International New Media: Evolution and Revolution

Christopher Harz examines the international new media market, chronicling its evolutions and revolutions.

Content delivered over cell phones is taking the entertainment world by storm. New media, including mobile TV and IPTV, was the subject at this years Sundance Film Festival and CES.

The topic of new media was hot at this years Sundance Film Festival, as it was at the recent CES (Consumer Electronics Show), and as it will be at the upcoming NAB (National Association of Broadcasters) Show.

Many of the independent filmmakers at Sundance are looking forward to new media including mobile TV and IPTV (television-over-Internet) to increase distribution channels and broaden audiences in coming years.

Of the many thousands of films that get submitted to Sundance each year, only a handful get major distribution deals. The situation is similar for getting a new TV show actually broadcast the ceo of a TV production company noted on a panel at the CES, The chances of an independent getting a TV show on the air are slim and none. The existence of hundreds of cable and satellite channels is deceptive most of those channels are controlled by a very few major companies. Videogame producers have known the hard facts of life for years. The truth is that there are three things more important in real life than Content is king, and they are, Distribution, distribution and distribution.

Steve Davis, president of mobile and online media at Infospace, notes there is lots of industry buzz on content for mobile, but that its still a very nascent business where the paradigm is evolving.

So, what is or are new media, and what new avenues are available for distribution on the global scene?

Mobile Content Platforms

Content delivered over cell phones is taking the entertainment world by storm. Steve Davis, president of mobile and online media at Infospace, noted at the recent NATPE (National Association of Television Program Executives), Virtually every major studio and network has announced in-house mobile initiatives, and a number of major production companies have dedicated creative teams developing content specifically for mobile.

He also noted the industry is still feeling its way along. While there is a tremendous amount of buzz in the industry you can barely open a newspaper or magazine without seeing a piece on next generation mobile content and technology, ours is still a very nascent business, where the paradigm is still evolving. The drive to try out new forms of content, figure out business models for them (pay-per view, advertising, subscription, other?) and then expand into whatever works, was summarized by the NATPE theme, Digitize, Monetize, Capitalize.

Although the displays of mobile devices are tiny, with cell phones at around two inches or so the total number of them is really impressive. There will be about two billion cell phones in the world this year, increasing to three billion by 2010 (CIBC research), and users seem willing to upgrade to new and better ones every 18 months or so over 825 million new cell phones were sold last year, allowing manufacturers such as Samsung and Sony to come out with new, ever more media-friendly models.

If Americans want to see what their new phones will look like in 12-18 months  they can simply fly to Tokyo or Helsinki, and walk up to any teenager and check out his mobile.

The trend toward high-tech cell phones is even more marked in Europe and Asia than it is in the U.S. When the Berlin Wall came tumbling down, much of the new Europe found itself with hopelessly antiquated analog landline phone systems. I remember visiting a factory manager in Communist East Berlin who had five phones on his desk, each one a dedicated line (one of them going to Moscow), so he would not have to wait two-three hours for an operator to put him through to his destination.

Rather than upgrade these legacy systems (as the U.S. kept doing), Europe chose to leapfrog into brand new technology wireless digital cell phones. Asia chose the same path, which is why it is now easy for Americans to see what their new phones will look like in 12-18 months they can simply fly to Tokyo or Helsinki, and walk up to any teenager and check out his mobile.

Cell phones have improved markedly, with displays evolving from under 100 lines of resolution to 320x240 or better, rich stereo sound (via NVIDIA or ATI dedicated audio chips), the ability to show video and Flash animation, and better battery life (hint: eBay is a cheap source for an extra battery or two).

These new improvements greatly affect the type of content that can be distributed to a mobile set. Early cell phones had little memory, which meant that content could only come one way: live, via the telephone company (telco), with each minute being charged for. This put the carrier into total control of content. American carriers have tended to keep tight control, allowing only a few hundred games on a telco system, for instance. I remember an EA (Electronic Arts) executive two years ago, bitterly complaining how hard it was to get a game onto Verizon.

NTT of Japan has been a far different story instead of maintaining anal retentive control over content like the U.S. telcos, it allowed third parties free rein over content movie clips, cartoons, animated horoscopes, digital pets, etc. NTTs DoCoMo division collects monthly fees, takes 7-9% off the top, and gives the rest to the content producers. Everyone is happy, and the number of such producers has grown into the tens of thousands, as NTT became the largest ISP in Japan.

Jamdat offers content on the Web. Users can buy it online and download it to their phones in a process known as store-and-forward. © 2000-2004 Jamdat Mobile Inc. All rights reserved.

What has recently allowed bypassing the strict telco controls has been more memory in cell phones, so games and other content can be watched without being connected. Aggregators such as Jamdat now offer content on the Web, and users can buy it online and download it to their phones, a process known as store-and-forward. New phones allow insertion of flash memory chips SanDisk showed its new mini SD card at the CES, .03-cubic-inch in size, which is capable of holding 1 gigabyte of storage, enough for 16 hours of music, or several TV shows and movies. The mini SD is intended for cell phones; it slips into a postage-stamp-sized adapter that lets it be inserted into normal SD memory slots in computers and TVs.

Electronic Arts recently bought Jamdat for about $700 million a measure of the market size that EA expects in mobile media.

In addition to new families of cellphones, mobile media got a giant kick in the pants with the release of Apples iPod Video, which comes with 30 GB or 60 GB of storage and the ability to download and view TV shows, films and video podcasts (sometimes called vodcasts). The rapid sale of eight million pieces of content for the iPod at $1.99 each set off a worldwide frenzy to package content both old and new and offer it online. Aggregators such as Apples iStore, CinemaNow, iWatch-Now and Google Video offer thousands of TV episodes, films (mostly very short videos), music videos, and video clips. Quite a few, such as You Are TV, have the .tv Internet address extension, making this export from the tiny Pacific nation of Tuvalu popular worldwide.

The conventional wisdom is that mobile TV watchers have very short attention spans, and watch their small screens only while waiting in line for something or traveling on a bus or train. Consequently, many aggregators are looking only for three- to five-minute video episodes. Comedy (including animation) and music videos fit very well into this framework, and there is hot demand for them at aggregator sites. New forms are emerging ringtones (a billion-dollar global industry), for instance, are starting to be replaced by their video equivalent. These ultra-short clips, known as chaku-motion in Japan, promise to form an explosive market, and are keeping many special effects houses in Tokyo working around the clock to keep up with demand. (Each chaku-motion costs about $1.)

SanDisk showed its new mini SD card at the CES, .03-cubic-inch in size, which is capable of holding 1 gigabyte of storage, enough for 16 hours of music, or several TV shows and movies.

One trend that seems to be successful is mobile content that creates social connections Trip Hawkins, the founder of Digital Chocolate, refers to mobile platforms as social computers, and believes that content should foster peoples desire to get together. Its all about community, he says. Mr. Hawkins has some credibility in the content area he founded Electronic Arts, which will produce over $4 billion of content in the coming year.

Mobile entertainment creators are experimenting with novel forms of short format content executives at NATPE spoke of getting long format into short bites. Some independent content producers are packing sneak previews of longer films into five minutes, hoping the short clip will draw viewers to the full film. Others are starting series of adventure episodes, reminiscent of the wildly popular action episodes shown in American movie theaters in the 40s and 50s, the so-called serial films or cliff-hangers, where each breakneck segment starring Zorro or Flash Gordon or Buck Rogers or Captain Marvel or Superman ended on a perilous note, and left viewers wanting to come back for more. It appears that everything old is new again.

The conventional wisdom that mobile viewers only want short clips may be wrong. Replays of TV shows (24-minutes or even 48-mintues long) have sold very well. A major study on mobile TV, conducted in Oxford in the U.K. by the team of Aqriva and O2, showed that viewers tended to watch for about 23 minutes once or twice a day, for a total of three hours a week, and were not especially drawn to ultra-short segments. Furthermore, viewers did not just watch their mobile screens while waiting for a bus much of the viewing of handheld sets was inside the users homes, with peak viewing around the three mealtimes each day.

The rapid sale of eight million pieces of content for the iPod video set off a worldwide frenzy to package content  both old and new.

In summary, independent entertainment producers have a lot of choices for where to pitch their content, including mobile content aggregators such as GoTV or Jamdat, conventional film or TV studios (at their brand-new digital media offices, which appear to be more open to indies than the hidebound old media offices are), telephone companies such as O2 in the U.K., Vodafone in France or NTT DoCoMo in Japan, cell phone makers such as Nokia or Ericsson (many new cell phones are shipped with games and other content included).

The New World of IPTV

Another emerging force, and one more open to longer-form films, is IPTV, the transmission of television and other video over the Internet. Although transmitting videos via the Internet has been tried before, in the late 1990s (remember DEN and POP?), what is different this time around is the availability of broadband, which now supplies over 100 million households worldwide. In general, the video signal is broken up into tiny chunks (called packets) at the sending end, is sent via Internet connections to an ISP at the receiving end, and is then transmitted to the viewer via landlines (such as phone DSL or fiber) or wireless. At the viewers end, the packets are reassembled into the original video program, and the content is watched either on a computer screen or after passing through a set top box (STB) or other translator - to the living room television screen (it can also be stored for later display on a mobile device).

IPTV seems ready to become a household word, with projections that it will have tens of millions of users and tens of billions of dollars of revenues by the year 2009. One of the reasons for this explosive growth is that a major battle is shaping up between the telcos and the traditional distributors of TV such as cable and satellite. Because cable operators have gotten into the telco business, offering phone and Internet data services, the telcos are striking back, by offering a triple threat telephone, Internet data and television all over the telephone lines (which are being upgraded with optical fiber), and all using the common Internet protocol as a common digital language. Many households will soon get their TV over the Internet, therefore.

Trip Hawkins, the founder of Digital Chocolate, refers to mobile platforms as social computers, and believes that content should foster peoples desire to get together.

Content creators may want to think of two basic types of IPTV: walled gardens and open Internet. Walled gardens describe a closed system, where the service provider (such as a telco or cable company) uses Internet Protocol to provide television content, but does so only for its own subscribers someone not living in an area served by Hong Kongs NOW or the U.K.s HomeChoice will not be able to view the content. A walled garden offers some new distribution possibilities for a content developer the telcos, especially, are looking for new or creative content to get viewers to switch over to them from existing cable or satellite venues.

However, walled gardens are still tightly controlled, and the content has to be pitched to each of these operators. What is astonishing is that telcos around the world are suddenly in show biz. Some of them cover very large areas, such as Frances Vodafone. The advantage to walled gardens is that they have a large number of captive viewers, and that the quality of the Internet-delivered content is very high (because all the nodes of the system are owned and can be tested by one party), and can even include HDTV.

The major IPTV operator right now appears to be NOW TV in Hong Kong. France Telecom is the leader in Europe, followed by Fastweb in Italy, Homechoice in the U.K., and Imagenio in Spain. In Asia, China and Japan are rapidly developing IPTV, whereas South Korea (which has the highest-speed Internet system in the world) is tied up in legal battles between telcos and the cable companies, which are desperately trying to hang onto their turf.

Certain producers offer content directly from their own websites, such as JibJab, which offers political satire. Animation is expected to be in high demand, because it travels so well across international borders (some simple voice-overs will customize it for different languages) a story starring a blue fox can be understood and enjoyed by cultures that might be shocked or befuddled by Desperate Housewives.

IPTV may lead to the emergence of a form of entertainment that has long been neglected, namely short films of 20 minutes or so, which have not been able to find a real market since they were popular in the 1950s, as lead-in segments at movie houses before the main feature. A sign of the new attention being shown to short films is the creation of a brand new Emmy the National Academy of Television Arts and Sciences recently announced that a winged golden statue will be awarded by them for new media content, 20 minutes or shorter in length.

IPTV is about to become a household world. Many homes will get TV over the Internet due to the triple threat by telcos, which will offer telephone, Internet data and television over phone lines.

Several international trade shows this year will offer an overview of both the technology and business models behind IPTV. One of these is the IPTV World Forum, running from March 4-6, 2006, in London, which will feature dozens of telcos such as BT, China Netcom and Fastweb, as well as content players such as MTV, Disney, TVN Entertainment, On-Demand Group, and Fashion TV.

Upcoming New Technology

Whereas new media may be emerging slowly this year, there are a couple of technical developments that may well provide a tipping point within a year or so.

One is the development of hybrid cell phones, which can receive broadband WiFi as well as normal telephone signals. The ability to sniff out and switch over to WiFi signals means that a cell phone can receive content at very high (1Mbps or better) rates, instead of the 100Kbps or so that cellular networks typically provide. Moreover, they can bypass the phone companies, and get content directly from the Internet, without any control by the telcos. A nice side benefit from this capability is that users can essentially phone for free (or very cheaply) over the Internet, making long distance calls via Skype or other VoIP (Voice-over-Internet Protocol) services, a feature that gives telco executives nightmares.

A lot of people are working on how to get around the small screen problem with mobile devices. Several types of goggles that attach to mobile players were on display at the CES such devices look like sunglasses, and offer virtual screens of around 15 inches for display of mobile content. Another solution is that of Microsystems, which shines a laser directly onto the eyes retina, which results in a clear picture that appears to be 20 inches or larger.

Another major development is the New Internet, a massive upgrade to the existing Internet that will give walled garden-type benefits such as quality control, security and cheaper delivery to the open Internet. Formally known as IPv6 (Internet Protocol version 6 the present protocol is IPv4, in use since 1973), the New Internet will greatly facilitate high-quality IPTV and delivery of mobile content.

Summary

New Media are beginning to offer new distribution channels, and there is reason for hope for independent creators of content such as games, movies and TV shows. The wave of the future could be seen at this years Sundance Film Festival, where film studio execs now rubbed shoulders with new media distributors such as IFC Films, Vongo (from Starz Entertainment) and T-Mobile. Aspiring producers should check out as many new venues as possible. Even if the revenues from some of these distribution channels may not be huge in the 2006/2007 time frame, a successful release over mobile or Internet can result in building up a track record that might impress the old-media types enough to take your pitch seriously. And eventually, new media should be able to bring about a revolutionary idea that creative content really has a chance to be judged and rewarded on its merits by a global audience, rather than being subjected to a process where success is akin to winning the lottery.

Christopher Harz is an executive consultant for new media. He has produced videogames for films such as Spawn, The Fifth Element, Titanic and Lost in Space. As Perceptronics svp of program development, Harz helped build the first massively multiplayer online game worlds, including the $240 million 3-D SIMNET. He worked on C3I, combat robots and war gaming at the RAND Corp., the military think tank.

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