The Consumer Electronics Show (CES) held in Las Vegas, Nevada from January 6-9 was a dazzling, one can say “over the top” way to start the new year (more on that later) for the broadcasting industry. The world’s largest consumer technology trade show, the CES was attended by over 140,000 industry professionals from over 80 countries. No other industry show demonstrates the pulse of consumer demand for information and entertainment devices than the CES show.
Past CES shows have been the launch pad for cutting edge devices such as the VCR (1970), the CD player (1981), Personal Computer (1982), DVD (1996), HDTV (1998) and 3D TV (2009), among others.
But for every cutting-edge product successfully launched at CES, there are hundreds that failed or never quite caught on among consumers. This year’s CES is no exception. It’s easy to get lost in the glamour of celebrities and constant barrage of glitzy marketing in the sprawling halls of CES with over 2,700 exhibitors and 250 conference sessions, so I’ll attempt to summarize the key highlights for the broadcast and satellite professional.
Well, an industry trade show these days would not be complete without 3D TV products on display and there were no dearth of those at CES. Although the spotlight belonged to Tablets, PCs Internet-connected TVs and Over-the-Top (OTT) devices, Toshiba demonstrated its glasses-free 3D TV sets to mixed reviews. LG demonstrated a smart phone that can display 3D video. Let’s just say that even the manufacturers admit that glasses-free 3D TV is still a nascent stage and will not be ready for commercial rollout anytime soon. Panasonic did debut the first 3D camcorder, which should fuel more user-created 3D content and help 3D TV adoption.
The consumer press has characterized the 2011 CES as the year of the “Tablet PC” and rightly so. Over 80 different new models of Tablet PCs were launched at CES to compete in a market dominated by Apple’s iPad which sold nearly 12 million units in 2010. Now one might ask, why would the sales of tablet PCs be of any relevance to say, a satellite service provider? Welcome to “Television 3.0” as one speaker describe the new multiplatform media environment.
Tablet PCs unlike laptops and desktop PCs are used mainly as entertainment appliances for viewing video and other content such as movies. Tablet PCs have the advantage of mobility and can be brought anywhere. However, like all the wireless and interconnected devices on display at CES that even included smart home appliances such refrigerators, tablet PCs need access to the radio spectrum to get connected. And that usually means they need bandwidth and lots and lots of it. That where satellite service providers come in. Terrestrial delivery alone will not be able meet the large bandwidth demands of mobile video and data and hybrid solutions requiring some satellite component might be necessary. Or, at least, that what the satellite service providers, who are paying a lot closer attention to developments at the CES in recent years, are hoping.
The Chairman of the US Federal Communications Commission Julius Genachowski summed it up best, saying “The consumer electronics industry is going wireless, and the future success of this industry and our innovation future depends on whether our government acts quickly to unleash more spectrum, the oxygen that sustains our mobile devices.”
The other key products that dominated the spotlight in this year’s CES are Internet-connected TVs and Over-the-Top (OTT) devices such as Apple TV, Google TV and Roku, among others which connects TVs to the internet to enable access internet video suc has Netflix, Vudu or iTunes. This is definitely not your father’s TV. Traditionally viewed as a passive device that requires little interaction, today’s television is an interactive device that require a more “immersive experience.”
OTT devices have become very popular over the last year and will only get bigger considering the connectivity of home entertainment and portable CE devices, according to IMS Research. Consumer demand for online video content will motivate sales of Internet-connectable TV devices to nearly 350 million units worldwide by 2015, setting the stage for intense competition in app development, international market according to research firm Parks Associates.
In a recently published study, “Convergence in Home Entertainment and Portable CE Markets”, IMS Research forecasts that over 2.1 billion
connected devices will ship globally in 2011. This includes a forecast of 226 million fixed entertainment devices such as TV sets and game consoles, over 1.6 billion portable CE such as smartphones and tablets, and 268 million home network devices such as residential gateways.
The popularity of OTT devices in the US has led to a phenomenon called “cord-cutting” where consumers have been cancelling their cable and satellite subscriptions and relying on an OTT device or an “Internet-enabled” TV to view videos. The cord-cutting phenomenon is a cause for concern for Direct-to Home (DTH) satellite service providers and cable providers.
"Set-top boxes are slowly catching up to consumer electronics devices which enable access to interactive services and over-the-top (OTT) content," says ABI Research practice director Jason Blackwell. "In the US, operators are favoring their own 'TV Everywhere' platforms, including Comcast's Xfinity, Dishonline.com, and U-verse, rather than supporting OTT video services. In Europe, Project Canvas and HbbTV are more open interactive TV platforms.
"More processing power is being tested in set-top boxes, including early tests of an Intel Atom-based platform. These high-powered boxes act as gateways with multiple tuners and support multi-room viewing with thin clients on other TVs in the household," says ABI Research senior analyst Sam Rosen. "'No new wire' home networking standards are enabling deployment of these gateway devices."
Perhaps to keep on top of the competition, EchoStar Advanced Technologies., a wholly owned subsidiary of US DTH operator EchoStar Corporation, announced at the CES that it has acquired assets of Utah-based Move Networks, a provider of advanced solutions for large scale streaming of video on the Internet.
However, cable and satellite operators need not worry about competition from OTT devices for at least a while, according to a recent report by Moody’s Investor Services. The key is programming content, which OTT providers don’t have either the rights to popular shows and events nor the expertise to develop quality programs. “Even with the advent of Internet TV, the broadcast and cable networks that invest heavily in exclusive content rights to popular programming and sporting events that command high viewership ratings will be protected from online competition over the next 10 years,” wrote Neil Begley in the Moody’s report, “2020 Vision: US Telecom, Media and Technology.”
The key is whether Google or Apple will be willing to make the financial investment to compete for sports-content rights and invest in production to put their own programming on the web in competition with the traditional content companies according to Begley. “But this is not highly likely as they would need to create or buy a lot of programming to be successful,” he said.
Perhaps, that is why the much anticipated launch of the OTT device Microsoft TV to compete with Apple and Google TV, which was predicted by most analysts will occur at this year’s CES did not happen. Instead Microsoft CEO Steve Ballmer in his key note at CES used the opportunity to announce the expansion of the over-the-top qualities of the Xbox Live console with the addition of Kinnect for Netflix and Hulu in the US market. Microsoft may be cautiously getting into the OTT market given its previous unsuccessful forays such as Windows Live TV and Microsoft Web TV.
Although not perhaps as earthshaking as launching a product to take on both Apple and Google and even cable and satellite operators, the addition of internet video delivery to gaming devices is an indication of where things are heading—an interconnected multiplatform environment that will require a lot of bandwidth.
And where there’s bandwidth demand, thee should be opportunities for satellite service providers.
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Virgil Labrador is the Editor-in-Chief of Satellite Market and Research based in Los Angeles, California. He is the author of two books on the satellite industry and has been covering the industry for various publications since 1998. Before that he worked in various capacities in the industry, including a stint as marketing director for the Asia Broadcast Center, a full-service teleport based in Singapore. He can be reached at virgil@satellitemarkets.com
