Opinion Paper

3DTV

The Next Challenge for TV-Platforms?

2010 / 03

We make ICT strategies work

 3DTV – The Next Challenge for TV-Platforms?

Table of Contents
1 Executive Summary............................................................................................. 3
2 What is 3DTV? .................................................................................................... 4
3 Is there a market for 3DTV? ................................................................................ 5
3.1 3D cinema – A persuasive success story .................................................... 5
3.2 3DTV – Developments along the value chain.............................................. 6
3.3 3DTV – Outlook ........................................................................................... 7
4 How does 3DTV work technically? ...................................................................... 9
4.1 Production ................................................................................................... 9
4.2 Distribution................................................................................................... 9
4.3 Presentation .............................................................................................. 12
4.4 Lessons Learned ....................................................................................... 13
5 Next Steps ......................................................................................................... 14
6 The Authors ....................................................................................................... 16
7 The Company .................................................................................................... 17

Opinion Paper 2 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

1 Executive Summary

Due to its recent success in cinema, 3D has become a major topic for the movie industry and
is pushing this significantly more authentic and intense movie experience towards private
homes. Currently most consumer electronics manufacturers are announcing the introduction
of 3D-ready TV sets. Along with progressing standardization work, the first mass-market-
ready end-to-end 3DTV solutions are expected to be available by mid-2010.

This opinion paper illustrates the background of 3DTV, examines the extent of the 3DTV
impact on the business of TV platform providers and outlines pitfalls and next steps for these
players regarding 3DTV.

We believe that the next two years will be shaped by the positioning of all relevant market
players along the 3DTV value chain. We estimate a multitude of 3D initiatives by content
providers, aggregators and distribution platform providers – pushing 3D Blu-ray and event-
based broadcasting. The future development of this market strongly correlates with a
considerable penetration of 3DTV sets, which is not to be expected before 2012.

Our recommendation for TV platform providers is to grasp the short-term opportunities of

3DTV using existing infrastructure as far as possible, while carefully evaluating both market
and technology conditions in order to prepare for a long-term 3D-readiness from 2012
onwards.

The subsequent three step approach for TV platform providers is:

1. Now – Check 3D-readiness of your platform by executing initial end-to-end tests
broadcasting 3D test content via the existing HD infrastructure and learn about 3D-
bandwidth requirements and about the quality differences of various formats.
2. Until 2011 – Utilize window of opportunity by actively positioning your platform as 3D-
ready, both to improve brand image and to attract early adaptors, e.g. by providing
exemplary 3D content for free or launching initial 3DTV offerings (e.g. 3D loop channel,
event-based 3D content), as well as promoting the 3DTV experience at consumer
exhibitions and in flagship stores.
3. 2012 and onwards – Evaluate the market impact of 3DTV on your overall platform and
assess the need to invest in new 3D-infrastructure to deliver full HD or multi-view 3DTV
to homes. To influence future 3DTV developments TV platform providers are advised to
actively participate in the definition and implementation of new industry standards as well
as to assure the readiness of their platform for future bandwidth requirements, e.g. for
multi-view 3DTV.

Opinion Paper 3 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

2 What is 3DTV?

3D is often referred to as the “natural evolution” of experiencing movies. Since the

beginnings of the movie industry there has been the idea to create films utilizing the natural,
three-dimensional visual perception of humans to achieve a significantly more authentic and
intense movie experience.

Human perception is based on the fact that – due to the distance between our eyes – each
eye sees a slightly different image of the environment. Subsequently, the brain composes a
three-dimensional reproduction out of these two images.

In short, a 3D video is a visual medium that gives the viewer the impression of depth in a
scene by presenting each eye a slightly different picture, thus emulating the natural human
perception of depth. Technically two or more pictures of a scene have to be recorded,
reprocessed, transmitted and displayed for each viewer’s eye using a synchronous filtering
technology.

This makes both production and presentation of high-quality 3D content more challenging
than the comparatively controllable 2D content. Therefore, 3D experiences have been limited
to the cinema for a long time. With increasing digitalization and technological advancements
in the home sphere, 3D is now on the verge of entering the home through computer and TV
screens.

To summarize, the term 3DTV stands for a three-dimensional viewing experience that is
achieved with depth cues on typical home environment screens such as computer monitors
or TV sets. 1

1 st
In this paper we are focusing on 1 generation 3DTV, which is technologically mature and available today. It
nd rd
creates a 3D effect based on two pictures (stereoscopic 3D). More advanced 3DTV techniques (2 or 3
generation) use multiple pictures and have many advantages, but won’t be mass-market-ready for several years.

Opinion Paper 4 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

3 Is there a market for 3DTV?

Currently, 3D is an important topic for all major Hollywood studios. Some experts, such as
Jeffrey Katzenberg, CEO of Dreamworks Animation, are confident enough to announce that
“[…] in 5 years from now all films will be produced in 3D.”2

Whether 3D will really become the widely acclaimed third major industry change after silent
to sound and black and white to color movies also depends on the extent to which 3D will
make it from the cinema to TV screens.

3.1 3D cinema – A persuasive success story

Cinema has been the door opener for 3D, triggering a remarkable market resonance
worldwide and thus laying the foundation for 3D at home. Analyses of movies simultaneously
launched as 2D and 3D versions show that revenues per 3D screen outnumber 2D screens
by a factor of 2.2.3

This effect is not only based on a higher number of tickets sold, but viewers are also willing
to pay a significant surcharge for the three-dimensional movie experience. In some cases
ticket sales increased by more than 80%, while the 3D surcharge on ticket prices typically
averages 35%.4

In the example of Monsters vs. Aliens, 55% of worldwide ticket revenues were generated by
only 27% of the cinemas – those equipped with 3D-technology. In North America the movie’s
average revenue per 2D cinema was US-$ 40,500, compared to US-$ 102,000 for 3D
cinemas.5 Due to these effects, the 3D movie Avatar has recently become the highest-
grossing film in history, outperforming Titanic on a global scale.

Encouraged by the outlined increases of major cinema performance indicators the number of
3D movies is growing exponentially. About 47 3D movies have been announced for 2010 –
about 2.5 times more than 2009 and almost 7 times as many as in 2007.6 A similarly
explosive growth is expected for 3D cinemas: their number is forecasted to almost quintuple
from 5,000 by the end of 2008 to 25,000 by the end of 2011.7

2
Jeffrey Katzenberg at 3D-Entertainment Summit, Los Angeles June 2009
3
Screendigest 2009, Detecon Analysis
4
Detecon Analysis based on screendaily.com, 2009 (e.g. Monsters vs. Aliens averaged 4,050 visitors per 2D-
cinemas compared to more than 7,400 visitors on average per 3D-cinema).
5
Screendaily.com, 2009
6
ScreenDigest, 2009
7
ScreenDigest, 2009

Opinion Paper 5 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

3.2 3DTV – Developments along the value chain

As of today, 3DTV is in a very early market stage. However, stimulated by the 3D boom in
cinemas, more and more TV market players are positioning themselves along the 3DTV
value chain to ensure a good starting position for the expected market development.

Production Aggregation & Distribution Presentation

Q Native 3D recording
Q Computer-generated 3D images
(3D CGI)
Activities Q 2D -> 3D conversion
Q Content encoding
Q Content aggregation & program
design
Q Content re-encoding (platform
optimization, not all players)
Q Content distribution - non-linear
(VoD, Blu-ray) or linear broadcast
(e.g. Satellite, Cable, IPTV)
Q Content decoding (either done by
Blu-ray player, Set-top-box or TV
set)
Q Content presentation on various
screens (e.g. TV, monitor,
beamer)

Selected
market
players

Q Major content producers have
gained 3D experience and high-
3DTV- quality content available
Readiness Q 2D->3D conversion possible
Q Production of un-staged live
3D-content challenging
Q Higher equipment costs
Q So far mostly event based 3D-trials
by major broadcasters with
announcements for test channels
in 2010
Q Increased bandwidth is an issue for
all broadcasters
Q Standardization ongoing with
Blu-ray & HDMI advanced
Q First generation of affordable 3DTV
sets announced for mid-2010 based
on stereoscopic technologies
Q Necessity for 3D-glasses in the home-
environment
Q Significant base of installed 3DTV-set
expected for 2012 onwards

Figure 1: Generic 3DTV value chain

Production

Most advanced players on the 3D scene are content producers with significant experience in
3D production for cinema. Furthermore, content producers benefit from leveraging their
existing 3D content in the developing 3DTV-market.

Presentation

Starting with IFA 2009 and most notably CES 20108 3DTV was the most important trend,
and most major TV screen manufacturers announced mass-market-readiness of 3DTV
screens in 2010. In particular Sony, LG, Samsung and Panasonic are preparing mass
market launches of 3DTV sets in the coming months. Furthermore, Sony went as far as
forecasting “[…] that 50% of all TV sets sold will be 3D-ready within three years […]”.9

8
e.g. CNET best of CES award 2010 (category: screens) – www.cesweb.com
9
announced at Ceatec in October 2009

Opinion Paper 6 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

Aggregation & Distribution

Compared to content producers and screen manufacturers, the level of 3DTV market
readiness is significantly lower in the fields of aggregation and distribution.

Most advanced is physical distribution with the Blu-ray Disc Association (BDA) having
announced the Blu-ray 3D standard at the end of 2009. Subsequently, the first 3D Blu-ray
disc players are expected for early 2010 and both Sony Pictures and Disney announced their
first 3D Blu-ray releases shortly after that. Although consumers generally have to invest into
new 3D-ready Blu-ray disc players, popular game consoles such as Sony’s Playstation 3 can
be upgraded with 3D video functionalities via firmware updates. This will instantly boost the
base of installed 3D-ready Blu-ray players to more than 30 million at the end of 2010.

In contrast, it can be observed that the 3DTV activity levels of TV stations and platform
providers are much lower.

Besides the launch of BS11’s 3DTV test channel in Japan, the last two years were
characterized by event-based 3DTV trials to gain initial experience with this new technology.
Typical for these kinds of trials are live broadcasts of sporting events to big outdoor screens
or cinemas, which simulate the presentation layer at home. For example, France Telecom’s
subsidiary Orange did a 3D broadcast of a Ligue 1 soccer match in April 2009.

Just recently a number of major TV aggregators and distributors started announcing 3DTV
activities. BSkyB for example already produced some sporting events in 3D, it recently pre-
tested its capabilities and it is going to launch a 3D channel in April 2010, using its existing
HD infrastructure. Furthermore, the company intends to broadcast all events of the 2012
Olympic Summer Games in 3D. Similar plans to launch 3D channels using existing HD
infrastructure have been announced by France Telecom, BS11 and some Korean TV
stations.

Another 3D highlight in 2010 will be the broadcast of the opening game of the FIFA world
cup in June by the American sports channel ESPN, which will launch its 3D channel through
this event. The 24h 3D channel announced by Sony, IMAX and Discovery Channel will
provide additional momentum for linear distribution of 3D content in 2010.

3.3 3DTV – Outlook

Due to the early stage of both technological development and market maturity it is quite
challenging to make any detailed projection of 3DTV market development. As a lesson
learned from the slow acceptance of HDTV in some saturated TV markets such as Germany,
key success factors for the market adoption of 3DTV are an early standardization of formats
and sufficient quantities of available content.

Opinion Paper 7 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

In an optimistic scenario, analysts expect up to 290 million 3D screens installed worldwide in

2014, which corresponds to a 3D share of about 12% of the installed base of TV sets – a
penetration rate that is expected to be significantly higher in advanced TV markets such as
North America, Western Europe and Asia Pacific. However, especially if standardization
should be delayed, this number could be as low as 55 million installed 3D screens in the
same year.10

Overall, it appears to be realistic that 2010 and 2011 are going to be characterized by a
strong positioning of most TV market players along the 3DTV value chain. Important pre-
requisites for the successful introduction of 3D at home have been put into place and are
pushing this development. More and more consumers already experience 3D at cinemas
and are willing to pay for 3D. The amount of available content is increasing and 3D-screens
are becoming affordable. With 3D Blu-ray ready to market in early 2010, both TV stations
and distribution platforms need to react quickly in order to avoid loosing ground against
physical distribution.

In our view it is key for distributors to find a “co-opetition” model with major content providers
in this new market in order to develop an attractive 3D content portfolio enabling an
innovative image of their own TV platform and to attract early adopters through
differentiation. However, sometimes this may lead to conflicts of interest with these players
(e.g. positioning of 3D VoD vs. 3D Blu-ray). It is important to start monetizing the existing
consumer willingness to pay for 3D content, e.g. by tailoring innovative and appetizing 3D
VoD and PayTV propositions. From 2012 onwards there is the opportunity that – driven by
events such as the Olympic Summer Games and by further technological development –
3DTV will accumulate a significant share of content – and subsequently revenues – in the TV
market.

10
All figures in this section: ScreenDigest 2009

Opinion Paper 8 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

4 How does 3DTV work technically?

To understand the challenges different players are facing along the value chain, it is
important to examine 3DTV from a technological perspective.

4.1 Production

Three basic approaches to 3D content production have to be considered:

Live camera capture: The production of native 3D content is based on the simultaneous
capturing of content using either two cameras or one camera with two lenses. These two
lenses are kept at a certain distance from each other (the stereo basis) to emulate natural
human eyesight.

Computer-generated images (CGI): The creation of 3D content by computer is usually

considered the easiest method of stereo generation, since both the viewer perspective and
multiple views can be rendered comparatively easily, even after the film has been produced.

2D to 3D conversions: For conversions – such as the Star Wars series presently under
development – depth cues are taken from the available 2D content to compute a 3D image.
After extensive post-production a depth effect can be created, although this 3D-material
does not match the quality of natively produced 3D content.

4.2 Distribution

After production, 3D content is usually provided in two full HD 2D video streams – one for
each eye – and it therefore theoretically requires twice the bandwidth of 2D content. In order
to make the delivery of 3D content to homes both technologically feasible and economically
viable, TV platform providers are keen to reduce the bandwidth requirements of 3D content.

Distribution of full HD 3DTV requires investments in new infrastructure

A variety of 3DTV codecs is currently under development including Multi-view Video (MVC),
Video-Plus-Depth (VPD), Multi-view Video-Plus-Depth (MVD), Layered-Depth-Video (LDV)
and Depth-Enhanced-Stereo (DES). Out of these, MVC is the most advanced codec
regarding standardization and implementation in the industry, due to its simplicity in
algorithms, encoding/decoding processes and correspondingly low error rates as well as
easy to handle post-production. For these reasons, MVC has already become part of the
MPEG2 and H.264/AVC codec families and has been standardized by the Blu-ray Disc
Association, meaning that 3DTV content on Blu-ray discs will be delivered in MVC format.

General advantages include full HD video resolution for two or more video streams (full HD
3DTV) and compatibility with future 3D standards based on multi-view. Disadvantages from
a TV platform provider perspective include the need for new infrastructure elements (e.g.
encoders), higher bandwidth and storage capacity requirements compared to 2DTV, as well
as investments in new set-top-boxes.

Opinion Paper 9 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

With regard to set-top-boxes, existing hardware may hold the potential for remote firmware
upgrades in order to decode 3D content, but other factors suggest the employment of new
set-top-boxes. These factors are higher bandwidth and storage capacity requirements as
well as an upgrade to HDMI 1.4 – allowing two 1080p HD streams simultaneously, compared
to only two 1080i HD stream for HDMI 1.3. Similarly, consumers also have to invest into new
3D-ready Blu-ray disc players, unless they own an upgradeable device such as Playstation
3.

Depending on the techniques and codecs employed, 3DTV requires about 1.2 to 1.7 times
more bandwidth than 2D content. This factor may increase even further for future multi-view
technologies with multiple video streams.

The higher bandwidth requirement of full HD 3DTV is a particular challenge for linear TV
platform providers – especially IPTV players – that already struggle to provide high-quality
2D HD signals. Full HD 3DTV will aggravate this problem even further and will most likely
require investments in fast VDSL or FTTx networks. Physical distribution media – such as
Blu-ray discs – have no bandwidth restrictions and offer ample storage capacities of up to 50
gigabyte per disc.

But does it make economic sense that TV platform providers now invest into new 3DTV
infrastructures just after having completed the roll-out of HDTV infrastructures? Due to the
comparatively slow acceptance of 3D displays the answer to this question has to be negative
in the short-term. Therefore, TV platform providers should actively seek possibilities to utilize
their existing HD infrastructure for delivering 3DTV to their customers.

3DTV can be distributed via existing HD infrastructures

For the distribution of 3DTV via existing HD infrastructures, 3D content has to be encoded in
a single standard 2D HD video-stream. To enable this, techniques such as “side-by-side”
and “over-under” squeeze two 2D video streams into a single video stream thus halving the
horizontal or vertical resolution available for each eye (spatial compression – see below).
Re-using existing HD infrastructure for 3D therefore involves compromising picture quality. In
this case, the 1080p HD format really makes a quality difference compared to 720p or 1080i
due to the lower resolution for each eye. The signal can then be distributed via an existing
HD stream. The 3D-ready display transforms the image into a stereoscopic video stream.

Side-by-Side Format Over-Under Format

(reduction of horizontal resolution) (reduction of vertical resolution)

Figure 2: 3DTV formats based on spatial compression for HD compatibility

Opinion Paper 10 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

From a transport perspective the signal specified above does not differ from normally
employed HD signals, so problems along the infrastructure chain are not to be expected.
Indeed, initial tests utilizing the standard WMV codec via HD infrastructure of a major IPTV
operator produced positive results and broadcasters such as BSkyB use similar approaches
in their pilot projects to deliver 3D to the home. Still, operators are advised to perform an
end-to-end analysis in order to assure compatibility.

Despite the loss of video resolution and the need to compromise on 3D quality, the
advantages for TV platform providers are obvious: no additional investments in network
elements, bandwidth or storage capacities are required and existing codecs as well as HD
set-top-boxes based on HDMI 1.3 can be employed. This approach maximizes the potential
of existing HD infrastructures to deliver 3DTV to homes and it is therefore of particular
interest to cable, satellite and IPTV providers with limited bandwidth capacities. It also offers
TV platforms short time-to-market to benefit from the 3D window of opportunity, because it
only requires viewers to purchase a 3D-ready display in order to enjoy 3DTV.

In addition to linear TV described above, 3DTV content can also be distributed via existing
HD VoD infrastructures, since viewers can be enabled to download 3D content to their set-
top-box before viewing it – thereby eliminating the need for a constantly high broadband
bandwidth of linear TV and the compromise of a reduced video resolution. Download-to-Own
(DTO) and Download-to-Play (DTP) therefore may be utilized as short-term 3DTV alter-
natives for TV platform providers in order to compete with full HD 3DTV offered on Blu-ray
discs, even though a comparatively large amount of data has to be downloaded.

In summary, we can conclude that TV platform providers have a choice between utilizing
their existing HD infrastructure with a potential compromise on 3D video quality for linear TV
and investing into new 3D infrastructure, but the benefits of using latest 3DTV codecs and
standards delivering high quality 3DTV are obvious.

Figure 3 gives an overview of advantages and disadvantages of different 3DTV formats:

Format Method Advantages Disadvantages Example

Using color-coded Can be used with

Low video quality Anaglyph
Color Coding images for left and any 2D color
and 3D experience (red/green)
right-eye presentation display

Sub-sampling and Fits into existing

Spatial compressing left and infrastructure, Side-by-side,
Lower resolution
compression right-eye images into a needs only 2D Over-under
single 2D image frame bandwidth

Multiplexing each left

and right-eye image in Conserves full Bandwidth
Time Multi-view
the time dimension and video resolution increase by factor
Multiplexing Video (MVC)
thereby increasing the (full HD 3DTV) 1.2 - 1.7
frame rate by 100%

2D device (display,
Using a 2D image plus Complex and
STB) and codec Video-Plus-
2D + Depth an associated depth current failure
(MPEG2, AVC) Depth (VPD)
map for each image rates are high
compatibility

Figure 3: Comparison of 3DTV formats

Opinion Paper 11 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

4.3 Presentation

As already briefly outlined, a separate picture is required for each of the viewer’s eyes to
create a perception of depth, which is technologically challenging. Thus for a number of
reasons 3D has been limited to cinemas until now. Firstly, compared to home, cinema offers
an ideal 3D environment with controlled seating and subsequently an optimal viewing
position for the presentation of 3D content. Secondly, cinema has no bandwidth limitations,
since content is delivered through physical media or downloaded prior to presentation.
Thirdly, after investing in 3D infrastructure, cinemas can rely on failure-proof operations
whereas in the home a number of devices – especially set-top-boxes and displays – have to
interact perfectly to make 3D work.

Today there are a number of 3D presentation technologies which can handle the challenges
outlined above. They have different hardware requirements and are at different stages in
their development, so some of them are readier for the market than others. Moreover, the 3D
experience is a different one with each technology.

Basically the two basic technologies “stereoscopic 3DTV” and “auto-stereoscopic 3DTV”
have to be differentiated. Stereoscopic 3DTV creates the 3D effect by two separate views
and requires special 3D glasses, while auto-stereoscopic 3DTV usually relies on multiple
views (multi-view 3D) and does not require 3D glasses. Although auto-stereoscopic displays
offer advantages, it is not expected that they will become market relevant before 2015 due to
high costs and the fact that the technology has not quite matured yet.

For stereoscopic technologies both polarization and active shutter techniques create a high-
quality 3D experience, with some advantages for active shutter which allows full HD 3D.
Polarization usually halves the resolution available for each eye due to the simultaneous
presentation of two pictures using line-by-line polarization on one screen. However, active
shutter results in higher prices for 3D glasses and additional costs for the necessary infrared
equipment synchronizing TV and glasses. Another issue for active shutter equipment
(glasses and synchronization unit) is compatibility. As of today there is no industry standard
for active shutter equipment. Therefore, consumers currently have to buy active shutter
equipment specifically for their TV sets, which can be slowing down market penetration.

Opinion Paper 12 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

Figure 4 outlines advantages and disadvantages of stereoscopic 3D technologies:

Picture
Display & HW
Technology separation Advantages Disadvantages
requirements
method
Pictures are Faded colors and only
converted into Easy to imple- limited 3D effect. Often
Standard 2D color
Anaglyph complementary ment. 2D screens causes dizziness when
screen
colors & filtered can be used used for a longer
for each eye period of time

Usually halves
Light wave Special polari-
LCD display can resolution of screen.
filtering (hori- zation TV set or
Polarization be used. Good 3D Color and brightness
zontal, vertical metal coated
quality are reduced due to
and circular) screen
polarization filter

Only for screens

High hardware
Synchronized with high input &
requirements. Today
gating of pictur- output refresh Good 3D quality.
glasses are expensive.
Active Shutter es per eye at rate. Requires an Full brightness for
Potential sync failures
high picture extra unit to 2D.
between screen and
refresh rates synchronize 3D
glasses
glasses

Figure 4: Comparison of stereoscopic 3D technologies

4.4 Lessons Learned

We can summarize that 3DTV technology is about to reach maturity in all stages of the TV
value chain:
Q Even though production of 3D content is challenging, a lot of content producers
have gained experience by cinema productions. In addition to native production
and computer-generated images, 2D conversion further increases the number
of available 3D content.
Q For TV platform providers distributing full HD 3DTV means increasing
requirements beyond those of HDTV and substantially impacts their platforms.
However, temporarily the existing HD infrastructure can be employed to
distribute basic 3DTV (e.g. Side-by-Side).
Q Different display technologies for 3DTV screens have been developed – with
stereoscopic approaches on the verge of market readiness.

In accordance with the announcements of major content producers, distributors and display
manufacturers initial steps into 3D will be taken in 2010, even though a full market uptake is
only forecasted for 2012 onwards. Consequently, TV platform providers need to prepare for
3DTV and might be able to participate by offering 3D via existing HD infrastructures and by
utilizing VoD. So which steps should TV platform providers take to benefit from 3D?

Opinion Paper 13 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

5 Next Steps

We recommend the following three step approach for TV platform providers on their way to
3DTV:

1. Now – Check 3D-readiness of your platform

The minimum requirement for TV platform providers today is to test the 3D-readiness of their
platform: Are there any bottlenecks along the HD distribution chain? If so – how can these be
overcome to make the infrastructure 3D-ready?

Initially this simply requires TV platform providers to use 3D test content via their existing HD
infrastructure and to evaluate all generations of HD set-top-boxes distributed to their client
base. This way, providers can assure the 3D-compatibility of their existing infrastructure and
learn about 3D bandwidth requirements and quality differences of varying formats. Both
LiveTV and VoD should be evaluated with regard to 3D.

In addition, 3DTV should become part of strategic planning including the coordination with
partners and suppliers such as hardware manufacturers (e.g. set-top-box) and IPTV
infrastructure providers (e.g. middleware).

2. Until 2011 – Use window of opportunity for 3D positioning

TV platform providers should actively seek to position themselves as 3D-ready within the
market, both to improve their innovative image and to attract early adaptors. Initial steps of
an active 3D positioning could include to
O issue press releases announcing 3D-readiness or 3D beta status
O demonstrate 3D-readiness of platform on an event basis
(e.g. flagship stores, conferences, trade fairs)
O use existing HD infrastructure to provide exemplary 3D content
(e.g. 3D loop channel, event-based 3D content)
O create a 3D content portfolio with a limited amount of high-quality 3D blockbusters
via VoD (e.g. Avatar, Ice Age 3, Coraline)
O seek partnerships with display and content producers who are eager to enter the
home market (e.g. Sony, Panasonic, Hollywood studios)

All examples mentioned above can be realized with a manageable effort through existing HD
infrastructures. At the same time they will have a strong positive impact on the provider’s
image in the market. We believe that despite certain open issues (e.g. 3D standards,
interfaces and specifications under development) operators should enter the 3DTV market
now with an initial offering and develop it further once the market establishes itself. Waiting
for all questions to be answered may jeopardize the opportunity to achieve a leading position
in the developing 3DTV market.

Opinion Paper 14 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

Active 3DTV players such as BSkyB in the UK and DirectTV in the US already announced
3D offerings. As mentioned earlier, VoD can play a critical role for providers with scarce
bandwidth capacities such as IPTV. Download-to-play can be used even in competition with
Blu-ray.

3. 2012 and onwards – Prepare for 3D with significant business impact

We expect 3DTV to become a major offering by 2012 and onwards. With a sufficient number
of 3D-ready displays in the market, approved standards, sizable market segments and a fair
amount of 3D content, 3DTV will become relevant for TV platform providers’ core business.
By 2012 3DTV production will not be limited to Hollywood studios, but will be used by a
diverse range of players and will gradually shift from event-based VoD and Blu-ray to a mass
market distribution via 24h-LiveTV broadcasting of everyday programs.

From 2015 onwards, auto-stereoscopic 3DTV may lead to a number of additional challenges
for TV platform providers, including the need for higher bandwidth capacities. Another long-
term development concerns higher video resolution (e.g. 4K-television) which is expected to
be relevant for 3DTV as well.

As a consequence, the outlined opportunity to distribute 3DTV via HD-infrastructure in 2010

is unlikely to be sustainable in the long run, and TV market players are advised to actively
participate in the definition and implementation of new industry standards as well as in
assuring the readiness of their platform including the evaluation of business models,
technologies and infrastructures.

The question for TV platform providers is not whether to embrace 3DTV, but how.

Opinion Paper 15 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

6 The Authors

Tobias Hiddemann is Consultant in the Competence Practice Strategy & Marketing of

Detecon International GmbH specialized on Telco strategy development. After earning his
degree in business administration, Tobias started his professional career at Detecon in 2006
and is primarily involved in service launch, post-merger integration and IPTV projects.

You can reach Tobias Hiddemann by calling +49 151 118 165 82 or writing to
Tobias.Hiddemann@detecon.com

André Seltitz is Senior Consultant in the Competence Practice Information Technology of

Detecon International GmbH specialized on IT-focused business strategy. André has more
than 5 years ICT experience both within industry and consulting. His current project focus
has been strategy development and launch projects in the areas of M2M, IPTV, HDTV and
3DTV.

You can contact André Seltitz by calling +49 171 767 00 83 or writing to
Andre.Seltitz@detecon.com

Opinion Paper 16 Detecon International GmbH

 3DTV – The Next Challenge for TV-Platforms?

7 The Company

We make ICT strategies work

Detecon is a consulting company which unites classic management consulting with a high
level of technology expertise.

Our company's history is proof of this: Detecon International is the product of the merger of
the management and IT consulting company Diebold, founded in 1954, and the
telecommunications consultancy Detecon, founded in 1977. Our services focus on
consulting and implementation solutions which are derived from the use of information and
communications technology (ICT). All around the globe, clients from virtually all industries
profit from our holistic know-how in questions of strategy and organizational design and in
the use of state-of-the-art technologies.

Detecon’s know-how bundles the knowledge from the successful conclusion of management
and ICT projects in more than 160 countries. We are represented globally by subsidiaries,
affiliates, and project offices. Detecon is a subsidiary of T-Systems International, the
business customer brand of Deutsche Telekom. In our capacity as consultants, we are able
to benefit from the infrastructure of a global player spanning our planet.

Know-how and hands-on expertise

The rapid development of information and telecommunications technologies has an

increasingly significant influence on the strategies of companies as well as on the processes
within an organization. The subsequent complex adaptations affect business models and
corporate structures, not only technological applications.

Our services for ICT management encompass classic strategy and organization consulting
as well as the planning and implementation of highly complex, technological ICT
architectures and applications. We are independent of manufacturers and obligated solely to
our client's success.

Detecon International GmbH

Oberkasselerstr. 2
53227 Bonn
Telefon: +49 228 700 0
E-Mail: info@detecon.com
Internet: www.detecon.com

Opinion Paper 17 Detecon International GmbH