Is the VR market primed to pluck?

For all the promise of virtual reality (VR) the consumer appetite remains as somewhat of an unknown. Theoretically the technology could revolutionise the entertainment space, but we’re currently in a bit of a waiting game.

HTC is ready to gamble the consumer appetite, supporting ecosystem and product portfolio has evolved to such a position to provide the fuel for a subscription-based library of premium VR content.

“We have built a new model for VR that shines a light on the great library of VR content this industry has developed and gives users a reason to spend more time in headset than ever before,” said Rikard Steiber, President of Viveport.

“At the same time, we’re increasing developer reach and potential revenue as more developers can monetize a single Infinity user. We believe this model matches how consumers want to experience VR”

In pursuit of simplicity, Viveport is effectively a ‘Netflix for VR’. Customers can either pay $12.99 a month or $99 a year to access a VR content library with more than 600 titles already listed. As with other subscription models such as Netflix for content and Spotify for music, customers will have unlimited access to all content hosted on the platform.

However, you still have to answer the question as to whether the VR segment is ready to deliver the much-anticipated riches.

For the profits to be made, three criteria have to be satisfied. Firstly, is there an ecosystem which is creating enough volume of content, wide enough variety and immersive enough experiences. Secondly, is the hardware priced to allow the opportunity to generate mass market penetration. And finally, is there enough demand from the consumer.

With 600 titles already listed on the platform, this would suggest there is a large enough ecosystem in place to create the content. HTC is promising more titles, as well as some co-ordinated launches such as ‘Angry Birds VR: Isle of Pigs’. Secondly, the price of VR headsets has been coming down recently, and while it is still expensive, it is not prohibitively so. Consumers can spend thousands at the top end, but then again Google Daydream View can be purchased for £69. The breadth of products is now available to make this segment potentially viable.

The final criterion is the consumer appetite. This is incredibly difficult to gauge without launching a product, but as long as there are early adopters it is a good time to launch. Let’s not forget, Netflix was not an immediate success, it took time to develop the monstrous subscription base it has today, but it steadily attracted more and more thanks to it being first to market, while also offering an affordable (and very good) experience. Much of this was done through word of mouth.

Another lesson which HTC will have to learn is that enough is never enough. Netflix has maintained it position as the leader in the content world because it is constantly driving for more. Last year, the team spend almost $8 billion on content acquisition and creation, a number which will drastically increase this year. Not only is Netflix funding bigger-budget productions, but it is also expanding the local content libraries around the world. With Viveport, HTC could do the same, but it needs to ensure it is constantly expanding.

HTC has crafted itself a leadership position in the VR world, and the raw materials are currently in place to make this a profitable segment. Add improved connectivity with fibre penetration increasing and 4G constantly improving to the above three criteria, and HTC could be onto a winner.

Who knows, maybe in a few years’ time we’ll be referencing Viveport as the heavyweight of the entertainment space, not Netflix.

EE takes step towards content aggregator model

Content is a tricky topic to discuss around EE and BT, such is the scale of the disaster over the last few years, but a tie up with Amazon Prime and MTV Play is a step in the right direction.

The new content offer will see EE customers receive six-month memberships to both Amazon’s Prime Video service and MTV Play. The news starts to make a more comprehensive content platform for the MNO, with customers already able to access Apple Music and BT Sport, all of which is covered under the EE Video Data Pass, a zero-rating initiative available to all customers.

“It’s our ambition to offer our customers unrivalled choice, with the best content, smartest devices, and the latest technology through working with the world’s best content providers,” said Marc Allera, CEO of BT’s Consumer division.

“In offering all EE pay monthly mobile customers Prime Video and MTV Play access, in addition to BT Sport and Apple Music – we’re providing them with a wealth of great entertainment they can experience in more places thanks to our superfast 4G network, and soon to be launched 5G service. So, if they want music on a Monday, telly on a Tuesday, films on a Friday or sport on a Saturday, we’ve got something for them.”

While the content play over the last couple of years have been pretty dismal this is an approach to content and diversification which we like. It allows the telco to leverage the scale of their customer bases, while also adding value to the existing relationship with said customers.

Content fragmentation is an irk for many customers, not only because of the various apps which need to be installed, but also the number of different bills. EE doesn’t seem to be addressing the first issue but consolidating bills to a single provider might well be of interest to some customers. It also has the advantage of making EE a ‘stickier’ provider, perhaps having a positive impact on churn.

“Content is a key differentiator for telcos,” said Paolo Pescatore of PP Foresight. “However, consumers are now spoilt for choice resulting in too much fragmentation. Telcos are very well placed to aggregate content, integrate billing and provide universal search. Whoever achieves this first will have a significant advantage over their rivals.”

Sky is one of the companies which has had a good crack at addressing the fragmentation challenge, Sky and Netflix content is available on the same platform and through the same universal search function, though EE’s push on the mobile side would certainly attract attention. Consumers no-longer consider entertainment as simply for the living room, new trends show more preference for on-the-go content.

While this is a step in the right direction for EE, this is only one step. The content options need to offer more depth to meet the demands of the user, while streamlining all the content into a single app would be a strong step forward. It would certainly be difficult to convince partners to hand over customer experience to a third-party, Netflix has shown much resistance to this idea making the Sky tie-up all the more impressive, though whoever nails this aspect of the aggregator model would certainly leap to the front.

Premier League giants take baby steps toward digital economy

If you’ve ever been on any sports’ club website you would be forgiven for thinking these guys are technophobes, but Intel is predicting a new era for sports broadcasting and fan engagement.

“We’re going to find ourselves in a couple of years’ time looking back and wondering how we ever got by,” said XXX of Intel.

The sports industry, and football in particular, has never really been at the forefront of technology. For an industry which defines itself, and almost entirely depends, on fan engagement little has been done to embrace new technologies and ideas. However, the last couple of years have seen a few rays of hope.

A couple of the more innovative clubs in the football industry, ones who just so happened to be partners of Intel, featured on a panel session to discuss the glaringly obvious opportunities which are being presented to sport clubs and the progress being made in shifting incredibly traditional businesses.

“We have been seeing a convergence of technology and sport and this has been accelerating over the last few years,” said Damian Willoughby, SVP Partnerships at Manchester City FC.

“Technology is impacting all of us and from our perspective, we are looking at how we can create fan engagement or fan experience, whether it is at Anfield or anywhere around the world,” said Billy Hogan, Chief Commercial Officer at Liverpool.

“What isn’t changing is the popularity of the English Premier League,” said Peter Silverstone, Commercial Director of Arsenal. “What is changing is the consumer appetite for how they consume the English Premier League as a product.”

What you have to take into consideration, and why it is so baffling that football clubs and the industry on the whole have been so slow to react to new technologies, is the global reach. The English Premier League (EPL) official Facebook and Twitter pages have 42 million and 18 million followers respectively. Another 23 million follow the competition on Instagram.

Below you can see the social media reach of each of the clubs on show during the event:

Club Facebook Twitter Instagram YouTube
Liverpool 32.2 million 11 million 12.4 million 1.1 million
Arsenal 36.9 million 14 million 13.3 million 1.1 million
Man City 36.7 million 6.6 million 10.4 million 1.6 million

This is a truly global industry and while these numbers are certainly impressive, the challenge now is how to best capitalise on such significant assets. This is where the Intel partnership and content play a role.

As all three of the executives point out, the idea behind technology implementation is to offer a greater variety of ways for fans to consume content. This might be through virtual reality, player POV footage, more in-depth analysis, behind the scenes content or partners stories. The idea is to create content which came be customisable, interactive and varied. Each user can create their own story on-demand, building interactions which are more suited to them.

Looking at Intel’s True View product, one of the technologies which will be used to deliver this enhanced experience, XXX highlighted 38 5K sensors will be installed in each stadium, allowing the team to capture footage which is eight times the definition of HD. The cameras capture volumetric data (height, width, and depth) using voxels, a 3D pixel, delivering a new experience for the consumer.

Collecting this data will allow the three clubs to introduce 360 degrees replays, allowing the consumer to decide how the content is viewed, player POV footage and new content on laser wall screens. Intel believe this sort of technology is addressing a supply/demand chasm in the market; consumers are demanding a different type of experience, yet few in the world of sports seem able to deliver it.

Creating all of these experiences has another excellent impact on these clubs; it allows them to match the globalised nature of football. The worldwide footprint of the Premier League is pretty unmatched in the entirety of sports, especially over the last decade with clubs targeting fans on distant shores. These are three clubs which have certainly fit this mould.

“Some of these people will never get the chance to go to Anfield, but we can deliver this experience,” said Hogan, referencing fans in Indonesia, China and the US.

Although there certainly have been positive steps forward in converging the worlds of technology and sport, this is only the beginning. Looking forward, there are some genuinely exciting technologies in the pipeline, each of which has the potential to completely revolutionise the experience.

Virtual reality is one which is constantly discussed, and while there might be some applications and hardware on the market which offer some sort of experience, this is only the tip of the iceberg. VR is very much an embryonic technology for the moment, though the fast decreasing price of hardware and the approaching 5G euphoria could take this technology to the next level.

Another area to consider is the delivery of content through holograms. A couple of months back Vodafone delivered one of the best 5G demos we’ve seen, live-streaming a hologram from Manchester to its Newbury HQ of England Women’s football captain Steph Houghton. The image was crisp while latency was pretty much non-existent. Slumbering journalists very bolted upright by genuine innovation.

Imagine sitting in your living room and experiencing a Premier League Football game as if you were sat on the halfway line and seeing replays through the eyes of the players. Or how about a boxing match hosted in Las Vegas, but live-streaming holograms to hundreds of venues throughout the world. The viewing experience could be completely revolutionised.

What these three clubs are doing are the first baby steps into digital transformation, a buzzword which has plagued us for years. However, it might not be too long before the sports entertainment world morphs into a completely unrecognisable beast.

Apple turns to gaming to crack subscription conundrum – sources

Apple has been searching far and wide for alternative revenue streams to reduce its reliance on the plateauing devices market, and the latest venture might take it into the world of gaming.

With content being an incredible bust for the business, Apple is reportedly in hot pursuit of the blossoming gaming segment. This is an area which would seemingly tick all the boxes for the iLeader; recurring revenues, a chance to grow organically and in before the segment has become popular and saturated.

According to Cheddar, Apple is in discussions to create a gaming platform which would bundle various titles together behind a paywall. It sounds like it could be a Netflix for gamers and would certainly give the status quo of gaming a bit of a poke.

Looking at the gaming segment, this is an area which is becoming increasing popular with users while profitability is certainly heading in the right direction for the developers and platform owners. There is already a lot of money flowing around this space, but as more games evolve away from single- to multi-player, internet focused experiences, popularity seems to be growing in the mainstream markets.

Recent figures from the Entertainment Retailers Association (ERA) in the UK suggest gaming now accounts for just over 51% of the three segments in the entertainment world (video and music being the other two), doubling in revenues since 2007. Netflix and Amazon have proven the subscription OTT segment has legs, normalised the idea in the mind of the consumer, so why shouldn’t a gaming platform work as well.

Of course, for this to work Apple would have to convince the developers to join hands behind the paywall. This is where Apple’s venture into the world of content has failed before; it didn’t create good enough content to be considered a realistic player. This will certainly be a big change in the status quo for the developers and it will be interesting to see what the results are. Apple not only needs high quality content, but a broad enough portfolio to make it value for money.

Here is where Apple is swimming against the tide. Single purchases might have been the way developers made money in the past, but the popular route is now free-to-play with in-game purchasing options. It has proven to be very successful and there might be some resistance to move to another business model. Don’t fix what isn’t broken might be a relevant phrase here. What Apple is suggesting in a completely new approach to revenue sharing as the games are bundled together behind a paywall. Theoretically it can work but change scares the majority.

If Apple can balance the equation, it would certainly be a relief for CEO Tim Cook who must be feeling some pressure right now. A less than enthusiastic earnings call demonstrated Apple is floundering in the software and services segment. Yes, it is growing, but not at the rate of knots which Apple investors have come to expect. Apple hasn’t really done anything exciting or applaudable in this segment yet, most of the gains are through iTunes or Apple Care for example; differentiation and diversification are desired above all else.

Apple is certainly stepping out of its comfort zone here, and we strongly suspect it might fail because of this. However, it might just lead the way for a fast follower (Netflix perhaps?) to reap the rewards.

In fairness though, you have to give Apple credit for creative thinking and an interesting idea. Those recurring revenues might not be that far away for the iGiant.

We’re all excited about VR but don’t forget about normal gaming

The gaming segment of the entertainment industry is one which is often overlooked, but it is quickly turning into an incredibly profitable one which could be a pain for the telcos.

The Entertainment Retailers Association (ERA) has compiled the figures for the various segments across the last 12 months in the UK, and to say than digital is taking over would be the understatement of the year (albeit we’re only three days in).

Driven by the adoption of services such as Netflix and Amazon, as well as streaming games through mobile and PC devices, digital accounted for roughly 76% of entertainment sales value in 2018. Looking at the broader segments, digital generated 80.1% of games revenues, 72.3% of video and 71.3% of music.

“On a market level these figures are a stunning testament to the investment and innovation of digital services who have transformed the fortunes of an entertainment industry many had thought was doomed by the internet and piracy,” said ERA CEO Kim Bayley.

Starting with music, streaming subscription revenues accounted for £829.1 million, an increase of 37%, compared to the £383.2 million generated in physical sales and £122.6 million in downloads. For video, streaming revenues increased by 26% to £1.6 billion, while both the physical rental and purchase market unsurprisingly declined.

Looking at the gaming side of things, digital sales grew an impressive 12.5% to £3.8 billion, while the physical gaming market declining 11.4% to £1.8 billion. Gaming now accounts for just over 51% of the three segments in the entertainment world, doubling in revenues since 2007.

“The games industry has been incredibly effective in taking advantage of the potential of digital technology to offer new and compelling forms of entertainment,” said Bayley. “Despite being the youngest of our three sectors, it is now by far the biggest.”

While this is a niche in the world of telecommunications, it is certainly one which is worth keeping an eye on. On the traditional gaming side, the content is becoming much larger and more immersive, with more of a focus on real-time online gaming against other players around the world. This in itself has the potential to cause stress to the network, but also grounds for irritated customers; buffering will not be accepted here.

The other growing sub-segment here is mobile gaming. The launch of Niantic’s Pokémon Go demonstrated the potential of mobile gaming when done correctly, and with data becoming cheaper every single day, more consumers will be encouraged to play these games on the go. Just to emphasise this point, research from Tappable last September claims 42% of gamers now consider smartphones to be their first choice for gaming, mostly down to the convenience of the devices.

Gaming is often an aspect of the connectivity ecosystem which is overlooked, but it is increasingly becoming more prominent in the lives of consumers. It is certainly an area which should be taken into consideration moving forward.