Posts Tagged ‘Netflix’

LG Is “All In” With OLED TVs

Yesterday (April 8), LG formally launched its new line of OLED televisions at The Garage on Manhattan’s upper west side. In addition to showcasing the 65-inch 65EG9600 ($8,999) and 55-inch 55EG9600 ($5,499) UHDTVs, LG also held a press briefing in conjunction with Netflix’ latest streaming series, Daredevil, which is available starting Friday, April 10.

I had the opportunity to sit on this panel and answer a few technical questions about OLED picture quality. Scott Mirer, VP of device ecosystem at Netflix was also on hand to offer his observations about the new OLED TVs, as was Matt Lloyd, director of photography for Daredevil (which, coincidentally, was shot in the adjoining Hell’s Kitchen neighborhood).

During my part of the discussion, I asked for a show of hands to see how many members of the press were currently using plasma TVs, and better than 60% of the hands went up. While LCD display technology current owns about 95% of the worldwide television market, there’s just no comparison to a late-model Panasonic, LG, Pioneer, or LG plasma set when it comes to video picture quality.

The panel discussion at LG's OLED TV launch event. Left to right, yours truly, Tim Alessi of LG Electronics, Matt Lloyd, DP on Daredevil, Scott Mirer of Netflix, and moderator Shelly Palmer.

The panel discussion at LG’s OLED TV launch event. Left to right; yours truly, Tim Alessi of LG Electronics, Matt Lloyd, DP on Daredevil, Scott Mirer of Netflix, and moderator Shelly Palmer.

Many of us shed more than a tear when it was announced that Panasonic was departing from the plasma TV business a couple of years ago. And we all figured that OLED (organic light-emitting diode) televisions would quickly step into the breach.

That didn’t quite happen like we expected. Even through large OLED TVs have been shown for well over a decade (going back to Samsung’s and Epson’s 40-inch prototypes in 2003), they just never seemed to make it to the starting line.

In the summer of 2013, LG launched a 55-inch curved 1080p OLED TV with much splash and hoopla. Later that year, Samsung followed suit with their 55-inch curved OLED TV, pricing theirs almost $6,000 less than LG. And in short order, a price war ensued – but it didn’t last very long, as Samsung pulled their product off the market for undisclosed reasons.

LG’s OLED imaging panels employ a white OLED emitter and color filters arrayed in an RGBW stripe to provide brighter images. This technology originated in none other than Rochester, NY at Eastman Kodak and was an outgrowth of research and development in the late 1970s and early 1980s.

In 2009, Kodak sold its OLED patent portfolios and business to LG Electronics outright. Ever since then, LG has been working industriously to bring OLED TVs to market. The ‘catch’ was manufacturing yields, which not all that long ago were in the low double digits.

Although subsidiary LG Display won’t disclose its current OLED yields, they are believed to be better than 50%, which is probably why we’re now seeing several models of televisions finally coming to retail. Granted; they’re not cheap – in comparison, you can by a 55-inch “smart” 1080p LCD TV for about $700 now, while a quantum dot-equipped 1080p LCD set will run about $3,000 currently.

However, the market knows what it wants to pay for a television, and you can expect those prices to come down in short order. LG’s original 55EA9800 OLED set started out at just under $15,000, but it can be yours now for just one-fifth of that original price. (For those with short memories, that’s what a quality 50-inch plasma cost about 7-8 years ago.)

The OLED exhibit featured this comparison between a 55-inch LCD with LED backlight (left), a 55-inch oLED TV (middle), and a 55-inch LCD TV equipped with quantum dot backlight (right.)

The OLED exhibit featured this comparison between a 55-inch LCD with LED backlight (left), a 55-inch oLED TV (middle), and a 55-inch LCD TV equipped with quantum dot backlight (right.)

While the rich blacks and saturated colors draw people like flies to OLEDs, it’s worth nothing that those same deep blacks and consistent grayscale and color reproduction at very low luminance levels allow OLED displays to show images with high dynamic range. If we go by an industry definition of HDR as 15 stops of light, OLED is definitely up to the challenge: With full white at 500 nits, for example, the step above black would measure just around .1 nits.

That’s a level of black previously attained only by plasma TVs, as well as LCD TVs with some trickery involved (black stretch, dynamic contrast, APL). But of course OLEDs can go much lower with grayscale reproduction: A more typical low gray (near black) level on an OLED display might be around .05 nits or so.

The clips of Daredevil provided by Netflix really showed off the abilities of OLEDs to handle dark scenes with point sources of high-key light, like streetlights. Another clip showed a fight scene in a dark hallway, with the only light coming from green-tinted fluorescent lamps. Yet, you could see details even in the darkest corners.

The consistent color tracking of OLEDs, their emissive structure, and their low operating voltages make them an ideal replacement – nay, step-up – from plasma display technology, which had to rely on high voltage, pulse-width modulation (PWM) technology to create images. OLEDs are also a lot thinner than any other display, and can even by printed onto flexible substrates.

But enough about technology! OLED televisions are finally coming to market, and that’s something to celebrate. As a bonus, both of LG’s newest OLED models are UHDTV-resolution (3840×2160 pixels) and have excellent 1080p upscaling, based on the Blu-ray clips of Skyfall that I saw at the event. Can’t wait for the rest of the lineup!

It’s All About The Pipes

It has become increasingly clear that consumers are moving to streaming and cloud downloads to watch TV shows and movies at home. This trend, which has been documented by numerous research firms and news organizations, reached a “tipping point” in 2011 when more video was acquired via streaming and downloads than by the traditional method of renting or purchasing optical discs.

I’ve been staying on top of this phenomenon ever since 2005, when optical disc purchases began a slow, steady decline. A few years later, DVD rentals also turned south and have stayed there ever since. The blue laser format wars of 2005 – 2006 did nothing to reverse this trend: Blu-ray disc sales have not nearly made up for the fall-off in packaged media sales and rentals.

Netflix, of course, carries the blame (or credit) for this reversal of fortune. The company now has over 50 million subscribers worldwide, with over 30 million of them stateside. Their clout has increased to the point where agreements have been negotiated with Comcast, Time Warner, Verizon, and other MSOs to ensure Netflix can stream its movies and TV shows with minimum guaranteed bit rates.

At the receiving end, we’ve seen increasing competition by Internet service providers to boost their download speeds. Although Verizon’s FiOS service lies buried in my front yard, ready for tapping, I still rely on Comcast for video, VoIP, and broadband. (For now, Verizon is a “useful idiot” when I complain to Comcast about ever-escalating costs.)

A quick check with the CNET Broadband Speed Test shows my download speeds at 10 AM average 17 – 20 Mb/s, which is certainly faster than they were a year ago. But they’re not nearly as fast as those encountered in South Korea, Zurich, Brussels, Hong Kong, or even Chattanooga, Tennessee.

An article in Friday’s New York Times explores why the U.S. has fallen behind in providing faster Internet service and offers up some intriguing data from a group called the New America Foundation’s Open Technology Institute. In many countries, governments regulate or control telecommunications services and have made the necessary investments to upgrade their broadband networks.

In contrast, broadband delivery in the U.S. is largely dominated by Comcast, Time Warner, AT&T, and Verizon, who appear to be motivated solely by the bottom line. There are exceptions, such as the aforementioned Chattanooga, where the city offers service through a publicly-owned and operated fiber optic backbone, and Kansas City, where Google took over an existing ISP and has been upgrading to fiber with haste.

What about the rest of Americans, particularly those in areas limited to DSL or even satellite broadband (always unpredictable?) Some hope may lie in the new High Efficiency Video Codec (HEVC), a.k.a. MPEG-H H.265. This codec promises to reduce bit rates by 50% over H.264, allowing delivery of 1080p/60 content to homes with adaptive bit rates in the vicinity of 1 – 2 Mb/s. Not coincidentally, that is the average download speed found in a majority of U.S. homes between 9 and 11 PM at night, when video streaming is heaviest.

Hand-in-hand with improved broadband service comes cord-cutting, or dropping pay TV channel packages in favor of streaming. A recent report by The Diffusion Group shows that 14% of all broadband homes don’t subscribe to pay TV, up from 9% in 2011. The report states that about 75% of U.S. households now have broadband service, so 13 million homes are doing just fine without the likes of DirecTV and Comcast.

I’ve written previously about the growing outflow of pay TV customers and how the pay TV industry saw its first net loss in subscribers in 2013. This trend hasn’t gone unnoticed by media companies: HBO announced last month that it would launch a streaming service for $15 per month that would reach a large, younger population of viewers who have no interest in cable subscriptions.

CBS followed suit the next day, announcing an “all access” subscription for $6/month to all its owned stations, current programming (viewed a day later), and an enormous archive of older yet still popular TV shows such as Star Trek and Cheers (two shows that, ironically, originally ran on NBC!). And yes, there are mobile apps for all of this.

The convergence of cord-cutting and improved broadband connections has economists wondering if we are finally reaching the era of “a la carte TV.” In an intriguing paper posted on the Knowledge@Wharton Web site, the author ponders if consumers would be better off with a la carte (pick your own channels) services, or if costs would skyrocket and diminish the value of choice.

One thing is for certain: Speed drives need. Just as improvements to the highway system in this country led to bigger, faster, and more comfortable cars, faster broadband access (no matter where it comes from), coupled with more efficient video codecs, will lead to more cord-cutting and a shift in video content delivery and consumption online at the expense of conventional TV channel viewing.

It’s all about the pipes…

Trends: Ignore Them At Your Peril

On August 15, Leichtman Research Group of Durham, NH released its quarterly revenue and subscription numbers for U.S. cable TV providers. And there was a surprise to be found in the calculations.

For the first time ever, the number of broadband service subscribers for major cable TV service providers exceeded (barely) the number of cable TV channel subscribers. This happened during the 2nd quarter of 2014 and represents a milestone for pay TV services. (And yours truly predicted it would happen a year earlier, in a DD posted a few years back. Oh well, close enough for government work…)

The actual differential favoring broadband subscriptions was small, amounting to about 5,000 more broadband customers. The actual totals for cable TV systems (not including Wide Open West, an overbuilder) were 49,915,000 for broadband, and 49,910,000 for cable channel service. What’s more interesting is that thirteen largest pay TV providers in the US (about 95% of the market) lost about 300,000 net video subscribers in 2Q 2014, compared to a loss of about 350,000 video subscribers in 2Q 2013.

To offset that decline, the 17 largest pay TV providers added about 385,000 broadband customers during the same time period. Cable TV companies control the lion’s share of broadband service revenue and have a 59% market share vs. AT&T’s U-Verse and Verizon’s FiOS services. The latter companies stayed essentially flat in new subscribers as an almost equal number of customers dropped DSL service (627,000) compared to those who signed up for faster broadband (636,000).

For all cable and telcos that Leichtman surveyed, the total number of broadband subscribers was about 85 million. Of that total, industry giant Comcast claimed 21.27 million and #2 service provider Time Warner Cable accounted for 11.97 million. Among cable TV companies, those numbers represent 42% and 23% market shares, respectively. (Keep that in mind as you ponder the consequences of a potential Comcast – Time Warner merger.)

Now for some additional perspective: Netflix recently broke the 50 million worldwide subscriber mark, with 36 million of those subscribers located in the United States. That’s larger than any cable TV or telco subscriber base. In fact, it’s more than Comcast and Time Warner combined, and is indicative of the meteoric growth Netflix has experienced since it commenced a streaming service in 2007.

Combined with the shift toward consumption of digital media online vs. renting or buying optical discs (as outlined in my last Display Daily), it’s clear that broadband is becoming the more desirable service for many households. I’d also venture an educated guess that customers who subscribe only to broadband services tend to skew much younger (Millennials) while traditional cable TV channel subscribers skew older (Baby Boomers).

While AT&T and Verizon have a smaller share of the pie, it’s still a large enough slice to motivate Comcast, Time warner et al to keep increasing their broadband speeds and not lose any competitive edge. I am a Comcast subscriber and while writing this article, checked my download speeds using CNET’s Internet Speed Test. The result? 20 Mb/s downstream at 5 PM, which is a considerable boost from what I had three years ago. Could the fact that Verizon ran optical fiber through my front yard a few years ago have anything to do with it?

What does all of this mean, long term? First off, the preference for faster broadband vs. a pile of pay TV channels that most people never watch will continue to re-shape the business model for cable TV companies. (The median number of channels watched in pay TV households currently stands at 17.) Continued price increases and increasing reliance on wireless (and not wired) phone service will prompt more customers to drop so-called “triple play” offerings and just go with broadband (and probably use services like Ooma for VoIP calling).

Secondly, the sheer size of Netflix and its expanding category of both rental movies and original series provide even more impetus for disgruntled pay TV subscribers to dump costly channel packages and stream everything from the Big Red Father. Both House of Cards and Orange Is The New Black are wildly popular – there’s no reason to assume Netflix won’t hit a few more home runs. (And their success is prompting HBO to finally discuss publicly a subscription streaming service independent of cable TV delivery.)

Finally; it may take more time than I prognosticated several years ago, but cable TV companies and telcos will slowly and inevitably morph into something that looks more like your local electric company, providing metered high-speed broadband connections and letting customers decide what they want to watch, and when. The DVR may even pay the ultimate price and fall by the wayside in favor of streaming from cloud servers as this comes to pass.

Even the biggest fires start with a tiny spark, and most people don’t even notice trends until they are well under way. Ignore them at your peril…

Stuffing Your Brain With Video

A recent poll conducted by the Harris organization revealed that 81% of respondents engage in “binge viewing” on a regular basis – that is, watching two or more episodes of a TV program in a single sitting.

The survey, conducted in mid-March on behalf of Comcast, included over 2,000 adults nationwide and 200 viewers in each of the top ten media markets. Dallas, San Francisco, and Washington D.C. had the highest number of binge viewers among respondents (88%), according to a story on the Home Media web site.

Philadelphia, New York, Los Angeles, and Houston also placed well above 80%, with half of the Los Angeles respondents saying they “binge view” at least once a week. Typically, a viewer decides to check out a new series via pay TV on-demand or streaming from Netflix or Hulu, and settles down in a comfortable chair with food and drink.

I’ve engaged in binging in the past. After CBS began running older episodes of Dexter on late-night TV during the writer’s guild strike a few years back, I got hooked on the show and downloaded Season 2 in SD to my TiVo HD DVR. I followed that with a download of Season 3 in HD, and then began watching on a regular basis via Showtime.

My wife and I would knock off two or three episodes at a time, for that was as long as we could remain seated comfortably. (Dexter episodes, like other premium channel series, usually run about 50 – 52 minutes each without commercials.)

Binge viewing is actually nothing new. The major broadcast TV networks used to run miniseries programming on a regular basis, playing out all episodes of a program during the course of a week. Roots started it all back in 1977, but the difference then was the absence of DVRs – you couldn’t skip the commercials. Miniseries programming ran its course in the 1980s and was largely gone by the end of the 1990s.

To binge view, you need a Netflix, Hulu, iTunes, Google Play, or Amazon Prime account, and an Internet streaming connection (Roku, Apple TV, etc.) or a DVR connected to your pay TV service. And in recent years, we’ve seen DVRs become increasingly powerful: TiVo’s Roamio Plus system has six channels of recording and you can add TiVo Mini satellite terminals to record and watch in different rooms – each Mini takes over one of the DVRs and uses Wi-Fi to stream the program.

Many of us wonder (and rightly so) why we’d want to record six programs at once in the first place. With my circa-2006 TiVo, I can record two shows at once and if need be, use my TV’s antenna to watch a third. But there have been a few times when a third DVR would have been really handy.

Apparently, I’m a piker. Verizon just announced it will roll out a set-top box with the ability to record 12 shows at once, offering enough storage capacity for 200 hours of HD programming. (A good rule of thumb for determining DVR capacity is about 8 – 9 GB per hour for HD programs, so I’m guessing the solid state/hard drives used in the Verizon box, manufactured by Arris, have a maximum capacity of 2 terabytes.)

Memory is cheap. You can pick up 32 GB micro flash cards for about $16 these days and a quick check online shows 256 GB flash drives selling for less that $200 at Amazon. So that 2 TB drive doesn’t add an awful lot to the cost of the new Verizon set-top box. Until Verizon’s announcement, Cablevision customers had bragging rights for the “monster truck” of DVRs, with the ability to record ten channels at once.

Even so, you can pile up programs in a hurry this way, creating a formidable list of time-shifted programs that you may never get to. (We don’t always watch everything we record.) A study conducted by Motorola Mobility (now owned by Arris) one year ago revealed that at least 41% of the programs we record are never watched – yet we continue to schedule recordings and pile up TV shows in our DVRs and complain about not having enough recording space.

All of this begs the question: Why not just stream the programs when you want, and skip the recording process altogether? For binge viewing, this approach seems to make more sense, particularly since you can access a video stream from any platform – TV, phone, computer, or tablet.

The devil in the details is bandwidth. We never seem to have enough of it, and it is costly to expand. During my booth visits at the NAB Show next week, I’ll be paying particular attention to demonstrations of the new HEVC H.265 codec. H.265 promises to slices bit rates by half for any video content, meaning it should be possible to stream 1080p video at data rates in the range of 3 – 4 megabits per second (Mb/s), with 720p streams requiring as little as 1 – 2 Mb/s.

If H.265 really takes off (it’s already supported in some 2014 models of televisions), the balance could be tipped back towards streaming from cloud storage and away from DVRs – that is, if there is a way to retain the commercial-skipping feature that viewers love so much and which you can’t use with most Internet streams.

Perhaps the future model is an online cloud with a monthly subscription that lets you watch shows when you want, anywhere you want, commercial-free. (Oh wait, we’ve got that already – it’s called Netflix…)

A La Carte TV: No Blue Plate Special?

As the winds of change push more and more consumers away from conventional pay TV packages and toward streaming, “over the top” video, an interesting report has just arrived from Needham and Co. analyst Laura Martin.

The report, detailed in the Los Angeles Times, says that moving to an “a la carte” model for delivery of TV programming would result in higher costs for consumers and possibly knock the foundation out from under media companies.

According to Martin, a la carte delivery of pay TV channels would cause at least 124 smaller channels to disappear altogether, taking with them 1.4 million jobs and at least $45B in advertising.

Martin has calculated that a typical entertainment cable channel costs about $280 million per year to operate and requires (with current retransmission and rights fees) about 165,000 viewers annually just to break even. As a result, only 50 or so channels would be likely to survive out of the nearly 200 channels of programming currently available across a multitude of pay TV outlets.

Martin also notes that the typical subscriber watches perhaps 20 channels at most out of an average selection of 180 channels. I think that number is high; anecdotal evidence from friends and colleagues suggest the number is much lower and close to 10 – 15 channels.

The Needham study states that, in addition to the economic cost of a move to a la carte pay TV – pegged at $80B to $113B of “U.S. consumer value” – the costs to subscribe to existing channels would also increase, as they would inevitably lose subscribers as well.

I’ve previously detailed the growing calls for moving sports channels to their own tier, given the additional cost burden they add to the average monthly cable bill (about 10% to 12%). Not surprisingly, companies like Disney (ABC, ESPN), Fox, Comcast (NBC), and CBS oppose a move like this.

But the fact is; consumers are increasingly voting to switch off pay TV services and instead rely on the likes of Comcast and Time Warner to deliver broadband connectivity, and nothing more. This “cutting the cord” trend finally gained the recognition it deserved earlier this year when it was revealed that pay TV subscriptions went into decline for the first year ever.

Aereo, the disruptive “remote antenna” service that is rolling out nationwide and faces continued court challenges, charges about $10 to stream over-the-air broadcasts through the Internet to connected TVs, tablets, and phones, and is another approach to OTT delivery. Yesterday, the company petitioned the 2nd Circuit of the U.S. Court of Appeals for a Writ of Certiorari – in essence, forcing the issue to the Supreme Court for review.

If Aereo wins here – and it could – then the floodgates will surely open for other, competing OTT services that could cherry-pick channels and deliver them to the home in an attempt to lower monthly subscription costs. And even the cable companies are paying attention: Comcast announced in October a limited entry-level pay TV channel bundle that also includes fast Internet and HBO Go for about $60 – $70/month.

Even so, Netflix is still the largest pay TV service in the world, closing in on 30 million subscribers. And all you need to watch it is a fast Internet connection (if it’s fast enough, you might even be able to watch Netflix’ 4K movie service that is scheduled to roll out next year). In many markets, all you really need as a Roku or Apple TV box plus an antenna to get a nice selection of free and premium programming.

Granted, you won’t get as many sporting events, but studies have shown that only about 4% of pay TV subscribers watch sports channels on a regular basis to begin with. And many big-ticket events like NFL games, major league baseball, college football and basketball, and (of course) the Olympics are still available on broadcast TV channels.

While Martin’s study is interesting, it discounts the “free market” effect of consumers voting to save money and find other ways to access TV programming.  There are always winners and losers in a free market system, and the fact is; pay TV subscriptions continue to rise annually at rates above inflation. Consequently, consumers are making necessary economic decisions about the price paid versus the value received, which is why interest in OTT video is slowly growing.

Starting next year, Canada will require pay TV services to “unbundle” TV channel packages as a way to rein in expensive monthly bills. So we have the perfect test lab north of the border to see just how a la carte pay TV will work, or won’t work. Stay tuned!