Rebecca Day

After announcing a multi-year deal with Warner Home Video to offer Warner video titles through its Redbox kiosks 28 days after release, Coinstar on its Q3 2012 earnings call last week proclaimed the physical disc alive and kicking. Redbox and Warner had parted ways in January after Warner said it would require Redbox to adopt a 56-day rental window to renew the company’s distribution agreement. That left Redbox to patch together a workaround solution to secure Warner titles for its rental kiosks. Quoting figures from the Entertainment Merchants Association, Coinstar CEO Paul Davis touted the $18 billion home entertainment market where “physical media is dominant, with $4 of every $5 spent on physical content.” He reiterated Coinstar’s position that it believes in the long tail of the physical disc market, but the support for the shelf-life of physical discs was noticeably more optimistic on this latest call than in recent webcasts. Coinstar executives again provided few details about the Redbox Instant by Verizon joint venture that’s due to start this quarter. Trials have moved from alpha to internal beta testing, Davis said. He wasn’t clear on the breadth of the rollout that’s been promised before the end of the year. “We plan to expand that beta to the public,” he said. He wouldn’t specify the week when that would occur, saying only, “we're committed that it will be out before the end of the year.” The joint venture is “gaining great insights that will lead to a strong product offering,” Davis said. The “smart and efficient” acquisition strategy to buy content on a per-subscriber basis avoids a large capital outlay for content, he said. Content deals are negotiated separately with studios for the physical and digital distribution deals, Coinstar executives said, but the deal announced with Warner includes streaming through Redbox Instant by Verizon. The agreement will make Warner titles available in VOD and electronic sellthrough formats, allows Redbox Instant by Verizon to support and distribute Warner UltraViolet-enabled movies and covers a multi-year subscription video-on-demand agreement supporting feature-length content, the companies said. As part of that agreement, Redbox also plans to join the Digital Entertainment Content Ecosystem (DECE) and to promote its UltraViolet digital locker service, Coinstar said. Coinstar attributed its “challenging results” for Q3 to competition from the Olympics that “negatively impacted” all entertainment channels “with the exception of NBC,” including theaters, TV networks, video-on-demand services and physical disc sellthrough. The quarter included nine weeks with two or fewer titles in a time period “that historically is one of our highest rental periods,” the company said. A drop in rental frequency for the quarter was driven by “the low level of content over an extended period of time,” Davis said. Coinstar Q3 revenue grew 16 percent to $537.6 million over Q3 2011.

A start-up turnkey systems provider is heading to the CEDIA Expo this week in Indianapolis with an ambitious plan to take on interactive service providers ADT and Comcast and a coming product from AT&T, a key executive told us. Jeff Zemanek, ex-president of Custom Electronic Design & Installation Association, also said CEDIA members have been “doing things the same way since 1989.” Now sales and marketing vice president of start-up G2i (Generation 2 Interactive), he’s joined with CEO Reed Stevens, son of CEDIA founding chair Chris Stevens, to form what G2i hopes will usher in the next era of the CEDIA market.

Pandora was among the most actively traded stocks early Thursday, up as much as 20 percent following better-than expected results for fiscal 2013 Q2, ended July 31. In an earnings webcast Wednesday, the company said an 86 percent spike in mobile revenue year over year helped fuel revenue growth of 51 percent to $101.3 million. Net loss for fiscal Q2 widened to $5.4 million from a loss of $1.8 million in fiscal Q2 2012, Pandora said. The company raised full-year revenue guidance to $425 million-$432 million from $420 million-$427 million.

Worldwide sales of mobile phones slipped 2.3 percent in Q2 to 419 million units, according to Gartner Group. The smartphone segment jumped 42.7 percent during the period, and now comprises 36.7 percent of total mobile phone sales, Gartner said. Slowing demand for the overall category is due to the challenging economy and users postponing upgrades in anticipation of high-profile product launches such as the iPhone 5, Gartner said. Chinese manufacturers are pushing 3G and preparing for major device launches in the second half that will propel the smartphone market further, while the feature phone market will continue to weaken, said analyst Anshul Gupta.

WealthTV’s 3D TV programming will be available via 3D content distribution portal Yabazam, the companies said last week. New 3D episodes from WealthTV will be released on Yabazam “on a regular basis,” from series including Wonders of the World, Take Off, Private Islands and Boys Toys, the companies said. The struggling 3D video content world will see a further bump in offerings later this month when Yabazam starts its pay-per-view 3D video service with roughly 50 titles, a spokeswoman said. Yabazam positions its 3D library as content “beyond the 3D features released by the major studios.” Prices for titles will range from $1.99 to $4.99, she said.

GreenPeak Technologies, supplier of the ZigBee chip inside Comcast-issued set-top boxes, announced availability last week of its GP510 communication controller chip that supports communication between ZigBee RF4CE-enabled devices and a set-top or home gateway. The GP510 was developed to be a low-cost solution for next-generation ZigBee set-top boxes, CEO Cees Links told us. It’s rolling out in set-tops from Comcast in select markets, according to a schedule the cable provider announced at CES earlier this year. Comcast uses GreenPeak chips in all its set-top boxes, Links said. Comcast’s Xfinity home control system allows consumers to monitor lights, thermostats, security cameras and alarm systems remotely from a computer or smartphone. The GreenPeak-enabled set-tops serve as the hub for wirelessly connected ZigBee devices and a sensor network in the Comcast home control system, Links said. AT&T’s Digital Life platform, in contrast, uses the competing Z-Wave wireless standard. Links cited the growth of sensor-based control and Wi-Fi networks in homes and said momentum was building around ZigBee as the standard for data communication for sensor control networks. Future set-tops will have Wi-Fi for content and ZigBee for sensor control for temperature, lighting, appliances and security, Links said. A connected water heater could send a signal via the cloud by email or text that it has malfunctioned, according to the Xfinity website, or a tripped window sensor could trigger a video camera to record. Links predicts that in 10 years “everyone will be used to Zigbee in the same way people are used to Wi-Fi” today. It “takes a few years before a standard settles in and harmonizes with everything around it,” he said, which is happening with ZigBee now. His view of the environmentally aware smart home of the future takes consumers “in a completely new direction.” When sensors and devices are connected over the same standard they can communicate in a transparent way, he said. In the environmentally aware smart home of the future, when a window is opened it can trigger a security breach if the homeowner is away and the alarm is on. If the alarm isn’t on, the home knows it’s occupied and the sensor triggers the heat to go off to save energy, he said. “We think there’s a place for a second network in the home,” Links said, envisioning homes with both Wi-Fi and ZigBee-based networks. Cost has been a major barrier to home automation at the mainstream level but cost is “going down significantly,” he said. There’s been a “breakthrough in the thinking of cable operators” who want to offer more in a competitive market than just entertainment content and Internet service, he said, and an emerging market needs a major player like Comcast to “shake up the market like Apple did for Wi-Fi” with AirPlay, he said. When Apple adopted Wi-Fi, “everybody else was standing in line” wondering why they needed Wi-Fi, he said. “We see Comcast as somewhat equivalent to Apple in playing this role because of their clout and reach,” he said.

With connected TV penetration now topping 20 percent worldwide, according to Q4 2011 market data, next-gen issues facing TV makers include how users control the connected TV experience, emerging business models for services and how TV owners connect to the Internet, according to a report from NPD DisplaySearch. Many of the technical hurdles of connected TV have been solved, and next phases will focus on consumer behavior -- including how people want to interact with their TVs -- the value of apps and whether consumers are willing to pay for services, DisplaySearch said. The U.S., at 40 percent penetration, trails Western Europe at almost 50 percent and China at just over 45 percent, according to DisplaySearch. “Penetration has been low in North America, despite the success of internet-based entertainment,” DisplaySearch said. North American consumers want “large but minimally featured sets,” a pattern that followed U.S. adoption of 3D and LED backlight TVs as well, it said. The most valued connected functions for TVs are video-related and offer “lean-back entertainment very much like TV viewing,” DisplaySearch said. Those apps need to be different from those for mobile devices and need to focus on viewing from a distance instead of location-based applications, it said. The most popular apps either directly access content to watch, or they complement viewing by providing context or more depth to TV content, it said. Connected TVs will also require adapted user interfaces to “interact with a screen on the other side of the room” that doesn’t have a touch screen, DisplaySearch said. It could lead to an “arms race” of new interface solutions, or the need might be filled by tablet or smartphone apps, it said.

TV Everywhere, the theme of the 2011 CES, still has “a long way to go before the vision is realized,” said Jonathan Weitz, partner at IBB Consulting Group, during a panel on the business of TV Everywhere at Streaming Media East in New York Wednesday. Looming issues include working business models to meet the needs of different content providers, a globalization path, and which devices and operating systems to support as disparate cloud-, mobile and traditional viewing devices hit the market.

Two-thirds of consumers who watch TV are multi-tasking with other CE devices, according to a recent study by CEA. Among consumers aged 18-24 the number of viewers interacting with electronic devices jumps to 85 percent, CEA said. U.S. adults online report watching some type of video content an average of 3.2 hours a day, five days per week, CEA said, and 34 percent of U.S. adults online report watching more video content today than they did a year ago.

The disruption of cable by over-the-top video has been greatly exaggerated, said panelists at Digital Hollywood’s Media Summit Wednesday in New York. Some OTT services will survive, many won’t, and consumers will likely adopt a multi-format approach to TV viewing in the future, panelists said. While cord-cutting isn’t happening in large numbers, “cord-nevers” coming out of college present a challenge to the pay TV industry, they said.