Here is a series of recommendations, rants, and observations about why MSOs (the cable companies) will be sad in 2011, unless they innovate and invest.

Entertainment = Consumption + Interaction:

Internet-enabled TV will bring about some radical changes.  Nielsen’s Three Screen Report indicates that consumption of the moving image is increasing across all three screens: traditional TV, internet, and mobile. The interactivity of this “data” will surely change. Entertainment now equals both watching and interaction: checking out additional content online, playing games, or participating in ads as entertainment. 3D and gesture-based interactions will also redefine this blurring of the line between passive and active viewing over the next few years.

Ditch the “dumb” set-top:

Content models that rely on “captive audience” set-top box capture of viewing habits are outmoded as delivery systems, and deliver poor analytics and reporting compared with the information we can glean from a data-only model. If content owners rely on this information, why does the old model remain unchecked? The set-top box is largely a passive unit that doesn’t include an interface, platform, or APIs for allowing advertisers to interact directly with their target audience in real-time like the Web does. We have seen some recent (and awesome) successes with new methods of delivery: Hulu, Netflix, MLB, and on-demand efforts. However we are in an infancy of thinking about the possibilities of satellite, cable, and their antiquated set-tops, and how broadcast can recapture some of the money that migrated to online advertising.

This is an opportunity for direct access to consumers in their living rooms. The delivery method is there, there is already a large internet-enabled box in many living rooms: tuner, DVR, AppleTV, Slingbox, etc. MSOs already have the access to provide value-add applications to the experience, but what is preventing them from radically changing the intersection of TV, Internet, and advertising? They actually have had a better chance than anyone.

Develop a platform:

Imagine tying content delivery to analytics and advertising – a platform that delivers both choice and guidance to direct viewers to shows they like, and then targets accompanying ads based on more granular information and feedback. Visible World does last-mile ad insertion for parent company, Comcast, who acquired one of the big three: NBC.  A small wrinkle in this still-disputed merger is Sen. Kohl, who is asking for a divestiture of NBC’s holdings in Hulu, arguing that it potentially violates anti-trust.

But this is an amazing opportunity for MSOs to radically change the model for consumers and advertisers by providing a platform for interaction. MSOs have a chance to drive people back to their subscriptions — otherwise we will see a switch to online viewing, where advertisers can get a lot more feedback for their digital dimes, and consumers can have more choice, and augment their experiences.

The TV could supersede the MSO-provided set-top box as a platform:

Internet-enabled TVs or TVs with companion internet-enabled boxes will supersede the current MSO interface and platform. Federated search across Internet/DVR/broadcast is far more useful and less clunky than a remote-driven interface.  In addition, the ability to bring in dynamic web content — ads, additional content, or related information — should quickly reduce the three screens to just two.

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When MSOs realize they are missing out on key advertising opportunities, we will see a rush to market with subscription- and licensed-content across the three screens. You would have thought that Hulu would have put the fear in them, but wait until Google TV takes their bite.  Their recent partnerships with TV manufacturer, Sony, ensures that this will be widely distributed to Best Buy, Walmart, etc. beyond the market reach of Roku, Slingboxes, of the world.

Prepare to lose ad revenue:

NBC Universal’s (current) CEO Jeff Zucker and his oft-quoted ‘trading analog dollars for digital pennies’ was revised last year to ‘digital dimes’ from the man himself. That is good news, especially for the multitudes of investors that entered into internet video ventures last year. Out of that gold-rush of investment though, there hasn’t been significant pay-dirt for many. Clearly the answer lies in uniting broadcast to the Internet, bringing the interactivity the web provides, in addition to the type of analytics that are possible. I predict Google TV will make more of an impact than Apple TV did to unite those advertising schemes, although watch out, Apple’s clearly got some plans a brewin‘.

Google TV offers the opportunity to sell ad’s within the interface, and provide targeted advertising, on the TV. Show me what you got MSO’s.

In Conclusion:

It is a rapidly changing world, and people have clearly shown that the TV, cable-tuner, and DVR do not have all the features people want. The cable companies who own the infrastructure and delivery method of video and data are being left out of this equation. Google has side-stepped around cable companies and the licensing issues — wisely I might add — and added a layer with enhancements that will allow them get deep into people’s living rooms, to collect data and provide a smarter ad platform. Things are going to get really interesting….

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Colin (who has written some excellent posts on our blog) brought up an interesting question in the comments of my NAB report regarding storage requirements for 3D workflows. I found my response growing to blog post proportions, so here it is….

3D (stereoscopic) video does not always double the capture data for a couple of reasons, most notably because there are different capture methods, different post-production methods for processing the data, and different ways to project the data, all which can affect the data requirements at different points in the production, post-production, or delivery process.

Data requirements will be double at worst because there are (sometimes) two stereo video tracks, but since the cameras are capturing very similar information, one of the accepted standards for delivery is 2D+Delta compression for the MPEG format. Using this compression the image data is processed with an algorithm that removes redundant pixel data from the two video tracks. The amount of data is equal to one image plus whatever is different in the other image (the Delta). Using this compression, 3D video is usually roughly 40% larger than a single stream of HD video.

Some cameras, like Pace’s Fusion camera (above) which James Cameron used for Avatar, do shoot with two cameras side-by side, thus creating stereo video tracks and double the data for post (plus metadata). In this workflow, the two tracks are used to focus differently on objects in 3D space, dynamically changing the space between the cameras, and effectively using different z-depth focus to achieve the effect. This actually is not a new methodology, but using software algorithms to help determine focal length and automating what previously was manual can bring faster and more repeatable results. Another company, 3ality, is also providing similar functionality with different toolsets, including hardware that retrofits into 2D workflows. Interestingly enough, one of the major differences between them as 3D forerunners is that Pace is only a rentable technology solution, and 3ality cameras can be purchased. Two different positions.

When post is complete, there are some tricks that can be employed to reduce data for delivery including the 2D+Delta for transmission. For viewing the 3D data, there are a few different methods all which require different hardware (projectors, screens and potentially different methods of decoding).  Instead of using two projectors, some 3D can be projected using interleaved frames at a higher frequency through a polarized filter, i.e. one frame for the left eye, followed by one for the right. This is employed by RealD 3D and has by far the widest adoption in US theaters. Further, some theaters are equipped with active glasses technology, meaning that the glasses themselves ‘shutter’ either mechanically or using an LCD shutter linked wirelessly to the projection system for timing. I have heard these glasses are bulkier and heavier but better for certain situations.

3D workflow is particularly interesting to Control Group as an opportunity to help our clients design lean, optimized pipelines. This will impact our data stores, but why double data if it can be avoided? I think this is an opportunity for integrators like us to help productions, as well as the post-house, in evaluating these technologies and coming up with an appropriate blend of supporting technologies and workflows. Our goal is to build workflows that suit the business model and subject matter, as well as figure out how data is managed, archived, and stored. This is not the time to spend unnecessarily, but it is time to consider when and how this will affect our clients, and help them begin readiness preparations. We want to help our clients avoid turning down work because they haven’t put thought into these issues.

In conclusion, there are a variety of methods that a broadcaster or strategic consultant can invoke – some new, some old – to solve the technical issues. I think a lot of real challenges lie in the production of 3D content, such as the creative process of capturing a scene and the framing of the shots to take advantage of the magic of 3D. These are new processes and they involve re-educating producers, directors, cinematographers, camera operators, actors, and production designers.

The technology? No problem.

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Whew! As always, NAB was quick, productive, and overwhelming – only this time it was in 3D!

Everyone, everywhere, was talking about 3D: cameras, displays, production software, trucks, expertise, etc. The race for preparedness is on, and people will spend as pushy studios and producers want to be the first to do this or that with 3D. First sitcom, first sporting event, first documentary, first newscast, etc. The reality is that we are a ways off from wide-scale adoption, and showrooms and special screenings will be the place for 3D for the foreseeable future. We are in a similar catch-22 phase as a few years ago during the early days of HD production – 3D TVs are just coming onto the market and will drop down to reasonable consumer level prices within the next 2-3 yrs. Consumers are asking “do I buy a 3D TV when there is little to no programming?” while content creators are wondering “do I produce in 3D when there is little to no audience?”

Being an industry event though, it’s about more than bragging rights or audience – it’s about technical feasibility, practice, and logistics – all things which will change when 3D comes to our living room. DirecTV has announced that they will carry four 3D channels starting in June, including ESPN 3D and a dedicated 3D pay-per-view channel. And Cablevision dipped its toes into the 3D pool a few weeks ago with an MSG Network broadcast of a Rangers and Islanders hockey game live from Madison Square Garden.

After talking to a few industry experts who participated in the recent Masters in 3D, the challenges with 3D production are less technical than logistical: camera placement for example. While HD favors wide top-down shots for seeing all the action, 3D is most effective with close, ground-level cameras – imagine Phil Mickelson’s birdie putt as viewed from grass-level, just across the green, the ball rolling right toward you as he sinks it…

There were also lots of other things of interest: Falconstor’s HyperFS, CatDV asset management, Avid’s Java app for editing over the web, 3ality cameras, Adobe CS5, among many more. We were particularly excited by the potential of Active Storage’s Innerpool appliance for metadata. This PCI Express card contains on-board redundant solid-state drives, specifically engineered for storing metadata in an Xsan environment. This has the potential of being something of a game changer, allowing us to more efficiently configure the storage in our Xsan integrations, and giving our clients more bang for their buck when deploying new SAN solutions.

We had some great meetings with prospective clients, old and new friends, fellow consultants and vendors, and we’re excited about some emerging strategic opportunities. Our work in online video technology and web delivery combined with our broadcast infrastructure and workflow experience means we are ideally positioned to help organizations streamline and bring these workstreams closer together.

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