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| EMagazine Volume 4 Issue 5 October 1999 |
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In the future, if consumer tastes still center on watching TV (or some kind of video) and listening to music, then the goal of the entertainment industry will be to define how and where these activities take place (and who will be participating). Currently, there is much activity surrounding the development of various "black boxes," which create new possibilities in the delivery of and interaction with digital content. |
Here's one phrase many companies are hoping to eradicate in the 21st century: "I'm bored, and there's nothing on!"
This is precisely the kind of statement, likely emanating from the lips of some precocious child, that a number of players from some very powerful industries - broadcasting, the Internet, computing, gaming, and music - are hoping to quell in the next century. From Hollywood and Silicon Valley and eastward to New York, companies are betting that a "digital revolution" in home entertainment will change the way in which consumers receive and interact with entertainment "bits" and their respective components.
The "Digital Millennium" and Entertainment
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Entertainment and computing applications also have a bearing on consumer attitudes toward technology (and perhaps some insight into exactly which US households will be likely early adopters of new applications at the beginning of the next century). Networks @ Home: The National Scan of Electronics Ownership study provides some key insight into the kinds of consumer segments that will be the early adopters of the "gee-whiz" technology coming our way. What we found were some dramatic differences in the attitudes toward technology of homeowners who already have multiple-PCs and home theater systems and those consumers who do not. In other words, technologies that make it easier for consumers to access and use data and entertainment content will likely find their early support in these key target segments.
The Platforms, the Platforms, the Platforms…
In the future, if consumer tastes still center on watching TV (or some kind of video) and listening to music, then the goal of the entertainment industry will be to define how and where these activities take place (and who will be participating). Currently, there is much activity surrounding the development of various "black boxes," which create new possibilities in the delivery of and interaction with digital content. For example:
Set-Top Boxes:
Although set-tops have been primarily the tool of cable companies to deliver
cable programming, this will soon change. The September 15, 1999, announcement
by Motorola Inc. that it was merging with set-top manufacturer General
Instrument Corp. is but one example of set-top box's perceived significance as a
medium for digital content and interactive television. Comments by Motorola's
chairman and chief executive officer, Christopher B. Galvin, point to the future
of the television "black box." According to Motorola, the merger will
allow the Company to "expand our portfolio for network access, delivering
next-generation solutions along with 'home hubs' that will handle high-speed
Internet access and video entertainment."
Other companies are as intent to utilize the set-top as a residential gateway for advanced services. For example, Microsoft Corp.'s $5 billion investment in AT&T earlier in 1999 is seen as a way to ensure that its CE operating system is found in as many as 5 million AT&T set-tops. Scientific-Atlanta is not resting on its laurels, either. Sales of the Company's advanced set-top box have boosted sales. Sony Corp. has also entered the cable set-top box market with a bang, closing a $1 billion deal to manufacture 3 million advanced platforms for Cablevision Systems. And these devices, according to the Federal Communications Commission (FCC), will be available at the retail level by July 2000 to, in the words of the FCC, "enhance innovation and bring consumers better prices."
Digital Recording Devices:
The "personal video recorder" (PVR) or "personal TV systems"
revolution, embodied in the form of digital recording devices from TiVo and
Replay Networks Inc., now reaches the consumer directly. As of September 10,
1999, TiVo appliances are available at Best Buy specialty retail stores. This
announcement was preceded by a flurry of activity over the summer, in which TiVo
and Replay Networks announced a series of investment agreements. Chief among the
financial backers of both companies are a number of top-level television
networks and content providers (chief among them are CBS, Cox Communications,
Discovery Communications Inc., NBC, Showtime Networks Inc., Time Warner , and
The Walt Disney Company) many of whom were initially threatening to sue one or
more of the companies. I guess the old adage "If you can't beat 'em, join 'em,"
has been altered to read, "If you can't kill 'em, make money off 'em!"
Game Consoles:
Video game players are still largely the realm of teenage boys, but as they get
more advanced, they may in fact serve as gateways for high-speed Internet access
and enriched content - which appeal to all members of the family. And that
appears to be the strategy of the major game platform developers.
Sony Computer Entertainment Inc. remains relatively tight-lipped about its plans for the PlayStation®2, which is scheduled for a March 2000 release in Japan and a later release in the US. However, what Sony has publicized about the next-generation gaming console is that it will serve as a "platform for Internet-based electronic distribution of digital content." The console will include a way to connect to a cable modem, which will serve to help "download data-intensive computer entertainment content to hard-disc drives" provided by the Company.
Why is this significant? Well, it probably doesn't mean that the PC is going away as a productivity or entertainment platform, at least not in the very near term. Parks Associates' study - Networks @ Home: Multiple-PC Households - reveals that PC ownership is high, even in households with more than one gaming console. On the other hand, what Sony is proposing could allow the game console to serve as a gateway and/or centerpiece to a broadband home network based on entertainment content. In fact, our consumer research indicates that consumers in multiple-PC households who currently own one or more game consoles are more receptive to the possibility of PC-based appliance or entertainment system in the home. More importantly, they are willing to pay significantly more for such a product or system! So there apparently does exist a good opportunity for the gaming folks.
…And Speaking of Content…
Sony is not the only company striving to build a business model based on
"e-content." Dallas-based Panja (formerly AMX/PHAST Corp.) plans to
provide the hardware to deliver a variety of content (developed through
partnerships with Internet content providers) through broadband pipes into the
home. Panja has aligned itself with content providers such as Infoseek to bring
specialized content - news, stock updates, music, and video - into the home.
Then, by its utilizing its experience with high-end home control systems, Panja
can set up a system that will route specific content and data to appropriate
devices in the home, such as a touch screen, a television, or a stereo. Is
"pay-per-bit" entertainment the wave of the future? With Sony, Panja,
and other entities pursuing other opportunities - particularly in the area of
video-on-demand - it could very well become a reality.
Panja is set to demonstrate its technology in connection with Replay Networks. This demonstration will take place at Parks Associates' Forum'99: Defining the Digital Millennium, held October 25-27 at Rancho Mirage, California. Parks Associates is pleased to welcome Panja and more than 20 other sponsors - including Home Toys, a publication sponsor - to the only cross-industry conference that moves beyond standards to discuss the business issues, strategies, and opportunities across industries. For more information about Forum'99, please visit http://www.parksassociates.com/forum99/index.html or call Parks Associates at (972) 490-1113.
Kurt Scherf is an in-home network analyst for Parks Associates, a Dallas-based market research and consulting firm that studies emerging residential technologies and services. Parks Associates publishes reports and journals, hosts industry gatherings annually, and provides custom information for Fortune 500 technology-based companies. Mr. Scherf is the author of Networks in the Home: Emerging Technologies and Standards and Analysis and Forecasts. For more information on this report, call 1-800-727-5711 or e-mail sales@parksassociates.com . Mr. Scherf is available at 972-490-1113 or at scherf@parksassociates.com .
