Home » Posts tagged 'Xbox'

Tag Archives: Xbox

Windows 10 is here to help regain Microsoft’s leading position in ICT

My verdict: The 3 phase launch strategy is almost flawless, as well as the functionality of the product. So the remaining question is whether the execution will be as flawless or not?

July 29, 2015, BBC NewsMicrosoft boss Nadella on Windows 10

From this interview 2 things are very important to remember:

  1. Cortana is the near term means to generate excitement for the Windows 10.
  2. Then the Hololens is to be launched within a year to drive that excitement even further into the augmented and virtual reality scenario which is expected to generate $150 billion in combined annual revenue by 2020, according to Digi-Capital, a research and advising firm.

Finally in the end of that interview Nadella is mentioning another important point:

It is a 5 year journey. It’s a beginning. Even the smart phone journey with touch was a 7 year – 8 year journey. So this is how you should think about these fundamental changes.

With all the client markets out of their real growth period such a way of thinking is the only possible one. See the specific posts on the client categories, with additional remarks highlighted here from them:

  • Aug 5, 2015PC Market Trends is particularly drawing the attention to the fact that phones and tablets with detachable keyboards, i.e. 2-in-1 devices running either Windows or Android are remaining a competitive issue for the category.
  • Aug 4, 2015Tablet and smartphone market trends on the other hand is emphasizing that the key going forward for the Windows will be if the coming wave of 2-in-1 detachable tablets (expected to be on the market in Q4) is a hit with consumers or if they go the way of the netbook-style laptops. This will determine how much the current Q2 2015 9% market share (which was just 5% in Q2 2014) of Windows-branded tablets could increase with the new Windows 10.
    Investors.com comments on tablet and smartphone market trends -- Q2'2015

Additional readings/information on Windows 10 Mobile:

  • July 29, 2015: Windows 10 coming soon to Lumia smartphones – Microsoft – Global which has indicated that “The following Lumia smartphones will receive a free upgrade when available: Lumia 430, Lumia 435, Lumia 532, Lumia 535, Lumia 540, Lumia 640, Lumia 640 XL, Lumia 735, Lumia 830, and Lumia 930. … In order to upgrade to Windows 10, your Lumia device will need to have the Lumia Denim software update [Jan 7, 2015] installed.
  • Aug 4, 2015 8:03 tweet by Gabriel Aul, Vice President, WDG Engineering Systems team, Re: “No new builds today Sooo, maybe on Friday? And what build is currently in testing? 10240 or even newer?”: “It will be a few more days. We’re moving to a new branch for [Windows 10] Mobile and that takes a bit of prep. Newer than 10240.” Note that people on the Insider program currently using the 10166 version.
  • Aug 4, 2015 8:20 tweet by Gabriel Aul, Vice President, WDG Engineering Systems team: “10240 has a blocking bug for [Windows 10] Mobile, we need a newer build with the fix.

Remark as of Aug 5, 2015: The Windows 10 launch caused below average rate of interest. One evidence is this same July 31 post. It had just 5 views so far and at least 3 of them were based on my Hungarian Facebook post. Even my “Embedded Android — a VIA Technologies …” post of July 28 had 12 views just in the first 3 days and none of them were generated from my Facebook page as I’ve not posted there about that.

July 29, 2015Windows 10 UK Launch Party by Microsoft UK for a “launch atmosphere”

IMHO Microsoft’s irresistible message is:

The upgrade to Windows 10 is free within the first year, and once you’ve upgraded it remains free on your device for life!

So I did the upgrade for both my devices yesterday, and it went very smoothly. One 2GB “classic” Toshiba laptop with Win7 on it, and a 4GB Lenovo Flex 2 dual-mode laptop with Win8.1.  The upgrade took about 3 hours on each, and now I am absolutely satisfied with the new Windows on them in all respects. Recommending the upgrade for everyone ASAP.

July 21, 2015: CEO Satya Nadella on “some amount of delay due to Windows 10 on the OEM side” in the Windows business, from Q4 2015 Earning Call Transcript (the 2 video inserts are mine), in order to understand Microsoft’s business strategy with the Windows 10 launch:

The way the Windows ecosystem works is there are phases to it … in some sense we’ve taken a very different approach with this Windows-as-a-service even when it comes to OEM relations and how they’re able to co-create the products with us. … there are three distinct phases:

  1. The first phase is what I will describe as the upgrade phase. That’s what starts in a week’s time, and that is a more retail execution and upgrade.
    July 28, 201510 Reasons to Upgrade to Windows 10: WINDOWS STORE (the other 9 you can find in the 10 Reasons to Upgrade to Windows 10 playlist of the Windows YouTube channel)

    July 28, 2015How to customize the Start Menu after Upgrading to Windows 10 by Scott Hanselman from Microsoft
    for more information see Scott’s Getting Started with Windows 10 post containing other very useful videos as well
  2. Then come the fall, you will see the devices from all the OEMs going into the holiday quarter.
  3. And then the enterprise upgrades; in fact, we have a release of enterprise features, which I mentioned in my script, which will ship in that timeframe. And I expect piloting to start and deployments to start in the second half of the fiscal year.

So that’s how I would think about the OEM as well as enterprise adoption. So my bullishness [in business sense] for Windows 10 is more in the second half of the fiscal year, and of course it will build. It will build starting in a week’s time in retail and in the upgrades, but I see this in three phases.

July 28, 2015Microsoft Windows 10 Official Demonstration by Ger Lynch from Microsoft Ireland for a mix of a salespitch (in good sense) and a walkthrough:

July 21, 2015: CEO Satya Nadella on “the new strategy around the phone business” and “how … that business trending over a longer period of time” from the Q4 2015 Earning Call Transcript (for the phone-specific Win10 information read the Windows 10 coming soon to Lumia smartphones page by Microsoft and note the “In order to upgrade to Windows 10, your Lumia device will need to have the Lumia Denim software update installed.” warning):

The big shift that we are making when it comes to phones is to not think about phones in isolation. That’s perhaps the biggest shift because I think about Windows 10 in its entirety, the Windows ecosystem in its entirety.

We clearly are going to have premium first-party portfolio, and you’ve seen some of the numbers, some of the progress we have made in Surface. I feel that we have a formula there that I would like to apply more broadly in terms of growing, just delivering innovation, growing our own economic return for it, stimulating demand, creating categories. All of that is what I want to do broadly. And it applies to phones, it applies to Surface hardware, it applies to Hololens, and that’s how I view it.

I believe our participation in the phone segment by itself with Windows phones and Lumia phones being there is important, and that’s why we picked the three areas where we have differentiation and we want to focus on it.

  1. We’re going to have great flagship phones for Windows 10. That’s actually a segment we don’t today have good devices, and we hope to change that with Windows 10.
  2. We have in fact good traction in the business segment. This is business customers who are actually buying phone devices, which is basically a radio with essentially a smartphone to be able to deploy their line-of-business applications. That’s where we have pretty unparalleled value, which is we have Visual Studio Online and some of the tools I talked about, so you can generate these apps at a low cost of ownership, manage them, secure them, and deploy them to our phone endpoints, and then of course, management and security. So that’s a place where we want to continue to focus.
  3. And in the value smartphones, that’s the place where I want us to be much more efficient. We clearly have some value to add there because of the uniqueness of Office and Skype and our services. But at the same time, I think we want to be smart about how many of these phones do we want to generate, how many, which price points we want to participate. That’s where you will see the most significant operational changes from how we operated last year to the coming year.

May 4, 2015Satya Nadella’s Keynote from Ignite 2015 on the Windows Community YouTube channel (see also the Microsoft announces new solutions
to empower IT professionals press release for more information) in order to understand the place of Windows 10 in the overall strategic setup of the company 

Microsoft - The 3 interlocking ambitions the Microsoft CEO talked about at Microsoft Iginite held on May 4-8, 2015 in Chicago

The 3 “interlocking ambitions” the Microsoft CEO talked about at Microsoft Iginite held on May 4-8, 2015 in Chicago

July 21, 2015: CEO Satya Nadella on Microsoft’s “third bold ambition to create more personal computing experiences with Windows and our devices” as the company’s equally important strategic ambition (in addition to “reinventing productivity in business processes” and “building the intelligent cloud platform with Azure“) from the Q4 2015 Earning Call Transcript

I am thrilled we are just days away from the start of Windows 10. It’s the first step towards our goal of 1 billion Windows 10 active devices in the fiscal year 2018. Our aspiration with Windows 10 is to move people from meeting to choosing to loving Windows. Based on feedback from more than 5 million people who have been using Windows 10, we believe people will love the familiarity of Windows 10 and the innovation. It’s safe, secure, and always up to date. Windows 10 is more personal and more productive with Cortana, Office, universal apps, and Continuum. And Windows 10 will deliver innovative new experiences like Inking on Microsoft Edge and gaming across Xbox and PCs, and also opens up entirely new device categories such as Hololens.

Windows 10 will deliver significant value to enterprise customers as well. Windows 10 provides advanced security capabilities with additional features for hardware-based security, mobile work and data protection. It also provides a single device management platform across all devices, from phones to laptops to Internet of Things devices. And Windows 10 helps enterprises stay up to date with Windows Update for Business and Windows Store for Business.

While the PC ecosystem has been under pressure recently, I do believe that Windows 10 will broaden our economic opportunity and return Windows to growth.

  1. First, we have an OEM ecosystem that is creating exciting new hardware designs for Windows 10. In fact, our OEM partners have over 2,000 distinct devices or configurations already in testing for Windows 10 upgrades as well as hundreds of new hardware designs. We are delighted that the first of these exciting new devices will start to be available on Windows 10 launch day, and by this holiday we will be selling the widest range of Windows hardware ever available.
  2. Second, we will generate new growth through gross margin on our own differentiated first-party premium device portfolio. We will also significantly reduce our losses on the phone by operating more effectively and efficiently with a more focused portfolio.
  3. Third, we will grow monetization opportunities across the commercial and consumer space. In the enterprise, customers will continue to value our unparalleled management security, app dev, and servicing capability. And for consumers, Windows 10 creates monetization opportunities with store, search, and gaming. We are confident that these are the right levers to revitalize Windows and restore growth. The progress we made this quarter and the forward-looking guidance that Amy will share shows the opportunity for renewed growth is real.

In hardware, both Surface and Xbox had an incredible Q4.

  1. We more than doubled Surface revenue to nearly $900 million this quarter, capping off a year in which it delivered more than $3.6 billion in revenue. Both consumers and enterprise customers love this device. Surface is clearly a product where we have gotten the formula right, earned fans, and can apply this formula to other parts of the hardware portfolio.
  2. Gaming is an important scenario for Windows 10, and our success with Xbox this quarter gives us a strong starting position heading into launch. Xbox Live users grew 22% this quarter and logged nearly 3.5 billion hours of gameplay. Our growing fan base is excited for the best games lineup in our history. All of this comes together with Windows 10, when fans can connect with each other, stream all of their Xbox One games to Windows 10, and experience the best virtual reality platform given our partnership with Oculus Rift and Valve.
  3. In search, Bing will now power both differentiated experiences on Windows 10 such as Cortana as well as search and search advertising across the AOL portfolio sites in addition to the partnership we already have with Yahoo!, Amazon, and Apple. With advertising revenue growth of 21% year over year, Bing will transition to profitability in the coming fiscal year.

July 28, 2015Windows 10 available in 190 countries as a free upgrade Microsoft news release for the summary of what has been launched worldwide overall

REDMOND, Wash. — July 28, 2015 — Microsoft Corp. announced that Windows 10 will become available Wednesday as a free upgrade1 or with new PCs and tablets. Windows 10 includes innovations such as Cortana,2 an Xbox app and Microsoft Edge for a familiar, yet more personal and productive, experience. The most secure Windows ever, Windows 10 is delivered as a service and kept automatically up-to-date with innovations and security updates. Windows 10 offers one experience that will become available on the broadest range of devices, including PCs, tablets, phones, Raspberry Pi, Xbox One, HoloLens and more — with more than 2,000 devices or configurations already in testing. The new Windows Store and Windows Software Development Kit also become available Wednesday, opening the door to new and innovative app experiences on Windows 10.

People around the world will celebrate the launch of Windows 10 Wednesday at fan celebrations in 13 countries and via a new yearlong initiative to celebrate people and organizations making a difference around the world. Microsoft encourages people to share how they plan to #UpgradeYourWorld and to vote for a global nonprofit to receive a cash donation by simply mentioning the nonprofit in a post on Instagram, Facebook or Twitter and using the hashtags #UpgradeYourWorld and #vote. More information on Upgrade Your World can be found at http://www.windows.com/upgradeyourworld.

“A new era of Windows starts today. From the beginning, Windows 10 has been unique — built with feedback from over 5 million fans, delivered as a service and offered as a free upgrade,” said Terry Myerson, executive vice president, Windows and Devices Group, at Microsoft. “Windows 10 delivers on our more personal computing vision, with a natural, mobile and trusted experience. Along with our partners, we’re excited to deliver the best Windows ever, which will empower people and organizations around the world to do great things.”

Windows 10: Best Windows ever

Windows 10 is fast and familiar — with the return of the Start menu and Live Tiles for instant, streaming updates of what matters most. Windows 10 is the most secure Windows Microsoft has ever released, with enhancements to Windows Defender and SmartScreen to help safeguard against viruses, malware and phishing and innovations such as Windows Hello, which offers a fast, secured, password-free way to log in.3 Keeping up-to-date is also simple, as free updates will help people stay current with the latest features and security updates for the supported lifetime of the device.

Windows 10 is more personal and productive, with voice, pen and gesture inputs for natural interaction with PCs. It’s designed to work with Office and Skype and allows you to switch between apps and stay organized with Snap and Task View. Windows 10 offers many innovative experiences and devices, including the following:

  • Cortana, the personal digital assistant, makes it easy to find the right information at the right time.
  • New Microsoft Edge browser lets people quickly browse, read, and mark up and share the Web.
  • The integrated Xbox app delivers the Xbox experience to Windows 10, bringing together friends, games and accomplishments across Xbox One and Windows 10 devices.
  • Continuum optimizes apps and experiences beautifully across touch and desktop modes.
  • Built-in apps including Photos; Maps; Microsoft’s new music app, Groove; and Movies & TV offer entertainment and productivity options. With OneDrive, files can be easily shared and kept up-to-date across all devices.
  • A Microsoft Phone Companion app enables iPhones, Android or Windows phones to work seamlessly with Windows 10 devices.
  • The all new Office Mobile apps for Windows 10 tablets are available today in the Windows Store.4 Built for work on-the-go, the Word, Excel and PowerPoint apps offer a consistent, touch-first experience for small tablets. For digital note-taking needs, the full-featured OneNote app comes pre-installed with Windows 10. The upcoming release of the Office desktop apps (Office 2016) will offer the richest feature set for professional content creation. Designed for the precision of a keyboard and mouse, these apps will be optimized for large-screen PCs, laptops and 2-in-1 devices such as the Surface Pro.

Windows 10: Best platform for businesses

Feedback from millions of IT pros has shaped Windows 10, the most extensively tested version of Windows ever. Ready for corporate deployments, Windows 10 will help companies protect against modern cyberattacks, deliver experiences their employees will love and enable continuous innovation with a platform that keeps companies up-to-date with the latest technology. Businesses will be able to control the frequency of their updates and select the features and functionality that are right for each group of their employees.

Windows 10 includes built-in, enterprise-grade security, so customers can replace passwords with more secure options, protect corporate data and corporate identities, and run only the software they trust. New management and deployment tools simplify device management, help lower costs, and enable companies to power their business with the enterprise strength of the Microsoft Azure cloud.

Top apps available on Windows 10

The new Windows Store will open Wednesday and begin accepting new apps for Windows 10. The Windows Store offers one-stop shopping for popular free and paid apps, games, movies, TV shows and the latest music, which can work across all Windows 10 devices. The new Windows Store is the only store where people can use Cortana to control apps with their voice5 and get real-time notifications on their app tiles. All Windows Store content is certified by Microsoft to help keep devices safer. In addition to existing Windows 8.1 apps such as Netflix, Flipboard, Mint.com, “Asphalt 8: Airborne” and The Weather Channel, the Windows Store provides a constant stream of new and updated Universal Windows Apps and games, including Twitter, “Minecraft: Windows 10 Edition beta,” Hulu, iHeartRadio, USA TODAY, “Candy Crush Saga” and others including WeChat and QQ, which will launch soon.6

Easy upgrade, devices now available

Upgrading to Windows 10 is easy for customers running a genuine Windows 7 or Windows 8.1 PC or tablet. Starting Wednesday, people who reserved their upgrade to Windows 10 will be notified in waves when their upgrade is ready to be installed. For business customers, Windows 10 is available to start deploying within their work environments, and starting Aug. 1, organizations that have volume licensing can upgrade to Windows 10 Enterprise and Windows 10 Education.

Retail partners are ready to help people upgrade to Windows 10 with our largest tech bench program ever, including more than 100,000 trained retailers and tens of thousands of stores around the world. Free upgrade programs will be available Wednesday, with Windows 10 software becoming broadly available in retail stores around the world between mid-August and September. Devices running Windows 10 will be available in some retail stores on Wednesday, with many, many more devices to become available in the weeks and months ahead.

Microsoft has also worked closely with retailers to introduce programs to help people easily upgrade, including Best Buy, Bic Camera, Croma, Currys/PC World, Darty, Elkjøp, Fnac, Jarrir, Incredible Connection, Media Markt, Staples, Yamada Denki, Yodobashi and many more leading retailers from around the world.

Information on upgrading, new and compatible devices, and apps for Windows can be found at http://www.windows.com. Additional information and media assets are available at http://blogs.windows.com/launch.

Microsoft (Nasdaq “MSFT” @microsoft) is the leading platform and productivity company for the mobile-first, cloud-first world, and its mission is to empower every person and every organization on the planet to achieve more.

1 Limited time free upgrade offer for qualified and genuine Windows 7 and 8/8.1 devices. Hardware and software requirements apply; see http://www.windows.com/windows10upgrade for details.

2 Cortana available in select markets at launch; experience may vary by region and device.

3 Windows Hello requires specialized hardware, including fingerprint reader, illuminated IR sensor or other biometric sensors.

4 An Office 365 subscription is required to edit Office apps on Windows 10 PCs or larger tablets.

5 Hardware dependent.

6 Some apps and content sold separately. App and content availability and experience may vary by region and device.

Advertisements

Windows 10 Technical Preview: Terry Myerson and Joe Belfiore on the future of Windows

Update: Microsoft reveals biggest-ever change in Windows updates [Computerworld, Oct 3, 2014] — Michael Silver of Gartner: “This is [Microsoft’s] answer to the update cadence issue for enterprises, and what organizations want. … Silver called the three “consumer speed,” “near-consumer speed” and “long-term.”” Rather than the historical offer-everything-to-everyone updating policy — which has relied on security patches during the approximately three years between each edition of Windows.
+ Microsoft: Consumers should wait for Windows 10 Consumer Preview out early 2015 [Pocket-lint, Oct 2, 2014] — “We’ve got the consumer preview at the start of 2015, then the developer preview in April, followed by the launch of the final version later in the year,” a spokesman for the company told Pocket-lint. + Microsoft (MSFT) Has Got 3-Step Startegy To Win Smartphone And PC Market ! [Dazeinfo, Oct 3, 2014]

Terry Myerson, executive vice president, Operating Systems Group, announces Windows 10, Microsoft’s next-generation unified platform (“from Xbox to PCs and phones to tablets and tiny gadgets” — “from some with 4 inch screens to some with 80 inch screens”) that adapts across a family of devices to the way people and organizations work. Technical Preview for early pre-release testing, evaluation and feedback is available October 1. Joe Belfiore, corporate vice president, Operating Systems Group,  presents what is called “the tailored experience for PC, tablet and phone” for the very first time.

Satya Nadella on “Digital Work and Life Experiences” supported by “Cloud OS” and “Device OS and Hardware” platforms–all from Microsoft

Update: Gates Says He’s Very Happy With Microsoft’s Nadella [Bloomberg TV, Oct 2, 2014] + Bill Gates is trying to make Microsoft Office ‘dramatically better’ [The Verge, Oct 3, 2014]

This is the essence of Microsoft Fiscal Year 2014 Fourth Quarter Earnings Conference Call(see also the Press Release and Download Files) for me, as the new, extremely encouraging, overall setup of Microsoft in strategic terms (the below table is mine based on what Satya Nadella told on the conference call):

image

These are extremely encouraging strategic advancements vis–à–vis previously publicized ones here in the following, Microsoft related posts of mine:

I see, however, particularly challenging the continuation of the Lumia story with the above strategy, as with the previous, combined Ballmer/Elop(Nokia) strategy the results were extremely weak:

image

Worthwhile to include here the videos Bloomberg was publishing simultaneously with Microsoft Fourth Quarter Earnings Conference Call:

Inside Microsoft’s Secret Surface Labs [Bloomberg News, July 22, 2014]

July 22 (Bloomberg) — When Microsoft CEO Satya Nadella defined the future of his company in a memo to his 127,100 employees, he singled out the struggling Surface tablet as key to a future built around the cloud and productivity. Microsoft assembled an elite team of designers, engineers, and programmers to spend years holed up in Redmond, Washington to come up with a tablet to take on Apple, Samsung, and Amazon. Bloomberg’s Cory Johnson got an inside look at the Surface labs.

Will Microsoft Kinect Be a Medical Game-Changer? [Bloomberg News, July 22, 2014]

July 23 (Bloomberg) — Microsoft’s motion detecting camera was thought to be a game changer for the video gaming world when it was launched in 2010. While appetite for it has since decreased, Microsoft sees the technology as vital in its broader offering as it explores other sectors like 3d mapping and live surgery. (Source: Bloomberg

Why Microsoft Puts GPS In Meat For Alligators [Bloomberg News, July 22, 2014]

July 23 (Bloomberg) — At the Microsoft Research Lab in Cambridge, scientists track animals and map climate change all on the off chance they’ll stumble across the next big thing. (Source: Bloomberg)

To this it is important to add: How Pier 1 is using the Microsoft Cloud to build a better relationship with their customers [Microsoft Server and Cloud YouTube channel, July 21, 2014]

In this video, Pier 1 Imports discuss how they are using Microsoft Cloud technologies such as Azure Machine Learning to to predict which the product the customer might want to purchase next, helping to build a better relationship with their customers. Learn more: http://www.azure.com/ml

as well as:
Microsoft Surface Pro 3 vs. MacBook Air 13″ 2014 [CNET YouTube channel, July 21, 2014]

http://cnet.co/1nOygqh Microsoft made a direct comparison between the Surface Pro 3 and the MacBook Air 13″, so we’re throwing them into the Prizefight Ring to settle the score once and for all. Let’s get it on!

Surface Pro 3 vs. MacBook Air (2014) [CTNtechnologynews YouTube channel, July 1, 2014]

The Surface Pro 3 may not be the perfect laptop. But Apple’s MacBook Air is pretty boring. Let’s see which is the better device!

In addition here are some explanatory quotes (for the new overall setup of Microsoft) worth to include here from the Q&A part of Microsoft’s (MSFT) CEO Satya Nadella on Q4 2014 Results – Earnings Call Transcript [Seeking Alpha, Jul. 22, 2014 10:59 PM ET]

Mark Moerdler – Sanford Bernstein

Thank you. And Amy one quick question, we saw a significant acceleration this quarter in cloud revenue, or I guess Amy or Satya. You saw acceleration in cloud revenue year-over-year what’s – is this Office for the iPad, is this Azure, what’s driving the acceleration and how long do you think we can keep this going?

Amy Hood

Mark, I will take it and if Satya wants to add, obviously, he should do that. In general, I wouldn’t point to one product area. It was across Office 365, Azure and even CRM online. I think some of the important dynamics that you could point to particularly in Office 365; I really think over the course of the year, we saw an acceleration in moving the product down the market into increasing what we would call the mid-market and even small business at a pace. That’s a particular place I would tie back to some of the things Satya mentioned in the answer to your first question.

Improvements to analytics, improvements to understanding the use scenarios, improving the product in real-time, understanding trial ease of use, ease of sign-up all of these things actually can afford us the ability to go to different categories, go to different geos into different segments. And in addition, I think what you will see more as we initially moved many of our customers to Office 365, it came on one workload. And I think what we’ve increasingly seen is our ability to add more workloads and sell the entirety of the suite through that process. I also mentioned in Azure, our increased ability to sell some of these higher value services. So while, I can speak broadly but all of them, I think I would generally think about the strength of being both completion of our product suite ability to enter new segments and ability to sell new workloads.

Satya Nadella

The only thing I would add is it’s the combination of our SaaS like Dynamics in Office 365, a public cloud offering in Azure. But also our private and hybrid cloud infrastructure which also benefits, because they run on our servers, cloud runs on our servers. So it’s that combination which makes us both unique and reinforcing. And the best example is what we are doing with Azure active directory, the fact that somebody gets on-boarded to Office 365 means that tenant information is in Azure AD that fact that the tenant information is in Azure AD is what makes EMS or our Enterprise Mobility Suite more attractive to a customer manager iOS, Android or Windows devices. That network effect is really now helping us a lot across all of our cloud efforts.

Keith Weiss – Morgan Stanley

Excellent, thank you for the question and a very nice quarter. First, I think to talk a little bit about the growth strategy of Nokia, you guys look to cut expenses pretty aggressively there, but this is – particularly smartphones is a very competitive marketplace, can you tell us a little bit about sort of the strategy to how you actually start to gain share with Lumia on a going forward basis? And may be give us an idea of what levels of share or what levels of kind unit volumes are you going to need to hit to get to that breakeven in FY16?

Satya Nadella

Let me start and Amy you can even add. So overall, we are very focused on I would say thinking about mobility share across the entire Windows family. I already talked about in my remarks about how mobility for us even goes beyond devices, but for this specific question I would even say that, we want to think about mobility not just one form factor of a mobile device because I think that’s where the ultimate price is.

But that said, we are even year-over-year basis seen increased volume for Lumia, it’s coming at the low end in the entry smartphone market and we are pleased with it. It’s come in many markets we now have over 10% that’s the first market I would sort of say that we need to track country-by-country. And the key places where we are going to differentiate is looking at productivity scenarios or the digital work and life scenario that we can light up on our phone in unique ways.

When I can take my Office Lens App use the camera on the phone take a picture of anything and have it automatically OCR recognized and into OneNote in searchable fashion that’s the unique scenario. What we have done with Surface and PPI shows us the way that there is a lot more we can do with phones by broadly thinking about productivity. So this is not about just a Word or Excel on your phone, it is about thinking about Cortana and Office Lens and those kinds of scenarios in compelling ways. And that’s what at the end of the day is going to drive our differentiation and higher end Lumia phones.

Amy Hood

And Keith to answer your specific question, regarding FY16, I think we’ve made the difficult choices to get the cost base to a place where we can deliver, on the exact scenario Satya as outlined, and we do assume that we continue to grow our units through the year and into 2016 in order to get to breakeven.

Rick Sherlund – Nomura

Thanks. I’m wondering if you could talk about the Office for a moment. I’m curious whether you think we’ve seen the worst for Office here with the consumer fall off. In Office 365 growth in margins expanding their – just sort of if you can look through the dynamics and give us a sense, do you think you are actually turned the corner there and we may be seeing the worse in terms of Office growth and margins?

Satya Nadella

Rick, let me just start qualitatively in terms of how I view Office, the category and how it relates to productivity broadly and then I’ll have Amy even specifically talk about margins and what we are seeing in terms of I’m assuming Office renewals is that probably the question. First of all, I believe the category that Office is in, which is productivity broadly for people, the group as well as organization is something that we are investing significantly and seeing significant growth in.

On one end you have new things that we are doing like Cortana. This is for individuals on new form factors like the phones where it’s not about anything that application, but an intelligent agent that knows everything about my calendar, everything about my life and tries to help me with my everyday task.

On the other end, it’s something like Delve which is a completely new tool that’s taking some – what is enterprise search and making it more like the Facebook news feed where it has a graph of all my artifacts, all my people, all my group and uses that graph to give me relevant information and discover. Same thing with Power Q&A and Power BI, it’s a part of Office 365. So we have a pretty expansive view of how we look at Office and what it can do. So that’s the growth strategy and now specifically on Office renewals.

Amy Hood

And I would say in general, let me make two comments. In terms of Office on the consumer side between what we sold on prem as well as the Home and Personal we feel quite good with attach continuing to grow and increasing the value prop. So I think that’s to address the consumer portion.

On the commercial portion, we actually saw Office grow as you said this quarter; I think the broader definition that Satya spoke to the Office value prop and we continued to see Office renewed in our enterprise agreement. So in general, I think I feel like we’re in a growth phase for that franchise.

Walter Pritchard – Citigroup

Hi, thanks. Satya, I wanted to ask you about two statements that you made, one around responsibly making the market for Windows Phone, just kind of following on Keith’s question here. And that’s a – it’s a really competitive market it feels like ultimately you need to be a very, very meaningful share player in that market to have value for developer to leverage the universal apps that you’re talking about in terms of presentations you’ve given and build in and so forth.

And I’m trying to understand how you can do both of those things once and in terms of responsibly making the market for Windows Phone, it feels difficult given your nearest competitors there are doing things that you might argue or irresponsible in terms of making their market given that they monetize it in different ways?

Satya Nadella

Yes. One of beauties of universal Windows app is, it aggregates for the first time for us all of our Windows volume. The fact that even what is an app that runs with a mouse and keyboard on the desktop can be in the store and you can have the same app run in the touch-first on a mobile-first way gives developers the entire volume of Windows which is 300 plus million units as opposed to just our 4% share of mobile in the U.S. or 10% in some country.

So that’s really the reason why we are actively making sure that universal Windows apps is available and developers are taking advantage of it, we have great tooling. Because that’s the way we are going to be able to create the broadest opportunity to your very point about developers getting an ROI for building to Windows. For that’s how I think we will do it in a responsible way.

Heather Bellini – Goldman Sachs

Great. Thank you so much for your time. I wanted to ask a question about – Satya your comments about combining the next version of Windows and to one for all devices and just wondering if you look out, I mean you’ve got kind of different SKU segmentations right now, you’ve got enterprise, you’ve got consumer less than 9 inches for free, the offering that you mentioned earlier that you recently announced. How do we think about when you come out with this one version for all devices, how do you see this changing kind of the go-to-market and also kind of a traditional SKU segmentation and pricing that we’ve seen in the past?

Satya Nadella

Yes. My statement Heather was more to do with just even the engineering approach. The reality is that we actually did not have one Windows; we had multiple Windows operating systems inside of Microsoft. We had one for phone, one for tablets and PCs, one for Xbox, one for even embedded. So we had many, many of these efforts. So now we have one team with the layered architecture that enables us to in fact one for developers bring that collective opportunity with one store, one commerce system, one discoverability mechanism. It also allows us to scale the UI across all screen sizes; it allows us to create this notion of universal Windows apps and being coherent there.

So that’s what more I was referencing and our SKU strategy will remain by segment, we will have multiple SKUs for enterprises, we will have for OEM, we will have for end-users. And so we will – be disclosing and talking about our SKUs as we get further along, but this my statement was more to do with how we are bringing teams together to approach Windows as one ecosystem very differently than we ourselves have done in the past.

Ed Maguire – CLSA

Hi, good afternoon. Satya you made some comments about harmonizing some of the different products across consumer and enterprise and I was curious what your approach is to viewing your different hardware offerings both in phone and with Surface, how you’re go-to-market may change around that and also since you decided to make the operating system for sub 9-inch devices free, how you see the value proposition and your ability to monetize that user base evolving over time?

Satya Nadella

Yes. The statement I made about bringing together our productivity applications across work and life is to really reflect the notion of dual use because when I think about productivity it doesn’t separate out what I use as a tool for communication with my family and what I use to collaborate at work. So that’s why having this one team that thinks about outlook.com as well as Exchange helps us think about those dual use. Same thing with files and OneDrive and OneDrive for business because we want to have the software have the smart about separating out the state carrying about IT control and data protection while me as an end user get to have the experiences that I want. That’s how we are thinking about harmonizing those digital life and work experiences.

On the hardware side, we would continue to build hardware that fits with these experiences if I understand your question right, which is how will be differentiate our first party hardware, we will build first party hardware that’s creating category, a good example is what we have done with Surface Pro 3. And in other places where we have really changed the Windows business model to encourage a plethora of OEMs to build great hardware and we are seeing that in fact in this holiday season, I think you will see a lot of value notebooks, you will see clamshells. So we will have the full price range of our hardware offering enabled by this new windows business model.

And I think the last part was how will we monetize? Of course, we will again have a combination, we will have our OEM monetization and some of these new business models are about monetizing on the backend with Bing integration as well as our services attached and that’s the reason fundamentally why we have these zero-priced Windows SKUs today.

Microsoft’s integrated solution for streaming video and Live TV providers on all devices, plus the upcoming live-action and “shared experience” TV of its own on Xbox

This is my finding as an update to the one of a year ago in “Microsoft entertainment as an affordable premium offering to be built on the basis of the Xbox console and Xbox LIVE services [Feb 13, 2013] OR create interactive content as a premium offering together with partners using Kinect technology as a starter OR moving Microsoft Xbox 360 to ‘entertainment console’ OR leaving the good quality commodities to others and going for a premium brand with Xbox as well”.

One cannot understand the Microsoft solution without first looking at:

  1. Cable and satellite video market (U.S. only)
  2. Pay-TV market (cable and satellite, IPTV, terrestrial)
  3. The overall TV market (home video, on demand video, linear TV)
  4. IPTV—AT&T U-verse TV and Verizon FiOS video in particular
  5. OTT (Over-the-top content)

Then the Microsoft solution could be presented as follows:

6.   Microsoft’s live TV solution on Xbox
7.   Preliminary information on the upcoming products from Xbox Entertainment Studios
8.   Xbox Music and Xbox Video services for other devices

Before all that, however, we should also understand a key trend that the Installed Base of Internet-Connected Video Devices to Exceed Global Population in 2017 [iSuppli press release, Oct 8, 2013] which is also showing the immense difficulty for the Microsoft effort:

More than 8 billion Internet-connected video devices will be installed worldwide in 2017, exceeding the population of the planet, according to research from  the Broadband Technology Service at IHS Inc. (NYSE: IHS).

The installed base of video-enabled devices that are connected to the Internet—a category that includes diverse product such as tablets, smart TVs, games consoles, smartphones, connected set-top boxes, Blu-ray players, and PCs—will expand to 8.2 billion units in 2017. This will represent a nearly 90 percent increase from 4.3 billion in 2013, as presented in the attached figure.

With the world’s population amounting to 7.4 billion people in 2017, this means that there will be 1.1 Internet-connected video devices installed for each global citizen.

image

“On average every human being in the world will possess more than one Internet-connected video device by the year 2017—a major milestone for the electronics market,” said Merrick Kingston, senior analyst, Broadband Technology, at IHS. “In practice, ownership of Internet-connected hardware will be concentrated among users whose homes are equipped with broadband connections. We’re quickly approaching a world where the average broadband household contains 10 connected, video-enabled devices. This means that each TV set installed in a broadband-equipped home will be surrounded by three Internet-connected devices.”
Asia-Pacific gets connected
The number of connected devices in the mature North American and Western European regions will grow at a relatively modest compound annual growth rate (CAGR) of 10 percent from 2013 to 2017.
In contrast, Asia-Pacific will expand at 20 percent during the same period. Driven largely by Chinese demand, Asia-Pacific will add 1.9 billion connected devices to the global installed base between 2013 and 2017.
On the other end of the regional spectrum, sub-Saharan Africa will contribute 145 million net additions to the total installed base during the next four years.

Challenges and opportunities

In order to cash in on this massive growth in Internet-connected devices, media companies across the operator, broadcast, consumer electronics manufacturing and over-the-top (OTT) businesses have embraced Internet protocol (IP) video distribution. Big names making a foray into IP video include HBO, Microsoft, DirecTV and Netflix.

However, all of these companies face a major challenge: how to wrap consumers into their ecosystems, given the proliferation of platforms, high switching costs and strong incentives for consumers to stay with their existing services.

Back in 2005, PCs comprised 93 percent of all connected devices. By the end of 2017, the base of connected devices will diversify dramatically, with PCs comprising only 23 percent of the connected installed base. Other devices will account for the rest of the market, including smart TVs at 5 percent, consoles  at 2 percent, and smartphones and tablets collectively representing 67 percent.
“Addressing the full breadth of the device landscape, and recuperating the development cost of doing so, will pose a major challenge for a number of media firms,” Kingston added.

1. Cable and satellite video market (U.S. only)

Let’s start with a list of cable and satellite video providers in the U.S.:

image
The chart is from Would a DirecTV-DISH Merger Still Make a New Pay-TV Media Monopoly?
[24/7 Wall St., Oct 10, 2013]. Note that Newco is the DirectTV-DISH merged company
just imagined by the article
. The actual Top 5 companies represented 75.4% of the U.S.
cable and satellite video subscribers: 35.6% satellite (newco) and 39.8% cable.
Relative to that Verizon FIOS video IPTV had 4.7M subscribers and
AT&T U-verse [IP]TV 4.5M by the end of Q4’12 (see below).

See also (in order to understand the challenges cable operators are facing everywhere):
TWC rebuffs Charter’s latest takeover bid [[IHS] Screen Digest commentary, Jan 14, 2014] with “The saga to create the nation’s second largest cable operation is moving into a new phase … With so many sharks circling TWC, IHS believes that it will be a matter of not if but when TWC accepts a bid.”
Time Warner Cable prepares for its business future [[IHS] Screen Digest commentary, Oct 8, 2013] with “TWC and other cable operators are in the unenviable position of seeing their primary product, pay TV video, declining. Coupled with encroachment from IPTV, and potential upstart OTT technologies, cable operators are pushing to grow other business lines. … Staying ahead of the technological curve is a problem for all pay TV operators, and cable more than IPTV, with Satellite experiencing the worst of it.
Netflix added to Virgin’s TiVo platform [[IHS] Screen Digest commentary, Sept 10, 2013] with “UK cable company Virgin Media has signed what is effectively an OTT carriage deal with Netflix to bring the streaming service onto the Virgin TiVo platform. Groundbreaking move is the first deal of its type and indicates a change in the positioning of Netflix and the competitive positioning of OTT against ‘traditional’ pay TV. … that more firmly positions Netflix as a content aggregator (read: channel) rather than a platform and opens the door for similar deals internationally. Move vindicates our long-held view that this was the correct way to position Netflix and other OTT content aggregators.

Cable takes the fight to OTT [[IHS] Screen Digest commentary, Oct 28, 2013]

After years of subscriber losses, Comcast announced on October 25, 2013, the first widespread test of a cable network lite bundle, the combination high-speed data (HSD) and broadcast basic video and premium channel. The trial is slated to run a minimum of one year, the operator plans to have stepped increases in the starter $49.99 per month price at 6 months ($60-$70) and again at one year ($70+).
This is not the first such offering however. In August of 2013 Time Warner Cable (TWC) initiated a similar promotion targeted at transitioning college students back toward video products, including HBO and HSD. TWC partnered with nine colleges in this limited trial, again the term is likely to run for a year or less. TWC is charging $79.99 per month for one year, but did not list a non-promotional price.
In the following analysis IHS makes two assumptions: 1) That cord-cutting and cord-never households will likely buy HSD from pay TV providers, and that it will skew toward higher speed tiers. 2) The price for bundled 25-30Mbit is ~$55 and unbundled ~$60.
Our take
The fact that the business of pay TV is  changing is no longer in doubt, but the business has insulated itself well and is preparing to weather the storm. Comcast and TWC are not the first to experiment with new offerings, Cox recently concluded its flareWatch trial, the first pay TV OTT trial. The difference between the Cox effort and Comcast and TWC is that the two latter companies have price efficiencies working  on their side.
That’s not to say that IHS believes that the Cox trial was ended because of price, more likely Cox received valuable customer feedback and experience. The Comcast and TWC deals are predicated on completely different foundations. Both offerings provide significant perceived value, and combined monetary value to subscribers.
Both deals compare to a HSD and Netflix and/or Hulu+ plan. The Netflix/Hulu+ plan will likely cost $68 to $76 depending upon HSD tier and number of OTT subscriptions, compared with Comcast’s year one monthly average of $60 and TWC’s $70. Another significant point of difference is the depth of offering.
Both pay TV providers share four common features, 25-30Mbit HSD, local broadcast channels, HBO, HBO GOComcast also includes StreamPix (Library title Subscription VOD). IHS believes that both Comcast and TWC are at a minimum matching Netflix on a like-for-like price content offering when considering HSD and HBO versus HSD and Netflix/Hulu+. The addition of broadcast local channels as well as SVOD in the case of Comcast, signal that cable is not going to give up the fight.

2. Pay-TV market (cable and satellite, IPTV, terrestrial)

Then, according to Worldwide pay-TV Subscribers to Exceed 1.1 Billion in 2019 with Increasing IPTV Market Share [ABI Research, Jan 22, 2014]

imageWorldwide pay-TV market reached 903.3 million subscribers in 2013, generating $249.8 billion in service revenue. IPTV operators enjoyed significant growth (18.5% YoY) in 2013 to 92 million subscribers with a total of $37.2 billion in service revenue.
“Increasing FTTH [Fiber To The Home] subscriber base and bundled subscriber base of telcos are boosting the IPTV market. ABI Research forecasts that the IPTV subscriber base will grow to 161 million subscribers in 2019 accounting for 15% of overall pay-TV market,” comments Jake Saunders, VP and practice director of core forecasting.
The global terrestrial TV market reached 9.5 million subscribers at the end of 2013. A declining pay DTT subscriber base in Italy and Spain had an impact on the overall Western European DTT market which dropped around 5% in 2013. Unlike Western Europe, the DTT market in Africa grew a remarkable 45% to 2.1 million subscribers in 2013. “As African countries start to switch over to digital, digital terrestrial TV has become an affordable alternative to satellite TV service in the region. ABI Research forecasts that Africa will have over 4.8 million DTT subscribers in 2019,” adds Khin Sandi Lynn, industry analyst.
DirecTV maintains its largest market share in terms of pay-TV service revenue. The company had around 20.2 million subscribers in the US with an ARPU above $102 by the end of 3Q-2013. Globally, the pay-TV market is expected to grow to 1.1 billion subscribers with $320.3 billion in service revenue in 2019.

3. The overall TV market (home video, on demand video, linear TV)

Or a broader view representing all other segments of the TV market as well:
Global TV market revenue to grow at a steady pace: up 23% by 2018
[DigiWorld by IDATE blog, Jan 30, 2014] by Florence Le Borgne
Head of the TV & Digital content Practice, IDATE.

At a time when video has become pervasive across all of our screens, most national TV markets are losing steam: shrinking viewership and pressure on advertising markets, especially in Europe. Although pay-TV seems to be holding its own, the fast-growing popularity of OTT offerings is shaking up the traditional pay-TV model, while the demise of physical media is virtually a foregone conclusion.
If the decline of physical media now seems inevitable, television still has a chance to reinvent itself in a way that takes into account changes in viewer behaviour and competition from new online vendors.
Accessing TV
According to IDATE, the number of TV households worldwide will reach 1.675 billion in 2018 (+9.6% in 5 years), with the number of digital TV households worldwide being 1.542 billion in 2018, which translates into 92% of TV households
  • Cable will the remain the chief access channel (592.3 million households in 2018) but will gradually lose ground to satellite and IPTV which will account for 32.9% and 10.9% of TV households, respectively, at the end of 2018.
  • Despite the development of hybrid TV solutions, terrestrial TV should continue its decline on the first TV set and drop down to number three spot by 2018, with roughly 21% share of the global market.
  • The development of hybrid solutions that combine live programming on broadcast networks (terrestrial and DTH) and OTT video services over the open Web is a key variable in the future development of the various TV access modes, and may well shake up current trends.
TV: top money-maker
Breakdown of audiovisual market revenue in 2013

image 

TV revenue
According to IDATE, the global TV industry’s revenue will come to €374.8 billion in 2013 and €459.2 billion in 2018.
  • Pay-TV revenue will grow by 21.3% between 2013 and 2018, or by an average 3.9% annually, to reach €220.2 billion in 2018.
  • Ad revenue will enjoy even stronger growth of 27.3% between 2013 and 2018, to reach €201.1 billion in 2018.
  • Public financing/licensing fees will continue to increase significantly (+7.7% in 5 years) to reach nearly €38 billion in 2018.
Video revenue
According to IDATE, physical media sales will total €16.3 billion in 2018, when video on demand (VoD) revenue will reach €35.4 billion in 2018, which is 90% more than in 2013.
  • This means that the global market will have shrunk to more than a quarter of what it was in 2013 (-27.2%).
  • Blu-ray will be the most common format and help temper plummeting physical media sales.
  • OTT video will continue to be the biggest earner, generating 51% of total revenue.
  • VoD will still be the dominant model on managed networks. It will generate €6.9 billion in 2018 versus €2.3 billion for subscription video on demand (S-VoD).
American OTT video providers’ footprint in Europe as of 31 December 2013
image
Source: IDATE, December 2013
American OTT vendors already have a solid foothold in Europe
Netflix is already present in seven European countries: Britain, Ireland, the Netherlands, Denmark, Norway, Finland and Sweden. The service had 1.6 million subscribers in the UK and Ireland at the end of 2013.
  • LoveFilm was reporting 1.9 million subscribers in the UK and Germany at the end of 2013.
  • At the end of 2013, iTunes’ VoD rental service was available in close to 110 countries, and permanent downloads in 14 countries, chiefly in North America and Europe.
More information on TV and new video services market report & database

UK Video Rental Market Plunges in 2013 as Half of Country’s Blockbuster Stores Close [IHS iSuppli press release, April 23, 2013]

The market for Blu-ray (BD) and DVD rental in the United Kingdom is expected to plunge by 22 percent in 2013, as half the country’s Blockbuster video stores shut down in a restructuring initiated by the company’s new management.
The U.K. market for physical-video rental will drop to £202 million in 2013, down £57 million, or 22 percent from £259 million in 2012, according to a newly updated forecast from IHS (NYSE: IHS) . While the market is generally on the decline, 2013 will bring the sharpest predicted annual decrease for the 11-year period from 2007 through 2017.

image

By the end of 2013, only 264 Blockbuster stores will be open in the country, down 50 percent from 530 in 2012. Blockbuster is the largest video rental chain in the country.
“The year 2013 is set to become a watershed for the U.K. video rental market as a result of the wholesale closure of Blockbuster UK stores,” said Tony Gunnarsson, senior video analyst at IHS. “The massive downturn in the store-based video rental market represents a significant loss to the video market and will result in a major decline and radical transformation of the U.K. video market overall. From 2013 on, the U.K. physical-video rental business increasingly will be dominated by online rent-by-mail subscription services.”
Both DVD and BD transactions are due to decrease across the store-based sector this year. DVD rentals will fall by a steep 53.2 percent to 15.4 million. BD is set to drop by an even larger 61.3 percent to 2.8 million respectively.
Blockbuster gets busted up
After filing for administration in January 2013, Blockbuster’s administrators Deloitte announced two separate rounds of store closures, including some 224 sites. In February 2013, supermarket chain Morrisons purchased 49 of these former Blockbuster stores in its drive to increase its store presence in southeast England.
Out of the remaining Blockbuster stores, Gordon Brothers acquired a total of 264 locations, including a number of Blockbuster outlets earmarked for closure that will now remain open.
Pay-TV killed the video store
In 2012, rental stores were responsible for 41.3 percent of the video rental market based on consumer spending. In the latest forecast for 2013, however, the store-based sector is now projected to generate just 24.7 percent of the overall market. This tilts the market toward the online sector, which will see its share of market increase massively from 58.7 percent in 2012 to 75.3 percent this year.
At the same time, the lost rental business won’t result in customers that used to rent at Blockbusters automatically signing up to become rent-by-mail customers with online providers, IHS believes. Rather, those customers are more likely to turn to a host of other video platforms, primarily pay-TV services.
Video rental market winds down
In the longer view, the U.K. rental market will return to a normal trend of decline after 2013, with spending on renting physical video shrinking at an annual rate of under 5 percent until 2017. By then, the retreat in spending is expected to be slightly more negative at 7 percent.

4. IPTV—AT&T U-verse TV and Verizon FiOS video in particular

As far as the U.S. is concerned AT&T U-verse TV and Verizon FiOS video are the leading IPTV services by far*, having 5.5 million and 5.3 million subscribers respectively, which is 11.7% of the above 92 million subscribers number by ABI Research:

image* The next service provider, CenturyLink “Ended the quarter with 149,000 CenturyLink® PrismTM TV subscribers, an increase of approximately 17,000 subscribers in third quarter 2013” according to its Q3 203 report [Nov 6, 2013]. CenturyLink only entered five U.S. markets after acquiring Embarq (2009) and Qwest (2010). In fact no other U.S. providers are in the Top 20 globally according to SNL Kagan Reports World’S 20 Largest IPTV Operators Served 83% of Global IPTV Households at End-2012 [June 6, 2013]. More:
– China’s leading telcos– China Telecom and China Unicom– serve an estimated 30% of the global IPTV subscriber base.
– Asian telcos accounted for 49.2% of the top 20’s IPTV subscribers in 2012, reflecting the region’s large market size and limited telco competition.
– France — the second-largest IPTV market by subscribers after China — is home to four operators ranked among the global top 20. [
Note that among Top 5 are Iliad and France Telecom. Iliad’s Freebox TV offering proposes a broad selection of TV channels (over 450, of which more than 200 are included in the basic package), as well as numerous audiovisual services, such as catch-up TV (with 45 channels available on Freebox Replay), and a wide video-on-demand offering. It was actually the largest IPTV deployment in the world with 2.4 million IPTV-enabled customers as of end 2007 (see here).]
– Nine operators out of 20 are located in Western Europe and seven in Asia
.

U-verse® Drives Wireline Consumer Growth and Broadband Gains

  • Wireline consumer revenue growth of 2.9 percent versus the year-earlier period
  • Total U-verse revenues, including business, up 27.9 percent year over year, now a $13 billion annualized revenue stream
  • 10.7 million total U-verse subscribers (TV and high speed Internet) in service:
    • 630,000 high speed Internet subscriber net adds; record annual net adds of 2.7 million
    • 194,000 U-verse TV subscribers added, lowest churn in product history
  • Continued U-verse broadband gains in the business customer segment, up 78,000, nearly doubling year-ago net adds
  • Strategic business services growth accelerates with revenues up 17.4 percent year over year, now more than 25 percent of wireline business revenues

Record-Low U-verse TV Churn. Total U-verse subscribers (TV and high speed Internet) reached 10.7 million in the fourth quarter. U-verse TV had the lowest-ever churn in its history. U-verse TV added 194,000 subscribers in the fourth quarter with an increase of 924,000 for the full year to reach 5.5 million in service. AT&T has more pay TV subscribers than any other telecommunications company.

U-verse TV penetration of customer locations continues to grow and was at 21 percent at the end of the fourth quarter.

image

Note that after AT&T Extends TV Watching to More Devices with Launch of U-verse TV on Xbox 360 [press release, Oct 11, 2010] and even after New U-verse Internet Customers Can Take Their Pick: A Free Xbox 360, SONOS PLAY:3, Kindle Fire or Nexus 7 Tablet [press release, March 18, 2013] that Xbox tie-up ended with AT&T U-verse TV To Drop Support For Xbox 360 on December 31 [Multichannel, Nov 26, 2013]:

“We’ve made this decision due to low customer demand,” an AT&T spokeswoman said via email on Tuesday. AT&T declined to say how many customers currently use the Xbox 360 as a set-top. … AT&T, the spokeswoman added, currently has no plans to support U-verse TV on the Xbox One. Verizon Communications FiOS TV is the first, and so far only, U.S. pay-TV provider to offer an authenticated app for the Xbox One during its initial launch phase.

In FiOS video we added 92,000 new subscribers in the quarter. Total FiOS videos customers reached 5.3 million, representing 35% penetration.

As far as the OnCue acquisition [from Intel, i.e. the Intel Media operation], look, the focus here is really to accelerate the availability of the next-generation IP video service which we will integrate into the FiOS video service. And really what we are trying to do is differentiate this even more so with fiber to the home versus others with the TV offerings and reducing the deployment costs. And this really accelerates us from if we were trying to build IP TV versus buying the IP TV technology.

From an FiOS customer perspective, we expect the benefits that they will have more elegant search and discovery activity and cost stream ease of use. But also keep in mind, with the acquisition of Verizon Wireless and becoming 100% ownership of that we also plan to take that platform and integrate it more deeply with our Verizon Wireless 4G LTE network. So that really was the strategy behind this.

As far as would we enable this platform to take us over the top, obviously we have our video digital media services that we have been working on for 2.5 years. We’ve just made two acquisitions related to that platform. So, look, we are positioning ourselves strategically to be in a position to competitively compete around the whole mobile first world and video, so I think that is where we are.

image

Pay-TV Operators Can Stave Off OTT Threat with Multiscreen and CDN Investments [iSuppli press release, April 17, 2013]

Despite the dire competitive threat posed by over-the-top (OTT) services, pay-TV operators can thrive by investing in additional service offerings that should include multiscreen services to more than make up for the erosion in their customer base, according to the IHS Screen Digest TV Intelligence Service from information and analytics provider IHS (NYSE: IHS).

Speaking here today at the IHS PEVE Entertainment 2013 Conference, Guy Bisson, research director for television at IHS, noted that although European cable operators have lost 1.4 million households, they have gained 17.8 more revenue-generating units (RGUs), during the five-year period from 2007 through 2012.

While cable operators in Europe and other regions are expected to lose more households in the coming years, RGUs will continue to increase, driving revenue growth for the industry. The below figure presents the IHS history and forecast of cable households and RGUs for the 27 countries of the European Union.

5. OTT (Over-the-top content)

OTT and IPTV Integration Increasingly Popular [Pyramid Points, Nov 27, 2012]

How do you plan to spend your evening most times when you order a pizza? You’re very likely to watch a video.
In the UK, Domino’s Pizza Group saw the value of over-the-top (OTT) online video to boost customer loyalty, and back in October launched the Domino’s Pizza Box Office video streaming offer. Customers order a pizza and get a download code to stream a movie at home. This is just another example of how OTT is revolutionizing the way video content is delivered to consumers: Today almost anyone can become a content provider.
Exhibit: Evolving video delivery environment and video platforms
image
Source: Pyramid Research

Many operators see the proliferation of OTT as a threat to their established IPTV business models. They fear that OTT will subvert their role in the pay-TV value chain and cannibalize revenue. We’ve found, however, that the opposite is just as likely to be true. In our new report, “OTT Growth Sparks Innovation Multiscreen Video Business Models,” we argue that OTT is serving as an innovation stimulus for the pay-TV market, pushing telcos to enhance their IPTV services with more screens. We also find that an increasing number of operators, alongside their managed IPTV services, are directly entering into non-managed OTT environments. This means that more operators are using the open Internet to offer video services to potentially any consumer with a broadband connectivity, being their existing customers or not.

OTT in emerging markets: Challenges and opportunities
Operators are warming up to the idea of launching their own OTT services, especially in emerging markets. While IPTV remains a premium service, which requires subscribers to purchase more expensive bundles, OTT is more flexible and only requires a good broadband connection. This means that in the more price-sensitive markets, where there is still strong demand for online video, OTT is becoming an attractive option for users. Besides, OTT services are typically delivered over a wide range of screens and at different price points, including smartphones, tablets and gaming consoles, making them more accessible to different consumer profiles.
In Colombia, for example, ETB has announced that it will shortly launch an OTT service to complement its upcoming IPTV deployment. In Mexico, the OTT service provided by fiber-to-the-home (FTTH) operator Totalplay, dubbed Totalmovie, has rapidly become the main competitor to Netflix. It offers video content in Mexico alongside the operators’ IPTV platform and across Latin America by using third-party operator infrastructure. As of October, it had 1.9m registered users and 5m unique monthly visitors.
We expect to see more Latin American operators launching OTT services. The second largest regional group, Telefonica, is considering positioning OTT commercial offers in several countries. The decision between managed (IPTV) or unmanaged video delivery (OTT) ultimately depends on each country’s infrastructure, competitive environment and operator position. Telefonica has, however, confirmed that there are already ongoing OTT initiatives outside Spain.
In Turkey, TTNET, the ISP of fixed-line incumbent Turk Telekom, has already been quite successful in combining its IPTV and OTT offerings. TTNET wants to add value to the bundles, which in turns helps increase customer loyalty and reduce churn. This is crucial in preventing the decline of Turk Telekom’s fixed-line base. While IPTV is positioned as a premium service, OTT is priced very competitively. As of August this year, TTNET had over 1.2m OTT and 150,000 IPTV subscriptions.
OTT can provide significant benefits to operators. In the case of TTNET, positioning OTT alongside IPTV is encouraging consumers to break through their broadband allowances, thus creating the need to migrate to higher-value packages. In the case of Totalplay in Mexico, OTT is contributing to the monetization of the operator’s superfast fiber-based network. For both operators, using third-party infrastructure breaks the link between content delivery and network management.

The outlook is positive

In the near future, we expect to see significant revenue-generating opportunities associated with VoD, catch-up TV, and targeted advertising, especially when telcos can integrate their OTT and IPTV offerings with interactive and social media functions.

Using the open Internet for content delivery, however, has its downsides. The main shortcoming with OTT is that the operator is not in control of quality of service (QoS). Especially in emerging markets, quality of service and network speeds vary wildly from country to country, making it challenging to ensure the same quality of experience (QoE) that can be guaranteed through a managed IPTV network. Another challenge for operators is securing in-demand content for OTT platforms. Without doubt content is king, but content is also costly. Unless they are backed by multimedia and broadcasting groups, operators tend to be the weak link in the content production and delivery value chain. But that is a challenge with IPTV too.

All in all, if telcos are serious about developing a pay-TV offering that can resonate with the demand for multiple viewing platforms at different price levels, they need to seriously consider the opportunity of complementing IPTV platforms with OTT.

— Daniele Tricarico, Analyst

More information from Pyramid Research:
Is the Arab World Ready for OTT Video? [Sept 13, 2013]
CDNs Offer New OTT Revenue Hope [Feb 20, 2013]
Chinese Regulator Opens Up to MVNOs [mobile virtual network operators] [March 15, 2013]

Finally here is a list of Top 10 Online Streaming Video Services [tom’sGUIDE, Jan 1, 2014] in the U.S. in order to understand the state-of-the-art of OTT video services:

Digital video options

Streaming video has just about displaced the DVD on the list of home entertainment options, and it may supersede cable and broadcast TV in the near future. Every modern computer has access to streaming video services, as do most game consoles and mobile devices, and even a growing proportion of televisions. Whether you’re looking to get your feet wet or expand your streaming horizons, check out 10 of the best services for watching movies, TV, music videos, Web shows and more.

image

Netflix

Netflix is the most popular video streaming service out there, and with good reason. The service is available on just about every platform, including computers, game consoles, set-top boxes and mobile devices, and it hosts movies and TV shows to accommodate every taste. From hit films like “The Avengers” to every “Star Trek” TV series to original programming like “Orange Is the New Black,” Netflix’s variety of content is unparalleled. You can even share an account among five different users to keep recommendations and viewing habits separate. Netflix costs $8 per month.

Inserts of mine:
Netflix added to Virgin’s TiVo platform [[IHS] Screen Digest commentary, Sept 10, 2013] with “UK cable company Virgin Media has signed what is effectively an OTT carriage deal with Netflix to bring the streaming service onto the Virgin TiVo platform. Groundbreaking move is the first deal of its type and indicates a change in the positioning of Netflix and the competitive positioning of OTT against ‘traditional’ pay TV. … that more firmly positions Netflix as a content aggregator (read: channel) rather than a platform and opens the door for similar deals internationally. Move vindicates our long-held view that this was the correct way to position Netflix and other OTT content aggregators.
Netflix passes 38m paying ‘streaming’ subscribers [[IHS] Screen Digest commentary, Oct 22, 2013] with:

Netflix’s total number of paid streaming subscribers increased by 2.4m over the quarter, to reach 29.9m subscribers in the United States and 8.1m subscribers internationally. The international streaming service saw a larger than expected increase of free trialists to 1.1m driven by Latin America and the September launch of the service in the Netherlands.
The third quarter of 2013 is a significant milestone for Netflix, as the quarter in which the Netflix US streaming subscriber count pulled even with the US subscriber count of pay TV giant HBO. The company ended the quarter just shy of 30 million streaming subscribers with estimates for HBO at roughly the same level.
The comparison with HBO is the most appropriate for companies such as Netflix, Amazon and Hulu‘s subscription service, rather than with the pay TV operators. Netflix, as well as Hulu Plus and Amazon, are acting as premium channels in investing in acquired and original content and following in HBO’s early-1990s footsteps. Despite the investment Netflix has made in its own original programming, the company has reported that a greater percentage of overall viewing on the platform is of previous-season TV episodes and catalogue movies. Netflix indicates that it plans to double its investment in original content in 2014, although this will still represent less than 10per cent of global content expenditure.
Netflix’s international business remained a loss-making venture as the company struggles to gain profitability without scale and without a legacy high margin physical business. Whereas in the US the company initially bundled its streaming proposition with disc rentals add value to the physical subscription Netflix has not had a preexisting business from which to launch a digital subscription internationally. At present, the international ventures are subsidized by domestic market return and with ongoing market expansions planned by Netflix; IHS does not expect this to change in the mid-term.

End od my inserts for Netflix

Hulu Plus

If you want to catch TV shows almost as soon as they air, Hulu Plus may be right for you. This streaming service hosts a plethora of TV shows and movies. Whether you want to watch “Leverage,” “Family Guy” or “Spongebob Squarepants,” Hulu generally posts new episodes within days of their airing on TV. Hulu Plus costs $8 per month (with some shows available only on computers for free), and provides past seasons of shows along with Hulu’s original programs. It is available on computers, game consoles, streaming boxes and mobiles.

Amazon Prime Instant Video

Amazon Prime Instant Video is a streaming service that comes with an Amazon Prime subscription. In addition to offering free shipping on Amazon orders and free Kindle books to borrow, Amazon Prime allows subscribers to access approximately 40,000 movies and TV shows. In addition to unlimited streaming offerings, users can rent and buy other TV shows and movies a la carte. This makes Amazon Instant Video a good choice for watching newer movies before they touch down on unlimited streaming services like Netflix. Amazon Prime costs $79 per year.

See also: Amazon may hike Prime cost as earnings disappoint and further challenges lay ahead of the company for which it needs to adjust its business model and expand its operations [‘Experiencing the Cloud’, Jan 31, 2014]

M-Go

If you’re not interested in paying a monthly fee for your streaming video content, M-Go might be up your alley. M-Go, which is the default streaming service on Roku boxes and also available on computers and mobile devices, allows you to rent and buy TV shows and movies. Prices range from $2 for individual TV episodes to $20 for HD movie purchases. M-Go excels in offering both HD and SD versions of content, making it an attractive choice if you want a one-off rental.

Blip

Watching big-budget movies and TV is all well and good, but for curated, original Web shows from charismatic creators, nothing fits the bill like Blip. Think of Blip as a more curated, creator-friendly version of YouTube. Individuals create and upload original series, ranging from comedy to reviews to funny pet videos, and Blip ensures that the content has professional production values and that new entries are added regularly. All content on Blip is free, and you can access it via your computer, mobile device or Xbox 360.

image

Vevo

MTV hasn’t played music videos since the ’90s, but the medium is not dead just yet. Vevo hosts the latest music videos from artists ranging from Katy Perry to Old Crow Medicine Show, but audiophiles would be wise to stick around for its scads of original content. Users can access biographies, retrospectives, behind-the-scenes footage and interviews about their favorite musicians, and curated playlists for both individual artists and entire genres. Vevo is free, and available on computers, mobile devices, Rokus, Apple TVs and Xbox 360s.

MLB.TV

If you’re a baseball fan, you’re in luck: Major League Baseball‘s streaming service is one of the best in professional sports. MLB.TV allows viewers to watch most games during the regular MLB season. (Postseason games are available through the Postseason.TV service at additional cost.) Fans can watch both home and away games from anywhere in the world. Stat junkies can examine each pitch as it happens and compare their fantasy teams in real time. MLB.TV costs $130 per year and is available on computers, mobile devices, set-top boxes, Xbox 360s and PS3s.

Crackle

If you crave pop cinema, Crackle could be the best thing to happen to your TV since afternoon basic cable. The Crackle service offers a rotating selection of a few hundred movies and TV shows, including “Ghostbusters,” “The Cable Guy” and “The Shield.” Crackle also creates and hosts original content, ranging from espionage thriller serials to “Comedians in Cars Getting Coffee” starring Jerry Seinfeld. Crackle is free (though you’ll have to watch some commercials) and available on computers, mobile devices, set-top boxes and game consoles.

Twitch

Watching other people play video games is, surprisingly, almost as much fun as playing yourself — sometimes more so, if you have a good host. Twitch is a platform for gamers to livestream their play sessions. You can find streams of everything from “League of Legends” to “Minecraft.” Whether you want to see tutorials, speed runs or popular Web personalities’ reviews, Twitch has you covered. The service is free, both to watch and to stream your own sessions. Twitch is available on computers, mobile devices, set-top boxes and PS4s.

YouTube

The biggest video streaming service online is just about unbeatable when it comes to variety of content. YouTube is the go-to site to upload short videos: cats, clips from your favorite TV programs, cats, original Web shows, cats, movie trailers, cats and more. The service will be one of the first to support content for the higher-resolution 4K TVs. If you’re looking to watch short-form videos, this is the place to start. YouTube is free and available on just about every device with a screen and an Internet connection.

Discovery to take majority control of Eurosport [[IHS] Screen Digest commentary, Jan 22, 2014]

Discovery Communications has agreed to take a controlling interest in Eurosport International, the pan-European sports channel, from its partner TF1 Group [of France]. … Discovery, which primarily operates a portfolio of factual channels in Europe, has branched out in recent years with the acquisitions of SBS Nordic in Scandinavia and Italy’s Switchover Media. It now has the option to acquire 100% of Eurosport International and could also increase its interest in Eurosport France, though TF1 expects to retain its 80% interest until at least 1 January 2015.
The US group‘s move to take control of Eurosport is, as the company noted yesterday, taking place a year sooner than originally planned. While sports is clearly a new playing field for Discovery, the male-skewing profile of Eurosport is a good fit with its factual channel brands, offering possibilities for combining advertising and network sales. To date, co-operation has focused on markets where Eurosport is not present, notably the US and China. In the US, Discovery has been showcasing Eurosport rally and superbike programming on its Velocity channel.
A further move into the US appears unlikely given the presence of ESPN and powerful rivals like Fox Sports, NBC Sports and CBS. Fox Sports in particular has recently made strong moves into the international market place. Outside the US, Eurosport successfully occupies a niche where it is not competing with premium pay operators like BSkyB, Canal Plus and Sky Italia for high cost events like league football, but instead focuses on lower profile events where rights are often shared with local free-to-air broadcasters.
The main uncertainty over Eurosport’s change of ownership surrounds its content supply from the European Broadcasting Union (EBU), which provides hundreds of hours of events like cycling, grand slam tennis, winter sports and athletics. TF1 is an EBU member, but with Discovery holding the reins, this arrangement will almost certainly have to be renegotiated, with possible implications for Eurosport’s cost base. Even now, there appears to be room for improvement: Discovery’s operating margin for its international operations was 44% in 2012, compared to a slender 14% for Eurosport International.

Sky sees future in OTT as upsell becomes focus [[IHS] Screen Digest commentary, July 26, 2013]

Sky [more precisely BSkyB] added more Now TV customers in the quarter to end June 2013 than new satellite customers and is increasingly pushing OTT access and connected devices as the core of its future growth strategy. In calendar second quarter (Sky’s fiscal Q4), the pay TV provider added 34,000 new TV customers to reach 10.442m and said the ‘bulk’ of TV growth came from OTT service Now TV. Organic growth for broadband stood at 119,000 (25 per cent more than BT added in the same quarter) with a further 400,000 added through the acquisition of O2’s UK broadband operations to reach 4.9m. Telephony grew 140,000 organically with 153,000 coming from O2 to reach 4.5m. The number of HD subscribers grew 117,000 to reach 4.789m or 46 per cent of the TV base, with 2.7m HD boxes connected to broadband. Annualised ARPU hit £577 up £29 in the year.
Sky said that its future strategy would focus on becoming the centre of the connected home across a range of content windows that would increasingly include DVD window for paid on-demand and movie retail as well as the traditional subscription window. The move comes on the back of impressive figures for on-demand and OTT content subscription with a three fold increase in Sky Store (on-demand) revenue and 166,000 customers paying £5 a month for the Sky Go Extra service that allows content download to mobile devices. Sky said that, on average, Sky homes have seven connected devices and that content access inside and outside the home was increasingly important to its offer. The operator said it had concluded four new studio deals with a wider range of rights to service this market and would prioritise getting its customer base connected. The new Sky HD box now comes with built in Wi-Fi and a new low-cost wireless connector is being made available. Sky also released a new Now TV box priced at £9.99 when a Now TV subscription is taken, the device also enables Smart TV functionality and is targeted at the 13m Freeview [a free-to-air digital terrestrial television service in UK, a joint venture between the BBC, ITV,Channel 4, BSkyB and transmitter operator Arqiva] homes who don’t currently subscribe to Sky services.
Our take
The latest move is interesting in that is represents a significant vote of confidence in both the incremental revenue that can be derived from OTT services and the potential to tap an entirely new customer base in the form of ‘dip-in’ Now TV users. While this goes hand in hand with an increased investment in original content and channels as well as sports rights to support the core service, it is clear that Sky sees the most upside in incremental revenue driven by OTT rather than strong additional growth in traditional satellite pay TV customers. With broadband and telephony being an increasingly important area of revenue growth, the connected device/OTT space becomes the next area for up-sell, meaning that the so-called ‘multi-product strategy’ becomes central. While none of the services require a tie-in to Sky’s own broadband, it is this very area that BT has chosen to attack with its bold move into sport. The free access to BT’s suite of new sports channels with a BT broadband 12 month contract means that not only could there be a subset of Sky TV customers who will migrate to BT broadband, but a further segment of existing BT customers who will not be available to Sky for triple-play up-sell. To date there has been no evidence that’s BT’s strategy is paying off (net TV additions for BT were roughly flat in the quarter to end June 2013). But BT says it believes this will change when the channels launch.
Sky’s strategy, then, is to fall back on its traditional strengths centred on content, but to do this in a way that embraces new forms of distribution and leverages the power of its existing customer relationships. Headroom for growth remains strong: despite triple-play penetration reaching 35 per cent among the Sky customer base, two-thirds of Sky customers have yet to take a broadband offer. With Sky out-performing the market in broadband net adds, this area is likely to ensure continued strong revenue and ARPU growth. But two areas of risk remain. If the majority of TV growth comes from Now TV, Sky will have to deal with an increasingly large segment of TV customers who are not tied into a contract and who are relatively low value in terms of ARPU. As this segment scales, clearly this could lead to large and seasonal fluctuations in churn and ARPU. The second area of risk is related: cannibalisation. While this is a risk that Sky is well aware of and keeping close tabs on, the renewed connected home push risks accelerating the transition to a more transient customer base.

UK TV viewing is about connection, says Ofcom report [[IHS] Screen Digest commentary, Aug 1, 2013]

The home entertainment experience is becoming increasingly connected with multi-tasking central to the enjoyment of TV content, according to the latest Communications Market Report from UK regulator Ofcom. According to the findings, there has been a huge increase in the devices that people take to the living room. On average, each UK household owns three different types on Internet-enabled device. The biggest growth over the last year in take-up of services and devices has been on the number of tablets and smart-phones. Thanks to the device mix, 22 per cent of people in the living room watching screens other than the main TV most of the time.
The main TV set remains important. Ninety-one per cent of UK population tune into the main TV set weekly up from 88 per cent in 2002, with viewers on average watching four hours a day in 2012 compared to 3.6 hours in 2006. Although the report finds that people gather around the TV in the living room, there has been a decline in the number of children with TVs in their bedroom; 52 per cent of UK children now have a TV set in their bedrooms which represents a 17 per cent decline over the last six years, mainly related to the increase number of tablets and Internet connected devices.
Average media household spend has increased in the last year to £113.51 a month after many years of decline. The biggest increase has been on mobile services (£46.73 a month) and fixed internet (£11.91 a month) and the biggest decrease has been on fixed voice (down £22.48 versus one year ago to £21.61 in 2012). TV spend has been stable over the last five years at between £28-£29 a month.
Our take

Ofcom figures reflect what IHS Screen Digest has long noted: live linear TV is not dead.

According to Ofcom, time-shifted viewing represents just 10 per cent of the total and hasn’t changed much over the last years despite the huge increase in DVR ownership. According to BARB figures DVR has grown from 18 per cent in 2007 to 55 per cent in 2010 and 67 per cent in 2012. Despite this, growth in time-shifted viewing has been only moderate up from six per cent four years ago. 
More than half of UK adults are regular media multi taskers, they ‘stack’ or ‘mesh’while watching TV weekly, with tablet owners more likely to multi-task than average. Almost one in four UK adults made direct communication with friends and family about the programs as they watching (media meshing) and half of UK adults conduct other activities while they are watching TV on a weekly basis (media staking).
The increase in tablet owners has also changed consumer viewing behaviour with VOD requests coming from tablets increasing from three per cent in 2011 to 12 per cent in 2012. More than 56 per cent of tablet owners used them to watch TV and 57 per cent of those watched linear TV on the tablet.

Ofcom also found that, when it comes to the much-hyped area of social TV, it is news, reality shows and sport events that are engaging viewers through social media, but the knock-on effect is that consumers want to watch these shows live in order to engage socially, providing another boost for linear TV.

TV Everywhere Spreads Among US Television and Cable Networks; NBCUniversal Leads [IHS iSuppli press release, Oct 18, 2013]

NBCUniversal leads the US TV Everywhere (TVE) effort in providing access to TV content on second screens like smartphones and tablets, while EPIX and HBO share the distinction of supporting TVE on more second-screen devices than any other premium or basic cable network, according to a new report from the TV Intelligence Service at IHS Inc. (NYSE: IHS).

From Wikipedia: TV Everywhere (also sometimes known as authenticated streaming)[1] refers to a model wherein television providers and broadcasters, particularly cable channels, allow their subscribers to access their respective content on digital platforms, including video on demand and live streaming of the channels themselves. TV Everywhere systems utilize user accounts provided by the television provider—which are used to verify whether the user is a subscriber to a particular channel, thus allowing or denying access to the content. The U.S. provider Time Warner Cable first introduced the concept in 2009; in 2010, many television providers and broadcasters began to roll out TV Everywhere services for their subscribers, including major networks such as ESPN, HBO,NBC (particularly for its Olympics coverage).
NBCUniversal provides TVE in 15 of its 18 channels, or 83 percent of the studio’s total stable of cable and broadcast networks to pay-TV subscribers willing to authenticate on second-screen devices. Meanwhile, EPIX and HBO have been at the forefront of the TVE experience, with both very willing to embrace new technologies and offering significant amounts of content on their apps and portals.
EPIX first kicked off the TVE phenomena in October 2009, formed by partners Paramount, MGM and Lionsgate after their failed renewal with Showtime HBO followed suit in February 2010 with the launch of its web portal and how has a vast TVE library online, even though it does not yet offer live linear streaming.

image

HBO, along with Cinemax and BTN2Go, are the only three networks to have TV Everywhere authentication agreements with all major US pay TV operators.
For its part, Showtime is the only premium network offering live linear streaming through TV Everywhere. The company is also allowing for authentication outside of the home, a feature likely to expand to other basic and premium cable networks as TVE continues to evolve.
The last premium channel group to the party is Liberty’s STARZ. STARZ and Encore launched TV Everywhere services in October of 2012, but are still missing authentication deals with both Comcast and DISH Network.
One entity so far remains the lone hold-out among the major channel groups not providing any TV Everywhere content—Discovery Communications. But that will change as Discovery is expected to finally jump into the fray in the near to midterm time frame. It will likely become critical to offer similar services, IHS believes, as TVE access becomes more central to the future of US pay TV video.
Solving the cord-cutting problem before it gathers steam
All major pay-TV operators to date have implemented some form of the TVE service, although sometimes in very limited form, via either live linear streaming or video on demand (VoD). But while the streaming of live linear network feeds is largely relegated to in-home use, video on demand (VoD) is a significant out-of-home TVE product.
VoD streaming channels, at 73 including cable, premium and broadcast, far outnumber the channels offering live streaming, at 31, as shown in the attached figure. NBCUniversal, the TVE leader, has 15 VoD channels and five live streaming channels, followed by Time Warner with nine VoD channels and three live streaming channels.
“TV Everywhere has been developed as a collective strategy by both pay-TV operators and TV content owners to enhance the traditional linear TV proposition, so that secondary screens like tablets and smartphones can be used to view TV content in addition to the primary screen,” said Erik Brannon, analyst for U.S. cable networks at IHS. “And in spite of the differences in strategy, all TVE products have one thing in common: They allow for current pay-TV video subscribers to authenticate and consume on secondary screens a significant amount of content that they purchase as part of their normal pay-TV video subscriptions.”
TVE is one approach that pay-TV operators and network owners are using to stem the tide of cord-cutting among cable subscribers before the number of defections become significant. In many cases, cable subscribers are finding themselves increasingly tempted to end their subscriptions—either because of high costs or because of other alternatives now available, such as over-the-top (OTT) alternatives like Netflix. In the second quarter of 2013 alone IHS estimates that the pay-TV business shed 352,000 subscribers, mostly to seasonality, but some elements of cord-cutting are likely to have been present as well. To be sure, the combined price of $28 (Netflix, Hulu Plus and Aereo) may be more appealing to consumers than the $80+ average revenue per user that IHS estimates pay-TV video customers will pony up for service in 2013.
Through TVE, both pay-TV operators and network owners hope to add new functionality and interactivity to the television viewing experience. And by partnering with pay-TV operators, content owners like the broadcast networks hope they can continue to solidify their hold on the distribution of premium television content.
Device compatibility extending beyond iOS and Android
TV Everywhere is also evolving beyond Apple iOS and Android, the two platforms on which TVE apps first appeared. Now, TVE apps from networks are becoming available and are being deployed across a wide range of connected devices, including smart TVs; video game consoles like Microsoft’s Xbox; Amazon’s Kindle Fire; Blu-ray players; and digital media products such as Roku and Apple TV.
Adoption of TVE initiatives by the major channels is a reaction to the changing landscape of TV viewers in the country, Brannon noted. And as it continues to grow in awareness and popularity, TV Everywhere will remain a central focus for pay-TV operators.

6. Microsoft’s live TV solution on Xbox

From Worldwide launch of Xbox One sparks global celebration for a new generation in games and entertainment [Microsoft press release, Nov 21, 2013]

Xbox One’s innovative architecture means you no longer have to choose between your games and entertainment. Get multiplayer alerts while you watch TV, and keep watching TV while you play. Snap your NFL fantasy football stats next to the game. Jump instantly from a game to TV, movies, fitness, music, sports, the Internet and Skype video chat with the sound of your voice. With Xbox One, you never have to stop playing to talk to a friend, surf the Web or watch live TV. You also have access to a new generation of TV experiences, and starting in the U.S. and coming to many markets soon, OneGuide will allow you to access your favorite shows, channels, apps or games with the Bing natural language voice search.

Xbox One Live TV, Xbox Fitness with Yusuf Mehdi [scarlettgarden YouTube channel, Oct 27, 2013]

Here’s an Xbox Wire interview with Yusuf Mehdi regarding live TV on the Xbox with instant switching and Xbox experiences tailored to the gamer profile

From Xbox One: Your Top Questions Answered [May, 2013]

Our goal is to enable live TV through Xbox One in every way that it is delivered throughout the world, whether that’s television service providers, over the air or over the Internet, or HDMI-in via a set top box (as is the case with many providers in the US). The delivery of TV is complex and we are working through the many technologies and policies around the world to make live TV available where Xbox One is available.

The TWC Case:

This deal, which will bring more live channels than any other experience on Xbox 360, will offer Time Warner Cable [TWC] subscribers with an Xbox Live Gold membership the ability to watch their favorite shows from right from their Xbox 360 — including favorites like AMC, BBC World News, Bravo, Cartoon Network, CNN, Comedy Central, Food Network, HGTV and more. And unlike any other platform, you’ll be able to control your entertainment using your voice via Kinect for Xbox 360.
I’m excited to announce, alongside our good friends at Time Warner Cable, that the TWC TV app has launched on Xbox 360 today, delivering up to 300 of the most popular TV channels to Xbox Live Gold members in the U.S. who are also TWC subscribers.
At Xbox, our vision has always been to provide all the entertainment people want in one place, putting the best in TV, movies, music and sports right next to your favorite games. Like Xbox 360, Xbox One will be the best place in your house for gaming, apps and TV and we can’t wait to show you more on that soon. Today, we’re thrilled to expand our growing entertainment app portfolio of more than 130 voice-controlled apps on Xbox 360 with the addition of TWC TV. TWC customers, thank you for your support and welcome to the Xbox family.
When we launched the TWC TV app on Xbox 360 in August, we promised we were hard at work with our partners at Time Warner Cable to bring you Video On Demand and just in time for the holidays, we’re delivering. Starting today, Xbox Live Gold members in the U.S. who are also Time Warner Cable subscribers can now get On Demand content right on their Xbox 360 in addition to the nearly 300 channels of live TV that the TWC TV on Xbox 360 app already offers. And don’t forget that with Kinect for Xbox 360, the app lets you control your favorite shows using voice and gestures so you can kick back, remote-free.
The update also includes an exclusive “share” feature that allows you to send messages to other Xbox Live members that are TWC TV customers while channel surfing. With the TWC TV app, you’ll have access to more than 5,000 On Demand choices and in-app messaging. Look for the update today or download the app now!

With an unexperienced person: Hands-on video: The Xbox One as a media device [gigaom YouTube channel, Nov 19, 2013]

The Xbox One promises to combine state-of-the-art video gaming with live TV and streaming apps. Check out or hands-on video for a closer look at the device’s entertainment offerings.

First Wave of TV & Entertainment Apps Coming to Xbox One Unveiled [Xbox Wire from Microsoft, Nov 8, 2013]

Offering more entertainment options has always been important to Xbox fans. For years, we’ve been working with leading entertainment brands and TV providers to offer our customers a wide variety of live and on-demand entertainment. Today we unveiled the complete Xbox One experience – showcasing how Xbox One delivers the best games and multiplayer features, along with your favorite movies, music, sports and live TV experiences – all in one place.

“We set out to make Xbox One the all-in-one games and entertainment hub for your home. The one system that offers the best games next to the best entertainment experiences and apps,” said Marc Whitten, Xbox Chief Product Officer. “Along with offering a stellar app portfolio from around the world, Xbox One takes the next step by offering them in a way that is seamless and easy to use.”

In addition to delivering live TV in every market where Xbox One will be sold, we are also bringing premium, voice and gesture controlled TV and entertainment apps specifically designed for your living room. These apps have been built from the ground up uniquely for Xbox One and are designed to harness the power of the all-in-one platform.  For example, Xbox One is empowering partners to bring media achievements and exclusive Snap experiences, as well as many other things to entertainment apps, offering everybody the opportunity to achieve badges or rewards for the media they consume in addition to gaming.

image

Something truly unique we’re doing with Xbox One is bringing together your favorite TV channels and entertainment app channels into one screen. Xbox One is also the only games and entertainment system that enables HDMI pass through. You can create your own personal Favorites in OneGuide – the Xbox One electronic program guide – so you can quickly and easily choose what you want to watch, whether it’s a TV channel like CBS, NBC or ESPN, or something inside an app like Xbox Video, Hulu Plus or the NFL on Xbox One. You can even add your personal photos and videos from the SkyDrive app to your OneGuide Favorites.

Additionally, a Bing search for TV, movies, games, or music scans across all apps to find exactly what you’re looking for, instead of having to hunt through each app individually. For the first time, you don’t have to juggle multiple screens across cable TV, video streaming services and other entertainment apps to quickly find the entertainment you’re looking for.

Today, we’re announcing the very first wave of some of the world’s biggest names in entertainment rolling out on Xbox One in the 13 launch markets between Nov. 22 at launch and spring 2014:

Australia

  • Crackle
  • Machinima
  • MUZU TV
  • Network Ten’s tenplay
  • Quickflix
  • SBS On Demand
  • TED
  • Twitch

Austria

  • Eurosport
  • Machinima
  • MUZU TV
  • TED
  • Twitch

Brazil

  • Crackle
  • Machinima
  • Muu
  • Netflix
  • Saraiva Player
  • Sky Online
  • SporTV
  • TED
  • Telecine
  • Twitch
  • Vivo Play

Canada

  • CinemaNow
  • Crackle
  • Machinima
  • MUZU TV
  • Netflix
  • Rogers Anyplace TV
  • Sportsnet
  • TED
  • The NFL on Xbox One
  • Twitch

France

  • 6Play
  • Canal+/CanalSat
  • France 2,3,4,5
  • La TV d’Orange
  • Machinima
  • MUZU TV
  • MyTF1
  • MYTF1VOD
  • SFR TV
  • TED
  • Twitch

Germany

  • Amazon\LOVEFiLM
  • Eurosport
  • Machinima
  • MUZU TV
  • TED
  • Twitch
  • Watchever
  • Zattoo

Ireland

  • Eurosport
  • Machinima
  • MUZU TV
  • Netflix
  • TED
  • Twitch

Italy

  • Eurosport
  • Machinima
  • MUZU TV
  • Premium Play
  • TED
  • Twitch

Mexico

  • Clarovideo
  • Crackle
  • Machinima
  • Netflix
  • TED
  • Televisa
  • The NFL on Xbox One
  • TV Azteca
  • Twitch
  • Veo

New Zealand

  • Machinima
  • MUZU TV
  • Quickflix
  • TED
  • Twitch

Spain

  • Eurosport
  • Gol Televisión
  • Machinima
  • MUZU TV
  • RTVE
  • TED
  • Twitch
  • Wuaki.tv
  • Zattoo

United Kingdom

  • 4oD
  • Amazon\LOVEFiLM
  • blinkbox
  • Crackle
  • Demand 5
  • Eurosport
  • Machinima
  • MUZU TV
  • Netflix
  • NOW TV
  • TED
  • Twitch
  • Wuaki.tv

United States

  • Amazon Instant Video
  • Crackle
  • The CW
  • ESPN
  • FOX NOW
  • FXNOW
  • HBO GO (coming soon)
  • Hulu Plus
  • Machinima
  • MUZU TV
  • Netflix
  • Redbox Instant by Verizon
  • Target Ticket
  • TED
  • The NFL on Xbox One
  • Twitch
  • Univision Deportes
  • Verizon FiOS TV
  • VUDU

The list above* is just the first wave of third-party apps that are coming to Xbox One over the course of the next few months.  We will continue to announce more apps coming to the platform and both the Xbox One and Xbox 360 entertainment app portfolios will continue to grow weekly.
*Xbox LIVE Gold membership required

In addition to the entertainment apps coming from partners, in every market Xbox One will also feature:

  • Internet Explorer
  • Skype
  • SkyDrive
  • Upload

With games, multiplayer gaming, live TV and the best entertainment apps, Xbox One is the most complete entertainment system.

Note that after AT&T Extends TV Watching to More Devices with Launch of U-verse TV on Xbox 360 [press release, Oct 11, 2010] and even after New U-verse Internet Customers Can Take Their Pick: A Free Xbox 360, SONOS PLAY:3, Kindle Fire or Nexus 7 Tablet [press release, March 18, 2013] that Xbox tie-up ended with AT&T U-verse TV To Drop Support For Xbox 360 on December 31 [Multichannel, Nov 26, 2013]:

“We’ve made this decision due to low customer demand,” an AT&T spokeswoman said via email on Tuesday. AT&T declined to say how many customers currently use the Xbox 360 as a set-top. … AT&T, the spokeswoman added, currently has no plans to support U-verse TV on the Xbox One. Verizon Communications FiOS TV is the first, and so far only, U.S. pay-TV provider to offer an authenticated app for the Xbox One during its initial launch phase.

With highly experienced users: Xbox One All-in-One Demo with Yusuf Mehdi and Marc Whitten [xbox YouTube channel, Nov 8, 2013]

Marc Whitten and Yusuf Mehdi walk through a comprehensive demo of Xbox One, including instant switching, biometric sign-in, Live TV, Skype, game DVR, OneGuide and more.

From Xbox One: The Complete All-in-One Games and Entertainment System [Xbox Wire from Microsoft, Nov 8, 2013]

As we head toward Nov. 22, we’re showcasing the all-in-one capabilities of Xbox One. This is the real Xbox One in action. Corporate Vice President of Marketing and Strategy, Yusuf Mehdi, and Chief Product Officer Marc Whitten show the best of Xbox One in this new video. And, you can see 10 of our favorite new features below.
#1 – Unleashing the Power of Your Voice
A simple voice command turns on your Xbox One, your TV, your set-top box and your AV system because Kinect for Xbox One is an Infra-Red blaster. And when you say “Xbox On,” your game is always ready to resume from wherever you left off. You can start playing your favorite game, find your favorite show, change channels, turn up the TV volume and more – with the sound of your voice, powered by Bing voice recognition technology.  Just say “Xbox, go to ESPN” and your TV will change directly to the ESPN channel. Or, “Xbox, go to Hulu Plus,” “Xbox, Volume Up,” “Xbox, Mute,” “Xbox, go to Music” – it’s simple. Kinect “talks to” your TV, set-top box and AV receiver, making it easier than ever to navigate entertainment in your living room.
#2 – Biometric Sign In
#3 – Instant Resume and Instant Switching
We’ve talked about instant switching before, but now you can see it for yourself in action. The video showcases how quickly you can jump from one experience to another and right back where you left off. You can literally jump from a game to live TV, music, movies, sports, Web sites and back again in seconds, just by using your voice.
#4 – Watch Live TV via Xbox One
Xbox One lets you watch live TV from your HDMI-compatible cable or satellite box, making it easy to switch from games to live TV – all with the sound of your voice, and without having to switch TV inputs. No more multiple remotes, missed multiplayer matches while you’re watching TV, or frustrating delays. Just connect your set top box to your Xbox One and you can watch live TV through your Xbox One.
#5 – Get a Multiplayer Invite, while you are Watching a movie or live TV
#6 – Game DVR and Upload Studio Let You Record and Share Your Greatest Moments
#7 – Do Two Things at Once
You can also choose to snap two experiences together – so you can play a game while you watch TV or listen to Xbox Music. Or, watch the big NFL game while you manage your fantasy football team. For gamers, snapping Machinima opens up a whole new world of opportunity. Just by saying “Xbox, Snap Machinima,” the Machinima app will be snapped next to “Dead Rising 3” or your favorite game, and walk-throughs, game reviews, help videos and more will appear.
#8 – Skype on the Big Screen, With Groups and Free Long Distance
Skype is amazing on Xbox One, offering the only big screen experience with Group Video Chat with up to four people. Kinect is the only camera in the world that will follow the caller and pan and zoom automatically as if you had your own camera man. You can talk with your friends while surfing the Web or checking the latest stats of a sports team. And have full 1080p video calls for one-to-one chats on your TV. 1
1 For 1080p video call, both users must have compatible HD displays, web cams, messaging clients, and broadband internet.

#9 – OneGuide Delivers Personalized Guide to TV, Apps and More

Xbox One has its own TV listings guide that can be navigated with your voice. Say “Xbox, what’s on Discovery Channel?” and boom, there you have the list of shows.  Call out your favorite TV show by name and start watching it instantly.  And, Xbox One is the only system that brings together your favorite TV channels and entertainment app channels into one screen.  Create your own personal Favorites in OneGuide, so you can easily choose what you want to watch – whether it’s on Fox, CBS, NBC, ESPN, Hulu Plus or the NFL on Xbox One app. For the first time you don’t have to juggle multiple screens across cable TV, video streaming services and other entertainment apps to quickly find the entertainment you’re looking for.

#10 – Xbox SmartGlass Enhances Gaming in New Way

Microsoft Is Changing the Game for Sports Fans [Xbox Wire from Microsoft, Sept 3, 2013]

Whether it’s in the living room or on the playing field, Microsoft and products like Xbox, Surface, and Windows 8 are impacting the way we experience our favorite sports.
In May, Microsoft announced a multi-year, landmark partnership with the NFL. For the Xbox community, this means exclusive interactive NFL experiences for fans at home, found only on Xbox One starting this November. Today, we’re excited to share more details about this partnership and the game changing NFL experiences for Xbox One and Surface. We are also pleased to introduce NFL.com Fantasy Football on Xbox 360, Windows 8 and Windows Phone which are available for download today.
Also making headlines today is the confirmation and details around the all-new ESPN application for Xbox One. Leveraging the unique platform capabilities of Xbox One, sports fans will now have control of the live programming, highlights, stats and more across ESPN like never before. 
The NFL on Xbox One and Surface 
Tailored for you, the NFL on Xbox One will deliver the best of the NFL, in a way that will completely reimagine the way you experience football from the comfort of your home.  Only Xbox One can bring interactivity to live games, stats, scores, highlights and your NFL.com Fantasy Football team all together on the best screen in the house – your TV. Xbox One will personalize your NFL experience, for your team, with the best content the NFL has to offer including NFL.com, NFL Network, and NFL RedZone.  Whether you’re watching the game or not, Xbox One makes it easy to keep tabs on the league with Snap mode. You can watch live TV, play games, or watch movies, while simultaneously tracking your NFL.com Fantasy Football team, or checking in for the latest scores and stats. 
While you’re watching at home, Surface technology is in the stadium, on the sidelines to help protect your favorite players.  Teams and trainers will implement use of the X2 concussion testing application this season to quickly diagnose potential player concussions immediately after leaving the playing field with the help of Surface tablets, helping quickly determine if they can get back in the game or call it a day.
ESPN on Xbox One We are also excited to announce ESPN on Xbox One, which builds on our innovations with ESPN on Xbox 360, and provides you with the best of ESPN networks and web content personalized just for you.  Featuring deeper sports content personalization, ESPN on Xbox One gives you immediate access to the teams and sports you care about most.  With WatchESPN, ESPN.com, and ESPN3 video content, you get the best highlights, live events and on-demand sports in full screen mode.  Additionally, you will receive personalized scores and stats in Snap mode from the most popular sports.
NFL.com Fantasy Football on Xbox 360, Windows 8, and Windows Phone 
Beginning today, NFL.com Fantasy Football is now available on Xbox 360, offering a whole new way to track your team and leagues on the best screen in your house – your TV. This destination is tailored just for you and your NFL.com Fantasy Football team, and is easy to jump into and simple to use. The Xbox 360 app brings you an endless playlist of Fantasy Football highlights, Fantasy analysis, stats, scores and standings about your NFL.com Fantasy Football team and leagues, making sure you don’t miss a thing. Consumers can head to NFL.com today to sign up for a league and get in the game before kick off on September 5th.
And, with the new NFL.com Fantasy Football apps for Windows 8 and Windows Phone, you can keep tabs on your team and leagues on your tablet, PC, and mobile device as well.
Download NFL.com Fantasy Football for Xbox 360, Windows 8 and Windows Phone today, and stay tuned for game changing experiences on Xbox One this November.

7. Preliminary information on the upcoming products from Xbox Entertainment Studios

Best Advice: Nancy Tellem [Fortune Magazine YouTube channel, Oct 31, 2013]

Nancy Tellem is the entertainment and digital media president of Microsoft.

Faces to Watch in 2014: Digital media | Nancy Tellem, Mike Hopkins, Issa Rae [Los Angeles Times, Dec 27, 2013]

A big year is coming up for game designers Ryan and Amy Green and Ruben Farrus, plus Microsoft’s Nancy Tellem, Hulu’s Mike Hopkins and Web writer-actress Issa Rae.

The Times asked its reporters and critics to highlight figures in entertainment and the arts who will be making news in 2014. Here’s who they picked:

Nancy Tellem | Microsoft’s president of entertainment and digital media

The veteran CBS television executive had her work cut out when she joined Microsoft Corp. in 2012 to launch a Santa Monica studio to create original content.

Long fascinated with changes in consumer behavior, Tellem is now playing an important role in determining what appeals to younger consumers accustomed to getting their entertainment on multiple screens. She is trying to build on the momentum that Microsoft has achieved by encouraging millions of consumers to consider the Xbox more than just a video game console. Xbox users spend more than half of their time online listening to music and streaming movies, TV shows and exploring other entertainment options. Microsoft wants to build a trove of exclusive content to differentiate its game system from the rival Sony PlayStation.

Microsoft’s slate of new shows designed to appeal to the digitally connected generation is expected to launch in the first half of 2014. Microsoft also brought Tellem on board to make inroads with Hollywood’s creative community. One of the first projects she announced was a live-action TV series, produced by Steven Spielberg, based on the “Halo” game franchise for Xbox Live, a feature that enables gamers to play against online opponents.

Tellem was trained as a lawyer and worked her way up the ranks in business affairs at Lorimar, Warner Bros. and then CBS. At the broadcast network, Tellem was a key executive in the development of new shows, including the hit reality show “Survivor.” She was one of the TV industry’s first female entertainment presidents.

— Meg James

Mike Hopkins | Hulu chief executive

Issa Rae | Actress-writer-director
… 

Nancy Tellem at Wrap Power Women Breakfast: Microsoft Is Aiming for a “Game of Thrones”  [The Wrap YouTube channel, Oct 30, 2013]

TheWrap’s keynote speaker at its fourth annual Power Women Breakfast (Oct 30, 2013) says Microsoft’s new studio has the ambition and the means to create landmark programming

Nancy Tellem at Wrap Power Women Breakfast: Microsoft Is Aiming for a ‘Game of Thrones’ (Video) [TheWrap, Oct 30, 2013]

Nancy Tellem, Microsoft’s new president of entertainment and digital media, said on Wednesday she has the means and the ambition to make a “Game of Thrones”-like series for the new studio backed by the technology giant.

“I have the ambition” to make a show as grand as “Game of Thrones,” said the former president of CBS entertainment at TheWrap‘s Power Women Breakfast at the Montage in Beverly Hills.

That, to me, was greatest testament to how wonderful television can be and how engrossed people are and committed – and it was a social experience,” she said.

And, she said smiling, Microsoft’s budget was “enough for me to do my job, let’s just say.”

Not being bound by the constraints of a 22-episode season or even show length and with the technology to engage the viewer through the Xbox platform allows Tellem and her team to “focus on the content itself” and then way viewers canshare that experience.”

Tellem said she expects that Microsoft will begin rolling out its new shows — which will range from sports programs to scripted series — as soon as the spring. She says they have not decided whether to release the episodes over time or put them all out at once, like Netflix.

Asked about binge viewing, Tellem said she was not sure if Microsoft would release all its content at once, observing that interactivity was more the distinctive purview of Microsoft.

Xbox One Reveal: Halo TV and NFL [xbox YouTube channel, May 23, 2013]

Nancy Tellem’s Xbox Entertainment Studios announcements of Halo TV with 343 Industries and Steven Spielberg and NFL from Xbox One Reveal Press Briefing.

From Microsoft unveils Xbox One: the ultimate all-in-one home entertainment system [press release, May 21, 2013]

Blockbuster titles, Steven Spielberg-produced Halo TV series, and exclusive agreements with the NFL transform games, TV and entertainment for the 21st century living room.

“Halo” television series. Award-winning filmmaker, director and producer, Steven Spielberg will executive-produce an original “Halo” live-action television series with exclusive interactive Xbox One content, created in partnership with 343 Industries and Xbox Entertainment Studios.

RTS Cambridge Convention 2013: Xbox One – From Gaming to Content [Royal Television Society, Sept 12, 2013]

Created for gaming, the Xbox One is the latest challenger to old-fashioned telly, but, said Microsoft entertainment and digital media president Nancy Tellem, it is not the final nail in the TV industry’s coffin.

“It’s an augmentation,” she argued. “Right now, [TV] is in a renaissance period — what Xbox offers is a different TV experience.” 

Since joining Microsoft from CBS a year ago, Tellem has been spearheading the software giant’s move into TV, delivered via its Xbox One gaming console.

Interactivity among its current 76 million connected console users would be the key to Xbox One’s success. “It isn’t just delivering content. It really offers an immersive experience,” she said.

The session was chaired by Matt Frei from Channel 4 News, who said that he enjoyed being a “passive” consumer of TV. To laughter from the audience, Tellem replied: “Xbox addresses the next generation.”  

Tellem identified sport, live events and scripted entertainment as genres particularly suited to Xbox One. Mentioning Game of Thrones as the type of complex drama suited to the console, she claimed: “You can give a much richer understanding of the characters and their history.”

Tellem is in discussions with studios and talent about commissions, which she hopes to announce in a few weeks. Earlier this year, Microsoft revealed that a TV show based on the Halo game, with the involvement of Steven Spielberg, was in the pipeline.

She also countered a suggestion from the audience that Xbox One’s programming would be geared at 18-year-old boys. Tellum said that her ambition was to reach out beyond traditional gamers, adding that 40% of its platform users were female, with most of the audience between 18 and 40. 

My mission it to transform it into an entertainment service,” she said, which would include music, film and sport as well as games. “It’s a simple offering that can access all your entertainment needs.”

Before joining Microsoft, Tellem had worked at the US network CBS for a decade and a half, latterly as senior adviser to chief executive Leslie Moonves.

Xbox Entertainment Studios to Debut Documentary Series Exclusively on Xbox in 2014 [Xbox Wire from Microsoft, Dec 19, 2013]

First Documentary Explores the Fabled Atari Mystery

Today, Xbox Entertainment Studios announced an original documentary series that will debut exclusively on Xbox in 2014. Xbox will produce the series with two-time Academy Award-winning producer Simon Chinn (Searching for Sugar Man and Man on Wire) and Emmy-winning producer Jonathan Chinn (FX’s 30 Days and PBS’s American High) through their new multi-platform media company, Lightbox

“Our collaboration with Xbox offers an unparalleled opportunity to make a unique series of films around the extraordinary events and characters that have given rise to the digital age,” said Simon Chinn. “Our goal is to produce a series of compelling and entertaining docs which will deploy all the narrative techniques of Simon’s and my previous work. It’s particularly exciting to be partnering with filmmakers like Zak Penn who come to this process from other filmmaking disciplines and who will bring their own distinctive creative vision to this,” added Jonathan Chinn.

“Jonathan and Simon Chinn are the perfect team to spearhead this series for Xbox. They are consummate story tellers and they plan to match their creative sensibility with the best talent in the industry,” commented Xbox Entertainment Studios President Nancy Tellem. “These stories will expose how the digital revolution created a global democracy of information, entertainment and commerce, and how it impacts our lives every day.”

The first film in the groundbreaking series investigates the events surrounding the great video game burial of 1983. The Atari Corporation, faced with overwhelmingly negative response to the video game “E.T. the Extra-Terrestrial,” buried millions of unsold game cartridges in the middle of the night in the small town of Alamogordo, New Mexico.

Fuel Entertainment, an innovator in cross-platform content development, secured the exclusive rights to excavate the Atari landfill and approached Xbox. Lightbox will document the dig, which is planned for early next year.

Filmmaker and avid gamer Zak Penn (X-Men 2, Avengers, Incident at Loch Ness) will direct. This episode will not only document the excavation, it will also place the urban legend of the burial in the context of the precipitous rise and fall of Atari itself.

“When Simon and Jonathan Chinn approached me about this story, I knew it would be something important and fascinating,” said Penn. “I wasn’t expecting to be handed the opportunity to uncover one of the most controversial mysteries of gaming lore.”

Shooting begins in January. The series will air exclusively on Xbox One and Xbox 360 in 2014 and will be available globally in all markets where Xbox Live is supported.

8. Xbox Music and Xbox Video services for other devices

Xbox Music + Video apps for Windows Phone 8 [Windows Phone Central YouTube channel, Dec 18, 2013]

On December 18th, Microsoft released two new apps for Windows Phone 8: Xbox Music and Xbox Video. We give a tour of both apps and show off some of their features on a Lumia 1520. More info: http://www.wpcentral.com/xbox-music-and-video-app-tour

Xbox Video for Windows Phone 8 Walkthrough [Pocketnow YouTube channel, Dec 19, 2013]

Microsoft finally released the Xbox Video application for Windows Phone 8. We go hands-on with the new application in this walkthrough video, and discover all its features and missing functionality. See more at Pocketnow: http://pocketnow.com/2013/12/19/xbox-video-for-windows-phone

New Xbox Video and Xbox Music apps Available for Windows Phone 8 Customers [Xbox Wire from Microsoft, Dec 18, 2013]

It’s a big day for Windows Phone 8 customers. New apps for Xbox Video and Xbox Music are becoming available today in the Windows Phone store.

Xbox Video Comes to Windows Phone

Today, Xbox Video launches on Windows Phone 8, so now you can truly take your movies and TV shows with you wherever you go. Stream from the cloud or download your favorite movie or TV episodes to your phone to watch them offline. You can rent or buy the newest hit movies or search for classics from the massive catalog with the only app that lets you download movies and TV episodes right to your Windows Phone 8. You’ll even get Rotten Tomatoes ratings and Metacritic scores right on your phone.

Xbox Video on Windows Phone 8 also delivers countless TV shows. With a Season Pass, brand new episodes are automatically added to your collection so you don’t miss a beat from your favorite new shows. Or catch up with every episode from past seasons and relive the glory days of your favorite shows from years past.

With Xbox Video, your collection follows you from screen to screen in the cloud. For example, you can buy and start a movie or TV show from XboxVideo.com or Xbox Video on a Windows 8.1 tablet, and continue watching on your Xbox One, Xbox 360 or Windows Phone 8. And with Xbox SmartGlass, you get a richer viewing experience that isn’t found anywhere else. Xbox SmartGlass integrated with Xbox Video for Xbox One and Xbox 360 offers second-screen experiences with bonus content and exclusive extras, serves as a remote control, and gives you new ways to interact with whatever you’re watching.

Xbox Video is a free download in the Windows Phone Store today, and don’t forget to check out our new Web store at XboxVideo.com

A Peek at the New Xbox Music for Windows Phone

Also releasing today is a new Xbox Music preview app. This early-access app gives Xbox Music Pass users a look into the new music experience on Windows Phone 8.¹ Stream millions of songs from your phone or download the ones you want for offline listening. Create playlists that sync across your devices. Play songs from your personal music collection alongside your Xbox Music Pass content. It’s the best way to experience all the music you love on your Windows Phone.

The Xbox Music Preview is available in all 22 markets where Xbox Music is available today and can be found in the Windows Phone Store. The full release will roll out in 2014. Xbox Music is available today on Windows Phone, Xbox One, Xbox 360, Windows 8/8.1, online at Music.Xbox.com and iOS and Android devices.

¹ Xbox Music Pass required to use the app. Compatible devices and internet required. Data charges apply. See Xbox.com/music.

Xbox Music For Android Review [Mikey Capoccia YouTube channel, Sept 9, 2013]

In todays video I will be reviewing the Xbox Music application for Android

Microsoft launches Xbox Music across iOS and Android, adds free streaming on the Web [press release, Sept 8, 2013]

Enjoy your favorite music from a 30 million-song global catalog powered by the one service that integrates your music experiences across your tablet, PC, phone and TV. All the music you love, every way you want it.

Nearing its one-year anniversary, Microsoft Corp.’s all-in-one music service, Xbox Music, continues making strides to deliver all the music people want, wherever they want it played. Today, Microsoft announced its plans to bring Xbox Music to iOS and Android devices, as well as free streaming on Xbox Music via the Web.[1]

Accessing music across all the different devices people interact with has become complicated. People today use PCs, laptops, tablets, phones and TVs to access different music services that don’t connect with one another. Xbox Music is designed to solve this common problem by combining the best of all music offerings with free streaming on the Web and on Windows 8 PCs and tablets, Internet radio, subscription (called Xbox Music Pass), and download-to-own options.[2] With today’s news, access to Xbox Music grows to include iOS and Android devices, as well as a free Web-based interface on computers.

“Xbox Music now, more than ever, powers music experiences between Windows 8, Xbox, Windows Phone, and now iOS, Android and the Web,” said Jerry Johnson, general manager of Xbox Music. “We’re also excited to connect artists with their fans on the most anticipated consumer product of the year when Xbox One launches Nov. 22.”

Expanding the Xbox Music family of devices

Starting today, your Xbox Music Pass brings the catalog of music to iOS and Android devices. Get unlimited access to the songs and artists you want at any time with playback across your tablet, PC, phone and Xbox console for $9.99 per month or $99.99 per year. Add a song to your collection on your Xbox, and you’ll also have that song on your iOS, Android or Windows 8 device on the go or at the office. Xbox Music Pass also unlocks unlimited access to tens of thousands of music videos on your Xbox 360.

With the addition of free streaming on the Web, enjoy on-demand access to 30 million songs globally for free on the Xbox Music Web player at http://music.xbox.com or through the Xbox Music app on all Windows 8 tablets and PCs. Discovering and enjoying free music is as easy as typing an artist or song name and hitting “play.” Songs are instantly available to stream at no cost and for you to create an unlimited amount of playlists.[1]

Continued innovation

Xbox Music will continue to grow and evolve over the coming months. Microsoft will add Radio to the free Web player, a quick and dynamic way to personalize your collection, discover new favorites, and create ultimate playlists by launching instant mixes based on your favorite artists. With unlimited skips and a view of the full recommended music stream, Radio puts you in control of your Internet radio experience.[1]

Xbox Music will grow on Windows 8 when it adds the anticipated new Web Playlist tool this fall. The tool scans all the artists and music available on a given Web page and creates a custom playlist of all that music. Think about the Web page of your favorite radio station, or an upcoming music festival, and all the bands and songs included on that Web page. Web Playlist identifies all that music and creates an instant, custom playlist inside Xbox Music with the simple touch of a button. Web Playlist along with Windows 8.1 will be released Oct. 17.

In the coming months, additional updates for iOS and Android platforms will become available, including an offline mode that lets you save your music to your device for playback without an Internet or data connection.

About Xbox

Xbox is Microsoft’s premier entertainment brand for the TV, phone, PC and tablet. In living rooms or on the go, Xbox is home to the best and broadest games, as well as one of the world’s largest libraries of movies, TV, music and sports. Your favorite games, TV and entertainment come to life in new ways through the power of Kinect, Xbox SmartGlass and Xbox Live, the world’s premier social entertainment network. More information about Xbox can be found online at http://www.xbox.com.

[1] Free streaming available only on the Web and devices running Windows 8 or later. Limited hours of free streaming after six months; unlimited with paid subscription. Coming later this fall: artist-based Radio on Android, iOS and the Web.
[2] Xbox Music Pass is streaming only on Xbox consoles, Android, iOS and the Web. Applicable taxes extra. On Xbox consoles, Xbox Music requires an Xbox Music Pass and an Xbox Live Gold membership (both sold separately). Download music on up to four devices. Some Xbox Music content may not be available via Xbox Music Pass, and may vary over time and by region. Coming later this fall: Xbox music download-to-own on Android and iOS, and playlists and song sync on Windows Phone 8. See http://www.xbox.com/music.
For details, please visit http://news.xbox.com.
For assets, please visit http://news.xbox.com/media.

The future is here: Yes, it is Microsoft Surface 2 with modern apps only! (And ARM, not x86/x64!)

This video is speaking for itself (and for the title): Why I Love my Microsoft Surface 2 : Tips and Tricks [Sean Ong YouTube channel, Nov 3, 2013]

In this video I show off my favorite features in the Microsoft Surface 2, with windows 8.1 RT. I show off voice control (windows speech recognition), multiple monitor support, and a variety of accessories via USB hub (including external hard drive, mouse, keyboard, and Xbox 360 controller integration). I show how I connect the Surface 2 to my HDTV as well as wireless casting of music and video! I also go through some other features, such as Spotify web player, and icloud web. Also kid friendly applications and multiple accounts. There’s so much stuff this thing can do, it will blow your mind away

That is how Sean Ong, a senior consultant at Navigant (focussing there on “technical, economic, and policy analysis of energy efficiency and renewable energy systems”) and himself an energy analysis engineer, was able to present the above, truly incredible customer value from current and especially future point of view for Windows 8.1 in geneneral and Surface 2 (ARM based) in particular. It is even more remarkable as nobody, I REPEAT NOBODY, from Microsoft worldwide could do that. I know even a highly professional, true world class Windows 8/Windows 8.1 expert who was not only fascinated himself by the above video, but acknowledged honestly that he was unaware of the speech recognition progress in Windows 8.1. And we are talking about an internal expert who has already been involved in the internal expert network of similar, most devoted Microsoft specialists in Windows 8 and Windows 8.1 for years.

For me this video is incredibly important because:

NOT ONLY FOR THE FUTURE OF MICROSOFT BUT FOR THE WHOLE STATE OF COMPUTING
AS THE MISSING COMMUNICATIONS FROM MICROSOFT, EVEN THE TOTAL INABILITY OF MICROSOFT TO COMMUNICATE THE INHERENT WINDOWS 8.1/SURFACE 2 VALUES, WERE CLEARLY POINTING TO TOTAL LACK OF MARKETING COMPETENCY FOR ITS GAME-CHANGING, MICROSOFT-ONLY, POST PC AREA INNOVATIONS INHERENT IN WINDOWS 8.1/SURFACE 2

Although these signs (both the positive and negative ones) were coupled with a number of competitive positive changes for Microsoft, such as:

But a number of competitive negative changes for Microsoft became even more worrisome (than any time before) lately, such as:

Fortunately we already know:

Board of directors initiates succession process; Ballmer remains CEO until successor is named.
Microsoft Corp. today announced that Chief Executive Officer Steve Ballmer has decided to retire as CEO within the next 12 months, upon the completion of a process to choose his successor. In the meantime, Ballmer will continue as CEO and will lead Microsoft through the next steps of its transformation to a devices and services company that empowers people for the activities they value most.
“There is never a perfect time for this type of transition, but now is the right time,” Ballmer said. “We have embarked on a new strategy with a new organization and we have an amazing Senior Leadership Team. My original thoughts on timing would have had my retirement happen in the middle of our company’s transformation to a devices and services company. We need a CEO who will be here longer term for this new direction.”
The Board of Directors has appointed a special committee to direct the process. This committee is chaired by John Thompson, the board’s lead independent director, and includes Chairman of the Board Bill Gates, Chairman of the Audit Committee Chuck Noski and Chairman of the Compensation Committee Steve Luczo. The special committee is working with Heidrick & Struggles International Inc., a leading executive recruiting firm, and will consider both external and internal candidates.
The board is committed to the effective transformation of Microsoft to a successful devices and services company,” Thompson said. “As this work continues, we are focused on selecting a new CEO to work with the company’s senior leadership team to chart the company’s course and execute on it in a highly competitive industry.”
“As a member of the succession planning committee, I’ll work closely with the other members of the board to identify a great new CEO,” said Gates. “We’re fortunate to have Steve in his role until the new CEO assumes these duties.”
Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.
Outgoing Microsoft CEO Steve Ballmer has always been a speaker and performer like no other — his absolute enthusiasm for his company is electric in person, turning ordinary corporate events into raw displays of emotion that are often criticized but never forgotten. Read more at The Verge: http://www.theverge.com/2013/9/27/4779036/exclusive-video-steve-ballmers-intense-tearful-goodbye-to-microsoft
Steve Ballmer paced his corner office on a foggy January morning here, listening through loudspeakers to his directors’ voices on a call that would set in motion the end of his 13-year reign as Microsoft Corp.’s MSFT -0.47% chief executive.
Microsoft lagged behind Apple Inc. AAPL -0.60% and Google Inc. GOOG -0.16% in important consumer markets, despite its formidable software revenue. Mr. Ballmer tried to spell out his plan to remake Microsoft, but a director cut him off, telling him he was moving too slowly.
“Hey, dude, let’s get on with it,” lead director John Thompson says he told him. “We’re in suspended animation.” Mr. Ballmer says he replied that he could move faster.
But the contentious call put him on a difficult journey toward his August decision to retire, sending Microsoft into further tumult as it began seeking a successor to a man who has been at its heart for 33 years.
“Maybe I’m an emblem of an old era, and I have to move on,” the 57-year-old Mr. Ballmer says, pausing as his eyes well up. “As much as I love everything about what I’m doing,” he says, “the best way for Microsoft to enter a new era is a new leader who will accelerate change.”
Mr. Ballmer, in a series of exclusive interviews tinged with his characteristic bluster and wistfulness, tells of how he came to believe that he couldn’t lead Microsoft forward—that, in fact, Microsoft would not be led by him because of the very corporate culture he had helped instill.
Mr. Ballmer and his board have been in agreement: Microsoft, while maintaining its strong software business, must shake up its management structure and refocus on mobile devices and online services if it is to find future profit growth and reduce its dependence on the fading PC market.
The board’s beef was speed. The directors “didn’t push Steve to step down,” says Mr. Thompson, a longtime technology executive who heads the board’s CEO-search committee, “but we were pushing him damn hard to go faster.”
Investors, too, were pushing for transformation. “At this critical juncture, Wall Street wants new blood to bring fundamental change,” says Brent Thill, a longtime Microsoft analyst at UBS AG. “Steve was a phenomenal leader who racked up profits and market share in the commercial business, but the new CEO must innovate in areas Steve missed—phone, tablet, Internet services, even wearables.”
The Microsoft board’s list of possible successors includes, among others, former Nokia Corp. NOK1V.HE +0.25% CEO Stephen Elop, Microsoft enterprise-software chief Satya Nadella and Ford Motor Co. F -0.12% CEO Alan Mulally, say people familiar with the search. In conjunction with Microsoft’s annual shareholder meeting Nov. 19, the board plans to meet and will discuss succession, says a person familiar with the schedule.
Representatives for Mr. Elop and Mr. Nadella say the men have no comment on the search. A Ford spokesman says “nothing has changed” since November 2012, when Ford said Mr. Mulally would remain CEO through at least 2014, adding: “Alan remains absolutely focused on continuing to make progress on our One Ford plan. We do not engage in speculation.”
Microsoft’s next chief will be only the third in its history. Mr. Ballmer joined in 1980 at the suggestion of his Harvard University pal, co-founder Bill Gates, and is its second-largest individual shareholder and a billionaire.
After growing up in Detroit, where his father was a Ford manager, Mr. Ballmer roomed down the hall from Mr. Gates at Harvard. He dropped his Stanford M.B.A. studies to become Microsoft’s first business manager.
He was Mr. Gates’s right-hand man, helping turn Microsoft into a force that redefined how the world used computers. He took the reins in 2000, further solidifying Microsoft’s position in software markets and keeping the profit engine humming. Revenue tripled during his tenure to almost $78 billion in the year ended this June, and profit grew 132% to nearly $22 billion.
But while profit rolled in from Microsoft’s traditional markets, it missed epic changes, including Web-search advertising and the consumer shift to mobile devices and social media.
Last year, Mr. Ballmer sought to reboot. In an October shareholder letter, he declared Microsoft would become a provider of “devices and services” for businesses and individuals.
He told the board he wanted to lead the charge and remain until his youngest son graduated from high school in four years. He began his own succession planning by meeting potential candidates in what he calls “cloak-and-dagger” meetings.
Mr. Ballmer’s reboot plan required a corporate overhaul. For guidance, he called his longtime friend, Ford’s Mr. Mulally, once a top Boeing Co. BA +0.73% executive. They met Christmas Eve at a Starbucks on Mercer Island near Seattle.
Mr. Ballmer brought a messenger bag, pulling out onto a table an array of phones and tablets from Microsoft and competitors. He asked Mr. Mulally how he turned around Ford. For four hours, he says, Mr. Mulally detailed how teamwork and simplifying the Ford brand helped him reposition it.
The Ford spokesman says: “Ford and Microsoft have a long-standing business partnership, and many of our leaders discuss business together frequently.”
It was a wake-up call for Mr. Ballmer, who had run the software giant with bravado and concedes that “I’m big, I’m bald and I’m loud.”
Microsoft’s culture included corporate silos where colleagues were often pitted against one another—a competitive milieu that spurred innovation during Microsoft’s heyday but now sometimes leaves groups focused on their own legacies and bottom lines rather than on the big technology picture and Microsoft as a whole.
He recalls thinking: “I’ll remake my whole playbook. I’ll remake my whole brand.”
The board liked his new plan. But as Mr. Ballmer prepared to implement it, his directors on the January conference call demanded he expedite it.
Pushing hardest, say participants, were Mr. Thompson, who had held top jobs at International Business Machines Corp. IBM +0.54% and Symantec Corp. SYMC +0.38%, and Stephen Luczo, CEO of Seagate Technology STX -2.33% PLC. Mr. Luczo declines to comment.
“But, I didn’t want to shift gears until I shipped Windows,” Mr. Ballmer says he told the directors on the call, explaining that he hadn’t moved faster in late 2012 because he was focused on releasing in October the next generation of Windows, Microsoft’s longtime cash cow.
Mr. Ballmer swung into gear, drafting a management-reorganization plan to discuss during a March retreat at a Washington mountain resort. He invited Mr. Thompson and another director, to get board perspective on his plan.
Instead, he got more pressure. Mr. Thompson says he told Mr. Ballmer and his executives: “Either get on the bus or get off.”
Mr. Ballmer says he took that as an endorsement of his plan. That evening, some of them played poker, drank Scotch and gathered around the lodge’s fireplace.
The next month, hedge fund ValueAct Capital disclosed a $2 billion Microsoft stake. ValueAct’s CEO Jeffrey Ubben at a conference said Microsoft’s stock was undervalued. Other shareholders were urging it to increase its dividend and shed noncore businesses. A ValueAct spokesman declines further comment. In September, Microsoft increased its dividend but hasn’t sold off businesses investors have urged it to, such as the Bing search engine.
Mr. Ballmer hewed to Mr. Mulally’s recommendations. For years, he had consulted with Microsoft’s unit chiefs individually, often dispensing marching orders. Now, he began inviting them to sit together in a circle in his office to foster camaraderie.
It was a lurching corporate-culture change. “It’s not the way we operated at all in Steve’s 30-plus years of leadership of the company,” says Mr. Nadella, an executive vice president.
Mr. Ballmer says his senior team struggled with the New Steve. Some resisted on matters large—combining engineering teams—and small, such as weekly status reports.
Qi Lu, an executive vice president, submitted a 56-page report on applications and services. Mr. Ballmer sent it back, insisting on just three pages—part of a new mandate to encourage the simplicity needed for collaboration. Mr. Lu says he retorted: “But you always want the data and detail!”
Mr. Ballmer says he started to realize he had trained managers to see the trees, not the forest, and that many weren’t going to take his new mandates to heart.
In May, he began wondering whether he could meet the pace the board demanded. “No matter how fast I want to change, there will be some hesitation from all constituents—employees, directors, investors, partners, vendors, customers, you name it—to believe I’m serious about it, maybe even myself,” he says.
His personal turning point came on a London street. Winding down from a run one morning during a May trip, he had a few minutes to stroll, some rare spare time for recent months. For the first time, he began thinking Microsoft might change faster without him.
“At the end of the day, we need to break a pattern,” he says. “Face it: I’m a pattern.”
Mr. Ballmer says he secretly began drafting retirement letters—ultimately some 40 of them, ranging from maudlin to radical.
On a plane from Europe in late May, he told Microsoft General Counsel Brad Smith that itmight be the time for me to go.” The next day, Mr. Ballmer called Mr. Thompson, with the same message.
Mr. Thompson called two other directors, Mr. Luczo and Charles Noski, former Bank of America Corp. BAC +0.84% vice chairman, and says he told them: “If Steve’s ready to go, let’s see if we can get on with this.”
At the board’s June meeting in Bellevue, Wash., Mr. Ballmer says he told the directors: “While I would like to stay here a few more years, it doesn’t make sense for me to start the transformation and for someone else to come in during the middle.”
The board wasn’t “surprised or shocked,” says Mr. Noski, given directors’ conversations with Mr. Ballmer. Mr. Thompson says he and others indicated that “fresh eyes and ears might accelerate what we’re trying to do here.”
Mr. Gates, Microsoft’s chairman, told Mr. Ballmer that he understood from experience how hard it was to leave when Microsoft was your “life,” says someone familiar with Mr. Gates’s thinking. Mr. Gates told the board he supported Mr. Ballmer’s departure if it ensured Microsoft “remains successful,” this person says.
That night, after Mr. Ballmer watched his son sing at his high-school baccalaureate ceremony—a Coldplay song with the lyrics: “It’s such a shame for us to part; nobody said it was easy; no one ever said it would be this hard”—he says he told his wife and three sons he was probably leaving Microsoft. They all cried.
On Aug. 21, the board held a conference call to accept Mr. Ballmer’s retirement. Mr. Gates and Mr. Thompson sat with Mr. Ballmer in his office. It was over in less than an hour.
Mr. Ballmer vows not to be a lame duck.
“Charge! Charge! Charge!” he bellows, jumping up from an interview and lunging forward while pumping his fist forward like a battering ram. “I’m not going to wimp away from anything!”
He has remained active, shepherding a $7.5 billion deal to buy Nokia’s mobile businesses and fine-tuning holiday-marketing strategies for Microsoft’s Surface tablets and new Xbox game console. In October, Microsoft reported better-than-expected quarterly earnings.
At his final annual employee meeting this September, Mr. Ballmer gave high-fives and ran off the stage to the song: “(I’ve Had) The Time of My Life” from the movie “Dirty Dancing.”
Last month, walking along Lake Washington, Mr. Ballmer bumped into Seattle Seahawks coach Pete Carroll, who was fired from earlier jobs and now is thriving. Mr. Carroll says he told his neighbor he went through “something like this” and predicted it is “going to be great.”
Mr. Ballmer says he is weighing casual offers as varied as university teaching and coaching his youngest son’s high-school basketball team. He plans no big decisions for at least six months—except that he won’t run another big company. He says he’s open to remaining a Microsoft director.
At a recent executive meeting, he perched on a stool to review developments. His third slide was labeled “New CEO.”
“Not a soul in this room doesn’t think we need to go through this transition,” he said. As he stood up, his voice started to crack: “As much as I wish I could stay your CEO, I still own a big chunk of Microsoft, and I’m going to keep it.”
He walked back toward the stool, then turned around and said in a near-whisper: “Please take good care of Microsoft.”

You could read also Reporter’s Notebook: Two Days With Steve Ballmer [The Wall Street Journal, Nov 15, 2013] ending this way: 

… This summer when he was deciding whether to step down, Mr. Ballmer quietly met with big institutional investors in Boston and San Francisco. The head of one big institution told him, “Microsoft would be better served with you gone.” Mr. Ballmer, who’s the second largest individual shareholder, knew the investor might get his wish. Yet, he argued, “Who cares more about Microsoft than I do? I own a lot. It’s my life.”

And that showed how his emotions alternate between bluster and wistfulness. The deed is done, the decision has been made, a new CEO is imminent. But Mr. Ballmer is struggling because Microsoft has been so much more than a job … as he said, “my life.”

My closing remarks:

  1. The next CEO problem to be solved is definitely the #1 issue for the future of the Microsoft
  2. The #2 issue is how successfully the Unique Nokia assets (from factories to global device distribution & sales, and the Asha sub $100 smartphone platform etc.) will now empower the One Microsoft devices and services strategy [‘Experiencing the Cloud’, Sept 3, 2013] for which the Microsoft answers to the questions about Nokia devices and services acquisition: tablets, Windows downscaling, reorg effects, Windows Phone OEMs, cost rationalization, ‘One Microsoft’ empowerment, and supporting developers for an aggressive growth in market share [‘Experiencing the Cloud’, Sept 4, 2013] is providing an interim answer, i.e. till the arrival of the new CEO
  3. The #3 isssue is How the device play will unfold in the new Microsoft organization? [‘Experiencing the Cloud’, July 14, 2013]. If Stephen Elop, former CEO of Nokia, and a previous senior executive of Microsoft, will become the next CEO then Minutes of a high-octane but also expert evangelist CEO: Stephen Elop, Nokia [‘Experiencing the Cloud’, July 13, 2013] could provide some clue for changes to be expected as a strategic evolution of the current one described in the already mentioned [‘Experiencing the Cloud’, July 14, 2013]. Even in case when he will not be selected by the Microsoft board as the next CEO he will have very strong influence on the device play for the initial first year integration of the acquired Nokia businesses into Microsoft, for very simple reason, that nobody could do this, and a successfull integration is a higher priority, #2 issue.
  4. Strategically, however, the most important issue is the
  5. Microsoft reorg for delivering/supporting high-value experiences/activities [‘Experiencing the Cloud’, July 11, 2013]

  6. Everything else which might be a crucial issue during this process is highly controversial, without any official clues from Microsoft or any other stakeholder sources. The most controversial among all of them is the issue of non-profitable and/or not necessarily integral to Microsoft businesses. These are the Bing and the Xbox businesses. The range of external opinions is extremely large with investment circles firmly believing that neither Bing nor Xbox are inherently integral to Microsoft, and most of the external development community with an exacly opposite belief of those businesses being inherently internal.

  7. My personal opinion is that with spin-off both extremes could be served sufficiently well, and even open completely new business development opportunities for both Bing and Xbox to grow substantially faster and bigger than otherwise. I would be especially enthusiastic for an Xbox spin-off as that business is already (with upcoming Oct 22 introduction of Xbox One) not a gaming console, but an entertainment ecosystem type of business. As such it would get enormous growth opportunities with its spin-off from the tightly integrated Microsoft mother ship.

  8. The ultimate issue for me, however, is how the currently quite crippled and/or bureaucratic marketing machinery of Microsoft could be completely overhauled as part of Nokia integration, and how fast that could be achieved, if any? I mean a new marketing machinery which is thriving on the huge number of opportunities provided by already delivered game-changing products and technologies, instead of not understanding them at all. I mean not simply an ability to produce videos like the one in the beginning of this post, but a competency to produce whole storyboards for production of such videos and other communication materials. One might call it “high-octane marketing” for simplicity. Even more I envisage such integration of the marketing activities into the whole supply chain management (SCM) as is done in Samsung. See my Samsung has unbeatable supply chain management, it is incredibly good in everything which is consumer hardware, but vulnerability remains in software and M&A [‘Experiencing the Cloud’, Nov 11, 2013] post for that, from which I will copy the following illustration here as well:

Windows Azure Media Services OR Intel & Microsoft going together in the consumer space (again)?

With Intel Media: 10-20 year leap in television this year [Feb 16, 2013] and Microsoft entertainment as an affordable premium offering to be built on the basis of the Xbox console and Xbox LIVE services [Feb 13, 2013] this is a highly probable assumption.

There is other evidence as well. In fact plenty of them. Especially from Microsoft side:

image

The Entertainment and Devices Division (EDD) of Microsof is currently the place where all of Microsoft consumer-only activities are concentrated. EDD revenue, however, was 11% down for the latest quarter vs. that of a year ago. Moreover, it was just 17.6% of the overall Microsoft revenue vs. 20.3% in the quarter a year ago.

In addition:
– in Microsoft Reports Record Revenue of $21.5 Billion in Second Quarter [Microsoft press  release, Jan 24, 2013] great progress was reported in the non-consumer segments of Microsoft:

“Our big, bold ambition to reimagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers,” said Steve Ballmer, chief executive officer at Microsoft. “With new Windows devices, including Surface Pro, and the new Office on the horizon, we’ll continue to drive excitement for the Windows ecosystem and deliver our software through devices and services people love and businesses need.”
The Windows Division posted revenue of $5.88 billion, a 24% increase from the prior year period. Adjusting for the net deferral of revenue for the Windows Upgrade Offer and the recognition of the previously deferred revenue from Windows 8 Pre-sales, Windows Division non-GAAP revenue increased 11% for the second quarter. Microsoft has sold over 60 million Windows 8 licenses to date.
“We saw strong growth in our enterprise business driven by multi-year commitments to the Microsoft platform, which positions us well for long-term growth,” said Peter Klein, chief financial officer at Microsoft. “Multi-year licensing revenue grew double-digits across Windows, Server & Tools, and the Microsoft Business Division.”
The Server & Tools business reported $5.19 billion of revenue, a 9% increase from the prior year period, driven by double-digit percentage revenue growth in SQL Server and System Center.
“We see strong momentum in our enterprise business. With the launch of SQL Server 2012 and Windows Server 2012, we continue to see healthy growth in our data platform and infrastructure businesses and win share from our competitors,” said Kevin Turner, chief operating officer at Microsoft. “With the coming launch of the new Office, we will provide a cloud-enabled suite of products that will deliver unparalleled productivity and flexibility.”
The Microsoft Business Division posted $5.69 billion of revenue, a 10% decrease from the prior year period. Adjusting for the impact of the Office Upgrade Offer and Pre-sales, Microsoft Business Division non-GAAP revenue increased 3% for the second quarter. Revenue from Microsoft’s productivity server offerings – collectively including Lync, SharePoint, and Exchange – continued double-digit percentage growth.

– while Entertainment and Devices Division Performance and KPIs for Earnings Release FY13 Q2 [Microsoft Investor Relations, Jan 24, 2013] were reported as:

Continued leadership position in console market

  • 5.9M consoles sold, down 28%
  • Halo 4 best-selling title of gaming franchise
  • Xbox LIVE members >40 million
  • Windows Phone sales were over 4 times greater than last year
  • 138 billion minutes of calls on Skype in quarter, up 59%

EDD revenue decreased, primarily due to lower Xbox 360 platform revenue, offset in part by higher Windows Phone revenue. Xbox 360 platform revenue decreased $1.1 billion or 29%, due mainly to lower volumes of consoles sold and lower video game revenue, offset in part by higher Xbox LIVE revenue. We shipped 5.9 million Xbox 360 consoles during the second quarter of fiscal year 2013, compared with 8.2 million Xbox 360 consoles during the second quarter of fiscal year 2012. Video game revenue decreased, primarily due to $380 million of revenue deferred associated with the Video Game Deferral. Windows Phone revenue increased $546 million, including patent licensing revenue and increased sales of Windows Phone licenses.

EDD operating income increased, due mainly to lower cost of revenue and sales and marketing expenses, offset in part by decreased revenue and increased research and development expenses. Cost of revenue decreased $544 million or 19%, mainly due to decreased sales of Xbox 360 consoles, offset in part by payments made to Nokia related to joint strategic initiatives and increased royalties on Xbox LIVE content and video games. Sales and marketing expenses decreased $92 million or 21%, primarily reflecting decreased Xbox 360 platform marketing. Research and development expenses increased $98 million or 25%, primarily reflecting higher headcount-related expenses.

– and here we should consider the following Segment Information for the Entertainment & Devices Division excerpted on Feb 17, 2013:

Entertainment and Devices Division (“EDD”) develops and markets products and services designed to entertain and connect people. EDD offerings include the Xbox 360 entertainment platform (which includes the Xbox 360 gaming and entertainment console, Kinect for Xbox 360, Xbox 360 video games, Xbox LIVE, and Xbox 360 accessories), Mediaroom (our Internet protocol television software), Skype, and Windows Phone, including related patent licensing revenue. We acquired Skype on October 13, 2011, and its results of operations from that date are reflected in our results.

Note here the inclusion of Mediaroom (MS IPTV platform) into the portfolio which was not in the FY12 portfolio as per Microsoft 2012 Annual Report [Microsoft Investor Relations, Oct 9, 2012]. Mediaroom is described by the Microsoft Mediaroom Newsroom [excerpt as of Feb 17, 2013] as:

Microsoft Mediaroom powers multi-screen entertainment services for consumers in partnership with operators. Visit: Mediaroom Website
Microsoft Mediaroom is the world’s most deployed IPTV platform. Mediaroom-powered TV services are being offered by more than 40 of the world’s leading operators, delivering services to more than eleven million consumer households equaling more than 22 million set top boxes deployed throughout the Americas, EMEA and APAC. Operator partners including AT&T, Deutsche Telekom and TELUS are already giving their subscribers the freedom to watch TV how they want, while gaining the most innovative ways to reach them wherever they are.

As another notable change according to Announcing the Windows 8 Editions [Building Windows 8 blog, April 16, 2012]

Windows Media Center will be available as an economical “media pack” add-on to Windows 8 Pro. If you are an enthusiast or you want to use your PC in a business environment, you will want Windows 8 Pro.

With further details provided in Making Windows Media Center available in Windows 8 [Building Windows 8 blog, May 4, 2012]

On the PC, … online sources [such as YouTube, Hulu, Netflix] are growing much faster than DVD & broadcast TV consumption, which are in sharp decline (no matter how you measure—unique users, minutes, percentage of sources, etc.). Globally, DVD sales have declined significantly year over year and Blu-ray on PCs is losing momentum as well. Watching broadcast TV on PCs, while incredibly important for some of you, has also declined steadily. These traditional media playback scenarios, optical media and broadcast TV, require a specialized set of decoders (and hardware) that cost a significant amount in royalties. With these decoders built into most Windows 7 editions, the industry has faced those costs broadly, regardless of whether or not a given device includes an optical drive or TV tuner.
Our partners have shared clear concerns over the costs associated with codec licensing for traditional media playback, especially as Windows 8 enables an unprecedented variety of form factors. Windows has addressed these concerns in the past by limiting availability of these experiences to specialized “media” or “premium” editions. At the same time, we also heard clear feedback from customers and partners that led to our much simplified Windows 8 editions lineup.
Given the changing landscape, the cost of decoder licensing, and the importance of a straight forward edition plan, we’ve decided to make Windows Media Center available to Windows 8 customers via the Add Features to Windows 8 control panel (formerly known as Windows Anytime Upgrade). This ensures that customers who are interested in Media Center have a convenient way to get it. Windows Media Player will continue to be available in all editions, but without DVD playback support. For optical discs playback on new Windows 8 devices, we are going to rely on the many quality solutions on the market, which provide great experiences for both DVD and Blu-ray.

image

Windows 8 Pro is designed to help tech enthusiasts obtain a broader set of Windows 8 technologies. Acquiring either the Windows 8 Media Center Pack or the Windows 8 Pro Pack gives you Media Center, including DVD playback (in Media Center, not in Media Player), broadcast TV recording and playback (DBV-T/S, ISDB-S/T, DMBH, and ATSC), and VOB file playback.

According to Should I Upgrade to Windows 8 Media Center? [About.com Guide, Nov 23, 2012]

The short answer? No. As of this writing, Media Center 8 is an exact duplicate of Media Center 7. No new features, no improvements, nothing.

So with Windows 8 Microsoft was clearly placing the bet on the on-line video!

Then we should consider also that Microsoft was just Announcing Release of Windows Azure Media Services [Scott Guthrie’s blog, Jan 22, 2013] supporting Xbox and IPTV (?i.e. when instead of Mediaroom –I would assume [to be verified!]– the content comes to the IPTV set-top boxes from Windows Azure Media Services?) as well:

image
with the following conceptual functionality (“architecture”) inside: image

What was announced is the V1 of the cloud-based variety of the overall Microsoft Media Platform (built on foundations of Windows Azure, Internet Information Services, Smooth Streaming and PlayReady) as defined in Microsoft Media Platform: Encoding and Serving Choices and Migration Considerations [Microsoft whitepaper, Jan 2, 2013] (corrections, emphases and additions are mine):

Two Microsoft Media Platform Technologies are on-premises (that is, they run on servers placed directly in an enterprise), while the latest, Windows Azure Media Services, is cloud-based as part of Microsoft’s Windows Azure cloud computing platform ( http://www.windowsazure.com/).

On-premises media technologies:

Cloud-based media technologies:

The initial components of Windows Azure Media Services, including Ingest [Upload media], Encoding [encode assets using a range of standard codecs, including popular adaptive bitrate formats], Content Protection [store and deliver your content securely using Microsoft PlayReady DRM or Apple AES Encryption], and On-Demand [Streaming] [deliver a fast, smooth, and adaptive experience to users while leveraging format conversion on the fly], are available or shipping soon with this release. Advertising (Ad Insertion) is currently available through Client SDKs. Additional components, including Live Streaming and Analytics, will be rolled out as they become available. When all of the components are in place, Windows Azure Media Services will offer a complete end-to-end media services solution, including video ingest, encoding and conversion, content protection, on-demand streaming, live streaming, and analytics.

The current environment for video streaming is experiencing new challenges. The video portion of Internet traffic today is significant and growing rapidly, as is the number of internet connected TVs and mobile devices. In this environment, video providers and broadcasters are switching to IP as the medium of choice to reach this wide diversity of endpoints.

To address these challenges, Windows Azure Media Services is designed to become a one-stop platform for securely encoding, packaging, and delivering video content from Windows Azure or CDNs, thus offering the scalability and reach of the cloud.

Some of advantages of migrating to Windows Azure Media Services are:

  • Windows Azure Media Services has the scalability and reliability of a cloud platform and can handle large bursts in demand for video applications.
  • It is widely available for a global audience and can use third-party CDNs like Akamai, Level3, or Limelight.
  • Windows Azure Media Services has cloud-based versions of familiar Microsoft Media Platform and media partner technologies.
  • As a Platform-as-a-Service (PaaS), Windows Azure Media Services is faster, cheaper, and lowers risk:
    • PaaS is faster because there is less work for developers. End-to-end solutions benefit from a single platform that solves integration issues. As a result, applications can go from idea to availability more quickly.
    • PaaS is cheaper because it offers less administration and management overhead, and greater economies of scale: you pay only for what you use, and large capital outlays for media servers and network infrastructure can be replaced by the more efficient operating expenses of cloud computing.
    • PaaS lowers risk. Because the platform does more for you, there are fewer opportunities for error.
  • Security Standards and Certifications: Windows Azure Media Services Security is working towards SOC2 (Service Organization Control 2) compliance and plans to complete a CDSA (Content Delivery and Security Association) certification process and an MPAA audit in 2013.

Windows Azure Media Services have the flexibility and power to enable you to create whatever media services solution that you envision. Some key usage scenarios are:

  • Creating an end-to-end workflow in the cloud. For example, a content management service can use Windows Azure Media Services to process on-demand Smooth Streaming video and distribute it to a variety of mobile and desktop clients.
  • Developing hybrid workflows that incorporate pre-existing on-premises resources. For example, a video production house might upload its finished videos to Windows Azure Media Services for encoding into multiple formats, and then use the Windows Azure Media Services Origin Service and a third-party CDN to deliver video on demand.
  • Choosing to utilize built-in Media Services components, or mixing and matching your own custom components or components from third parties. Individual Windows Azure Media Services components can be called via standard REST APIs for easy integration with external applications and services.

[see more detailed information in the whitepaper itself and in the announcement blog referred earlier]

I should only highlight one particular additional feature with the V1 release from Announcing Release of Windows Azure Media Services [Scott Guthrie’s blog, Jan 22, 2013]

… our on-demand streaming support also now gives you a cool new feature we call dynamic packaging.

Traditionally, once content has been encoded, it needs to be packaged and stored for multiple targeted clients (iOS, XBox, PC, etc.).  This traditional packaging process converts multi-bitrate MP4 files into multi-bitrate HLS file-sets or multi-bitrate Smooth Streaming files.  This triples the storage requirements and adds significant processing cost and delay.
With dynamic packaging, we now allow users to store a single file format and stream to many adaptive protocol formats automatically.  The packaging and conversion happens in real-time on the origin server which results in significant storage cost and time savings:

image

Today the source formats can be multi-bitrate MP4 or Smooth based, and these can be converted dynamically to either HLS or Smooth.  The pluggable nature of this architecture will allow us, over the next few months, to also add DASH Live Profile streaming of fragmented MP-4 segments using time-based indexing as well.  The support of HLS and the addition of DASH enables an ecosystem-friendly model based on common and standards-based streaming protocols, and ensures that you can target any type of device.

ADDITIONAL MPEG DASH / MICROSOFT RELATED INFORMATION:
Microsoft Announces Support for MPEG-DASH in Microsoft Media Platform [Microsoft Media Platform team blog, April 16, 2012]
Alex Zambelli of Microsoft at Streaming Media West – held on Oct 30-31, 2012 [streamingmediavideo YouTube channel, published on Jan 2, 2013]

Microsoft Sr. Tech Evangelist, Microsoft Media Platform discusses the ascendancy of MPEG DASH.

as well as the quite universal aspect of multitargeting even in this V1:

Consume

Windows Azure Media Services provides a large set of client player SDKs for all major devices and platforms, and they let you not only reach any device with a format that’s best suited for that device – but also build a custom player experience that uniquely integrates into your product or service.

Your users can consume media assets by building rich media applications rapidly on many platforms, such as Windows, iOS, XBox, etc.  At this time, we ship SDKs and player frameworks for:

  • Windows 8
  • iOS
  • Xbox
  • Flash Player (built using Adobe OSMF)
  • Silverlight
  • Windows Phone
  • Android
  • Embedded devices (Connected TV, IPTV)

To complement all that here is a brief introduction into the whole Microsoft Media Platform (the on-premises varieties as well) followed in details with how HTML5 is fitting into that, from streamingmediavideo YouTube channel [May 9, 2012]:

This session explores the role of HTML5 in the Microsoft Media Platform.

In Streaming Servers 2012: New Features, New Opportunities [StreamingMedia.com, Oct 24, 2012] the latest features of the streaming server/platform solutions from Adobe, Anevia, CodeShop, Microsoft, and RealNetworks are overviewed, together with some upcoming features. This shows quite well how much the Microsoft Media Platform is advanced and hence could be the best platform for such an effort as that of Intel Media.

There is a wortwhile comment as well from the same Microsoft specialist as already shown in the videos above:

Alex Zambelli · Seattle, Washington

Hi Tim,
Just a few corrections: The latest version of IIS Media Services, known as IIS Media Services 5.0 Premium, targeting OTT linear TV scenarios is available exclusively to Mediaroom customers as part of Mediaroom Component Technologies.

See also: How to Use Continuous Network DVR Feature in PlayReady Premium and IIS Media Services Premium? [PlayReady blog, Dec 29, 2012] “PlayReady 2.x Premium and IIS Media Services 5.0 Premium have enabled the following four key features which are needed for scalable live TV service:”

This is showing that Mediaroom is using the latest technologies available in the Microsoft Media Platform along with Windows Azure Media Services.

Finally Intel Media is heavily betting on the new H.265/HEVC standard. This is how the same Alex Zambelli (since January working for a premium video workflow services and products partner of Microsoft) is viewing this issue in his H.265/HEVC Ratification and 4K Video Streaming [Alex Zambelli’s Streaming Media Blog, Jan 28, 2013] post:

The media world today is abuzz with news of H.265/HEVC approval by the ITU. In case you’ve been hiding from NAB/IBC/SM events for the past two years – or if you’re a WebM hermit – I will have you know that H.265 is the successor standard to H.264, aka MPEG-4 AVC. As was the case with its predecessor it is the product of years of collaboration between the ISO/IEC Moving Picture Experts Group (MPEG) and the International Telecommunications Union (ITU) Video Coding Experts Group (VCEG). The new video coding standard is important because it promises bandwidth savings of about 40-45% for the same quality as H.264. In a world where video is increasingly being delivered over-the-top and bandwidth is not free – that kind of savings is a big deal.
What most media reports seem to have focused on is the potential effect that H.265 will have on bringing us closer to 4K video resolution in OTT delivery. Most reports speculate that H.265 will allow 4K video to be delivered over the Internet at bit rates between 20 and 30 Mbps. In comparison, my friend Bob Cowherd recently theorized on his blog that 4K delivery using the current H.264 video standard would require about 45 Mbps to deliver 4K video OTT.
While I think the relative difference between those two estimates is in the ballpark of the 40% bandwidth savings that H.265 promises, I actually think that both estimates are somewhat pessimistic. Given the current state of video streaming technology, I think we’ll actually be able to deliver 4K video at lower bit rates when the time comes for 4K streaming.
A common mistake that most people dealing with lossy video compression seem to make is to assume that the ratio between bit rate (bps) and picture size (pixels/sec) remains proportional and fixed as the values of both axis change. I don’t think that’s the case. I believe that the relationship between bit rate and picture size is not linear, but closer to a power function that looks like this:

image

In other words, I believe that as the pixel count gets higher a DCT-based video codec requires fewer bits to maintain the same level of visual quality. Here’s why:
  1. The size of a 16×16 macroblock, which is the smallest unit of DCT-based compression used in contemporary codecs such as H.264 and VC-1, grows smaller relative to the total size of the video image as the image resolution grows higher. For example,  in a 320×180 video the 16×16 macroblock represents 0.444% of the total image size, whereas in a 1920×1080 video the 16×16 macroblock represents only 0.0123% of the total image. A badly compressed macroblock in a 320×180 frame would therefore be more objectionable than a badly compressed macroblock in a 1920×1080 frame.
  2. As many studies have shown, the law of diminishing returns applies to video/image resolution too. If you sit at a fixed distance from your video display device eventually you will no longer be able to distinguish the difference between 720p, 1080p and 4K resolutions due to your eye’s inability to resolve tiny pixels from a certain distance. Ipso facto, as the video resolution goes up your eyes become less likely to distinguish compression artifacts too – which means the video compression can afford to get sloppier.
  3. Historically the bit rates used for OTT video delivery and streaming have been much lower than those used in broadcasting, consumer electronics and physical media. For example, digital broadcast HDTV typically averages ~19 Mbps for video (in CBR mode), while most Blu-ray 1080p videos average ~15-20 Mbps (in 2-pass VBR mode). Those kinds of bit rates are possible because those delivery channels have the luxury of either dedicated bandwidth or high-capacity physical media. However, in the OTT and streaming world video bit rate has always been shortchanged in comparison. Most 720p30 video streaming today, whether live or on-demand, is encoded at average 2.5-3.5 Mbps (depending on complexity and frame rate). 1080p30 video, when available, is usually streamed at 5-6 Mbps. Whereas Blu-ray tries to give us movies at a quality level approaching visual transparency, streaming/OTT is completely driven by the economics of bandwidth and consequently only gives us video at the minimum bit rate required to make the video look generally acceptable (and worthy of its HD moniker). To put it bluntly, streaming video is not yet a videophile’s medium.
So taking those factors into consideration, what kind of bandwidth should we expect for 4K video OTT delivery? If 1080p video is currently being widely streamed online using H.264 compression at 6 Mbps, then 4K (4096×2304) video could probably be delivered at bit rates around 18-20 Mbps using the same codec at similar quality levels. Again, remember, we’re not comparing Blu-ray quality levels here – we’re comparing 2013 OTT quality levels which are “good enough” but not ideal. If we switch from H.264 to H.265 compression we could probably expect OTT delivery of 4K video at bit rates closer to 12-15 Mbps(assuming H.265′s 40% efficiency improvements do indeed come true). I should note that those estimates are only applicable to 24-30 fps video. If the dream of 4K OTT video also carries an implication of high frame rates – e.g. 48 to 120 fps – then the bandwidth requirements would certainly go up accordingly too. But if the goal is simply to stream a 4K version of “Lawrence of Arabia” into your home at 24 fps, that dream might be closer to reality than you think.
One last thing: In his report about H.265 Ryan Lawler writes that “nearly every video publisher has standardized [H.264] after the release of the iPad and several other connected devices. It seems crazy now, but once upon a time, Apple’s adoption of H.264 and insistence on HTML5-based video players was controversial – especially since most video before the iPad was encoded in VP6 to play through Adobe’s proprietary Flash player.” Not so fast, Ryan. While Apple does deserve credit for backing H.264 against alternatives, they were hardly the pioneers of H.264 web streaming. H.264 was already a mandatory part of the HD-DVD and Blu-ray specifications when those formats launched in 2006 as symbols of the new HD video movement. Adobe added H.264 support to Flash 9 (“Moviestar”) in December 2007. Microsoft added H.264 support to Silverlight 3 and Windows 7 in July 2009. The Apple iPad did not launch until April 2010, which was also the same month Steve Jobs posted his infamous “Thoughts on Flash” blog post. So while Apple certainly did contribute to H.264′s success, they were hardly the controversial H.264 advocate Ryan makes them out to be. H.264 was already widely accepted at that point and its success was simply a matter of time.

More information:
What Is HEVC (H.265)? [StreamingMedia.com, Feb 14, 2013]
Episode 99 – Windows Azure Media Services General Availibility [Microsoft Channel 9 video, Jan 25, 2013]

In this episode Nick Harris and Nate Totten are joined by Mingfei Yan Program Manager II on Windows Azure Media Services.  With Windows Azure Media Services reaching General Availability Mingfei joined us to demonstrate how you can use it to build great, extremely scalable, end-to-end media solutions for streaming on-demand video to consumers on any device and in this particular demo shows off the portal, encoding and both a Windows Store app  and iOS device consuming encoded content.

For more information visit the Windows Azure Media Services page to learn more about the capabilities, and visit the Windows Azure Media Service Dev Center for tutorials, how-to articles, blogs, and more information and get started building applications with it today!

How to build customized Media Workflows using the Media Services .NET SDK – Part I [Microsoft Channel 9 video, Feb 5, 2013]

In this two part video, Mingfei Yan will teach you how to use the Windows Azure Media Services .NET SDK to create your own media workflow including how to upload, encode, package and deliver your video assets.  In this part you will learn how to create media asset and upload a video file from local drive.

After completing this part you can watch part II here. You can get started with Windows Azure Media Services today for free!

How to build customized Media Workflows using the Media Services .NET SDK – Part II [Microsoft Channel 9 video, Feb 5, 2013]

– IMPORTANT: Client Ecosystem for Windows Azure Media Services [Mingfei Yan blog, Jan 14, 2013]

This blog gives an overview of what kind of client support Microsoft offers as part of Windows Azure media Services. On one side, you could create, manage, package and deliver media asset through Windows Azure media services. Many popular streaming formats are supported, such as Smooth Streaming, Http Llive Streaming and MPEG-dash. On the other hand, we provide various SDKs and frameworks for you to consume media asset by building rich media applications rapidly on many platforms, such as PC, XBox, mobile and etc.

What is Windows Azure Media Services [Mingfei Yan blog, Aug 21, 2012]

Introducing Microsoft Media Platform [Media & Entertainment Insights blog, April 12, 2011]
Microsoft Media Platform – David Sayed interview [Quantel blog April 20, 2011]
H2 2012 Media Platform Product Update Roundup [Alex Zambelli’s Streaming Media Blog, Nov 16, 2012]: “It’s been a busy summer with most of the team focused on Windows Azure Media Services, but I’d like to take a moment to highlight a few other Media Platform releases of the past few months:”
Mediaroom 2.0 Unites Software and Cloud Services to Power New TV Experiences Across Three Screens [Media & Entertainment Insights blog, April 6, 2010]