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2006 Australia - Digital Media, Convergence, Triple Play and IPTV

Annual report on the Digital Media, Convergence,Triple Play and IPTV market in Australia includes: in-depth analyses of the market and the various trends and developments, market overview and statistics for the Digital TV market, Broadband TV, Triple Play business models, convergence, media centres for the digital home, content and media markets, personal/digital video recorders (PVR/DVR), datacasting and Set Top Boxes.


Digital Media
The first results from the convergence of telecommunication, media and IT developments are to be seen in the arrival of the new digital media. Led by the Internet a new range of Internet media are developing and these, in turn, are motivating other industry sectors to also change their business models in order to better align them with the emerging Internet economy.

Telecommunication and Media Industry Analyses
Most of the Australian telecommunication and media companies have a vested interest in protecting their traditional businesses. Over the last 50 years they have been able to obtain certain political advantages that have allowed them to carve out monopolistic markets. The new digital media are undermining these companies’ privileged status and their grip on their monopolies. They are now being forced by these changes to jockey for a position in the new Internet economy. Key industries covered are: telecommunication, TV and radio broadcasting, newspaper publishers, film and video industries.

Internet Media Companies
Changes in the Australian telecommunication and media markets are forced upon the industry by the emerging Internet companies such as: Google, ebay/Skype, Yahoo, Vonage, AOL, MSN, News Limited and Amazon. They are breaking down the old business models in the industry which are mainly built around monopolistic market structures. Their success, however, depends on access to high-speed broadband infrastructures, and the vested interests are trying to keep a grip on this market. This will result in a continuation of the fierce battles that are taking place between the traditional players and the new Internet companies.

Digital Media Application
With the convergence of telecommunication, media and IT we see the arrival of digital media. The report focuses on some of the earliest Internet applications and their subsequent development. These applications have created some of the largest media companies in the world. As speed and capacity increase, a whole new range of applications will be entering the market over the next decade. Reports cover: Internet portals, online directories and search engines, blogging, vlogging and web publishing.

The narrowband services have been around for several years and the new video applications are emerging as the Internet media companies seek to exploit the added speed and capacity of broadband infrastructure. As speed and capacity increase a whole new range of applications will be entering the market over the next decade. We report on the digital media developments in: video entertainment, music, MP3, iPods, games, gambling and online dating.

Take-up for digital TV receivers in Australia has improved considerably since broadcasts began in 2001. However, by mid-2005 digital TV was still only a niche medium with a penetration of only 820,000 digital TV receivers. While DSL TV is being introduced in some developed markets around the world, progress in Australia is very slow. Telstra will certainly pull out all stops to make life as difficult as possible for potential DSL TV players; however, with the new access charges, wholesale facilities such as ULL and line-sharing are looking more interesting by the day. Video-on-Demand (VoD) exhibits good potential on the new information and entertainment superhighways, but the vested interests involved are making it very difficult to come up with workable models. With mobile TV becoming available the industry has been looking at new technologies to deliver such services in a more efficient way.

Broadband TV - IPTV
With the arrival of the Internet, content once again became important and video-based applications were revived for delivery over the Internet. The file-sharing features of the Internet created the success of Napster. Similar peer-to-peer file-sharing initiatives show that multimedia file sharing remains a key application. More specifically, multimedia file sharing can be seen as a subset of webcasting, of which streaming data/audio/video and VoD are other components. New DSL-based-broadband networks in Australia are now rapidly moving into triple play business models, delivering voice, data and video services. DSL TV is one of the emerging disruptive technologies.

Mobile Content and Mobile TV
During the 1990s the three Australian mobile operators refused to link their networks so as to allow seamless SMS over their networks. In July 1999 Telstra surprised the industry by initiating discussions to interconnect the SMS services from Telstra, Optus and Vodafone. This resulted in an unprecedented boom in SMS and the arrival of service providers such as BlueSkyFrog, Mobile Messenger, Communicator, Red Oxygen and permission-based content providers such as Coca Cola and Pepsi. We provide an overview of the key players and their services. While the content market for mobile operators has never taken off, the real game seems to be strategic positioning for the wireless broadband market. Also included are scenario forecasting models.

As an extension of the immensely popular SMS service, MMS was aimed at providing longer text messages, in addition to music and pictures, it also allows for the sending of messages to multiple recipients. Launched in Australia in 2001, it has failed to take off. Elements of MMS will be introduced into other technologies, similar to where WAP ended up. The current technology - and more importantly its business models - don’t yet stack up. The same applies to the mobile TV technology -possibly a great engineering feat, but where is the business model?

Media reforms in Australia
Mass media has become the greatest form of mass communication, and in many ways the TV is the key conduit for reaching the general population. The potential to influence people’s views and opinions is enormous, and accordingly a raft of laws exists to regulate what is actually broadcast in Australia, and who is in control of those broadcasts. Media reforms have been addressed on many occasions during the past decade, but, with full control of the Senate, the government gave it another go in 2005. However, in November 2005 the Minister for Communication, Helen Coonan, put it in the too-hard basket again for 2006.

1. DIGITAL MEDIA MARKET ACCELERATING IN 2006
1.1 The rise and rise of digital media
1.2 The Internet
1.2.1 The killer app
1.2.2 High-speed, always-on Internet
1.3 It’s worthwhile fighting for open networks
1.3.1 Structural changes to the industry are overdue
1.3.2 Alcatel puts its weight behind the monopoly
1.3.3 The farce of infrastructure-based competition
1.3.4 We should stand firm on open networks
1.3.5 The telcos failed for 30 years - Internet succeeded in 10
1.3.6 Open networks engine for innovation and growth
1.3.7 Large economic benefits
1.3.8 BT leading the way
1.3.9 Safe harbours undermine the Internet economy
1.3.10 Bill of Internet Rights
1.4 Digital content
1.4.1 Introduction
1.4.2 Digital Content Industry Action Agenda
1.5 The end of an era
1.5.1 The passing of Kerry Packer
1.5.2 Media initiated government policies
1.5.3 From bullying to cooperation
1.5.4 Media need to pull up their socks
1.5.5 Watch out for the Internet media companies
2. MEDIA REFORMS AND POLITICS
2.1 Prelude
2.1.1 Government review in November 2005
2.1.2 Government review by House of Representatives in February 2006
2.2 proposed media reforms
2.2.1 Overview
2.2.2 New services on spare spectrum and other platforms
2.2.3 Multichannelling and anti-siphoning
2.2.4 Media ownership and control
2.2.5 Regional services protection
2.3 Analysis of government review on media reforms
2.3.1 Disappointing media policy options
2.3.2 Don’t buy your digital TV yet
2.3.3 Digital TV policy could cost the government $1 billion
2.3.4 Patchy digital TV reception - yet another stumbling block
2.3.5 IPTV regulations?
2.4 Policies and Regulations 1996 - 2006 - Historic
3. MEDIA POLITICS
3.1 The ugly side of the Australian media
3.2 The ACCC on triple play monopolies
3.3 Media reforms in 2006
3.4 Shareholders interests vs national interests
3.4.1 Introduction
3.4.2 The shrewd fox
3.4.3 Media diversity
3.4.4 Telstra’s dominance
3.5 Pay TV
3.5.1 Another monopoly
3.5.2 ACCC wants Foxtel divested
3.5.3 Separate content aggregation and content distribution
3.6 Access monopolies
3.6.1 Access, key to Internet economy
3.6.2 Make access free
3.6.3 Broadband access monopoly
3.6.4 Content and access don’t mix
3.7 Broadcasting oligopoly
3.7.1 Broadcasters self-destruct
3.7.2 Broadcasters don’t own content
3.7.3 Broadcasters don’t own infrastructure
3.8 Where to go from here?
3.8.1 ACCC powerless
3.8.2 Insincere government
3.8.3 ACCC proposal still valid
3.8.4 Facilities-based competition and open networks
3.8.5 Operational separation
4. TELCO AND MEDIA INDUSTRY ANALYSES
4.1 The telcos
4.1.1 Incumbent telcos and media companies - the cracks are appearing
4.1.2 Financial market a victim of privatisation
4.1.3 Traditional businesses models are done for
4.1.4 Structural reforms are the only way forward
4.1.5 Keep an eye on BT and Internet companies
4.1.6 The Internet is rapidly becoming a national asset
4.2 TV broadcasters
4.2.1 Hanging on to the past
4.3 Radio broadcasters
4.4 Newspaper publishers
4.4.1 Industry failed to see changes
4.4.2 Dumbing down the media
4.4.3 Opportunities still there
4.4.4 Multimedia news
4.4.5 Structural changes
4.4.6 John Fairfax on the wrong track
4.4.7 Publishers need to move into the new media faster
4.4.8 Rear mirror strategies
4.4.9 Competition from the Internet media
4.4.10 Boycotting new developments
4.5 The video and DVD rental companies
4.5.1 The end of the video store?
4.5.2 DVD rental companies
4.5.3 DVD rentals over the Web
4.5.4 Quickflix
4.5.5 HomeScreen
4.5.6 fetchmemovies (Telstra)
4.6 Film and video producers
4.6.1 A few stats
4.6.2 ABC digitises archives
4.6.3 Broadband production Initiative
4.6.4 The Film Australia Library
5. TRIPLE PLAY MODELS
5.1 Three distinct markets
5.1.1 Infrastructure market
5.1.2 Content market
5.1.3 Appliances and services market
5.2 Lower costs open up access to new models
5.3 Killer Apps
5.3.1 Killer app one: always-on, affordable high-speed Internet access
5.3.2 Killer app two: broadband TV/IPTV
5.3.3 Killer app three: broadband VoIP
5.4 Telco’s arrogant stand on content
5.4.1 Triple play makes it impossible for telcos to dominate content
5.4.2 IPTV will be delivered by the Internet companies, not the telcos
5.4.3 Tele-presence will be the killer app
5.4.4 Triple play is an access product
5.4.5 Content providers are fighting back
5.4.6 Customer service is not what the industry wants to deliver
5.4.7 Internet companies might take over the telcos
5.5 Triple play in cable TV
5.5.1 Digital upgrades
5.5.2 Global dynamics cable vs telco
5.5.3 Role of cable
5.5.4 The future of infrastructure-based competition
5.6 Triple play pioneers in Australia
5.6.1 Adam Internet
5.6.2 iiNet
5.7 Triple play in telecoms
5.7.1 Broadband providers are taking the lead
5.8 Triple play will deliver transparent bills
5.9 The ACCC on triple play monopolies
5.10 The future of triple play
5.10.1 New technologies
5.10.2 FttH - ultimate triple play infrastructure
5.10.3 Media centres in the home
5.10.4 Separation and integration
5.11 Triple play developments around the world
6. BROADBAND TV
6.1 Are you ready for the IPTV explosion?
6.2 IPTV Regulations ?!
6.3 Movies Downloading
6.3.1 Starting with Video-on-Demand (VoD)
6.3.2 Primary target markets - statistics
6.4 IPTV developments
6.4.1 Introduction
6.4.2 Demand forecasts
6.4.3 Global perspective
6.5 Telstra’s complex convergence strategy
6.5.1 Introduction
6.5.2 BigPond Media
6.5.3 Sensis
6.5.4 IPTV
6.5.5 Conflicts of interest remain
6.5.6 Telstra vs News - what about Optus?
6.6 Other players
6.6.1 M2B World
6.6.2 VOD Pty Ltd
6.6.3 Movies Online Ltd/Reeltime
6.6.4 Anytime
6.6.5 Crank TV - IPTV music channel
6.6.6 ROO Media
6.6.7 IPTV from Video Ezy IPTV
6.7 Broadband HDTV
7. MOBILE TV
7.1 TV to go mobile by 2008
7.2 The broadcaster and the mobile operator
8. ELECTRONIC PROGRAM GUIDES
8.1 Introduction
8.2 Brief overview of DVRs
8.3 Brief overview of Home Media Centres
8.4 The EPG market
8.4.1 EPGs essential for success of DVRs
8.4.2 Mixing pot of industries
8.4.3 New business models for EPG
8.4.4 Competition
8.5 Key players
8.5.1 iceguide
8.5.2 TiVo
8.5.3 Hobbyists
8.6 EPG analyses
8.6.1 Missed opportunities for FTA broadcasters
8.6.2 Broadcasters conspired to block EPGs
8.7 Forecasts
8.8 Global developments
9. DIGITAL VIDEO RECORDERS
9.1 Introduction
9.1.1 Technical description
9.1.2 Functional overview
9.1.3 Electronic Program Guides (brief introduction)
9.1.4 Home Media Centres (brief introduction)
9.2 Free-to-Air DVRs
9.3 Pay TV DVRs
9.3.1 Foxtel’s iQ recorder
9.3.2 Other developments
9.3.3 Austar
9.4 TiVo
9.5 Sky Plus from News Corp
9.6 Digital TV and DVDs
9.7 Television advertising
9.8 Forecasts
9.9 Developments in the USA
10. HOME NETWORKS
10.1 Statistics and forecasts
10.1.1 Market set to accelerate in 2006
10.1.2 Connected home technologies
10.1.3 Home networking market forecast - IDC
10.2 Home networking
10.2.1 Broadband-enabled connected homes
10.2.2 Home automation market
10.2.3 Smart Wired House - survey findings
10.2.4 Home wireless market
10.3 W Home
10.3.1 Overview
10.3.2 Customer base
10.3.3 Powerline broadband
10.3.4 Examination W Home’s of business model
10.4 Telstra gearing up to offer digital home gateway
10.5 HomePlug
10.5.1 Introduction
10.5.2 Orthogonal Frequency Division Multiplexing (OFDM)
10.5.3 56 bit DES
10.5.4 Interoperability
10.5.5 Reach - with and beyond each home
11. HOME MEDIA CENTRES
11.1 Market overview
11.2 Broadband revives the concept
11.3 Key players
11.3.1 VIIV from Intel
11.3.2 Microsoft’s Media Centre
11.4 Market Analysis - early 2006
11.4.1 Catalyst for new business opportunities
11.4.2 Stragglers will be left behind
11.4.3 Overhaul of the lounge room
11.4.4 Content providers are coming to the party
11.5 Television advertising
11.6 Forecasts
12. INDUSTRY BUSINESS MODELS
12.1 The role of the telecos
12.2 The role of the broadcasters
12.3 The role of content providers
12.4 The role of the IT industry
12.4.1 Introduction
12.4.2 The IT industry
12.4.3 Consumer electronics
12.4.4 Software companies
12.5 Triple play business models
12.6 Consumer profiles
12.6.1 Switched-on cybers
12.6.2 Digital absorbers
12.6.3 Tech pragmatics
12.6.4 Techno learners
12.6.5 Digi-nots
12.6.6 Consumer interests
13. INTERNET MEDIA COMPANIES
13.1 Digital Content Industry
13.1.1 Overview of the industry
13.1.2 Industry sectors
13.1.3 Industry statistics
13.2 From old to new media
13.3 Google
13.4 Yahoo!7
13.5 MSN - ninemsn
13.5.1 Internet pioneer
13.5.2 Ninemsn
13.5.3 Optus and ninemsn
13.5.4 Telstra and Nine
13.5.5 Analysis of the deal part 1
13.5.6 A new deal with Telstra? Part 2
13.6 News Corp
13.6.1 No leader for the move to convergence
13.6.2 News moving into content niches
13.7 Telstra Sensis
13.7.1 Telstra’s three pronged approach
13.7.2 Sensis - online directories
13.7.3 Trading Post
13.7.4 Other online activities
13.7.5 Analysis of Telstra’s plans
13.8 John Fairfax
13.9 Digital media applications
13.10 Internet media bypassing the telcos
14. MARKETING STRATEGIES
14.1 Internet companies taking over the bat
14.1.1 Telcos operators of Internet economy infrastructure
14.1.2 Internet strategies around core business
14.1.3 Niche marketing for smaller telcos
14.1.4 The Internet business models
14.1.5 New virtual business models
14.1.6 Wholesale to the Internet companies
14.1.7 Spinning off into the Internet economy
14.2 The key drivers of growth
14.3 The role of service providers
14.3.1 Service providers as e-commerce leaders
14.3.2 E-cash service providers
14.3.3 The role of ISPs
14.3.4 New telcos - no winner, many losers
14.4 The multimedia consumer
14.5 Customer loyalty
14.5.1 Emagine
14.5.2 Loyalty until the next deal
14.5.3 Customer segmentation
14.5.4 Effectiveness of loyalty programs
14.5.5 Customer value management
14.6 Advertising
15. ADVERTISING STRATEGIES AND REVENUES
15.1 Internet advertising
15.1.1 Marketing issues
15.1.2 Costs advantage of Internet advertising
15.1.3 Changes in web advertising
15.2 Advertising statistics and revenues
15.2.1 Web advertising goes mainstream
15.2.2 Market trends - 2006
15.2.3 Market statistics
15.2.4 Report from early 2006
15.2.5 Reports from 2005
15.2.6 Reports from 2004
15.3 Dubious ‘ADVERTISING’ tactics
15.3.1 Mouse-trapping
15.3.2 Spawning
15.3.3 Spam
15.4 Advertising and the digital media - analysis
15.4.1 Infrastructure bottleneck in Internet economy
15.4.2 New technologies, same customers
15.4.3 Permission-based models
15.4.4 Advertising industry needs to go digital
15.4.5 Traditional media are missing the boat
15.4.6 Broadcasters are too broad
15.5 Interactive advertising
15.5.1 Foxtel Interactive TV ads
15.5.2 One hand tied to its back
15.5.3 Individually addressed advertisements
15.5.4 And again…permission-based models
15.5.5 Foxtel needs to break away from telstra
15.5.6 Revenue opportunities
16. BRANDING AND CUSTOMER SERVICE
16.1 Branding
16.1.1 Customers not companies create brands
16.1.2 Brands and reputations are earned not created
16.1.3 Emotional and cultural values
16.1.4 Brand does not reflect a product but an image
16.2 Customer service
16.2.1 Business market
16.2.2 SOHO market
16.2.3 The misuse of ‘customer service’
16.2.4 Costs of customer acquisition
17. DIGITAL MEDIA
17.1 Portals
17.1.1 Overview
17.1.2 Advertising model
17.1.3 Search and advice models
17.1.4 Vertical portals from content providers
17.1.5 Our own experiences
17.2 Directories
17.2.1 Directory service overview
17.2.2 Needed: competition in directory services
17.3 Searching
17.3.1 Google clear winner
17.4 Blogging
17.4.1 Creating havoc in news media
17.4.2 Mediacracy
17.4.3 Affecting traditional news media
17.4.4 Other blog terms
17.4.5 Personal video services
17.5 Publishing
17.5.1 Personal web publishing sites
17.5.2 Publishing software link with Kerry Stokes
17.6 Video entertainment
17.6.1 New emerging business models
17.6.2 VoD from Foxtel
17.6.3 VoD from Telstra BigPond
17.6.4 DSL TV
17.6.5 IPTV from Video Ezy
17.6.6 Broadcasting over IP (BoIP)
17.6.7 Interactive TV
17.6.8 Tele-presence
17.6.9 Multimodal documentaries
17.6.10 Digital media service from Rehame
17.6.11 Think different re Video iPods
17.7 Music
17.7.1 Introduction
17.7.2 Historical overview
17.8 MP3
17.8.1 destra Media
17.8.2 destra Music
17.8.3 Musicpoint
17.8.4 MP3.com.au
17.8.5 Rajon
17.8.6 Ninemsn assault on the online music market
17.8.7 Analysis
17.8.8 Telstra
17.9 Gambling
17.9.1 Historic data
17.10 Games
17.10.1 Statistics - 2005
17.10.2 Statistics - 2004
17.10.3 Statistics 2002 - 2004
17.10.4 Major players
17.10.5 Broadband games
17.11 Online dating
17.12 Adult entertainment
18. GLOSSARY OF ABBREVIATIONS
Exhibit 1 - Some application bit rates
Exhibit 2 - Drivers of high-speed Internet
Exhibit 3 - Digital media reform - current rules and key proposed changes
Exhibit 4 - Proposed retail pricing strategy
Exhibit 5 - Multi-dwelling units
Exhibit 6 - Media centre devices
Exhibit 7 - Intermix Media
Exhibit 8 - Telecommunication convergence
Exhibit 9 - Digital media marketing commandments
Exhibit 10 - Wholesale sales by music format- 2004
Exhibit 11 - Key music industry statistics - 2002
Exhibit 12 - Some licensed Australian online racing operators
Exhibit 13 - Key games statistics - 2002


Table 1 - DSL, 1Gb/s, DWDM transmission speeds - what does it mean?
Table 2 - Media advertising expenditure - 2002 - 2005
Table 3 - EPG forecasts Australia - 2005; 2007; 2010; 2015
Table 4 - Telecommunications services revenue by product - 2005; 2010; 2015
Table 5 - FTA TV adoption by device - June 2005
Table 6 - Penetration of pay TV services by access device - 2005
Table 7 - Penetration of DVD players by type of device - 2005
Table 8 - EPG developments based on current DVRs
Table 9 - EGP developments based on DVR pricing
Table 10 - Home network penetration of households - 2005; 2010; 2015
Table 11 - Australian multi dwelling units (100+) - 2003 - 2008
Table 12 - Revenue forecasts - Australian home automation market - 2003 - 2008
Table 13 - Media Centre penetration forecasts Australia - 2005; 2007; 2010; 2015
Table 14 - Switched-on cyber demographics
Table 15 - Digital absorber demographics
Table 16 - Tech pragmatic demographics
Table 17 - Techno learner demographics
Table 18 - Digi-not demographics
Table 19 - Online users and other media
Table 20 - Telco advertising budgets - 2002 - 2004
Table 21 - General advertising revenue - 1997 - 2007
Table 22 - Online advertising by classification
Table 23 - Online advertising spending by category - 2003 - 2004
Table 24 - Top ten strengths of the Internet as an advertising medium - December 2004
Table 25 - Top ten weaknesses of the Internet as an advertising medium - December 2004
Table 26 - Top reasons why advertisers choose to advertise online
Table 27 - Digital music market - revenue and forecasts - 2004 - 2009
Table 28 - Electronic gaming machines per state - 2002
Table 29 - Australian games software sales and growth - 2000 - 2009
Table 30 - Retail sales of leading games consoles - 2003
Table 31 - Retail sales revenue of games hardware - 2000 - 2002
Table 32 - Retail sales revenue of games software - 2000 - 2002

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