Virtual Reality (VR) Headset Shipments Plummet

Virtual reality headsets – video game technology briefly championed as a home entertainment savior – appear to have lost their mojo among consumers.

Global shipments of VR headsets dropped 33.7% in the second quarter of 2018, according to new data from the International Data Corporation (IDCWorldwide Quarterly Augmented and Virtual Reality Headset Tracker.

Tethered VR headsets declined 37.3% as major brands such as Oculus and Sony were unable to maintain consumer demand following price reductions in the previous-year period, according to IDC.

The report said the two brands managed to ship 102,000 and 93,000 headsets respectively in the period. The category leader, HTC, shipped close to 111,000 headsets (excluding the standalone Vive Focus) thanks to the growing popularity of the Viveport subscription service as well as the launch of the Pro headset.

Screenless viewers, which enjoyed initial popularity when Samsung, Alcatel, and Google bundled the headsets with smartphones, has seen consumer interest dwindle. The category has shrunk from 1 million headsets in Q2 2017 to 409,000 units this year. This category was the largest contributor to the decline in shipments for the overall VR headset market.

“One of the major issues with the VR market is that consumers still find it difficult to try a VR headset,” Jitesh Ubrani, senior research analyst for IDC, said in a statement.

IDC expects this to be a temporary setback as the VR market finds its legs. The arrival of new products, such as the Oculus Go and HTC Vive Pro, and new brands, combined with the need for greater headset fidelity all point to a positive outlook for the quarters ahead.

“This is where the commercial market has an opportunity to shine,” said Ubrani. “HTC’s recent partnership with Dave & Busters or Oculus’ work with schools around the world stand to play an important role in educating and enticing consumers to use VR.”

Indeed, standalone VR headset shipments grew 417.7% in the quarter, largely due to the global availability of the Oculus Go/Xiaomi Mi VR, which managed to ship 212,000 headsets.

While the consumer side of the VR headset market remains the focus of attention, the commercial side is gaining traction. In Q2, roughly 20% of VR headsets were destined for the commercial sector, up from 14% last year. Along with the increase in share, average selling prices have also increased from $333 to $442 during the same period.

“In a market where mainstream VR content is still lacking, a growing number of vendors are looking to commercial as a way to build their business while they wait for the consumers to catch up,” said Tom Mainelli, VP, devices and augmented and virtual reality at IDC. “These vendors are moving beyond entertainment-focused deployments to real-world training scenarios in companies of all sizes, all over the world. IDC expects commercial buyers to represent an increasingly important percentage of the market going forward.”

Rachel Whetstone Named New Netflix Communications Boss

Netflix Aug. 27 named Rachel Whetstone as its new chief communications officer, replacing Jonathan Friedland, who was reportedly fired for “unacceptably low racial awareness and sensitivity” following separate uses of the racist “N-word” in company meetings.

Whetstone is responsible for leading communications on a global basis, having held similar positions at Facebook, Uber and Google.

“Rachel is a proven communications leader and a strong addition to the Netflix team,” CEO and co-founder Reed Hastings said in a statement. “Her deep knowledge and international expertise will be invaluable as we bring Netflix and its expanding lineup of original content to an increasingly global audience.”

A graduate of Bristol University, Whetstone worked as a political advisor in the U.K. before entering the private sector. She joined Google in 2005 and served as SVP of communications and public policy at Google from 2010 to 2015. She held the same position at Uber from 2015 till 2017, prior to joining Facebook as a VP of communications last year.

 

Amazon, Google Smart Speaker Market Hold Under Threat by China

Amazon introduced the first voice-activated smart speaker in 2014 with Alexa and Amazon Echo. According to new data from Strategy Analytics, Amazon’s global smart speaker share of shipments fell to 41% in the second quarter (ended June 30) from 44% in Q1 and 76% in Q2 2017.

By contrast, Google increased its share to 28% in Q2, up from 16% during the same period last year. China’s Alibaba finished third with Apple and JD.com rounding out the top five.

David Watkins, director at Strategy Analytics, says Amazon and Google accounted for a 69% share of global smart speaker shipments in Q2, which was down from more than 90% in Q2 2017.

“The drop is not only a reflection of growing competition in the smart speaker market but also Amazon and Google’s inability to break into the fast-growing Chinese market that is dominated by local powerhouse brands such as Alibaba, JD.com and Baidu,” Watkins said in a statement.

Indeed, Strategy Analytics contends China has the potential to become a lucrative market for smart speakers driven by voice-activated software – as underscored by Google’s recent $500 million strategic partnership with Chinese ecommerce giant JD.com.

David Mercer, VP at Strategy Analytics, believes Google and Amazon’s pursuit of volume over margin has made it difficult for third-party entry-level speakers entering the market with similar features.

However, Mercer contends the premium end of the market offers opportunity to vendors such as Roku who can entice consumers with superior build and audio quality.

“Early adopters of low-cost smart speakers such as the Echo Dot or Google Home Mini who are now looking to buy a second device will be a key target demographic for such vendors,” he said. “Apple has established an early lead in the premium smart speaker market, benefiting from a fiercely loyal fan base and strong momentum behind its Apple Music service. However, we expect the higher end smart speaker market to grow and become much more competitive moving forwards as vendors such as Samsung with its Galaxy Home speaker look to capitalize on the growing acceptance of voice as an established control mechanism.”

 

EIDR Appoints New Officers, Welcomes CAA to Board

EIDR (Entertainment ID Registry), the source of universal identifiers for digital distribution of movie and television assets, has appointed a slate of new officers to its board of directors and has welcomed back Eric Iverson of Creative Artists Agency (CAA) to the board.

Bill Kotzman, partner product manager at Google, will succeed Kip Welch of Motion Picture Laboratories (MovieLabs) as chair and will be based in Los Angeles. Kotzman is joined on the EIDR board by new president Greg Geier of Sony Pictures Entertainment, new VP Scott Maddux of TiVo and new treasurer Jeff Stevens of Warner Bros.

“It’s a tremendous time to be taking on the role of Chairman of EIDR,” said Kotzman in a statement. “The necessity of systemic automation of the media and entertainment supply chain is impossible without properly identified content, and the non-proprietary EIDR ID model is the gold standard for making that happen. The new board officers reflect the breadth of EIDR members, with Greg and Jeff representing major film studios, Scott representing a metadata provider and content discovery company, and myself representing a major digital retailer, I bring my years of experience in driving new models of workflow efficiency for Google Play, and know first-hand that EIDR has been a catalyst for value creation at Google. It’s clear that the true ‘network effect’ of EIDR’s global ubiquity is now within reach, and as we plan for the next version of EIDR (v3.0) — I look forward to working with the board and executive director Will Kreth to execute on that vision.”

EIDR also has added Iverson, CIO of Creative Artists Agency, to the board. He previously served on the board in his capacity at Sony Pictures Entertainment.

“I look forward to returning to EIDR to help them address the opportunities and challenges ahead,” said Iverson in a statement. “Around the industry, I get the chance to talk with senior executives daily about the potential for positive structural improvements in M&E. The respect for what EIDR has created, at nearly 2 million unique content IDs, and more than 3 million alternate IDs, is universal. EIDR is clearly becoming an important part of the data ecosystem. Obviously, the performance of the films and television shows in which our clients participate is significant, and we look forward to helping add value to EIDR’s emergence as a better way to measure that performance on digital distribution platforms.”

“EIDR’s mission is more important than ever as the industry deals with fragmentation in every corner of the ecosystem — from content creation to distribution to consumption,” said Maddux in a statement. “TiVo co-founded EIDR alongside MovieLabs and we remain deeply committed to the development of industry-standard ID solutions.”

“We’re extremely fortunate in three ways; with Bill taking on the role of Chairman, our slate of new board officers, and CAA not only joining us, but bringing Eric back into the fold,” said Will Kreth, executive director of EIDR, in a statement. “We have a collective powerhouse of a team, and I’m delighted to be working with them to both innovate and bring positive changes to the organization.”

EIDR is a universal identifier system for movie and television assets. EIDR provides globally unique identifiers for the entire range of audiovisual object types that are relevant to entertainment commerce.

Google Joins Streaming Video Alliance

Google has joined the Streaming Video Alliance, an industry forum designed to solve challenges to improve the video experience, according to the organization.

Alliance members gathered May 10 at member Viacom’s headquarters in Times Square.

“Viacom is pleased to host the Streaming Video Alliance face-to-face meeting, where we can continue collaborating with the member technology companies, programmers, and distributors to promote standards around distributed caching and video quality-of-service measurement that will benefit us all and our audiences,” said Glenn Goldstein, CTO, Viacom, in a statement.

“A lot has happened in the four years since the Alliance was founded,” said Jason Thibeault, executive director of the Streaming Video Alliance, in a statement. “New industry technologies have been introduced and adopted, new alliance members have joined our ranks such as AWS and Google and the consumer demand for and consumption of streaming video continues to soar. As we kick off our fourth annual member meeting, I’m inspired by our collective progress to date and look forward to our members’ continued contributions to the streaming video industry.”

Founded in 2014, the Streaming Video Alliance is a global association of organizations from across the video ecosystem that have come together to collaborate on building solutions to the technical challenges facing the streaming video industry. Through best practices, specifications, functional requirements, proof-of-concepts, and other documents published by its working and study groups, the alliance strives to improve the end-user video experience and promote increased adoption of streaming, according to the organization. Members include companies and individuals from across the streaming video ecosystem such as network operators, technology providers, service providers, and content owners. Current members include Adobe, Amazon Web Services, Anevia, Arris, Bamtech Media, Beamr, Blue Frame, CBC, Cedexis, CenturyLink, Charter Communications, Ciena, Cisco Systems, Comcast, Concurrent, ContentArmor, Conviva, Digital Element, Dolby, Edgeware, Ericsson, Espial Group, FOX Networks, Friend MTS, Google, Harmonic, Hughes Satellite Systems, IBM, IneoQuest, Intel, Interra Systems, Irdeto, Ketan Bhardwaj, Liberty Global, Limelight Networks, NBCUniversal, NCTA, NeuLion, Nexguard, Nice People at Work, Nokia, NTT East, OWNZONES, Phenix, Qwilt, Rob Dillon, Sinclair Broadcast Group, Sky, SSIMWAVE, Tektronix, Telecom Italia, Touchstream, Unified Streaming, Verimatrix, Verizon, Viacom, ViaSat Inc., Viavi Solutions, Videastream, Western Digital Corp., and Wowza Media Systems.

For more information on the Alliance, its working groups, or to inquire about becoming a member, visit www.streamingvideoalliance.org.

Research: OTT Sub Households to Far Outstrip TV Sub Households in 2020

U.S. OTT subscriber households will far surpass TV subscriber households in 2020, according to new data from Convergence Research.

In five years at the current run-rate Netflix will have in the United States as many subscribers as all the the traditional TV access providers combined, according the Convergence’s Brahm Eiley. Amazon Prime at the current run rate will surpass the traditional U.S. TV access providers in terms of subscribers in three years.

However, the average revenue per unit (ARPU) for U.S. TV subscribers in 2020 will still be four times U.S. OTT subscriber households’ ARPU, down from 6 times in 2017.

Convergence has just released its annual 2018 Couch Potato Reports, “The Battle for the American Couch Potato: OTT, TV, Online” and “The Battle for the American Couch Potato: Bundling, TV, Internet, Telephone, Wireless.”

Convergence estimates that U.S. OTT access revenue (based on 55 OTT providers led by Netflix) grew 41% to $11.9 billion in 2017, forecasts $16.6 billion for 2018 and $27.6 billion for 2020.

The firm estimates 2017 U.S. cable, satellite and telco TV access (not including OTT) revenue grew 1% to $107.6 billion ($94.30 per month ARPU) in 2017, forecasts $107.4 billion ($97.90 per month ARPU) for 2018, and $106.9 billion for 2020.

In 2017, the United States saw a decline of 3.66 million TV subscribers and in 2016 a decline of 2.2 million. Convergence forecasts a decline of 3.72 million TV subs for 2018.

The firm reports that 2010 saw the start of the rise in cord cutter/never households, and as of the end of 2017 estimates 32.13 million U.S. households (or 26.1% of households) did not have a traditional TV subscription with a cable, satellite or telco TV access provider, up from 27.56 million (22.6% of households) at the end of 2016. Convergence forecasts 36.76 million (29.6% of households) will be cord cutter/never households by the end of 2018.

Meanwhile, 2017 saw U.S. residential broadband subs surpass U.S. TV subs, growing to 96.95 million. Convergence estimates 2.33 million U.S. residential broadband subs were added in 2017 (2.66 million in 2016) and revenue grew 7% to $56.8 million; the firm forecasts 2.57 million additions and 6% growth to $60.5 billion for 2018.

“The gloves are off,” commentary in the report reads. “The TV-movie Industry is being reconstructed from the inside and by the outside, as programmers now directly compete against their traditional TV access and independent OTT buyers that rival them in terms of content spend. Amazon, Apple, DAZN, Facebook, Google and Netflix all have the money muscle to finance their own productions or outbid on programming including major sporting franchises.”

Because the OTT services are acting more like studios and vying for top content, traditional content owners may fight back, the commentary reads.

“We expect especially for the U.S. market going forward fewer content deals between programmers and independent OTT providers: 2017 saw Disney choose not to renew with Netflix and embrace OTT, HBO not renew with Amazon in the U.S., Hulu (which is spending more on content on a per U.S. subscriber basis than Amazon or Netflix) continue to bolster its offerings, compete more directly against TV access providers, and A+E, AMC, Discovery, Scripps, and Viacom back supply Philo,” the firm commented. “The traditional TV ecosystem does not show decline ‘yet’ except for TV subscribers. TV access players continue to raise prices (ARPU is growing but we forecast TV access revenue decline going forward), and programmers have kept up increases in programming fees and advertising rates, but this architecture cannot last in the long run.”

Michelle Slavich Joins Warner

Michelle Slavich has been named EVP, global publicity and strategy, Warner Bros. Pictures.

In her new role, Slavich will oversee domestic and international publicity and work with her teams to develop global publicity strategies on all releases from Warner Bros. Pictures and New Line Cinema across media outlets and platforms worldwide. She’ll also work closely with the marketing group’s senior management team on PR campaign design and strategy for both individual film titles and key franchises. Slavich will report to Blair Rich, president, worldwide marketing, Warner Bros. Pictures Group and Warner Bros. Home Entertainment.

“Michelle is a well-respected publicity executive with an impressive track record of leadership, innovation and strategic vision,” said Rich in a statement. “As we tackle the constantly evolving landscape of film publicity, she’s a great choice to lead the team and further our already-excellent publicity teams in supporting our world-class films and filmmakers.”

Slavich joins Warner from Google, where she most recently served as head of entertainment communications for YouTube, overseeing the platform’s entertainment and music PR initiatives, as well as corporate and creator communications. She was with Google more than five years, and in the last two years, her team launched more than 50 publicity campaigns for the company’s YouTube Original series and movies. Slavich was also responsible for the PR launch campaigns for the company’s subscription services YouTube TV and YouTube Red.

Before that, Slavich served as VP of publicity at Universal Studios Home Entertainment (USHE), overseeing publicity, promotions and events for NBC Universal film and TV releases. In this role, Slavich supervised more than 200 publicity campaigns for Universal Pictures, Focus Features & NBC.

Prior to USHE, Slavich held positions at Rogers & Associates and PeopleSupport Inc., as well as in theatrical publicity at DreamWorks/Amblin Entertainment. She began her career as a publicity assistant at the Shoah Foundation, Steven Spielberg’s nonprofit organization dedicated to the recording of Holocaust survivor testimonies for educational use.

European Union Proposes Tax Hike on Digital Companies

The European Union March 21 announced plans to implement an interim 3% tax hike for digital companies aimed at leveling the playing field between local and multinational companies based outside the region.

With almost half of the top 20 global companies by market capitalization digital operations (compared to 5% a decade ago), the EU says digital companies (i.e. Facebook, Google, Apple, Amazon and Netflix) pay an average tax rate half (9.5%) that of the traditional economy (23.3%) in member countries.

The trade union contends profits made through activities such as selling user-generated data and streaming video content are not captured by current tax rules.

Apple infamously parked more than $120 billion in Ireland to avoid taxes in the U.S. and other countries it operates in. A strategy the company reportedly had to outsource to Bermuda and Grand Cayman after Irish authorities sought to close loopholes.

Tax avoidance strategies used by Apple and other digital multinationals deny governments around the world as much as $240 billion annually in lost revenue, according to a 2015 estimate by the Organization for Economic Cooperation and Development, reported by The New York Times.

Netflix reportedly paid less than £400,000 ($565,000) in 2015 corporate taxes in the U.K. on revenue of £36.5 million.

Netflix told The Guardian it contributed financially in other ways, including wages, value-added taxes (VAT) and funding myriad British-based original content productions.

Maybe, but to USC law professor Edward Kleinbard, U.S. multinational firms are “global grandmasters” of not paying their fair share of taxes.

“[They employ] schemes that deplete not just U.S. tax collection but the tax collection of most every large economy in the world,” Kleinbard told the Times.

New EU rules would deem multinational digital companies having a European presence if they meet at least one of the following criteria: exceed €7 million in annual revenue in a member state, having more than 100,000 users or 3,000 business contracts in a member state in a taxable year.

The new taxes, which the EU believes would generate €5 billion ($6.1 billion) in annual revenue, would apply primarily to online advertising, sale of user-provided data and third-party ecommerce.

Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs at the EU, said the digital economy is a “major” two-way opportunity for Europe and digital firms based outside the region – with legal and fiscal concerns.

“Our pre-Internet rules do not allow our member states to tax digital companies operating in Europe when they have little or no physical presence here,” said Moscovic. “This represents an ever-bigger black hole … because the tax base is being eroded. That’s why we’re bringing forward a new legal standard as well an interim tax for digital activities.”

 

Amazon on Top in Harris Reputation Poll

Amazon took the top spot in the 2018 Harris Poll Reputation Quotient Rankings.

Disney ranked high at No. 5, and Netflix, at No. 21, beat out fellow tech giants Google and Apple, ranked Nos. 28 and 29, respectively.

Among mass merchant/consumer electronics retailers, Costco (No. 17) topped Best Buy (No. 46), Target (No. 49) and Walmart (No. 69).

According to Harris, the Reputation Quotient is “technically designed to understand how a company is perceived in modern culture.” The measure takes the top most visible companies (for good or bad reasons) and evaluates them across six dimensions of corporate reputation attributes to arrive at a corporate reputation ranking. If a company is not on the list, it does not necessarily suggest that they have either good or bad reputation, but rather they didn’t reach a critical level of visibility to be measured.

The Weinstein Co., which has been embroiled in executive Harvey Weinstein’s alleged sexual assault scandal, and Takata, with its infamously defective airbags, came in last on the list at Nos. 99 and 100, respectively.

Apple, Disney and YouTube Top Millennial Brands in New Report

Apple, Disney and YouTube, respectively, ranked as the top three most “intimate” brands among millennials, according to MBLM’s Brand Intimacy 2018 Report, which is the largest study of brands based on emotions. Brand intimacy leverages and strengthens the emotional bonds between a person and a brand.

“We were surprised and pleased to see YouTube as an addition to the top three most intimate brands for millennials this year,” stated Mario Natarelli, managing partner, MBLM. “We believe its rise is due to our culture’s continued need for escape and the brand’s immediate, diverse content, personalities and growing offerings in movies and live TV. YouTube is clearly an established ritual in the lives of many millennials today.”

By comparison, in MBLM’s 2017 report, Disney placed first, followed by Amazon and Netflix.

The other brands that rounded out the top 10 were Target, Amazon, Nintendo, Google, Xbox, Netflix and Whole Foods.

The age group of 18-24-year-olds had a slightly different mix of top companies. The top 10 for that group were Apple, Amazon, YouTube, PlayStation, Starbucks, Nintendo, Google, Netflix, Coca Cola and Walmart.

The report analyzed the responses of 6,000 consumers and 54,000 brand evaluations across 15 industries in the United States, Mexico and the United Arab Emirates. The full report will be released on March 13, 2018.