And to remind us that even in rainbows, you can find a dark side, SAI reported on reality in the recent Kasenna fire sale that the folks here that lose are the investors. $90 million since 2000? What has Kasenna been doing with that money? I know personally I attended a ‘cowboy” themed party they threw in Texas two years ago, but I am sure that didn’t eat up the whole budget. I would have loved to see their burn rate - not that they were watching it.
Okay this news is from April, but its still interesting. our favorite witty and often ascerbic VC news portal, Silicon Alley Insider reported that VCs were still having a love affair with video start ups to the tune of $217.3 million in the first quarter alone of 2008.
Okay - so each day there seems to be a shake up out there and the shock waves are getting more frequent. Variety reported today that France’s Iliad who won Gallic (what a cool name!) broadband TV operator Free, Europe’s biggest IPTV operator, will pull down a syndicated loan for around Euros 1 billion ($1.6 billion), mostly to buy Alice, Italia Telecom’s rival Internet TV player in France. Did you follow that? Essentially this pretty much makes France the world’s biggest broadband TV market.
Now, this is on the heels of PCCW‘S announcement that they will now offer out of the box IPTV - they feel they have been so successful at it that they will just package up what they know (and got from others) and just push that right into the market.
The winds of change are coming - there is a storm coming and in this case, survival may not be about anything that anyone can predict.
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Reliable and insightful news source, Fierce Telecom, (although not a good party thrower) recently reported that 24 percent of households in the EU dumped their fixed telephone lines for mobile, and 39 percent of homes in Eastern Europe who did not have to deal with growing pains and successive re-iterations of technology delivery vehicles, have gone mobile. Even my mom who lives in North America dropped her fixed line and now lives solely with her iPhone alone.
It’s odd that the big names aren’t rushing to former soviet bloc markets to get involved as they march out of the dark into the converged IPTV light - still people haggle over Tier 1 and keep trying to build a better machine to reach them, but meanwhile, the power of emerging markets and those countries who are dramatically changing their habits because of the nature of infrastructure and lifestyle will want companies that know their market and know what they are seeking - a road to content on any screen.
Their reporter, Jim O’Neil gave up some interesting factoids:
* Finland (61 percent) and Portugal (48 percent) have seen the highest flight from landline use
* Of European households with Internet connections, 22 percent use their PC for making phone calls. Latvia, Lithuania and Czech Republic lead in the category with more than 50 percent.
* Nearly half of all European households have access to the Internet, with most connected households accessing the Internet via an ADSL line.
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And guess what? Ads are expected to play a huge role in service profitability. This is mentioned in a new report from Infonetics. Okay so folks are buying phones like crazy - but will they be able to deliver to users what they think they will be able to do on them? Or will those phones end up in some dark corner because operators cant get the services out to the subscribers to hold their interest? Its funny because we know so many start ups with great ideas that users would want - that they actually would like to use - but these start ups can’t get close enough to the operators to show them/tell them about the application or what can be done because their voice is too small. We still maintain that the big guys still need to listen to the small guys 
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Finally, some news that we were waiting for — Infonetics just released a report on the growth of middleware over the next several years — Jeff Heynon of Infonetics says that early IPTV operators are running into problems because of scaling issues with their off-the-shelf middleware. This is interesting and we are glad to see Jeff shed light on what has been talked about in whispers but few have voiced because of the big names that charged into the space 5-7 years ago and gobbled up smaller middleware companies in an attempt to dominate and roll out one size fits all product. An anonymous source at Alcatel-Lucent stated that they still don’t know what to do with with all their middleware have after numerous acquisitions. But…. as all operators are not the same not only in Western Europe but also more so in emerging and growing markets in Eastern and Central Europe, even the big operators would be considered small by their standards and the requirements are staggeringly different. For starters they need a highly scalable and customizable solution for their markets that aren’t homeogenous - these markets are hybrids - terrestrial, cable and IPTV - and they need middleware that can scale all over the place, but mostly to accomodate smaller numbers, not the Big Mac numbers that every one always talks about. These emerging market operators need to customize and regionalize their programming and it’s the middleware that allows them to do that. At any rate, the report forecasts that the number of IPTV subscribers will reach 93m worldwide by 2011, would be interesting to see statistics on which part of the world those numbers will come from.
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That the dark lords behind the Carlyle Group and Providence Equity Partners are working on an all cash deal to buy Informa - the UK’s biggest publisher of not only magazines but also analysis and trade shows. All cash deal, you read that correctly. And if the dark lords take over Informa, it will be the largest takeover in the history of UK publishing. How’s that for scary.
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This past week LinkedIn announced that they raised around USD53m in funding, valuing the company at around USD1bn - guess what? Its value has quadrupled over the past 16 months. Also in social networking land, Facebook expanded into China. Now this should be interesting to watch as the number of potential users dwarfs the Western world. This user adoption will surely shape the evolving nature of social networking into what we believe will be more absolute models for advertising.
Some simple projections on the advertising market and its potential on social networking sites. We think the statistic that is most interesting is that around 72% of all US ad agencies and advetisors will NOT run ads on user generated video blogs.
This just in on Telephony online – the $64,000 question - can IPTV compete on content? The biggest issue is how will these giants differentiate themselves? And what will be the deciding factor for their offering. The networks and content providers are saying that being able to adapt content to each screen will be key and yet the cable industry says, that’s not important. So who’s right? The folks that are closer to the content the tweens who are driving their programming and using the online interactive features, or the guys sitting behind desks who have lost touch with the next generation users? We think its the users and that those that listen to the users will have the advantage. Check your egos at the door!
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