Yes, Shanghai now has the first test network of FTTH. No, it does not stand for Fantastic Television Treats for Home, but in fact for Fiber-to-the-Home. It is used to provide services such as HDTV, VoIP, Broadband Internet and networked computer games. I am not sure what this means in terms of IPTV and how the two will co-exist.

Another government group - The Ministry of Information Industry (MII, pronounced “Mission Impossible 1“) - has projected the amount of FTTH consumers will break 20 million by 2008. They have said that the test network has been set up in a “Residential area” of Shanghai, so that really narrows it down. Well, I can at least tell you it is not in my area.

This whole thing brings to mind the old concept of the Integrated Services Digital Network that tried to accomplish exactly the same thing as FTTH is doing today. Really, it was the same thing, but they seemed to be about 25 years too early. ISDN was first introduced in the early 1980’s, and was not widely accepted until the early 90’s, but never really got off the ground. It seems that having all your services on one line was a ridiculous proposition, mostly due to poor adpotion and high cost.

Nowadays, computers and connections are so inexpensive; it seems about time for something like this to come forward. It’s about time we had phone sex, internet porn and the Playboy channel on the same line!

Shanda’s bigwigs are at it again. Seems president of Shanda Interactive Entertainment Jun Tang has something to say about the X-box. After their decision to start selling music online in an environment saturated by piracy, and developing health food and drinks, they have decided to denounce Microsoft’s Xbox 360 release in China. For those of you who are unfamiliar, the Xbox 360 is Microsoft’s next generation console, to compete with Playstation 3 and Nintendo’s Revolution.

He claims the poor popularity of FPSs and sports games in China is one of the reasons. Sure, but perhaps Chinese people might actually play other games? While Xbox 360 has a decent library of games that will only continue to grow.

The other reason he cited was that the device would be too expensive for Chinese people  if there are no games for it. I really don’t think that is much of a problem. I put Chinese electronics consumers into 2 groups- those able to buy an Ipod and those who cannot. There does not seem to be much of an in-between.

I think this move is probably because of Shanda’s recent big losses and Microsoft’s plan to invest 100 million dollars per year in China’s internet market, putting even more pressure on Shanda’s weakening position. Perhaps they took this chance to take a few cheap shots at Microsoft’s strategy. While the big “M” has already has a history of poor performance in China, they do learn quickly. Given the moves Shanda is making, I would not put too much credibility in their analysis right now.

It seems that Philips wants their flat screen displays in all Chinese households. Here is what Rudy Provoost, CEO of Philips had to say.

“China has 350 million households. If each family has one Philips product there’s huge market potential for us,” Provoost says. He adds that flat screen TVs are the driving force for their business.

He semed to be hinting at the fact that they wanted an Flat Screen TV in each household. Now don’t get me wrong, but what percentage of those households could really afford a Philips flat screen tv? Who would want to either? Why when you have a perfectly good CRT for half the cost that will last twice as long. I am guessing their potential market is a very small fraction of that figure. I would suggest that his market analysts come to China and actually learn what the Chinese people want.

Some figures that seemed more well thoguht out were that they want to take their market share from 3.5 to 7 percent in two years. Again, we might see some Chinese companies merging to fight off the “foreign devils”. They are even trying to etch themselves out 5 percent of the booming mobile phone market.

Anyhow, they seem confident enough. It’s easy to be when you are one of the world’s biggest electronics companies, bringing in USD$35.48 Billion last year. Not to be easily mistaken, their market dominance is currently in lighting products, electric shavers and DVD recorders. I heard that electric shavers were not so popular with the Chinese.

You can read more about it here.

Not sure if you are aware, but Intel has recently released a new chip called “Viiv” (read: vīv) that is aimed at the digital entertainment market. This means more movies, pictures and all sorts of multimedia. On its own, it is not such an interesting thing. Knowing that it is the content that drives the platform, Intel has made deals with content providers such as Eros, the largest international distributor of Indian films, New York-based CBS Corp.’s MTV, Burbank, California-based Walt Disney Co.’s ESPN and, not to be missed, Shanghai Media Group.

Now Intel never said anything about moving in on the Chinese entertainment market. If not, are they trying to appeal to Chinese abroad? I think it is more likely that Intel with try to market the new chip in China, but now since it is dabbling in providing content; this could lead to some unforeseen governmental issues. We will have to wait and see how it’s dealings with SMG turn out.

SMG, being government controlled probably won’t much enjoy if Intel tried to buddy up with other China based content providers in the future. Though, playing their cards right, I think Intel might make a niche for themselves, if even in the IPTV market. I really don’t see the boom in sale of entertainment centric PC’s in China. Why buy an expensive media PC when you can go to the local store and buy a cheap beige box for a fraction of the price, that for a fraction of the price, does essentially the same thing. For those less tech savvy, a TV with IPTV or a DVD player is sufficient.

We are at a time of great change in terms of digital entertainment. Between emerging technologies, government regulations, and consumer tastes, China’s future in this area may be difficult to predict. We will see in the next few years how it all pans out.

Update January 7:
Here is a more recent story covering the details of partnership between SMG and Intel- http://www.digitalmediaasia.com/default.asp?ArticleID=12427

I remember back in the day of phone modems when the big tech companies were trying to push ISDN as the all in one data line for phone, data and television. Unfortunately due to slow adoption, the medium was never successful.Nowadays we have cell phones, ADSL, and digital cable. Still, on the cable end China is still lagging behind. Are they ready to adopt IPTV, rather than digital cable as their source of entertainment?

I seem to have mentioned the Chinese government’s restrictions on media innumerable times already, but again, it is a hurdle to IPTV entering China. Yet despite this, the piracy or the relatively shallow penetration that IPTV has, the potential is enormous. Industry experts are claiming that China will soon overshadow markets such as Italy, Japan and Hong Kong.

For those of you unfamiliar with HDTV, think of it as streaming video from the web, without a computer. It really is simply just that.

German company Siemens has already bet on the success of IPTV in China, launching their own IPTV service in conjunction with Shanghai Telecom Company with Shanghai Media Group providing content.

While IPTV has been growing its roots in China for some time now, it is at the point where it will reach critical mass needed for mass adoption and eventual changeover from traditional cable services. Could this also see the better integration of cable and internet companies? Signs point to yes, but it depends greatly on what the government does at this stage.