Subscription video on demand (SVOD) services such as Amazon and Netflix have sent shockwaves through the broadcast world.
As they gain millions of new viewers each year and produce ever more of their own award winning content Netflix, the market leader, is now in over 15% of British homes, while Amazon’s market share is about 5%.
And new technologies that let us watch what we want on whatever device we want are transforming traditional television viewing habits.
According to UK regulator Ofcom, household subscriptions to the top SVOD services – Netflix, Amazon Prime and Sky Now – shot up from 4.2 million to six million in the 12 months to March.
Forecasts from Mintel suggest that UK streaming video subscription revenues will rocket from £437 million to £1.17 billion between 2014 and 2019 as users more than double.
For the broadcasters, this comes at a time when the number of people who own a TV set is falling in the UK and the long term viability of the licence fee is in question.
Research from media consultancy SNL Kagan has also found that in the US, take-up of cable, satellite and other pay-TV services is falling fast as lower cost SVODs undercut them.
Netflix and Amazon have big advantages over broadcasters in their ability to target programmes at specific audiences and lavish budgets “measured in the billions” on their productions. A traditional cable company has to worry about filling entire programming schedules of a vast selection of channels – SVOD companies have no schedules at all.
So SVOD can afford to be highly selective about what they want to commission and then pay over the odds to get it.
Last year, director of BBC television, Danny Cohen, admitted the corporation had been “blown out of the water” when bidding against Netflix in one deal.
And Mr Clarkson’s new driving show on Amazon Prime – with its global subscriber base of 40 million – is reported to have a budget of about £160m for just three seasons.
No wonder Amazon founder Jeff Bezos recently admitted that the show will be “very, very, very expensive”.
The difficulty for SVOD services in the past was that you could only watch the programmes on a laptop or desktop, which meant they weren’t ideal for collective family viewing.
Now internet-enabled smart TVs are bridging the gap, and new technologies, such as Amazon’s Fire Stick and Google’s Chromecast, are enabling viewers to beam content wirelessly from any connected device to their TV sets with relative ease.
Many cable TV services, such as Virgin’s Tivo, also offer Netflix as part of their packages, again widening access.
But SVOD’s Achilles heel is currently internet bandwidth – or lack of it.
Average download speeds in the UK are still around 23 megabits per second (Mbps), so viewing SVOD on more than one device at the same time can lead to jerky, stuttering pictures.
When you think about all the connected devices in the average home fighting for a share of bandwidth, ultrafast wi-fi connections – 100Mbps and above – are likely to be needed for SVOD to continue its rapid growth.
And it’s important to put SVOD growth numbers in context.
Such services accounted for about 3% of total UK viewing in 2014, while around 90% went to live, recorded and on-demand television – the domains of the traditional broadcasters and cable channels.
For now, SVOD platforms are mostly a “complementary” form of viewing, says Ofcom, used primarily to access films and US TV shows.
They also face fierce competition from mainstream and cable channels, which are themselves offering new digital services, not to mention from recorded TV and free video-on-demand services like YouTube.
TalkTalk has been fined a record £400,000 for poor website security after the theft of the personal data from 157,000 customers.
The Information Commissioner’s Office, which imposed the fine, said security was so poor that the attack succeeded “with ease”.
TalkTalk said the fine was “disappointing” as it had “co-operated fully” with the investigation.
“The TalkTalk attack was notable for our decision to be open and honest with our customers from the outset. This gave them the best chance of protecting themselves.”
The fine is the largest yet imposed by the ICO, which under its powers could have imposed a maximum fine of £500,000.
The Information Commissioner, Elizabeth Denham, said: “TalkTalk’s failure to implement the most basic cyber security measures allowed hackers to penetrate TalkTalk’s systems with ease.”
“Yes hacking is wrong, but that is not an excuse for companies to abdicate their security obligations.
“TalkTalk should and could have done more to safeguard its customer information. It did not and we have taken action,” she added.
In nearly 16,000 cases, the attacker was able to steal bank account details.
The ICO explained that TalkTalk had been very lax in enforcing proper security on its own website.
Database software, which held details of customers inherited from the 2009 takeover of a rival firm, Tiscali, was out of date.
As a result, the attacker got hold of the customers’ details by attacking three vulnerable web pages, using a well known hacking technique called SQL injection.
A bug, which could have been fixed, allowed the attacker to bypass restrictions, but the company was simply unaware of the problem or that it could be solved easily.
That was despite two previous, similar cyber attacks earlier in 2015 that should have alerted the firm to the problems with its software and data storage.
“In spite of its expertise and resources, when it came to the basic principles of cyber-security, TalkTalk was found wanting,” said Ms Denham.
“Today’s record fine acts as a warning to others that cyber security is not an IT issue, it is a boardroom issue.
“Companies must be diligent and vigilant. They must do this not only because they have a duty under law, but because they have a duty to their customers.”
A police investigation of the data theft is still going on.
In May, TalkTalk revealed that the attack had cost it £42m and that 101,000 subscribers had left in the aftermath of the attack.
The firm said at the time of the attack that it appeared to be an attempt to extort money. Six people, all under 21 years old, have been arrested as part of the police investigation.
Microsoft has announced plans to build two data centres in the UK.
Consumers should also benefit from faster running apps.
The announcement, made by Microsoft chief executive Satya Nadella in London, follows a similar declaration by Amazon.
The two companies vie to provide online storage and data crunching tools via their respective platforms Microsoft Azure and Amazon Web Services.
The companies’ latest efforts should address highly regulated organisations’ privacy concerns.
In a related development, the firm has also announced plans to offer its Azure and Office 365 cloud services from two German data centres controlled by a third party, a subsidiary of Deutsche Telekom.
“Microsoft will not be able to access this data without the permission of customers or the data trustee, and if permission is granted by the data trustee, will only do so under its supervision,” it said.
The move will make it even harder for overseas authorities to gain access to the files.
Microsoft is currently engaged in a legal battle with the US Department of Justice, which is trying to make it hand over emails stored on a server in Ireland – the tech firm says the government is trying to exceed its authority.
Mr Nadella announced the plan to open a data centre near London and another in elsewhere in the UK – whose location has yet to be named – in 2016. They will bring the company’s tally of regional data centres to 26.
He added Microsoft had also just completed the expansion of existing facilities in Ireland and the Netherlands.
Scott Guthrie, Microsoft’s cloud enterprise group chief, added that the move would address privacy watchdogs’ concerns about “data sovereignty”.
“We’re always very clear that we don’t move data outside of a region that customers put it in.”
“For some things like healthcare, national defence and public sector workloads, there’s a variety of regulations that says the data has to stay in the UK.”
“Having these two local Azure regions means we can say this data will never leave the UK, and will be governed by all of the local regulations and laws.”
Amazon has also committed itself to multiple UK data centres, but has not said how many at this stage. It will make the UK its 15th regional base.
Although that is fewer than Microsoft’s, the company is currently the global leader in this field in terms of market share.
Announcing its move, Amazon said an added benefit of having a local data centre was that the public would experience less lag when using net-based services.
Although outsourcing computing work to one of the big tech companies offers the potential for savings – as they do not have to build and maintain their own equipment – there are also risks involved.
A fault with Azure knocked many third-party websites offline last year, and Amazon has experienced glitches of its own.
However, major faults taking clients’ services offline are a relatively rare occurrence.
The basic technology underpinning the Bitcoin virtual currency could be used by some of the world’s biggest banks.
Nine banks, including Barclays and Goldman Sachs, may adopt the blockchain system that logs who spends which virtual coins in an ever-expanding computer equivalent of a ledger.
The banks want to use the blockchain method because it is hard to fool – making fraud more difficult.
It could also speed up trading systems and make deals more transparent.
The project to test blockchain like technology is being led by financial technology firm R3 which has signed nine banks up to the initiative.
The other seven are JP Morgan, State Street, UBS, Royal Bank of Scotland, Credit Suisse, BBVA and Commonwealth Bank of Australia.
Technical meetings with the banks had prompted discussion of how it could be used within banks’ trading arms, said David Rutter, head of R3 in an interview with Reuters.
For Bitcoin, the blockchain acts as a globally distributed ledger that logs transactions. Everyone involved with the virtual currency contributes to the way the blockchain verifies each deal. The sheer number of people involved makes it very hard for one bitcoin user to get fraudulent deals verified and approved.
Despite this, Bitcoin has been hit by a series of scandals and thefts although most of these came about because hackers exploited weaknesses on exchanges where coins are traded or in digital wallets where they are held.
Mr Rutter said the banks were most interested in the technical architecture underpinning the blockchain that could be adapted for their own ends. The first place the blockchain was likely to find a role was as a log of who bought which stocks or shares, he said.
By adopting the technology banks could cut the cost of reporting transactions and working out who bought what and when, he added.
No timetable has been given for when technical trials of the blockchain like technology might begin.
Investing heavily in school computers and classroom technology does not improve pupils’ performance in a global study by the OECD.
The report from the Organisation for Economic Co-operation and Development examines the impact of school technology on international test results, such as the Pisa tests taken in more than 70 countries and tests measuring digital skills.
It says education systems which have invested heavily in information and communications technology have seen “no noticeable improvement” in Pisa test results for reading, mathematics or science.
Annual global spending on educational technology in schools has been valued at £17.5 billion, by technology analysts Gartner. In the UK, the spending on technology in schools is £900 million.
The British Educational Suppliers Association (BESA) says schools have £619 million in budgets for ICT, with £95 million spent on software and digital content.
The report says:
- Students who use computers very frequently at school get worse results
- Students who use computers moderately at school, such as once or twice a week, have “somewhat better learning outcomes” than students who use computers rarely
- The results show “no appreciable improvements” in reading, mathematics or science in the countries that had invested heavily in information technology
- High achieving school systems such as South Korea and Shanghai in China have lower levels of computer use in school
- Singapore, with only a moderate use of technology in school, is top for digital skills
“One of the most disappointing findings of the report is that the socio-economic divide between students is not narrowed by technology, perhaps even amplified,” said Mr Schleicher.
He said making sure all children have a good grasp of reading and maths is a more effective way to close the gap than “access to hi-tech devices”.
He warned classroom technology can be a distraction and result in pupils cutting and pasting “prefabricated” homework answers from the internet.
The study shows “there is no single country in which the internet is used frequently at school by a majority of students and where students’ performance improved”.
Among the seven countries with the highest level of internet use in school, it found three experienced “significant declines” in reading performance – Australia, New Zealand and Sweden – and three more had results that had “stagnated” – Spain, Norway and Denmark.
The countries and cities with the lowest use of the internet in school – South Korea, Shanghai, Hong Kong and Japan – are among the top performers in international tests.
The study did not gather a figure for the UK’s internet time in class, but the UK has among the highest levels of computers per pupil.
But Mr Schleicher says the findings of the report should not be used as an “excuse” not to use technology, but as a spur to finding a more effective approach.
He gave the example of digital textbooks which can be updated as an example of how online technology could be better than traditional methods.
There’s so much hype about driverless cars, but they are not on the verge of taking over.
There are many reasons why fully autonomous vehicles – to use a more formal name – will take much longer to reach mass adoption than tech companies would have us believe. Here’s a rundown of the main challenges they face:
Driverless cars will be programmed to avoid collisions, especially with people. But suppose a mother pushing a buggy steps out into the road suddenly and the car does not have enough time to stop.
Does it swerve into the path of oncoming traffic, potentially threatening the lives of its own passengers and the lives of others? Would it make a different decision if a cat ran out in front? Who will be responsible for programming such decisions into the car? And what if you don’t agree with the default ethical algorithm – should you have the right to override the default settings?
There are doubts over whether the technology will ever become sophisticated enough to handle such decisions anyway.
So if you own the car, are you liable? Or is it the car manufacturer? Or is it the maker of the specific piece of equipment that failed? Or is it the software company?
Sorting all this out will take years and lots of legal wrangling, not to mention new regulations at national and international level.
The technology isn’t good enough yet
Many semi-autonomous technologies are already available in today’s cars, from emergency braking to cruise control, self parking to lane keeping. This year, Ford is also planning to introduce automatic speed limit recognition tech and Daimler is hoping to test self-driving lorries on German motorways.
Andy Whydell, director at TRW says radars have a range of about 218-328 yards but struggle with distances greater than this.
As a result, “sensors may not have sufficient range to react fast enough at high speed when something happens ahead,” he says. “Work is going on to develop sensors that can see ahead 400m.”
Lasers and cameras are also less effective in rainy, foggy or snowy conditions, which potentially makes them unreliable in much of the northern hemisphere.
Driverless cars may need to communicate directly with each other using systems similar to aeroplane transponders – transmitting location, speed and direction to other vehicles.
But will the industry be able to agree a technological standard for this vehicle to vehicle communication?
In other words, collaboration in a highly competitive market will be difficult, to say the least.
Cars will become increasingly connected to the internet and mobile networks, enabling live streaming of traffic data, music, and social media updates. Perhaps car to car communication will become standard, too. But connectivity presents security issues.
Researchers recently demonstrated how they could take remote control of a Jeep Cherokee by hacking into its internet-connected entertainment and navigation system via a mobile phone network. This prompted manufacturer FCA (Fiat Chrysler Automobiles) to announce a voluntary recall of 1.4 million cars so that software could be beefed up with extra levels of security.
In a related development, Manchester-based NCC Group said weaknesses in some car infotainment systems could allow hackers to seize control of a vehicle’s brakes or steering. Attacks could be mounted via digital audio broadcasting (DAB) radio signals, the company claimed.
Do we even want them?
The global success of BBC’s Top Gear is just one indication of just how much we love cars and driving. Rightly or wrongly, many of us love the thrill of speed and the sense of freedom cars give us. Being in control is an important aspect of that.
But in the driverless world we become passive and disengaged; the car is reduced to a commodity, a mere tool for mobility. Where’s the fun in that? Driver surveys suggest we are at least ambivalent about the technology.
The UK’s online sales growth figures has been published by the ONS.
In the Office of National Statistics (ONS) “Shopping in shops that have no shops” report the ONS debates that arguably the biggest change to shopping in the 20th century was the emergence of supermarkets. For many this made the shopping experience less personal, but as online shopping has become the norm for many in the 21st century, shopping has, to some, become even less personal; in 2008 just 5p of every £1 spent in shops was spent online – by 2015 this had risen to 13p.
So, nearly half of every £1 spent in shops online in 2015 was spent in online stores that have no permanent physical presence on the high street or out of town shopping park. These shops might have a stall sometimes in a market or fair, but that’s it.
This is not a blip – it’s actually a growing trend – up from 41p of every £1 spent in shops online in 2010.
So what does this mean for British shopkeepers? Well, considering that nearly 88% of all shopping in Great Britain in 2015 was done in physical stores it’s clear that the British public are not ready quite yet to move to an exclusively online shopping experience.
However, it could be that some shop types will become more online focused than others in the future, as it does seem that there are some items we are more willing to buy online than others.
Looking at physical shops that also have an online presence, only 4p of every pound spent in shops mainly selling food was spent online, whereas 12p of every pound spent in clothing stores was spent online and 11p of every pound spent in department stores.
This might have something to do with delivery and returns. When ordering food to be delivered you have to ensure you are at home for the delivery – this is not so for clothing items. Also, it can be difficult and time consuming to return food but lots of clothing stores have made it free and very easy to return their products by making it possible to drop packages off at the corner shop for example, or using lockers in supermarkets.
The November effect on UK online shopping sales
One of the most intriguing trends over recent years has been growth of online shopping in November. There is a spike in our overall spending in online shops in that month.
In 2008, 6% of all shopping in November was carried out online, rising to 16% in November 2015.
While people spend more overall online and in store in December than November, the advent of online sales events like Cyber Monday, which take place in November, and the increasing convenience of online shopping, has seen people seemingly using online buying as a chance to get organised early for Christmas.
The full ONS reports is at: http://visual.ons.gov.uk/shopping-in-shops-that-have-no-shops/
Almost half of Argos’ sales are now online with their strongest quarterly digital sales rise for three years.
The Home Retail Group said online sales grew by 16% during its first quarter, and accounted for 49% of sales over that period. That’s up from 44% a year earlier. Mobile commerce sales were the larger part of those online sales, accounting for 29% of total Argos sales.
Argos is currently three and a half years into a transformation plan, launched in October 2012, to make it a digital first retailer.
The rise comes ahead of the planned sale of the general merchandise retailer to Sainsbury’s. This, said John Walden, chief executive of Home Retail Group, was on track to be completed in the third quarter of this year.
Walden said he was pleased with first quarter trading, in a “challenging” and deflationary retail environment.
“Many of the digital capabilities we are building, as we pursue the transformation plan to reinvent Argos as a digital retail leader, are positively impacting our business. Internet sales grew 16% during the quarter, which is our strongest quarterly digital sales growth for over three years.
“Digital sales accounted for almost 50% of total Argos sales in the quarter, including mobile commerce which now represents almost 30% of sales. Argos’ customer experiences overall improved in the quarter, aided by Fast Track, a market-leading national proposition for both same-day home delivery and store collection. Fast Track continues to build momentum and is achieving leading levels of customer satisfaction.”
The update came as Home Retail Group said Argos sales came in at £868 million in the 13 weeks to May 28, 2.6% up compared to the same period last year. Growth came following a number of new store openings during the previous full-year – net space increased by 2.5%.
During the quarter itself, two digital concessions were closed within Homebase stores, the DIY group that Home Retail Group has now sold. Sales reported on a like-for-like basis, which strips out the effect of store openings and closures, were up by 0.1%.
Urgent action is needed to deal with the UK’s digital skills crisis warn MPs- or it risks damaging the country’s productivity and competitiveness.
“Stubborn digital exclusion and systemic problems with education and training need to be urgently addressed”, the report said.
It urged the government’s digital strategy to be published without delay.
The report found that:
- 22% of IT equipment in schools is ineffective
- Just 35% of computer science teachers had a relevant qualification
- Only 70% of the required number of computer science teachers have been recruited
- The UK needs another 745,000 workers with digital skills by 2017
- 90% of jobs require digital skills to some degree
- Skills gap costs economy around £63 billion a year in lost income
“Digital exclusion has no place in 21st Century Britain,” the Commons Science and Technology Committee said.
“While the government is to be commended for the actions taken so far, stubborn digital exclusion and systemic problems with digital education and training need to be addressed as a matter of urgency in the government’s forthcoming digital strategy,” it continued.
The report calls for businesses to invest more and better training at all levels of education.
“The UK leads Europe on tech, but we need to take concerted action to avoid falling behind. We need to make sure tomorrow’s workforce is leaving school or university with the digital skills that employers need,” said the committee’s chairwoman, Nicole Blackwood.
In response a government spokesperson said: “This government recognises the crucial role digital skills play in our society and economy. Our Digital Strategy, to be published shortly, will set out how we will help employers and individuals access the tools they need to power our digital economy.
“This will make sure we are well placed to remain a tech leader in Europe. We will consider the Select Committee’s report and respond in due course,” they added.
The Science and Technology Committee says there is no single definition of what a Digital Skill actually is, but is generally understood to be the ability to use computers and digital devices to access the internet, the ability to code or create software and the ability to critically evaluate media, and “to navigate knowingly through the negative and positive elements of online activity and make informed choices about the content and services they use”.
Ocado said that more than half of its orders were checked out using mobile devices, as it reported double digit sales growth.
Over the same period, said the online grocer, sales of £582.9 million were 13.9% up on the same time last year. Pre-tax profits climbed to £8.5 million from £7.2 million last time. However, the average Ocado.com basket declined in value by 2.2% to £110.10, as a result of price deflation.
More than half of sales came from customers who have an Ocado Smart Pass – a membership scheme that includes free delivery. “Membership,” said chief executive Tim Steiner in his statement, “helps to drive customer loyalty, shopping frequency and ultimately total spend per customer.”
Chief executive Tim Steiner said he had been encouraged by steady progress in the business “The market remains competitive with ongoing price deflation but our increasing scale and operational efficiencies meant that we still grew profits, albeit at a slower rate.”
“We have been gaining share in the online grocery market and expect this to continue. The last few years have shown beyond doubt that British shoppers are choosing the benefits of grocery shopping online and we believe that the momentum of channel shift away from bricks and mortar stores will continue. The more opportunities customers have to try grocery shopping online, the more they will be attracted to Ocado’s superior customer offer.”
Making no reference to the EU referendum, he added: “Sales growth continues at pace and the productivity of our operations is improving. We have the technology, the brand and the financial resources to build on our leading position and look forward to the future with confidence.”
Ocado said its beauty business, in partnership with Marie Claire, was now expected to launch in the second half of this year. “We believe the high quality of service delivered by our technology and logistics platform combined with the awareness and relevance of the Marie Claire brand, should make this an attractive shopping destination for customers,” said Steiner.