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Monday, 1 March 2010

The Revolution Will Be Televised

Demand for internet TV  continues to gain momentum in the US. The latest numbers from iSuppli, the market research firm, found that one fourth of TVs purchased by Americans in January were connected to the Web, either through integrated technology or an external device.
The researcher found that of the new sets purchased in January, 27.5% indicated their sets were connected to the internet. In December the number was 24.3%. Cisco estimates that video traffic is growing at 132% compound, making it the fastest growing type of data over the internet.
Latest numbers from DirecTV, a leading US pay TV service, with operations throughout South America, highlight the growing attraction of mobile connectivity. In the third quarter last year DirecTV saw twice as many connections to its service through the iPhone as in the entire year over personal computers. Since then DirecTV has signed up 2m mobile customers who schedule their DTVs from their iphones.  As well as internet and mobile enabled TV companies like DirecTV are also benefitting from increased interest in 3D television.
Speaking at the company’s most recent results, Mike White, DirecTV’s president and ceo said: “ I think it's fair to say that increasingly our consumers expect us to be even more of a full video provider and they also expect to access that content whenever and wherever they want.” 

He added that DirecTV, which has an alliance with AT&T, is working on ways to ensure that  its customers will be able to watch the same programs they currently view on their TV on their mobile phones and other devices, such as Apple’s forthcoming iPad. DirecTV noted that its coverage of the US National Football League -NFL- was particularly popular with iPhone and other mobile device owners. Sport will therefore form an integral part of the company’s plans to attract mobile users.
As we have pointed out in the last couple of issues of the Mash, interest in content companies is increasing, both because of rising advertising traffic, but also the growing awareness that content in an age of mobile devices, may have a higher value than many at first thought.
The pay TV business in the US is mature but a number of technological trends are now infusing the sector with new life. Besides mobile internet access, which has only just begun, the sector is seeing increased interest in Digital Video Recorders -DVR, high definition TV - HD and now 3D and internet enabled TV. The growth  in DirecTV’s subscribers who are taking HD and DVR has doubled over the last year. 
Later this year the company plans to launch a 3D film and program service. Interest in 3D is high following the unprecedented success of Avatar, which has become the biggest grossing movie of all time.  A number of other 3D film launches are expected this year.
Besides the technological angle to DirecTV the company a great deal of exposure to the rapidly growing Latin American market, where its sales rose by 47% over the year. DirecTV has operations in Mexico, Venezuela, Brazil and Argentina. 
Over the last quarter Tiger Global, a leading US hedge fund, in which the legendary money manager Julian Robertson has invested, emerged as the largest institutional investor in DirecTV, taking an 11.4% stake.
As we highlighted in Mash 35, Vizio, the American based flat screen TV maker is the leading supplier of LCD TVs in the US. Vizio - in which Amtran of Taiwan is one of the leading investors - saw shipments increase 92% over the year to 5.9m. 
iSupply found that nearly 42% of Web-surfing TVs in the US had integrated connectivity, which means that they can be accessed from other devices, such as PCs. Another 20% were connected through video-game consoles; 13% through Blu-ray players; PCs and stand alone boxes tied at around 12% each.