One Last Lingering Look at CES

As January comes to a close, there’s still time to wring one more drop of blood from the Consumer Electronics Show that was held earlier this month in Las Vegas. Mike Wolf, principal analyst of broadband for ABI Research, said one overriding theme to this year’s CES extravaganza was a shift from the usual onslaught of gadgets to the bevy of announcements by online and content companies. “The flood of online content announcements from Google, Yahoo and others show that after years of hesitation from the larger media players, the market for premium content is finally taking shape,” Wolf said. The CES announcements included partnerships with content aggregators and the portable devices to play video on. “One theme that I think was very prevalent in a lot of (CES) booths was content portability and mobility; the ability for our subscribers, in the not too distant future, to have products where they want and when they want,” said Cox Communications CTO Chris Bowick. “There were some very impressive portable media players that offered voice, video and data that were very cool.” “Of course, you can’t go to CES without saying everything is getting more dense from a storage perspective, and more compact.” Content big bang from iPod Wolf credits last years’ announcement by Apple to sell videos online through its iPod platform as the “big bang” that started the online video evolution, which continued to expand at this year’s CES. “It (video) was gaining momentum in 2005, and the resistance from content owners was lessening, but when Apple got involved, it pushed things into hyperdrive,” Wolfe said. Moving video One other area that was a big focus at CES was taking content off traditional channels, such as cable or satellite set-top boxes, and moving it around the home. Scientific-Atlanta was moving content with MoCA  (Multimedia over Coax Alliance) while Motorola showed its set-top box that was developed for Verizon‘s Fios service, which could, at some point, allow content to be moved to a Motorola handset. Paying up Now that the content owners have loosened the reins on content, including popular network shows, the question becomes, what is the business model between customers, content owners and service providers? “The plumbing is largely there, but what is the business or monetization model? Will it be similar to iTunes or something else?” Wolf asked. “Content owners know what return assets are, and this is new to them, but they are getting more comfortable with the idea.” As ABI Research noted in a recent report, although the online premium video market will continue to be dwarfed for the next five years by traditional distribution channels such as broadcast and cable, it will nevertheless grow rapidly, as large content providers offer their crown jewels for purchase over the Internet, and new platforms enable consumers to watch this video in whatever format they choose. “As both content and platform providers enable an online video distribution chain, ABI Research believes that the premium online video market should grow 89 percent annually through 2010,” Wolf said. “When companies such as Intel, with their new Viiv entertainment PC platform, and other large stakeholders such as Apple and Microsoft focus their attention and resources, the combined impetus will force this market to expand and consumers to open their wallets.” At the SCTE Conference on Emerging Technologies earlier this month, Comcast Media Center COO Gary Traver cited a study that said while 5 million customers downloaded podcasts last year, that number is projected to increase to 45 million users by 2010. Traver also referred to a Jupiter Research study that said revenues from mobile TV subscriptions will rise from $136 million this year to $7.6 billion by 2010. Cable’s advantage So will all the new forms of content and devices erode cable and satellite’s video advantage? Probably not in the near term since both have long-standing arrangements with content providers, and not everyone may want to watch TV or a movie on a 2-inch cell phone screen. Wolf said one weapon that cable has in its arsenal that others lack is VOD. Comcast, which topped the billion view mark last year for VOD, is just one example of cable companies continually adding to their free VOD offerings as value adds for customers. “The cable industry is pretty well positioned. As this (online video) channel opens up, it will expand the pie,” Wolf said. “Over time, alternative distributors will compete with cable, but they’re small today. With VOD, cable has a big weapon for downloading content to these other devices.”