U.S. Pay-TV Downgrader and Cord-Cutter Analysis

The debate about the health of the U.S. pay-TV sector rages on, as key quarterly financial results and current business model analysis is published. While the market continues to fragment, more insight is being shared about the emergence of distinctive consumer market segments and the likely impact of this trend.

eMarketer reports that as over-the-top (OTT) video viewing becomes a bigger part of the video news and entertainment ecosystem, some consumers are finding it easier to either reduce or terminate their traditional pay-TV subscriptions.

In summary, Yankee Group found 11 percent of U.S. consumers had considered canceling their pay-TV service, though only 2 percent actually did. Wedbush Securities found 12 percent of consumers had cut premium services over the past year, while 7 percent had totally cut pay-TV. Meanwhile, Strategy Analytics predicted in September that 13 percent of Americans would terminate services next year.

According to a survey by SAY Media, 13 percent of U.S. internet users already fall into the category they call opt-outs -- meaning viewers either don't have a television or haven't watched live TV in the past week, but they stream at least 4 hours of internet video weekly.

Another one in five internet users was an on-demander -- a viewer who also streamed at least 4 hours per week of online video and who spends less time watching regular television than a year ago.

Both on-demanders and opt-outs were somewhat younger than other internet users. But while on-demanders tended to be more affluent than average, opt-outs were poorer than any other group. Their online networks were smaller than average, and they were about half as likely as on-demanders to have a Netflix subscription (25 percent vs. 47 percent).

They owned fewer devices for watching video than any other group -- probably because some of them lacked TVs, and they were the least likely group to own a mobile video device.

Studying the non-subscribers of Netflix suggests that some people, along with those most likely to join them, will simply use free video content on one of the aggregation sites like Hulu or the individual TV network sites. They visit those sites frequently, watching 57 hours of online streaming video a month, compared with 42 hours for on-demanders.

Why Cable Network Operators Need Better STBs

The arrival of innovative high-powered multimedia consumer devices -- such as the Apple iPad tablet -- is raising consumer UI expectations and driving cable network operators to demand more sophisticated set-top boxes (STBs) from equipment suppliers.

This emerging trend will have a significant impact on the legacy STB sector over the next several years, according to the latest market study by Heavy Reading.

"The STB, the primary cable component inside millions of U.S. homes, is morphing, expanding, and extending itself with new features and functionality," notes Craig Leddy, research analyst at Heavy Reading. "By utilizing the best capabilities of each device platform, a cable MSO can tailor its services to meet individual customer interests."

The new range of options is stretching and redefining the traditional meaning of the set-top box, Leddy says. "Emerging devices are helping cable to serve multiple screens and add more interactive and on-demand features to video content," he explains.

The result could be a bounty of new cable capabilities that will retain customers -- in the face of satellite and telco pay-TV competition, plus new low-cost over-the-top video offerings -- and hopefully produce some new value-added revenue opportunities.

Key findings of the Heavy Reading market study include:

- Cable is redefining the STB by embracing new devices to meet its in-home video needs.

- Never before have MSOs had so many options for devices and capabilities, including next-generation STBs, DTAs, and broadband-connected devices.

- Comcast's demo of an Apple iPad app that extends the functionality of conventional STBs is likely to spark more efforts to meld STBs with other end-user devices.

- MSOs are curtailing spending on leased STBs and seeking next-gen architectures to handle multiple video formats.

- The STB market is likely to become fragmented as MSOs use different devices for unique customer needs.

Multimedia Apps Drive Residential Gateway Growth

Broadband service providers continue to evolve their customer premise equipment (CPE) requirements, as growing consumer demand and new multimedia applications expand the digital home market.

According to the latest market study by In-Stat, residential gateway unit shipments were up 18.1 percent from the previous quarter and 37 percent from the same quarter last year.

This growth surge was lead by Europe which posted more than a 30 percent increase in unit shipments. Technicolor was the global leader in both unit shipment and revenue market shares.

"The overall Broadband CPE market grew in 2Q10 but this was predominately as a result of significant increases in Residential Gateway shipments," says Brad Shaffer, Industry Analyst at In-Stat. "This is a continuation of an on-going trend that began in 4Q09."

Highlights from the In-Stat market study include:

- Total broadband CPE revenues for 2Q10 were $1.52 billion.

- D-Link saw the biggest revenue market share gains in the Residential Gateway market in 2Q10 compared with 2Q09, followed by Motorola and Zyxel.

- xDSL modem revenue decreased nearly 10 percent from the previous quarter.

- Cable modem shipments approached 6 million, a 1.3 percent increase from the previous quarter, but a double-digit decrease from the same quarter last year.

- Broadband router shipments were 8.3 million in 2Q10.

U.S. Early-Majority Embrace Connected TV Solutions

There is mounting evidence that the market development of digital video entertainment distribution in America has reached a significant milestone. Previously, the primary barrier to the increased adoption of long-form video online streaming was the apparent difficulty of viewing that content on a TV monitor.

Resolving the PC-to-TV connectivity and device configuration issues were considered the realm of the early-adopter and technology-savvy video entertainment consumer. While the perceived roadblocks are still a deterrent to a large segment of the total addressable market, the pragmatists in the early-majority seem to be guiding their peer-group to the practical solutions.

According to the latest market study by In-Stat, there are now 30 million U.S. broadband households currently viewing some form of online video on their TV sets. In addition to downloading digital video, close to 90 percent of these households also stream online video to their primary television.

Over the next five years, In-Stat expects that the majority of consumer electronics (CE) devices purchased -- including digital TVs, Blu-ray players and gaming consoles -- will be web-enabled with 137 million devices shipping in the U.S. in 2014.

"The future will be a hybrid environment in which consumers will get their digital entertainment from both pay-TV and online sources," said Keith Nissen, Principal Analyst at In-Stat.

He added, "Digital entertainment will be viewed on a plethora of web-enabled devices, dictated by content type, source, location, and many other factors. However, the home big screen TV will continue to be the preferred device for consuming both broadcast as well on-demand video content."

Key insights from In-Stat's market study include:

- Within five years, over 11 million pay-TV operator-provisioned hybrid set-top boxes will be capable of delivering online video content directly to the TV.

- By 2014 there will be 57 million U.S. broadband households viewing full-length online video on the TV.

- Web-to-TV video content revenue will reach $17 billion by 2014.

- Among households viewing Internet TV at least once a week, the 45 to 54-year old age group saw the biggest percentage increase from 2009 to 2010.

Stimulating Growth in Digital Media Consumption

Interest in connected TVs and Blu-ray players has been slow to develop, predominantly due to minimal consumer electronics (CE) industry promotion, and a glut of competing solutions which already provide swift and easy access to digital media.

Pay-TV, PCs, smartphones and the Apple iPad are all enabling consumers to access information however, wherever and whenever they want it.

"Despite the initial low level of interest in connected TVs, we are now reaching a point of critical mass," says David Watkins at Futuresource Consulting. "Our analysis shows consumer usage growing as connected TV devices become increasingly versatile and the range of content, applications and major web brands available on CE platforms increases."

There is a current surge of industry interest in TV application development, closely following the mobile phone model, and in some instances this will also allow a micropayments business model to be put in place.

In the mobile market, only Apple and Blackberry have, so far, created revenue models based on apps and services. Other cellphone makers are still dependent primarily on device sales.

Despite this scenario, in the emerging Connected CE market, hardware makers are looking for monetization models from content owners and online service providers, with a variety of approaches under review.

Connected CE devices will stimulate further growth in digital media consumption, boosted by enhanced networking solutions, more flexible access to purchased content and growth in over-the-top streaming media.

"Online subscription and VoD services may experience some growth through connected CE devices, but there will be competition from incumbent Pay-TV distributors, and these providers are looking to exploit Connected CE, to broaden reach and extend their brands into new and lucrative markets," says Watkins.

"As the penetration and versatility of television sets continues to rise, we're also going to see programmers, advertisers, publishers and e-commerce providers tapping into Interactive TV, enabling real-time interaction between broadcast and online media."

Europe Continues to Lead in Mobile M2M Apps

Worldwide cellular wireless M2M (machine-to-machine) connections are growing steadily, and are expected to exceed 297 million in 2015. According to ABI Research, their prior forecast of about 225 million connections by 2014 has now been raised to 232.5 million.

However, there are many regional differences in the growth pattern. Europe continues to account for the largest regional share with 110 million connections in 2015; North America will rank second with 79 million and the Asia-Pacific region third with almost 66 million.

"The major world regions show different drivers for cellular M2M markets. The European market is the most diversified and has the most mature deployments. The EU benefits from regulatory mandates surrounding eCall and smart energy," said Sam Lucero, practice director at ABI.

In North America the focus has traditionally been more on telematics, although M2M is now growing strongly in other areas including smart energy. Both telematics and energy are providing impetus in Asia-Pacific, but the markets are less mature, outside of key countries such as Japan.

Network operators providing M2M in Asia are NTT DoCoMo in Japan, Korea Telecom, and China Mobile -- which recently announced that it is serving five million M2M connections.

In Europe, the major providers include Telefonica in Spain, Telenor (Scandinavia), Orange Business Services (part of France Telecom), and Vodafone.

The four major cellular operators in North America, Verizon Wireless (which operates GM's OnStar mobile service), AT&T, Sprint and T-Mobile are all offering M2M, in addition to alternative providers such as Kore Telematics and Numerex.

Business model and operational differences exist as well.

European providers tend not only to set up distinct M2M business units, but to supply those units with their own M2M-specific network infrastructure. They're more oriented towards providing value-added services -- in addition to basic M2M connectivity.

In contrast, North American mobile operator M2M business units tend to use the service provider's main wireless networks for basic M2M applications.

U.S. Mobile Advertising and Marketing Forecast

Once again, analysts are predicting that advertising targeted to U.S. mobile phone service subscribers will be embraced by the mainstream American marketer, according to the latest market study by eMarketer.

U.S. mobile ad spending will be up 79 percent in the U.S. market to reach $743 million, based upon the current eMarketer forecast. However, growth will slow somewhat as advertising spending reaches $1.1 billion in 2011 -- and potentially more than $2.5 billion by 2014.

"The expansion of the smartphone market and the attractive usage and demographic profile of smartphone owners have forced more marketers to pay closer attention to mobile," said Noah Elkin, eMarketer senior analyst.

Video, display and search ad spending on mobile media is predicted to more than double this year, while growth in messaging advertising will lag behind the other mobile formats.

That said, SMS text messaging is the largest ad format, with spending of $327 million estimated for 2010. And, the upside is huge, since most U.S. marketers have yet to discover how easy it is to send opt-in broadcast text messages to mobile phone service subscribers -- SMS is still the de facto data capability that's enabled in the majority of mobile phone handsets.

eMarketer had originally forecast that U.S. mobile ad spending would reach $593 million in 2010. That estimate included display ad spending of $166 million. In response to increased market interest, eMarketer has revised the overall forecast of mobile display spending for 2010 to $202.5 million.

"It is safe to say that many marketers who had not previously considered mobile advertising are now eager to tap into its potential, thanks to the stamp of legitimacy applied to the medium by the high-profile entrance of companies such as Apple and Google," Elkin said.

Worldwide Free Wi-Fi Hotspot Venue Usage Soars

Fast-food restaurants, coffee shops, book stores and other retail establishments continue to use Wi-Fi access to attract new customers -- and keep current customers coming back.

It's been proven, the availability of free Wi-Fi broadband access does influence venue choice.

According to the latest market study by In-Stat, nearly two-thirds of their survey respondents indicated that free Wi-Fi influences their choice of venue. An additional 31 percent indicated that free access may influence their choice, and just 5 percent said that it would have no influence over venue choice.

"Our research shows that while revenue may not always be directly gleaned from the hotspot offering, free Wi-Fi has a significant value in bringing customers to a venue," says Amy Cravens, Market Analyst at In-Stat.

In some local retail business communities, pervasive access to free Wi-Fi has been used as a way to help revive a downtown or main-street marketplace -- in the hope of stimulating an small business economic recovery. Other communities are following the progress of these forward-looking retail pioneers.

Cravens adds, "It's no wonder then that over 150 thousand café or retail venues have now deployed Wi-Fi hotspots, although not all of these are free. That's in addition to the tens of thousands of travel-related broadband Internet access installations (at hotels, airports, in-flight) worldwide."

In-Stat's global market study findings include:

- Worldwide annual hotspot connects, or sessions, will reach over 2 billion by the end of 2010 with annual hotspot connects anticipated to grow to over 11 billion by 2014.

- Asia-Pacific region will have about one quarter of the worldwide hotspot venues over the forecast period.

- By 2012, handheld consumer electronics devices are anticipated to account for half of hotspot connects.

- The total worldwide hotspot market size will swell to 319,200 venues by year-end.

93 Million Cellular PC Modem Upside in 2010

Wireless network modem shipments in 2009 topped 72 million units, a significant growth over the 46.4 million units shipped during 2008. According to the latest market study by ABI Research, both volumes pale in comparison with the expected 93 million units expected to ship in 2010.

The overwhelming majority of these modems are found in the USB dongle form factor rather than embedded in their host devices. "Many new mobile broadband networks are being deployed right now," says ABI Research principal analyst Jeff Orr.

The HSPA and HSPA+ protocols, as well as 4G WiMAX and LTE, are luring new broadband service subscribers who want their existing computing and communications devices to be enabled for those networks.

Orr adds, "We find that new computer sales with embedded modem modules are being adopted between 9 and 12 months after the new network services launch, while USB modems are an immediate upgrade opportunity."

ABI practice director Kevin Burden says, "The USB modem is the most efficient, lowest cost, quickest and easiest way to take any wireless device online in the widest range of locations. It's a familiar interface, compact, easy to carry, and convenient."

ABI sees the USB modem continuing to provide strong growth to this segment for the medium-term at least. Chinese vendors have been making deep inroads in this market, making the most of their high-volume, low overhead manufacturing capabilities.

Indeed they have been so successful that last quarter one European vendor, the Belgian firm Option Wireless, asked the EC to investigate possible dumping within its member states. According to ABI, that investigation is still in progress.

Enterprise Opportunity for New Tablet Applications

According to the latest market study by ABI Research, over 11 million media tablets and 43 million netbook PCs will ship worldwide this year. That is lower than analysts expected at the end of last year, based on the results during the period following their introduction.

Regardless, says ABI Research principal analyst Jeff Orr, "43 million netbook shipments are good growth, just not the meteoric pace of the past couple of years."

Part of the drop in demand for netbooks may be due to media tablet sales. However, tablets are still a long way from the 40-50 million annual shipments that ABI Research considers the threshold for a mass-market consumer electronics product.

"Apple has sold a few million iPads in its first quarter, which is great for creating a new market," Orr says. "But early adoption of media tablets is not outpacing netbooks. The iPad average selling price above $650 isn't driving consumer adoption. Competition, especially on price, is needed."

Moreover, Samsung will start selling its Galaxy Tab through network operators this year, a distribution model that differentiates it from the Apple iPad. The network operators want a piece of the new device revenue, not simply to provide network services.

In the U.S. market, the Galaxy Tab will be available through all four of the largest mobile broadband service providers. Vodafone will sell it in the UK and possibly elsewhere, as will NTT DoCoMo in Japan.

To date, the tablet use-case is predominantly consumer-based. ABI believes that the enterprise market for tablets -- as a replacement for laptops or smartphones -- is unclear. Perhaps it isn't a replacement at all, but more a device that has application-specific demand.

A sizable niche market, such as unified communications applications, could develop very quickly for purpose-built tablets that are intended for enterprise use.

More Connectivity for Portable Entertainment Devices

Cellular wireless network connectivity isn't just for mobile phones and notebook computers. More and more consumer electronics devices incorporate Wi-Fi connectivity, but some applications may require an Internet connection in places where Wi-Fi hotspots are typically not available.

Based upon this growing demand, a number of portable entertainment devices (PEDs) now incorporate cellular connectivity. They provide a growing revenue opportunity for mobile service providers, multimedia content owners, and device manufacturers, according to the latest market study by In-Stat.

There will be significant growth across all categories of 3G or 4G-enabled PEDs over the next five years. WCDMA will be the dominant enabling technology across the majority of shipments -- with the exception of digital photo frames, where GSM will be dominant.

"Standalone e-readers represent the brightest spot in 3G/4G-enabled PEDs with unit shipments expected to grow significantly across all regions over the next several years," says Stephanie Ethier, Senior Analyst.

North America will dominate compared to other regions capturing 64 percent of the worldwide 3G/4G e-reader market by 2014. Asia-Pacific will rank second in market share. Other PED products, such as digital photo frames and personal navigation devices will also incorporate cellular connectivity.

In-Stat's market study findings include:

- Total 3G/4G PED unit shipments across all segments will increase by 87 percent between 2009 and 2014.

- Total 3G/4G PED unit shipments in Asia will surpass 5 million by 2013.

- Of the PED markets included in this research, only e-readers are expected to incorporate 4G technology over the next five years.

- Western Europe 3G/4G PED unit shipments jump 542 percent in 2012, over 2011.

OTT Video Ads Reach 45% of the U.S. Population

According to the latest market study from comScore, 175 million U.S. Internet users watched online video content in September 2010 for an average of 14.4 hours per viewer.

The total U.S. Internet audience engaged in more than 5.2 billion viewing sessions during the course of the month.

Google Sites, driven primarily by video viewing at YouTube.com, ranked as the top online video content property with 144.2 million unique viewers. Yahoo! Sites captured the #2 spot with 54.4 million viewers, followed by Facebook.com with 52.2 million viewers.

Microsoft Sites jumped 3 positions in September, securing fourth place with 45.5 million viewers. Google Sites had the highest number of overall viewing sessions with 1.9 billion and average time spent per viewer at 260 minutes, or 4.3 hours.

Americans viewed more than 4.3 billion video ads in September, with Hulu generating the highest number of video ad impressions at 794 million. Tremor Media Video Network ranked second overall (and highest among video ad networks) with 526 million ad views, followed by BrightRoll Video Network (476 million) and ADAP.TV (444 million).

Video ads reached 45 percent of the total U.S. population an average of 32 times during the month. Hulu delivered the highest frequency of video ads to its viewers with an average of 27.5 over the course of the month.


Other findings from the comScore study include:

- The top video ad networks in terms of their potential reach of the total U.S. population were: ScanScout at 46.8 percent, BrightRoll Video Network at 44.5 percent, and Break Media at 44.1 percent.

- 83.9 percent of the total U.S. Internet audience viewed online video.

- The duration of the average online content video was 4.9 minutes, while the average online video ad was 0.4 minutes.

- Video ads accounted for 12.3 percent of all videos viewed and 1.2 percent of all minutes spent viewing video online.

Why U.S. Broadcast Radio Use is in a Decline

If you really like banal auto dealership commercials, then you would enjoy the typical American broadcast radio station. However, eMarketer reports that a recent Edison Research study highlights the trends in media usage among U.S. teens and young adults -- the results aren't encouraging for legacy marketers.

Waking up to the radio was a routine for this young demographic a decade ago, but usage has sharply declined. Also, as many young people have reduced their traditional media use, the Internet has replaced much of that activity.

The trend is apparent in total time spent with various media. In 2000, teens and young adults were spending close to 2 hours and 45 minutes listening to broadcast radio each day. By 2010 it had fallen to an hour and a half.

In contrast, time spent online had risen from an hour a day to almost 3 hours.

Alternative music listening services have also emerged. In 2010, 36 percent of consumers surveyed by Bridge Ratings ages 12 and over had listened to online music services in the past week -- 17 percent had listened to a podcast.

Pandora is leading among the online music services, according to online listeners surveyed in March this year. Pandora was cited as the favorite by 27 percent, and 42 percent had listened in the past year. No other service had more than a single-digit response.

The ability to skip songs and fewer commercials were the top benefits cited by Pandora listeners. It is obvious, to everyone but traditional media advertisers, that the absence of banal commercials online are considered a major bonus by all consumers.

How Mobile App Stores Created a $6.6 Billion Market

According to the latest market study by Portio Research, over the last 2 years the mobile app store revolution has exploded from zero to a $6.6 billion market in 2010, and this rapid revenue growth is forecast to continue over the next 5 years.

With stakeholders making huge investments to improve the quality and utility of mobile apps, the worldwide mobile phone applications user base is expected to grow at a CAGR of 37 percent between 2009 and 2015 -- to reach nearly 256 million by 2015.

Between 2009-2015, mobile application downloads are expected to increase at a CAGR of 53.2 percent, while global revenue from mobile applications -- including in-app payments -- will grow from $6.6 billion in 2010 to over $23 billion by 2015.

Smartphones allow users to download, install and run advanced applications. The increased consumption of mobile applications has resulted from the growing worldwide smartphone user base, that enables more service subscribers to sample and adopt mobile apps.

Furthermore, the success of Apple's iPhone App Store has inspired others to open storefronts. Today, there are a rapidly increasing number of app stores in the global market.

The ecosystem encompasses application developers, aggregators, mobile operators, handset and operating system (OS) vendors, and application store owners -- the apps market is witnessing both consolidation and the formation of consortia to better challenge Apple's app supremacy.

Used by both the consumer and enterprise segments, and seeing impressive uptake in both developed and emerging markets, mobile applications are changing the nature of the mobile phone services industry.

Mobile Media Consumption Trends, by Geo Region

comScore performed a recent market study of mobile phone usage behaviors in Japan, the United States and Europe that explores the key market segmentation opportunities. The study examined content consumption and demographic comparisons across markets to provide a comparative look at how consumers interact with mobile media.

"Mobile media usage continues to accelerate across the globe, driven by advancing technologies and the growing number of content options available to consumers," said Mark Donovan, comScore senior vice president of mobile.

A cross-market analysis revealed significant differences among consumers by geography. Mobile users in Japan were the "most connected" of the three markets, with more than 75 percent using connected media  -- browsed, accessed applications or downloaded content -- in June, compared to 43.7 percent in the U.S. and 38.5 percent in Europe.

Japanese mobile users also displayed the strongest usage of both applications (Apps) and browsers with 59.3 percent of the entire mobile population accessing their browsers in June and 42.3 percent accessing applications. Comparatively, 34.0 percent of mobile users in the U.S. and 25.8 percent in Europe used their mobile browsers, with 31.1 percent in the U.S. and 24.9 percent in Europe accessing applications.

Messaging methods also varied with Europeans displaying the strongest use of text messaging with 81.7 percent sending a text message in June, compared to 66.8 percent in the U.S. and just 40.1 percent in Japan. Japanese users exhibited the highest reach in the email category at 54 percent, while consumers in the U.S. were most likely to use instant messaging services on their mobile (17.2 percent).

Social networking and blogs reached the greatest percentage of mobile users in the U.S. at 21.3 percent, followed by Japan at 17.0 percent and Europe at 14.7 percent. Japanese users were most likely to capture photos (63.0 percent) and watch TV or video (22.0 percent) on their mobiles, while Europeans were most likely to listen to music (24.2 percent) and play games (24.1 percent).

A demographic analysis showed that mobile media consumption was more balanced across age segments in Japan, when compared to the U.S. and Europe.

In the U.S., 25-34 year olds were 44 percent more likely to access mobile media than an average mobile user, with 18-24 year olds 39 percent more likely. In Europe, 18-24 year olds represented the most-connected segment, 54 percent more likely to be mobile media users, while persons age 25-34 were 35 percent more likely.

The U.S. and Europe also showed greater gender disparity among mobile media audiences. Females were 9 percent less likely to be mobile media users in the U.S., while females in Europe were 16 percent less likely.

In summary, marketers can gain a competitive edge by studying the key drivers of media consumption trends. That insight can be applied to the development of targeted marketing that acknowledges the unique needs and wants of these apparent consumer segments.

STB Vendors Attracted to Latin America and Europe

The recent volatility in the global pay-TV industry is starting to impact vendor product shipments. In 2Q10, worldwide total set top box (STB) revenue declined by 6 percent from the previous quarter while shipments declined even more.

One bright spot, shipments for HD-capable STBs and DVR-enabled STBs were up slightly over 1Q10, contributing to a slightly higher selling price.

For the remainder of 2010, only Latin America and Europe are forecast to show any gains in revenue or unit shipments, according to the latest market study by In-Stat.

The global market for STBs is highly fragmented with many vendors offering legacy pay-TV products. Moreover, as the market evolves to include more Hybrid STB and purpose-built low-cost online video players, the fragmentation will likely increase.

In-Stat's market study uncovered the following:

- Cisco, Motorola, and Pace were the market leaders in cable STB shipments.

- Echostar, Humax, Pace, and Technicolor were market leaders in satellite STB shipments.

- Cisco, Motorola, Netgem, and Samsung were market leaders in IPTV shipments.

55.7 Million Subscribers in the U.S. Own Smartphones

comScore released data on key trends in the U.S. mobile phone industry during the three month average period ending August 2010. Their report ranked the leading mobile OEM and smartphone operating system (OS) platforms in the U.S. market -- according to their share of current mobile subscribers.

234 million Americans ages 13 and older used mobile devices. Device manufacturer Samsung ranked as the top OEM with 23.6 percent of U.S. mobile subscribers, up 1.2 percentage points from the preceding three month period. LG ranked second with 21.2 percent share, followed by Motorola (18.8 percent share), RIM (9.0 percent share, up 0.3 percentage points) and Nokia (7.6 percent share).

55.7 million people in the U.S. owned smartphones during the three months ending in August, up 14 percent from the May period. RIM was the leading mobile smartphone platform in the U.S. with 37.6 percent share of U.S. smartphone subscribers, followed by Apple with 24.2 percent share.

Google continues to gain ground in the market, rising 6.6 percentage points to capture 19.6 percent of smartphone subscribers. Microsoft accounted for 10.8 percent of smartphone subscribers, while Palm rounded out the top five with 4.6 percent.

Despite losing share to Google Android, most smartphone platforms continue to gain subscribers as the smartphone market overall continues to grow.

Nearly 67 percent of U.S. mobile subscribers used text messaging on their mobile device, up 1.4 percentage points versus the prior three month period, while browsers were used by 34.5 percent of U.S. mobile subscribers (up 2.6 percentage points).

Subscribers who used downloaded applications comprised 32.3 percent of the mobile audience, representing an increase of 2.3 percentage points from the previous period.

Accessing of social networking sites or blogs increased 1.7 percentage points, representing 22.5 percent of mobile subscribers, while listening to music inched 0.4 percentage points, representing 14.7 percent of subscribers.

Enabling the Mobile Social Network Apps in India

The user population of mobile social networks in India is expected to reach 72 million by 2014, driven by the reduced cost of smartphones and the launch of 3G services, according to the latest market study by Analysys Mason.

The number of all online social network users in India has grown by 43 percent to approximately 33 million unique users as of July 2010 -- with India emerging as the seventh largest market globally.

According to the study results, the increased number of social network users is driving the number of mobile social network users (around 10 million in 2009), representing around 2.2 percent of the total number of mobile subscribers.

"Innovative data tariff plans (daily, weekly and monthly plans) and the significant reduction in data charges are driving adoption of data-based services such as social networking," says Sourabh Kaushal, Principal Consultant at Analysys Mason.

Mobile phone service providers and handset manufacturers have started taking several initiatives to address this emerging opportunity. However, both need to expand their addressable base of consumers and focus on service innovation to increase the penetration of social networking in India.

"Operators are launching services such as pay-per-site tariffs and are expected to promote social networking applications to drive adoption of data services among their subscribers," explains Kaushal. "Handset manufacturers have also started to launch mobile handsets specifically designed for social networking in order to increase the value proposition and differentiate their devices."

Young people and young professionals are driving the adoption of mobile social networking in India, accounting for 70 percent of the total number of users in 2009. In terms of gender, males account for 56 percent of the total number of mobile social network users in India.

Low-Cost OTT Pay-TV Fuels New CE Demand

eMarketer reports that Americans are viewing movies online more frequently, increasingly adopting low-cost over-the-top (OTT) pay-TV subscription services, such as Netflix. Moreover, online viewing of full-length TV episodes is on the rise and accounting for a greater share of consumer attention.

With these changes in video entertainment viewing habits, mainstream consumers will increasingly look to enjoy these new experiences on a big TV screen. Two recent forecasts project a dramatic growth in sales of internet-enabled television sets around the world.

iSuppli Corporation estimated in July that 28 million web-enabled TVs would be sold worldwide this year -- more than double the sales in 2009. By 2014 they're forecasting a 428.6 percent increase to 148 million units sold.

DisplaySearch has a higher estimate of connected TV sales for 2010, at 45 million units worldwide, and a more conservative projection for 2014 at 119 million units. However, that still translates to growth over the same period of 164.4 percent.

eMarketer notes that while the unit forecasts may be different, there's agreement on a dramatic growth curve for consumers seeking to connect their primary television to the Internet. In fact, a Retrevo market study indicates that many consumers in the U.S. have either already connected their TV to the web or are planning to do so.

"Nearly a quarter of U.S. Internet users have already connected their TVs to the internet and another quarter would like to," said Paul Verna, eMarketer senior analyst.

"That means that if the number of people who wish to connect their TVs did so, the universe of web-enabled TV would be approximately 108 million viewers -- using eMarketer's estimate of 221 million U.S. internet users in 2010."

This demand creates a huge opportunity for consumer electronics (CE) manufacturers to deliver this connectivity and easy-of-use in affordable ways -- whether through IP-enabled TVs directly, retail set-top boxes like the Roku player, Blu-ray disc players, game consoles or any combination of the above devices.

Deja Vu for the Legacy Video Entertainment Industry

The video entertainment industry has slowly adapted to media distribution technology innovations over the years, including reluctantly acknowledging the invention of the home Video Cassette Recorder (VCR) and Digital Video Disc (DVD) recorder.

Now, as internet-based video streaming services and on-demand viewing of TV and movies has a growing impact on traditional revenue streams, the legacy media industry must adapt once again, according to the latest market study by In-Stat.

In-Stat believes that identifying the successful new services, licensing models, and associated business models will require continual trial and error by the big-media content producers and pay-TV distribution companies -- with no apparent certainty of success.

"The decline of retail video disc sales, coupled with on-demand viewing of TV content and the threat of video cord cutting, points to enormous changes ahead for the video entertainment industry," says Keith Nissen, Industry Analyst at In-Stat.

As new business models emerge, there will be winners and losers, with billions of dollars at stake. In-Stat's research identifies the potential revenue impact to players throughout the video value-chain, based on realistic scenarios.

In-Stat's latest market study findings include:

- Pay-TV operators generated $93 billion in 2009, but as TV viewing becomes more splintered and TV monthly rates rise, pay-TV operators run the risk of subscriber defections to low-cost alternative offerings.

- Premium channels (HBO, Showtime, etc.) are in competition with online video subscription services for both subscriber spending, as well as movie licensing rights.

- Broadcast TV advertising revenue is slowly declining as consumers shift attention from traditional pay-TV to over-the-top (OTT) video service offerings, such as Netflix and LOVEFiLM.

- Retail digital video disc sales are expected to drop by $4.6 billion from 2009 to 2014.

- The emergence of electronic sell-through for online video purchases and rentals will transform the digital entertainment industry over the next five years.

- Online VOD (Video-on-Demand) subscription revenue is expected to approach $3.5 billion by 2014.

M2M Applications Growth and Global Market Upside

Infonetics Research released the results of their latest market study which provides market size, analysis and forecasts for machine-to-machine (M2M) connections and equipment by technology, region and vertical.

"From a well-established base over GSM built up over the last decade, the embedded mobile M2M market is now poised for rapid acceleration, driven by new mobile devices, applications, services and providers, combined with the availability of higher speed networks," says Richard Webb at Infonetics Research.

Demand is rising for mobile M2M applications, such as smart energy monitoring and intelligent traffic, backed by government policy and funding, which is helping to create a virtuous growth cycle for the embedded mobile market.

Highlights from the Infonetics market study include:

- Worldwide revenue for embedded mobile modems for M2M applications is forecast to more than triple in 2010 over 2009, and to continue growing strongly through at least 2014, at a 66 percent compound annual growth rate (CAGR).

- The number of connections for embedded mobile M2M applications hit 87 million in 2009 and is forecast to jump to 428 million by 2014, driven by wider availability of services, new M2M applications and Connected Society regulatory or public policy initiatives.

- Over half of all embedded mobile connections are GSM based, with strong growth expected in W-CDMA and later, LTE connections, driven by high bandwidth M2M applications and the need for future-proofing long-life device cycles.

- The Utilities and SmartGrid vertical accounts for the largest share of overall revenue for embedded mobile M2M modems, with over a quarter of total revenue in 2009.

Blu-ray Adoption Helps Drive Over-the-Top Video

Sales of Blu-ray disc (BD) players, excluding PS3, are expected to total nearly 24 million units this year across the three key growth regions -- USA, Europe and Japan -- according to the latest market study by Futuresource Consulting.

"Last year's crucial Q4 period accounted for nearly half of all BD players that were sold globally in 2009, and the upward trend is continuing, with our projections showing in excess of 80 percent unit growth across this year," says Jack Wetherill, Research Consultant at Futuresource.

This view is based on inputs from a wide range of companies operating in the global Blu-ray hardware business, including vendors, retailers and component suppliers, and forms part of their ongoing research in this area.

All attention will once again be on the holiday season, with Futuresource predicting sales in excess of 11 million units in that quarter alone, a healthy year-on-year growth that will continue to drive BD adoption into the mass market.

"Sales of HD-capable and 3D-capable TVs, coupled with dramatic reductions in BD player prices are continuing to fuel interest," Wetherill continues. "Add to that the burgeoning 3D Blu-ray market segment, and we'll see the format continue to gather momentum in all major markets across the globe."

At least 10 percent of all Blu-ray devices shipped this year are expected to offer 3D playback, rising to more than 25 percent in 2011.

By 2014, nearly 40 percent of homes across the three key global markets -- Western Europe, the USA and Japan -- will own a 3D Blu-ray player, recorder or home theatre.

Futuresource believes that there is a long-term opportunity for the industry to further sustain consumer interest in Blu-ray. I would add, part of that interest will be driven by using these devices to stream online video content from low-cost OTT subscription services, such as Netflix and LOVEFiLM.

Fewer U.S. Broadband Subscriber Adds in 2010

According to the latest market study by Leichtman Research Group (LRG), the nineteen largest cable and telephone providers in the U.S. -- representing about 93 percent of the total market -- acquired 330,000 net additional high-speed Internet subscribers in the second quarter of 2010.

Net broadband additions in the quarter were the fewest of any quarter in the nine years LRG has been tracking the industry. That said, it's not clear what is responsible for the significant decline. Is it still the economic environment, is the market fully saturated at the current price points, are limited-time price incentives not attractive to the prospective customers?

Other key findings from the market study include:

- The top phone companies had a net loss of about 7,500 subscribers -- compared to a gain of 385,000 subscribers in 2Q 2009.

- AT&T had a net loss of 92,000 subscribers in the quarter -- this is the first time that any of the top ten broadband providers reported a quarterly net subscriber loss.

- AT&T and Verizon added 451,000 fiber subscribers in the quarter (via U-verse and FiOS), while having a net loss of 515,000 DSL subscribers.

- The top cable companies added over 335,000 broadband subscribers -- about 140 percent of the additions of a year ago.

- Overall, broadband additions in 2Q 2010 fell to only 53 percent of those in 2Q 2009.

The top broadband providers now account for about 73.5 million subscribers -- with cable companies having 40.5 million broadband subscribers, and telephone companies having over 32.9 million subscribers.

The top cable broadband providers now have a 55 percent share of the overall market -- a slight increase from the 54 percent share of the market they had at the end of 2Q 2009.

Sensor-Driven UI Design will Transform Smartphones

The sensor-driven user interface (UI) will be an emergent theme in the next wave of mobile device innovation -- turning objects, locations, and people into networked, interactive elements.

By 2013, according to the latest market study by ABI Research, 85 percent of smartphones will ship with GPS, over 50 percent will ship with accelerometers, and almost 50 percent will have gyroscopes.

"The growth of sensors in smartphones will be driven by applications such as gaming, location awareness, and augmented reality, as well as the expansion of motion-based commands," says senior analyst Victoria Fodale at ABI.

The high-level operating system of a smartphone, which provides open application programming interfaces (APIs), has facilitated the use of data from cameras, sensors, and GPS receivers.

When an accelerometer is combined with a gyroscope, developers are able to create applications that can sense motion on six axes: up and down, left and right, forward and backwards, as well as roll, pitch, and yaw rotations.

This interactive capability gives a mobile device similar functionality to a game controller -- such as the Nintendo Wii.

Prompted by Apple's UI innovations with the iPhone, smartphone OEMs have poured resources into UI design and development. Many OEMs, particularly those using Google's Android OS, developed their own custom UI overlays.

Sensors will also help OEMs to innovate beyond a touchscreen UI for differentiation in the marketplace. However added functionality must be balanced with ease of use.

"There is an inherent paradox with technology," says Fodale. "As mobile devices integrate more technology, the UI must be kept simple enough to be intuitive for the user."

SMB Social Media Marketing Expectations Reset

eMarketer reports that according to a market study performed by Network Solutions and the University of Maryland, small-business social media marketing use has apparently plateaued in the U.S. at 24 percent adoption.

The study of American small to medium businesses (SMB) found that most primarily use Facebook (82 percent), and that common activities are maintaining a "company page" on a social network and posting status updates or links to interesting content.

About half of those businesses that used social media also monitored social networks for mentions of their company and/or product names.

As small business gains experience with social media, some have realized their expectations are not in tune with reality. As most begin to look at social media as a channel more for customer loyalty than for prospect acquisition, they're also finding that hopes for increased brand awareness and attracting new customers have not been fully met.

However, while fewer small businesses expected to use social media as an engagement channel, nearly two-thirds have actually had success in that area. Customers are "connecting" with companies through sites like Facebook and LinkedIn, but relatively few sales leads are captured.

Small businesses have found other frustrations. Many say their online activity requires more time than they had expected, although those concerns dropped from 50 to 43 percent between December 2009 and June 2010 -- perhaps suggesting SMBs are being more realistic about their social media marketing campaigns.

Also, those saying their business had been criticized online nearly doubled, reaching 29 percent. Regardless, just 1 percent of small businesses said their image was hurt more than it was helped by social media marketing activity -- down from 6 percent.

3.8 Billion OTT Video Ads Viewed in One Month

comScore reports that 178 million U.S. Internet users watched over-the-top (OTT) video content in August for an average of 14.3 hours per viewer. The total U.S. Internet audience engaged in more than 5.2 billion viewing sessions during the course of the month.

Google Sites, driven primarily by video viewing at YouTube.com, ranked as the top online video content property with 146.3 million unique viewers. Facebook.com jumped one position to capture the #2 spot with 58.6 million viewers, for a total of 243 million viewing sessions.

Yahoo! Sites ranked third with 53.9 million viewers, followed by VEVO with 45.4 million. Google Sites had the highest number of overall viewing sessions with 1.9 billion and average time spent per viewer at 270 minutes, or 4.5 hours.

Americans viewed more than 3.8 billion video ads in August, with Hulu generating the highest number of video ad impressions at 790 million. BrightRoll Video Network ranked second overall (and highest among video ad networks) with 469 million ad views, followed by Tremor Media Video Network (442 million) and Microsoft Sites (234 million).

Video ads reached 45 percent of the total U.S. population an average of 28 times during the month. Hulu delivered the highest frequency of video ads to its viewers with an average of 30 over the course of the month.

Other findings from the comScore study include:

- The top video ad networks in terms of their potential reach of the total U.S. population were: Break Media at 46.4 percent, BrightRoll Video Network at 45.0 percent, and ScanScout Network at 44.5 percent.

- 85.1 percent of the total U.S. Internet audience viewed online video.

- The duration of the average online content video was 4.8 minutes, while the average online video ad was 0.4 minutes.

- Video advertising accounted for 10.7 percent of all videos viewed and 1.0 percent of all minutes spent viewing video online.