Category: The Front Line

Well, Whaddya Know!

It’s late July, and the summer doldrums have definitely arrived. The flow of press releases has slowed to a trickle, and all kinds of strange stuff arrives in my mailbox several times a day – most of it destined for the recycling bin. Even so, there are a few stories worth mentioning.  Let’s take a quick glance.

The tables have turned: Remember when your parents limited the number of hours of TV you could watch in a day? Well, it appears Millennials are self-regulating, when it comes to the boob tube.  According to a story on MediaPost from last Thursday, Nielsen has discovered that the number of hours spent viewing traditional TV continues to decline year-over-year for this demographic.

Nielsen’s current numbers show that the average Millennial watched a little less than 22 hours of traditional TV, per week, during the first quarter of this year. That’s a decline of 14 minutes per day from Q1 2013. In contrast, their parents (50 – 64 and 65+) watched more than twice that amount at 45 and 52 hours, respectively. (Well, us Baby Boomers grew up with television, so maybe that’s not surprising.)

Much ado about nothing? Aereo, the renegade broadcast TV-over-IP “antenna” service that lost a major ruling in the U. S. Supreme Court last month, flip-flopped in its assertion that it wasn’t a cable TV system and insisted it was, applying for a license to broadcast copyrighted content from the U.S. Copyright Office. But Aereo’s request was just turned down by that august body, putting its future into limbo.

Now, a story on the GigaOM Web site suggests that Aereo had maybe 100,000 subscribers at most. How do we know that? Well, as part of its application to the U.S. Copyright Office, Aereo submitted a payment of $5,310.74 to cover “royalty and filing fees” from January 2012 through the end of last year. Using some basic assumptions about Aereo (such as its monthly subscriber fee) and royalty payments of .33 to 1.064% of gross profits, law professor Bruce Boyden backed into a guess of around $1 million gross revenue for that time period.

That’s not a great ROI for the time and investments Aereo made, and the article stated that, even if all of the $1M in revenue came in 2013, it represents only 10,000 subscribers.  We’ll have to see what the next steps are, pending more hearings in court next month.

Not selling like hotcakes, Part I: Apple’s recent financial results show that the company sold 35.2 million iPhones in Q2 2014. That’s up over 12% Y-Y and was largely driven by a big jump in sales in Brazil, Russia, India, and China, a.k.a the BRIC countries. Good news, but offset by the fact that iPad sales dropped 9.2% in the same quarter. That follows a 16% decline in iPad sales in Q1 2014. What’s going on here?

One obvious answer is that consumers don’t turn over their tablets quite as often as their phones. I’ve seen other research that shows a retention rate of 2+ years for tablets, which implies satisfaction with these products. But that doesn’t help Apple’s bottom line, which is why they’re pushing into the “wearables” market – and just got a patent for a new smartwatch called iTime that features sensors, in-strap circuitry, and support for arm and wrist gestures, according to the ETCentric Web site. Will it offset declining iPad sales?

Not selling like hotcakes, Part II: Finally, from the Home Media Web site, we get a story that says “UHDTVs are underwhelming at the marketplace,” based on market research by HIS. The share of UHDTV shipments among the top 13 LCD brands reached 5% in May, up from 4% in April, 3% in March, and 2% in February. (Hmmm…so, they’ve increased by more than 100% in three months? That’s not too shoddy!)

IHS goes on to state that “UHDTV pricing remains too high to gain meaningful market share.” Well, duh! Until recently, all Japanese and Korean UHDTV sets in the 55-inch class were priced close to $3,000, and we know that’s a non-starter. But LG recently cut its 55-inch 4K LED TV to $1,999, and Vizio will be launching a 55-inch 4K LED for just $1,300 in the fourth quarter.

HIS analyst Jusy Hong was quoted in the story as saying that UHDTV shipments will increase to 14.5 million by the end of the year, up from a paltry 2 million in 2013 – and that’s nothing to sneeze at.  Samsung and LG are the kingmakers here, accounting for 46% of all UHDTV shipments in May. In contrast, the “big six” Chinese brands – Haier, Hisense, Skyworth, TCL, Konka, and Changhong – captured a combined total of 45% market share in UHDTVs.

Gotta run! The reclining chair and an ice-cold glass of lemonade are calling…

4K TV Does NOT Require Native 4K Media

Repeat after me: 4K TV does NOT require native 4K media. Again: 4K TV does NOT require native 4K media.

The reason I’m repeating myself — not only in the previous sentence, but also in echoing other articles I’ve written — is that self-styled experts continue to say that 4K TV will not be successful until native 4K media is widely available. They are wrong, obviously wrong, and for an obvious reason: High-quality 2K-to-4K up-conversion is so good that experts can’t see the difference in side-by-side tests from distances of three feet or more. Even at nose-on-the-screen distance, the differences are subtle.

Good up-conversion has remarkable quality but it isn’t expensive. Seiki, the Chinese company with a Japanese name that introduced the first sub-$1500 4K TV set last year, has an HDMI cable with a converter chip built into the cable that sells for $59.95! This is not any converter chip. It’s the Marseilles Networks video processing chip with Technicolor up-scaling certification that was introduced to high acclaim at last year’s summer PEPCOM Digital Experience show in New York.

Inexpensive, high-quality 2K-to-4K up-conversion is available from Seiki. (Photo: Ken Werner)

Inexpensive, high-quality 2K-to-4K up-conversion is available from Seiki. (Photo: Ken Werner)

There is a back story here. When Seiki introduced its sub-$1500, 4K, 50-inch set last year, people were impressed with the screen and price but

appalled at the low-quality built-in 2K-to-4K conversion. Seiki acknowledged the problem and worked with Marseilles to produce the up-converter cable, which it then gave to purchasers of the initial 4K sets.

In addition to including the Marseilles up-converter in its 2014 sets, at CE Week in New York in late June, Seiki introduced a Blu Ray Player with the Marseilles chip built in at the impressive MSRP of $99!

Seiki’s Sung Choi told me that Seiki is also introducing 28-, 32-, and 40-inch 4K monitors. Sales will be through Walmart, Sears, Best Buy, Amazon, and Costco. I asked Choi one of my standard questions: “Who makes your display panels?” All of the major suppliers, he said, including Sharp and CSOT. “It depends on pricing.”

Vizio and TCL have also promised 4K TV sets at $1000-ish prices by Q3 or Q4 of this year, and we can certainly expect others. Tier 1 brands aren’t going that low yet, but their prices are trending downward, too, and probably faster than they would like.

Set-makers know they don’t have to wait for native 4K media before they sell 4K TV sets. It’s time for the self-styled experts to stop doing their readers the disservice of feeding them false information and erroneous analysis.

Ken Werner is Principal of Nutmeg Consultants, specializing in the display industry, manufacturing, technology, and applications including mobile devices and television.  He consults for attorneys, investment analysts, and companies entering or repositioning themselves in industries related to displays and the products that use them.  You can reach him at



Humpty Dumpty Strikes Again!

I’ve been on hiatus the past couple of weeks, recovering from a heavy teaching schedule at InfoComm and also celebrating the wedding of my son in late June.

Even so, I steal a glance at the daily headlines now and then. And it was impossible to ignore the 6-3 Supreme Court decision against Aereo in late June. Aereo, as has been well-documented in this space, was a cocky startup that attempted to get around copyright law and retransmission fees by constructing a Rube Goldberg-like system of antennas to receive and distribute broadcast TV signals to subscribers in New York, Boston, and other markets.

The initial court decisions against broadcasters and in favor of Aereo (1st and 2nd Circuits) were offset by an unfavorable decision in the 10th Circuit. So Aereo pushed to have the Supreme Court hear its case (ABC Television Networks vs. Aereo) in late April. And the majority of the Supremes ruled that Aereo was essentially a cable TV system in operation, even though it devised an elaborate technical work-around to avoid such classification.

After squealing like a stuck pig, Aereo execs pleaded with Congress to take up their case and called the SCOTUS decision “a blow against consumer’s rights to watch free television.” Actually, although none of the justices really understood what was going on here – despite their insistence that the Aereo decision had no impact on so-called “cloud” media storage and delivery systems –  they got it right.

Studying Aereo’s patent application showed their attempt to re-define science and established technical terminology, classifying everything in a TV channel receiver system from the antenna, receiver, decoder, and MPEG encoder as an “antenna” and the MPEG network interfaces moving signals from the roof of a building to H.264 encoders and multiplexers as an “antenna transport system.”

Nice try, but no cigar. That’s essentially what a cable TV system does. The converted signal formats might be different, but the process remains the same. So unwittingly, Aereo got called out. But now the story takes a decidedly different turn.

Last week, Aereo did an about-face and filed a petition to 2nd Circuit Judge Alison Nathan, asking that Aereo indeed be classified as a cable TV service provider under Section 111 of the Copyright Act: “If Aereo is a ‘cable system’ as that term is defined in the Copyright Act, it is eligible for a statutory license, and its transmissions may not be enjoined (preliminarily or otherwise).” In a nutshell, this means that Aereo would merely have to pay retransmission fees to all of the stations it carries and it could resume operations as before.

As expected, this filing brought an incredulous response from the likes of ABC and CBS, who expressed disbelief that Aereo, having made such strong arguments that they were not a cable TV system, would now petition the court to determine if they were eligible for a compulsory license – as a cable TV system.

Here’s a quote from the Forbes story: “… it is astonishing for Aereo to contend the Supreme Court’s decision automatically transformed Aereo into a ‘cable system’ under Section III, given its prior statements to this Court (United States 2nd Circuit) and the Supreme Court. It represented to this Court, for example, that it could not qualify as ‘a cable system’ and, therefore, that cases interpreting the application of Section III were ‘irrelevant to the issues here’.”

Two other interested parties, and FilmOn, are watching this part of the proceedings with great interest. Both companies also attempted to set up and operate Internet streaming services to carry broadcast TV channels, but out-of-market. And both were shut down by the courts. Even so, FilmOn has registered with the U.S. Copyright office as a cable TV company and paid for a license to retransmit copyrighted programs.

If nothing else, the Aereo case has provided us with some great theater and entertainment, and also raised valid questions about growing technical illiteracy in this country. But it’s clear that CEO Chet Kanojia and his backers (which include media mogul Barry Diller) aren’t going down without a fight. Hence, the 180 degree-turn in their court strategy.

I’m reminded of a conversation Alice had with Humpty Dumpty in Alice in Wonderland: “When I use a word,” Humpty Dumpty said, in a rather scornful tone, “it means just what I choose it to mean, neither more nor less.” Apparently Aereo’s lawyers are big fans of Lewis Carroll..

I Have Seen the Smart Phone’s Future, and It Sings!

If your main priority is watching your smart phone, buy a Samsung Galaxy S5, which has the best display ever put into a cell phone, at least thus far. But what do you do if you want much-better-than-CD-quality sound to come out of your phone’s little 3.5-mm audio jack? Is such a thing even possible? And even if it is, will you be able to tell the difference with earphones that cost less than a small BMW? The answers, perhaps surprisingly, are “yes,” “yes,” and “yes.”

Two currently available smart phones — the Harman/Kardon edition of the HTC One (M8) and the LG G2 — contain the the digital-analog converter (DAC) circuitry for decoding 192kHz/24-bit FLAC files. (This compares to CD’s quality of 16 bits and 44.1 kHz PCM sampling rate.) The result was demonstrated for me on Tuesday evening (June 24) by David Chesky, head of Chesky Records and the creator of HDTracks, which supplies downloadable music files at 24-bit studio quality. HDTracks generally charges for the files you download but a music sampler is available on the site at no charge.

I certainly don’t have “golden ears,” but listening to the Doors with what were described as “a $100 pair of Chinese earphones” plugged into the HTC One was a remarkable experience. Musical texture and dynamic range were much better than what I’ve become used to, with stunning musical detail and spaciousness. Unlike Beats earphones, which attempt to impress you by distorting the sound, high resolution audio gives you the uncompressed, uncompromised sound that studio engineers have been listening to for years (before they dumb down the product to accommodate whatever file size and bit rate consumer products could handle).

Now, said top audio engineer Frank Filipetti of Earwhacks, “Consumers can hear exactly what we hear in the studio. They just have to ask for it.” Filipetti and Chesky were just two of the audio industry’s technical luminaries who spoke at the “High Resolution Audio Listening Experience” sponsored by the Producers and Engineers Wing of The National Academy of Recording Arts and Sciences, the Digital Entertainment Group, and CEA.

At the "High Resolution Audio Listening Experience," held June 24 in New York, Bob Ludwig discussed his project to convert the entire Bruce Springsteen catalog to high-resolution audio.  (Photo:  Ken Werner)

At the “High Resolution Audio Listening Experience,” held June 24 in New York, Bob Ludwig discussed his project to convert the entire Bruce Springsteen catalog to high-resolution audio. (Photo: Ken Werner)

This was no dry technical exposition. Presenters, guests, media, bottles of beer and glasses of wine were crowded into the main studio at Jungle City Studios. (Jungle City is so far west on 27th Street in Manhattan that audio types were rubbing shoulders with revealingly dressed young women and their escorts angling for early entry to a velvet-rope club that shares the street.

The other major speakers were Mark Waldrep of AIX Records and Bob Ludwig. Ludwig has more awards for Best Mastering Engineering, among many others, than would fit in this column. One of his current projects is remastering the entire Bruce Springsteen catalog into high resolution audio. He demonstrated some befores and afters in the studio, and golden ears were not needed to tell the difference. The high-res track conveyed much richer emotional content than the original CD.

As the demonstrations at CE Week and ShowStoppers a few blocks away on the following day showed, it is clear that high-resolution audio will be commanding a lot of attention in the consumer electronics space during the coming months and years. The high resolution audio track and the TV track are not converging yet, although the Dolby Atmos 3D sound system is being adapted to high-end TV audio systems, and that is also receiving considerable attention.

High-res audio is one of the more exciting developments in consumer electronics to come along in some time. After years of pushing convenience and mobility at the expense of audio quality, the industry is now clearly committed to returning to quality. But this is not simply a return to the quality of a good CD player playing through a cabinet full of audio components. It is much, much better. Even though the consumer hi-res industry is in its infancy, we can get remarkable quality from a cell phone. A separate DAC can be purchased for less than $100, and at ShowStoppers, Sony was showing its HAP-S1 networkable digital music system for $1000. The S1 has a high-quality DAC, a large hard drive for storage, a 4.3-inch display interface, a stereo amplifier, and even a couple of analog inputs. The audio quality is phenomenal, the compact case looks and feels like high quality, and this is certainly a consumer product: seamless and easy to use. Prices go up from there (Sharp was showing a $5000 high-res audio device with WISA wireless speaker connections), but even now, hi-res audio is accessable to anybody with the resources to acquire a high-end smart phone.

This is going to be interesting.

Ken Werner is Principal of Nutmeg Consultants, specializing in the display industry, manufacturing, technology, and applications. He consults for attorneys, investment analysts, and companies entering or repositioning themselves in industries related to displays and the products that use them. You can reach him at

Time For A Game Reset!

I’m writing this column the Friday before InfoComm, the AV industry’s largest trade show. It takes place next week in Las Vegas and should be a doozy, what with all of the changes happening in our industry: 4K digital displays and media players, new IPTV “in a box” solutions, expanding use of wireless connectivity, high-power laser-illuminated projectors, and next-generation display interfaces looming on the horizon.

Concurrently, the NBA Finals are underway, with the workmanlike San Antonio Spurs in the process of routing the flashy, star-studded Miami Heat. When you watch a Finals game on TV, the broadcast will frequently show a “game reset” graphic, which shows you which team has the possession arrow, how many fouls players have accumulated, and how many timeouts each team has left.

So before I leave for Las Vegas, I’m going to offer a “game reset” as we approach the mid-point of 2014. (Wow, did those six months pass by quickly, or what?)  There’s been lots of news about consumer electronics, TVs, 4K, China, Netflix, and video streaming recently – here are some of the headlines that grabbed my attention.

Sony TV Sales Rise 30% as Viewers Ready for World Cup (Bloomberg): Finally, some good news for a legendary CE brand that has seen an endless series of setbacks, including another whopping financial loss for its most recent fiscal quarter. According to Bloomberg, sales of Sony televisions during Q1 ‘14 generated $2.15B in revenue for the company, an increase of 30% over Q1 ’13.

While encouraging, that number doesn’t being to approach rival Samsung’s $9B revenue. But it at least keeps Sony in the game and earned them the #4 spot in sales rankings after Samsung, LG, and TCL. Sony forecast that 16 million TVs would be shipped this year, but claims it can still make money with a few as 13.5 million TV shipments. Keep in mind that Samsung and LG accounted for 40% of all TV shipments in the quarter, so Sony still has some ground to make up.

4K TV Shipments Are Taking Off (Business Insider): Two weeks ago, BI released a report that stated 4K (Ultra HD) TV shipments reached the “million per month” plateau this past March, and should hit 15 million by the end of the year. That’s nothing to sneeze at – with current TV shipment levels, Ultra HD would account for 7.5% of all worldwide TV shipments through December.

Falling prices have a lot to do with, as does the growing desire for bigger TV screens. BI states that the average selling price for 4K-capable televisions has dropped 86% worldwide in just two years, falling from $7,851 in 2012 to $1,120 in 2014. Last weekend’s HH Gregg sales flyer featured the LG 55-inch 55UB8500 120Hz Ultra HD LCD TV for just $1,999 – a discount of almost $1,000 from its original price – while Vizio has already gone on record saying they will have a 55-inch Ultra HD smart TV (no 3D) shipping later this year for $1,299.

Streaming video is greener than watching DVDs (Advanced TV):  This story was intriguing, as it details research by Northwestern University and Lawrence Berkeley National Laboratories that claims streaming movies and TVs shows is much more eco-friendly than watching them from an optical disc, such as the DVD or Blu-ray format. Researchers developed a model called “life cycle analysis” and studied five different ways of viewing movies, calculating the energy used and carbon dioxide emissions attributed to each method.

The test model required accounting for the energy used to manufacture DVDs; to transport DVDs by truck; to drive to and from local stores and rental locations to obtain discs; to stream movies over the Internet; and to manufacture and operate the DVD and Blu-ray players ultimately used to watch the movies. With no 4K standards in place yet for Blu-ray and sales and rentals of optical discs continuing to drop each year, will streaming become the de facto format for 4K content delivery?

49% Of U.S. Households Have a TV Connected to the Internet (Leichtman Research Group): It should be no surprise at all that almost half of all U.S. households now have a television connected to a wired or wireless network. And that’s because Netflix streaming now accounts for about 34% of all evening Internet traffic. The LRG study shows that 49% of Netflix subscribers watch video via a connected TV or other device (Roku, Blu-ray player, game console, computer) on a weekly basis.

Non-Netflix subscribers aren’t as enthusiastic, with only 8% of them using their Internet-connected TVs on a weekly basis. And 78% of survey respondents say they watch Netflix on a TV, and not on tablets, phones, or computers. Interestingly, 47% of all households surveyed get Netflix, Amazon Prime, and/or Hulu Plus, and 34% watch any streaming video on a daily basis.

Cisco says 4K IP Traffic Rising (Home Media): Finally, Cisco’s forecast for “visual networking” and service adoption predicts that 4K (Ultra HD) streaming video will account for 11% of all IP video traffic by the year 2018, a massive increase from last year’s paltry .1%. 2K HD video will constitute 52% of all IP video traffic over the same time period, with SD video streaming dropping to 37% from its current 64% share.

Cisco goes on to say that more than half the world’s population will have an Internet connection in 3.5 years with half of that attributable to mobile devices. In 2013, the average bandwidth used by an Internet customer was 15 GB a month, and that is expected to double by 2018. Now here’s a fun number to wrap your head around: Annual Internet traffic is expected to grow nearly three-fold to 1.6 zettabytes (ZB) by 2018! According to the story, “That is more than 13 times than all the IP traffic generated in 2008 or the equivalent of 1 billion DVDs being downloaded per day.”

OK, the referees are signaling our timeout is over. Back to the game!