If they had spent more time together and merged their respective laboratories in Murray Hill and Princeton we wouldn't have two content transport systems fighting over who is going to service our home today.

DVD Insider #54 - Bell, Sarnoff Together at Last

THE Insider

DVD Insider #54
Bell, Sarnoff Together at Last
by THE Insider
an industry marketing/communications expert with more than 15 years of video, storage and networking experience.

  • 1 If by Wire
  • 2 If by Air
  • 3 If by Whatever
 

New Jersey isn't that big of a state that Alexander Graham Bell and David Sarnoff two of the 20th Century's leading inventors, engineers and scientists certainly must have bumped into each other periodically.

If they had spent more time together and merged their respective laboratories in Murray Hill and Princeton we wouldn't have two content transport systems fighting over who is going to service our home today (Figure 1).

But it didn't happen.

Now there are two many people making a living with both men's inventions that it probably never will. It will just look similar.

The Cable Guy and the Telephone Guy are both jockeying to be the bigger winner in delivering voice, data, video content to the home.

The Cable Guy has a head start. He has the ear of Tellywood and has vowed to protect their version of IP (Intellectual Property) at all costs (our costs that is).

The Telephone Guy has the ear of the consumer especially since we are accustomed to heavily using their IP (Internet Protocol). This is certainly true of the coming generation of young buyers who multitask with their phones like there is no tomorrow!

Until the turn of the century Alex's and Dave's (they were on a first name basis after all) focus was mostly on analog, one-way communications. Everyone got the same content. On-demand viewing at your convenience was an added cost. Sarnoff's practitioners have grown accustomed to a fairly stable home environment where most people still get their TV enjoyment free and analog (Figure 2).

Families no longer congregate in the family or living room for their entertainment.

They want their entertainment throughout the house. They want it on all of their portable devices (Figure 3). That is still a long way from slam-dunk plug-and-play easy. Even Otellini (Intel) and Gates (Microsoft) need help to get the devices to work together and share content.

IPTV both flavors -- is beginning to gain followers around the globe. And it's turning the business model on its ear.

In the U.S., analysts estimate there are only two million IPTV households and nearly 21 million worldwide. The major growth is in Asia, Europe and North America.

The writing is on the wall that tomorrow the content is going to be digital. People want and expect two-way networks. Folks are excited about being able to selectively get personalized content. On-demand is becoming an integral part of the entertainment process.

For the telcos, satellite providers and cable firms; that is the level of service consumers will expect and demand.

Not really known as world class service firms, it is a level of service content owners and providers are struggling to deliver. And at the same time, make a buck.

They may not have figured out the financial side yet but they are running like crazy to get their unfair share of the growing broadband market (Figure 4). In many instances they won't be competing against each other because while huge numbers of households have cable (Figure 5) not every home has broadband wire capabilities. Believe it or not…many don't even have a computer (GASP!!!).

The U.S. still represents the largest broadband market (Figure 6) but already the UK (okay it's a smaller country but still…) has more than 50% penetration of broadband service. If you're looking to invest, scout almost any country in the Pacific Basin. The heat is on and the potential is to die for !!!!

We admit right up front we don't see the big excitement and urgency of demand. But then Boomers aren't the wave of the future (we have trouble focusing on the TV set) it is the teens and tweens who want it all and want it now!!

They want their video iPods. They don't just want TV shows over the cable or from the satellite, they want it on their terms…TV on demand. Oh hell…they are demanding everything (Figure 7) !

So who is going to be the winning platform? All of them!

TV (cable and satellite) will continue to have the lead when it comes to home entertainment. But if you see our kids whizzing down the street with their mobile (everything) phones blasting away it is pretty obvious that you're going to invest in mobile services (no this isn't considered inside trading !!).

Why?

We haven't got a clue!!!

We want a phone that rings…younguns' (gawd that sounds old) want ring tones (Figure 9). "Everyone" wants unique screen savers. Silence is deafening so they need music rattling around in their heads constantly.

They've got to be entertained. They need their games, their sport clips, their movie previews, their movies.

When we said we were bored, dad had a ready answer…get a job!! When we wanted entertainment we skipped classes and went to the pool hall like any testosterone-filled male or went skinny dipping or ... But that was then. This is now. The world is digital.

And that scares the hell out of Tellywood, their lawyers and the Congressional seats they own. They want to deliver the content but they want to do it their way. The solution is Digital Rights Management (DRM) the idea of delivering you the content without really giving it to you!

The solution is Advanced Access Content System (AACS) which is still in the finalization stage but it is close.

Their initial solution was delightfully simple…add security on every device!

That stops copying and sharing before it starts.

Ok it sucks a little. But wait!! The really important content isn't theirs …it's yours!!!

You know. Your pictures. Your movies. Your documents. Your school/office work. Your purchased videos. Your purchased music. Your stuff.

Their content and your content are still open to interpretation. But in our book if we purchase the content we should own it.

But you still want to be able to move it around the house, onto/off of your iPod, onto your notebook computer, onto your cellphone.


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