3D HDTV, When the Glasses Came Off

Tuesday May 31, 2011 - Greg Scoblete

In most years, the consumer electronics replacement cycle is driven by incremental improvements. More megapixels here, larger displays there. Occasionally this cycle is punctuated by a bona-fide breakthrough that transforms the market: what the iPod did for portable music, the Flip did for camcorders, the iPad did for tablet computers or what high definition did for the television market. It was clear that consumer electronics manufacturers were hoping for a similar breakout for 3D HDTV - a breakout that, to date at least, just hasn't materialized.

One need only walk the floor at the CES and NAB shows to understand that 3D HDTV hasn't lived up to the considerable hype surrounding it. At CES, vendors spent half as much time explaining why 3D HDTV hadn't failed than boasting about the technology itself - and if you have to explain to people why a product isn't a failure, it's probably a failure. At NAB, exhibitors without a huge monetary stake in the outcome didn't think much of 3D video. Broadcasters were leery of the expense and technological hurdles associated with 3D in light of a perceived lack of consumer enthusiasm.

There is no shortage of reasons for 3D's flat reception: there's the glasses of course. No one likes to wear them, especially heavy ones and most especially heavy expensive ones that need a battery. Not everyone can even properly view 3D images, some people (like yours truly) get motion sickness in the process and there are even concerns that 3D viewing can impair children's depth perception. If ever there was a kiss of death, it's stoking parental fears about product safety. And, as DTC's own Stewart Wolpin documented, retailers haven't exactly done a bang-up job selling 3D either.

But I think there's something else at work. I think consumers caught wind of the game. Consumers understand the replacement cycle, whereby electronics manufacturers quickly set about making new products "obsolete" by piling on new features in an effort to entice consumers to fork over more money. Heck, Best Buy even poked fun of it in a recent ad campaign. But it's one thing to have new technology eclipsed by better technology. It's quite another to have something of dubious benefit paraded before your eyes as the Next Big Thing. Consumers may be willingly led along with incremental feature enhancements, but they don't want to feel like marks.

That's not to say 3D HDTV market has already failed. In fact, it appears that 3D capability is going to be incorporated into an ever-larger assortment of TVs - whether consumers want it or not. The adoption curve, therefore, will grow. Think of it as an update to Henry Ford's famous maxim about customers having any color car they like so long as it's black. The 21st century edition: you can have any TV you like, so long as it's 3D.

Why Microsoft Bought Skype

Monday May 23, 2011 – Stewart Wolpin

Socializing with my tech reporting peers at a couple of events this past week, the Microsoft-Skype deal was a popular – and puzzling – topic of conversation. No one could quite grab the love handles on this deal, why Microsoft would spend $8.5 billion on a company that lost a reported $7 million last year and $418 million in 2009.

Most folks say it’s because Skype has nearly 700 million registered users worldwide. Yeah, that's some of it. Then there's Skype's video telephony technology. Yeah, that's a big part of it.

But I humbly submit Microsoft has finally grokked the Apple success story – it's the ecosystem, stupid.

As Microsoft CEO Steve Ballmer noted in an interview on CNBC, the megadeal will allow the two companies "to build a strong framework for collaboration" and "one-plus-one is definitely more than two."

Unlike Apple, Microsoft isn't really a hardware vendor (other than Xbox), so its ecosystem options have been limited. And we all know the reaction of the Justice Department had when Microsoft tried to piggyback its ecosystem-building software (i.e. Internet Explorer) within Windows.

But Skype poses no such monopoly-laden threat – it's already been voluntary loaded onto hundreds of millions of – maybe a billion – PCs, as well as some Panasonic and LG connected HDTVs, and new Panasonic connected Blu-ray players.

And nothing else. And therein lies Microsoft's ecosystem opportunity.

On the phone in the living room

First, turning a Blu-ray player into a video phone is a much better idea than incorporating the capability into TVs. Consumers are far more likely to buy a new $150 Blu-ray player to get video telephony as a Trojan Horse capability than purposely on a $1,500 HDTV. I wouldn't be surprised if a lot more Blu-ray player makers – prompted by Microsoft – started adding Skype video capabilities to their wares.

Next, Blu-ray player makers have to start bundling the camera/mic combo with the players – right now, the Panasonic's TY-CC10W array costs more – $170 – than the company's BDT-210/110 decks it’s designed to work with.

Similarly, TV makers have to start building the Skype telephony camera/mic array into the TV's bezel, just like they were built into PCs and laptops and tablets and made Skype ubiquitous on these devices – truly a case of if you build it, they will video call.

With Skype video built into more and more TVs, millions of couch potatoes can video chat with the office-bound and laptop road warriors.

Then, there's smart phones and Microsoft's ailing (but otherwise excellent) Windows Phone OS. But Microsoft (rightly, IMHO) believes it has a potentially winning product, it merely lacks the killer app and the hardware distribution muscle – and Skype video calling gives them the former, and its deal with Nokia, the world's leading cell/smart phone seller (and try saying that three times fast), the latter.

So there is now the opportunity to get Skype video telephony onto millions of smart phones, which can call millions of PCs, which can call millions of living rooms.

Finally, there's the Xbox. Adding Skype video into Microsoft's ubiquitous game player will allow players to visually chat while playing (and perhaps incorporate each other into games), and to call millions of living rooms and millions of cell phones and millions of PCs and laptops…

In other words – an ecosystem. A video telephony ecosystem.

You may say I'm a dreamer, but that's why I think Microsoft bought Skype.

If a DVD Falls off a Cloud Will Anyone Hear It?

Monday May 16, 2011 – Myra Moore

You know the old saw: Content is King. I’m not delusional enough to suggest that has changed, and, in fact, it hasn’t. But the quest for convenience has become almost as important as having access to high-value content when it comes to entertainment media consumption.

It’s more common now that we no longer hold in our hands the media we purchase – CDs, DVDs, newspapers, videogames, etc. The devices that we hold in our hands do the work of accessing the media we consume, which, we are told, will be lounging about in the cloud not cluttering up our hard drives, and providing us with greater ease of access from multiple devices.

Traditionally, “access” means watching all you can eat from the plate that your pay TV service provider puts in front of you for about $40-$100 a month. The only thing you hold in your hand is a remote control. It’s a pretty clean transaction, or, at the very least, one that most of us understand.

Now that we’ve got these devices that let us access media from most anywhere we are, providers understandably want to figure out how to extract as much value as possible for providing this convenience. We may not have to give over actual cash (so says Google and Amazon as they formulate their cloud strategies that they tell us are free, for a limited amount of cloud real estate), but in the “matter of fact” words of Bob Dylan, we all know that in exchange for this nice convenience “we’re gonna have to serve somebody.” It is, after all, a transactional relationship.

What exactly is being transacted? Well, in exchange for getting to park your stuff on someone’s cloud, the cloud landlords get greater access to you in hopes that you will buy more media/stuff from them (assuming the content owners play nice with them). But more importantly the cloud owners just get plain old access to consumers and who they are, what they buy, what movies they watch, what books they buy, where they are, what concert they’re going to on Saturday night, etc. This isn’t news. We’ve all heard the Orwellian nightmares and the opposite utopian views regarding the ease of only being told/sold what we want to hear/buy.

So, what more is there to talk about? I’ve got one question: Do consumers care?

Maybe consumers don’t care if they don’t own what’s in the cloud and that the cloud owners can use their personal information to sell to advertisers. Minus the factor of personal media ownership, millions of people have signed up for that transactional relationship with Facebook – without batting an eye.

When it comes to your media and/or documents that you’ve always “owned” how important is it that you can’t hold it in your hand? My guess is that most people will say “not so much” as long as they get headache-free access to their (or formerly known as “their”) content.

Still, there are many unanswered questions about the rules for content hanging out on a cloud that may cause some to pause and think before hitting the “I Agree” button on a terms and conditions box. What if someone hacks into my cloud? What if law enforcement wants to know about my music/book/comic book collection; do agents serve me a search warrant or just ask my cloud landlord to tell them? How do I take my stuff to another cloud if I don’t like the one I’m on? What if the content owner tells my cloud landlord to delete a certain piece of content from my cloud? These are all important questions that will most likely be answered by current or future cloud landlords. Why will the cloud landlords get to answer the questions? Because most of us will click the “I Agree” button.

Ding, Dong, the Flip is Dead

Monday May 9, 2011 – Stewart Wolpin

Every once in a while, analysts/forecasters like myself hit the Nostradamus lottery and predict something otherwise unpredictable. Blissfully ignoring all of my forecasting darts that missed not only the board, but the wall it's hung on, I will take this rare opportunity to boast "I told you so."

At the end of January I posited in this space that: Given that cheap digital cameras now shoot high-def video, that smart phones shoot high-def video, that beer can camcorder makers are making a wider variety of sub-$250 models, "pocketcam makers are going to have to come up with something/anything radical to continue ruling the camcorder kingdom."

And then, a few weeks ago Cisco announced it was abandoning much of its consumer business, most prominently Flip, the leading pocketcam brand. (Blue Microphones, which made accessory stereo microphones for the Flip, posted a light-hearted reaction to the bad news.)

To be honest, I wasn't expecting something this radical this soon. In my DTC forecasts I figured it would take a couple of years for pocketcams to join 8-track tapes and Palm Pilots in the flaming meteor technology firmament.

But the shift away from pocketcams seems to be happening much quicker as every device now seems to include high-def video recording capabilities. For instance, I met with DXG a couple of weeks ago, and the company that at one time made Kodak's pocketcams showed only one new slab-style camcorder, a 3D model. All its other new models are beer can styled.

Who's Next?

In the wake of Flip's success, JVC (Picsio) and Sony (Bloggie) jumped into the pocketcam arena with varying degrees of success. Canon smartly avoided the entire category, concentrating instead of establishing a quality-or-nothing beachhead. Both JVC and Sony could quietly back-out of the pocketcam business and pretend as if it never happened.

Pocketcam's most vulnerable other practitioner is Kodak, which was beginning to threaten Flip's category hegemony. The lone U.S. digital camera maker – heck, the company that invented the digital camera – has one of those tiger-by-the-tail decisions: it can't let go but it can't hold on for much longer.

Even with Flip gone, there clearly is still a market for pocketcams – their breast-pocket convenience factor for non-smartphone owners is hard to deny. Kodak, considering the hits it has taken in its uncomfortable transition from its reliance on film to digital photography, might be forced into remaining the lone major pocketcam purveyor – which might be a good thing, for a while.

But in a slight adjustment to what I said in late January, Kodak and the rest of the pocketcam makers are going to have to come up with something/anything radical to compete with the growing number of devices that do a lot more than just shoot high-def video.

Video Optical Disc Wonder-land?

Monday May 2, 2011 - Maya Jasmin

With the push to get over-the-top (OTT) content to the television, options are becoming more plentiful and quality is improving. The question of what will become of video optical disc packaged media undoubtedly has to be explored. The best way to embark upon that exploration is to go straight to the numbers. DTC’s latest estimates for video optical disc devices and pre-recorded packaged media suggest that the video optical disc market as a whole is far from extinction, especially the packaged media market.

DTC’s latest data intensive report The Video Optical Disc, Devices and Media: Worldwide Shipments (2009-2015)-5^th edition, chronicles the trends of the video optical disc market including DVD and Blu-ray disc (BD) PCs, DVD players and recorders , BD players, DVD and BD pre-recorded packaged media, and DVD and BD video game systems. The total device market is forecasted to ship over 396 million units in 2011 and nearly 404 million in 2015.

Even though the total packaged media market is forecasted to decline between 2011 and 2015, annual shipments are expected to hover around the 5 billion mark, give or take a few hundred million any given year. The decline is somewhat misleading however, in that is a function of the inverse relationship between DVD and BD units. Prerecorded BD media is expected to experience impressive growth. In 2011, 757 million units are expected to ship with shipments likely to catapult over the 2 billion mark in 2015, continuing to grow throughout the foreseeable future. However, DVD media will be in decline over the forecast period and beyond, but is still expected to log respectable shipments of more than 2.5 billion in 2015.

So while OTT content is definitely a viable opponent to packaged media as we know it, DTC does not believe that the market will suffer extinction anytime in the near future. And we still contend that while BD will not be the giant that DVD was, it will definitely extend the life of the video optical disc device and media markets. It is not surprising that many devices that play traditional packaged media are now incorporating the ability to play OTT content. So instead of head-to-head competition, it looks like OTT content and video optical disc packaged media will just have to learn how to play nice!