery of their Internet-delivered media, Time Warner has successfully generated a huge stream of perpetual income that didn’t exist until those subscribers signed on.

Yesterday, Apple officially launched their new iTunes Video Rental service.

The film rental service is built upon the existing content management and distribution system that facilitates the sale of audio and video products across the Apple CE line, including a newly untethered and upgraded IP-based AppleTV set top product. I presume it will also work on iTunes for Windows.

Is this service revolutionary? No. Evolutionary? Yes.

Cable operators in the Americas and Europe have offered VOD-based rentals for almost a decade (in Asia, almost two decades), but have not expanded their focus beyond their prized set-top box — some have started developing parallel stream-based services on the Internet, but there is no cohesive product relationship. Cable-delivered services have started and ended at the television set.

In relation to online services, Disney’s MovieBeam and film industry venture Movielink both offered film rentals by all the major studios in the same price range as the new Apple service, but their products were not very accessible and alienated consumers.

Apple’s agreement with Hollywood enables iTunes to rent movies 30 days following a DVD releases. This is presumably done for the same reasons that Hollywood fragments their DVD distribution amongst several region codes.

Apple operates the world’s most popular electronic media distribution service and is clearly the manufacturer of the world’s most popular portable media players. This dominance feeds directly into the adoption of their iTunes audio and video manager/player, compatible with both Microsoft Windows and Apple’s own OS X — and closes the loop on a single-provider “fully integrated” Virtual Walled Garden Overlay.

Apple will be the first effective solution to bring wide-scale video from the Internet to television. On the other hand, YouTube and its clones that drive traffic through novelty and news will not escape the immediacy of the social media-driven browser universe — regardless of mobile and television-focused efforts.

While this product will be the service to popularize electronic film rentals to the general public, other services such as the unlimited electronic streaming delivery products from Netflix will equally share this vanguard, but in a more constrained and restricted manner.

After an agnostic media management and delivery infrastructure reaches the edges of the Internet, Hollywood will pull back control over their media and begin to pursue direct delivery of media themselves

Hollywood has a history of taking control of media delivery channels that cross over the boundary from experimental to mass market — acquiring their video tape manufacturers and distributors. Affiliate television stations are finding the territorial relevance that solidified their existence in the traditional television delivery value chain has been erased by the global and direct reach of the Internet enabling the parent networks to deliver television directly to consumers through websites.

Eventually, the proprietary FairPlay format of Apple will also be superseded by a consumer-friendly format, popularized by consumer media generation — enabling/allowing consumers to integrate their own personal media with acquired media across consumer-chosen devices.

Apple’s iTunes Rentals service is evolutionary — as a stepping stone. It’s not going to kill DVDs or DVD rental services because the majority of the movie viewing public won’t immediately change their habits to pay apple $3-6 to watch a movie.

Apple will see the world to the time when Hollywood (and all media producers) will be have the capability to deliver media directly into consumer’s lives with commodity technology, infrastructure and players with flexible billing/usage models allowing for purchase, rental, subscription, advertising-support, gifting, freebies, exchanges and situations not thought of yet.

Today, Netflix announced they are offering their subscribers “Unlimited Streaming” of movies and TV shows “on their PCs” — beginning today their “unlimited” DVD rental subscribers (tiers beginning at $8.99/month) may start streaming unlimited movies and TV shows.

The Netflix press release specifically refers to PCs as being the destination device for their unlimited streaming plan, but depending on the formats and encryption selected, a “PC” could mean any IP-based device connected to a television — an AppleTV or Mac Mini, Tivo, Slingbox or Microsoft Media Center. But, this information is conspicuously absent from the Netflix site which has me suspecting it’s a not-so spectacular Windows-only format.

The announcement of a “Hollywood-fed” full-feed pay-one-price video streaming service is huge, but only if the format is eventually transportable and compatible with mobile and wireline devices. If it is tied to Windows or restricted to a specific player, it’s just another proprietary footnote on the pathway to a useful service.

The number one loser in the market today due to this announcement has to be your local cable company. Cable companies will try to launch stream-based services, to keep their customers inside “The Garden” while they are out and about in Internet land, but will largely fail because cable doesn’t have the mind share when consumers start thinking of feeding their IP-based video devices.

If Comcast scrapes through the FCC hearing on their practice of degrading P2P services used by their subscribers unscathed, you can bet that they (and other operators) will start degrading all third-party streaming services on their networks unless direct per-sub revenue shares are negotiated.

None of the streaming deals are exclusive as far as I know, so as soon as someone in Hollywood starts to see a winning model emerge, they will start feeding the streaming channel directly. Netflix should enjoy their market success now, while it lasts — they will be in Blockbuster’s shoes in three to five years unless they develop some extreme competitive technical and marketplace advantage (highly unlikely).

In my recent post about not attending CES, I referenced an idea I have about a conference I’d love to attend, but doesn’t exist — sort of a “Whole Communications Show and Conference.” Later, I shared a little of my philosophy about media relationships and how devices and infrastructure play a facilitating role rather than a central role.

Media relationships are rare in today’s communications environment — In fact, media producers seem to have been actively trying to avoid them. The cable system operators and telcos have amplified this inclination, by locking media and communications products behind Walled Gardens.

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However, both audio and visual media have reached the point where their consumable and broadcast formats are universally available on one hand and universally usable on the other. This optimal state enables the media products to escape proprietary devices and networks and exist wherever the format is understood.

The recording industry has been very slow to adapt to this development and the motion picture and television industries appear to be a little more cognizant about their future, but seem to be hesitating when it comes to fully embracing change.

There are several high-profile examples of television networks developing Windows-only media download services and film studios still encourage the formation of operator-based exclusive content deals.

Tethering media products artificially restricts media’s availability to consumers and conversely constricts a consumer’s access to media — this is why “Network Neutrality” is important. However, if media producers were truly invested in neutrality, they would be enthusiastically pursuing the formation of media relationships, and they aren’t — yet.

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Under the misnomer of “Convergence,” media producers have been sold on a vision of the future that advises them to adapt their existing products from one old media device or infrastructure onto another old media device or infrastructure.

The “Triple Play” concept invented by the incumbent infrastructure operators is a perfect example of the linear thinking and tunnel vision behind “New Media”.

Media producers are best to forget about Triple Plays and start conceptualizing media products for features that exist across platforms and networks — there are no more televisions or stereos, there are players.

The days of remonetizing assets across and upon new platforms are also over, as demonstrated by the fact that everyone has re-encoded their music collections for use upon audio players — it’s only a matter of time before consumers start re-encoding their film and television collections for use upon video players.

“Mobile Video”, “Mobile Web” and “Mobile Commerce” do not exist — short of operators obfuscating access to their platform to inflate the size of their Walled Garden. There will be no logical reason why IP video, web or commerce can’t exist natively within a mobile environment as it does on any other Internet-connected device.

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There are a couple dozen media industry conferences produced worldwide. Most have been around for decades, begun as their respective industries took shape. Until the 90s, most of the media industries were segmented along proprietary infrastructure — For example, cable television shows were all about the newest set top box, largest head ends and widest coax cable and mobile telephony shows were focused on how to deliver more voice calls, of a higher quality through a matrix of smarter cell towers from smaller portable telephones.

As the Internet gained users and growth, an avalanche of digital media applications were tacked onto the formerly-proprietary networks and devices courtesy of IP-inspired technologies. The trade shows however, remained very linear in their focus. Even their “New Media” context was all about identifying and segmenting off the newest digital services within their old, proprietary business models.

I believe there will always be a need for shows for device manufacturers, for media producers and game developers to meet separately amongst others in their field to formulate standards, discuss best practices and whatnot.

Infrastructure operators across platforms need to begin thinking of meeting together at a large IP Network shindig (less NetWorld + Interop, more outward-facing) or else become naked transport against their will. Whole Media will commoditize incumbent infrastructure into raw transport, they will need to become the best, most efficient transport they can to compete effectively in a Whole Media economy.

The Whole Communications Show will give media producers a place to spend a little time at the 50,000 foot level with device manufacturers and work on products that create media relationships independent of infrastructure and allow for license federation across devices — Whole Media.

Producers that ignore Whole Media will find their existing and planned business models and partnerships disrupted — and eventually, their assets outside of their control.

Consumers are quick to understand that they can move abandoned media wherever they desire with or without the producer’s participation. Whole Media is about grabbing hold of the media relationship with consumers and actively working with them to facilitate a relationship wherever it may go.

Whole Media is a relationship without segmentation — concerning products without boundaries.

All the hype about Apple’s iPhone has me thinking about a device so cool and useful that I would do just about anything to own one. These are the features such a device would have:

Form factor

1. The device would be about the size of an iPhone and weigh no more than 4oz.

Interface

1. A high-definition screen, larger than 240×320 pixels — preferably 480×720 at 180dpi or higher. It would work in both portrait and landscape orientations.
2. There would be on-screen virtual keys and also connect to a bluetooth keyboard.
3. It would accept voice commands, including voice dialing.
4. It would be capable of connecting to a bluetooth headset
5. The video could be output into an external monitor (think airlines / desktops / tvs)
6. The OS and Applications windowing API would allow for slick and reactive experience.

Memory and Storage

1. There would be at least 2GB of RAM
2. There would be at least 20GB of stateful storage (disk or solid state).
3. There should also be a USB2.0 or Firewire port for external storage
4. There should also be an API available to connect to WebFS or some other remote IP-based storage service.

Power

1. The battery should be removable, with spares sold as accessories.
2. Battery life should average 8-10 hours, regardless of voice or video use.
3. There should be modular mains connectivity for worldwide AC options.
4. There should be an option for Car, Boat and Plane DC power connectivity.

Multimedia

1. There would be a camera with a resolution of at least 2MP. This would be used for taking photos or capturing video.
2. It should be able to receive streaming video from files or broadcast
3. It should be able to address my home media server(s) through a tethered sync or from any IP network
4. there would be a stereo microphone.
5. There would be sound input (line and mic) and output jacks (line and headphone).
6. There would be a hardware OpenGL 3D render engine.
7. There would be hardware H.264/MPEG 4 encoding and decoding. A FPGA/Media ASIC for future codec compatibility

Applications

   Productivity

1. Email should be compatible with IMAP(S), POP3(S) and Exchange over IP
2. Calendar should sync over IP with Exchange, .Mac, Yahoo or Google calendars and also have the option to sync via tether to my local Outlook/iCal
3. My address/phone book, notes and lists should also sync over IP and/or tether.
4. I should be able to plug in a GPS USB key and tie location into meetings/events in my calendar
5. There should be an option to perform the above securely (OpenSSL, MSFT VPN and Cisco VPN compatible)
6. The geek in me also wishes an SSH client — because my productivity often relies upon a command line.

   Internet

1. There should be a full featured web browser with Javascript, Flash and a full Java Runtime Environment
2. There should be freedom for developers to develop for the device platform, release open source applications or commercial applications as they desire
3. There should be freedom for consumers to use open source or commercial applications upon the device as they desire
4. There should be an open API that Internet software can utilize to plug into the camera, microphones, USB and A/V ports.

   Voice Calling

1. 100% Voice over IP.
2. Roaming and Long Distance constraints and rules would not be tied to the device.
3. The phone number or network address should be temporarily or permanently assignable to other IP-based devices

   Video Calling/Conferencing/Receiving

1. 100% Video over IP.
2. Compatible with other IP-based video calling and conferencing standards as they are adopted
3. Compatible (and addressable at no extra cost) with my IP Video Television services and subscriptions

Network Plan

1. Membership/Subscription/Identification/Access Control should be performed and verified at the personal level rather than the device level. I should be able to replace my IP Communications device freely without pre-notifying the network operator and having to negotiate new device credentials.
2. The communications device will never ever register itself on a cell/mobile operator’s voice network. Ideally, there will be no “Home Network” registration required and therefore no need to roam.
3. The network service will actually be a network access aggregator who, through relationships with WiMax and WiFi network operators, will ensure that I have a near-seemless worldwide access experience at a flat rate price.
4. There is no mandatory application or service feature bundling requirement from the network operator or aggregator. I am free to form application delivery relationships with anyone I wish, worldwide (including VOIP and Television).
5. I am free to use any network-delivered applications or device-based features I wish without network owner/operator/aggregator interference.

Price

1. The base device MSRP should be US$700.00 or less.
2. The network subscription fee should be US$100.00/mo. or less.
3. Alternately, network subscription fees could be subsidized by ads or traceable in-network affiliate-like purchase agreements or gifting by other services
4. Application subscriptions should be US$20.00/mo. or less — or ad supported, or free.

There are two consumer electronic DRM stories bubbling to the Internet consciousness recently.

The first has to do with Sony Pictures deciding it was time to start encrypting their movie content with a new DRM scheme that their own Sony Electronics DVD Players (not to mention any other DVD player made until maybe a month ago) cannot decypher.

This can’t be too good for Sony, as they are still struggling with the poor “goodwill” created when they started installing malware onto their customer’s PCs.

If at first Sony doesn’t succeed, try again. And again. This is clearly a protracted example in how to piss customers off, permanently.

The second involves the reprogramming of more recent HD-DVD and Blu-ray “high definition” disc players that, unlike their DVD playing hardware cousins, were actually meant to be “field re-programmable.”

AACS LA, the DRM licensing authority for all your favorite take-home HD media needs has determined that it is time to release new DRM keys for your favorite take-home HD media players.

This is all fine and good, in an ideal world where hardware keys and locked media are defined and matched dynamically, you expire the old key and activate the new key at the same time you expire the old lock and activate the new lock.

The problem with hardware is, once it has left the factory (or store), you are purchasing a device with a defined key. The problem with take-home media is once it has left the factory (or store), you are purchasing a piece of media with a defined lock. The lock and key have to match before you are allowed by the media producer and the hardware manufacturer to enjoy your content.

If one side of the key holder and lock builder scenario diverge, consumers of keys and locks (because this is where the consumer media marketplace has evolved) are left with locks, keys and no content.

Field-programmable devices (such as HD-DVD and Blu-ray disc players) can accept their new keys by an automatic update included with all new locks er media, simply include a special header in the media handshake process that forces the player to avoid the content on the disc and install the new keys from the disc instead and then reboot. For device manufacturers, this is the ideal key distribution case. The other common hardware/firmware update can occur through manufacturers requiring consumers to download software from the Internet onto a CD-Rom and have them turn on their DVD/CD player with the disc inside (this is less ideal, as it requires alot of action from a consumer).

Where the funkiness begins is when key expiration is required. What happens to the old locks in your collection that needed this key to play? Well, they don’t unless they are allowed to work, only on media produced before the revocation date (when the new key and lock set were published).

The second amount of funkiness starts when lock makers (media companies), decide it is time to make, design and distribute a new lock. Not simply filling the distribution pipeline with new locks generated from the same algorithm the previous key could unlock but creating a new algorithm. This new algorithm needs to be installed along with new keys inside your DVD player or computer so that the media encrypted with the new lock. But what about the old keys and locks? Well, they don’t just go away either. They stick around anyway.

Requiring a media player to store and understand all these keys and algorithms is fine when it’s a PC, but sooner or later an “untethered” device will start to slow down or simply stop working because it can no longer handle all of these firmware changes.

The media companies have already defined a path, stating that it is the consumer equipment manufacturers’ responsibility to keep consumers up to date with the keys required of the media companies’ locks, even when these locks are non-standard and proprietary (and breaking the media format specification).

I predict two things will happen. Consumer electronics manufacturers will tire of their devices’ becoming randomly but eventually disabled by media companies’ drm policies. And, consumers will get pissed off that the lifetimes of their electronics and purchased media no longer means life-time it means time-to-disabled.

DRM can not last.