Jason Dunn
02-01-2005, 06:00 PM
<i>The following article is written by an industry insider, anonymously referred to here as Steve Sanders.</i><br /><br />Anyone who struggled to make their way through the three football fields of fantasy we call CES would come away believing high definition TVs, camcorders, recorders/players are going to be snapped up and snapped together by any consumer who knows what is good for him or her. The big problem is it still requires credit cards with a huge spending limit, a lot of patience or assistance and hurdles thrown in the way of the buyer by factions that focus more on patent payments than the consumer.<br /><br />The big, beautiful screens from Sony, Samsung, LG, Pioneer, Panasonic and the newcomers from Taiwan and Mainland China you never heard of are spectacular. TV that sits on the counter or floor is rapidly giving way to video wall art. Trouble is they cost as much as a fine painting and lack the one thing you want … content worth watching (and that you can save). Television and content providers are rapidly improving the number of HD programs and some you may even want to save with your DVR. No problem right now but what happens mid year when the obligatory broadcast flags go into effect and recorders must identify the flag before it can successfully record your high def program(s)?<!><br /><br />Our first hurdle comes up because there are two approaches to the content protection (VCPS that puts money into Philips and HP coffers or CPRM which puts the money in the pockets of the 4C members). Which will be used is being hotly contested but either approach will require a new DVR if you want to save the content in high definition. The decision on who wins is probably two years away which should coincide with when all of the high def components will really be in place.<br /><br />The second hurdle (and huge noisemaker) at CES was the rivalry of words between the Blu-Ray (BD) and HD DVD camps. Some members of the media say that it is obvious that consumers want the high definition storage and that the rivalry is only hurting demand and sales. Especially since it appears that Hollywood studios are divided equally on the issue and no one wants to blink.<br /><br />But a few analysts are skeptical of the immediate demand.<br /><br />Why?<br /><br />DVD was significantly better than VHS for viewing. HD is better than DVD but is it so much better that people will open their checkbooks immediately? Analysts from IDC, Gartner, Enderle Group and others feel true volumes for HD won't arrive for at least 4-5 years because "good enough" viewing will be sufficient until present systems fail and prices of new products come down dramatically.<br /><br />IDC and Enderle both note that the majority of the country (and globe) still don't have DVD burners or DVD recorders even though prices have come down to $50 and $200 respectively. Now that DVDR media is well under $1 and DL (8.5GB) media is just now approaching $6 people are still looking for the killer app that makes it imperative that they record an hour of standard def video.<br /><br />The low-cost burners and media have some people practising what they jokingly call "burn and return," they are the minority. Even more though are beginning to master the recording of TV favorites onto their HD and then have transferred them to DVDR. But most of the DVR users simply struggle with the technology so they can watch shows when they want to watch them and then overwrite older video content when the HD gets full. And with hard drives getting bigger and cheaper that is probably going to continue.<br /><br />For those who plunk down $3,000-plus for a high def screen they will have to add another $1,000 - $2,000 for a high def DVR and $25-plus per BD or HD disc. But then they only be able to watch them on their set since most manufacturers agree that sales volumes won't become significant until sets are below $1,000, DVRs are below $500, and media gets down to $2-$3. <br /><br />Put those costs on top of the standards "discussions" and it becomes easy to understand why research firms are looking to 2010 for widespread high def sales. By then, "everyone" will have a good/cheap DVDR/RW based system using single and double layer media so it will take another 3-5 years before high def recorders/burners replace present products. <br /><br />By then we'll again have the next great solution ready to battle over.<br /><PAGEBREAK><br />But there were high points of CES as Samsung, HP and Sony had strong offerings of complete media center PC-based solutions. While the big hitters and many of the other firms at the show spun tales of end-to-end home entertainment packages. Of course when Microsoft's demo at Gates keynote went blue screen it cast a serious doubt about how easy and reliable these plug-and-play solutions really were right now. <br /><br />Many of the CES attending firms took a more modular - one step at a time -- approach meeting our home entertainment needs. You know, a HD-based media server, wireless link to the TV/stereo, DVR hardware/software that accessed the cable box or satellite receiver and other parts of the puzzle. <br /><br />In fact, according to market analysts at In-Stat people are only now beginning to understand how they can purchase and use the new DVRs with interactive program guides (Fig 1). While most consumers according to a recent CEA survey don't have an audio or video media server, it is a product they are interested in acquiring over the next 2-3 years. <br /><br />Because of the huge number of iPods and personal MP3 players that have been sold and will be sold this year we probably shouldn't have been surprised to how people wanted to use their media servers. But according to the CEA research, most of the respondents want the server more for audio than video use: listen to the same music in a number of rooms in the house - 52% store digital music collection and play it anywhere in the house - 51% record live TV and have it available on other sets in the house - 44% view digital photos on the TV - 41%<br /><br />But when it comes to video content, the survey held few surprises:<br />• play DVDs - 91%<br />• store content - 88%<br />• access PC content - 84%<br />• download content - 75%<br />• record live TV - 75%<br />• distribute content - 74%<br />• play video games - 63%<br /><br />Even Gates during an interview with the Washington Post said that Microsoft and the industry in general still had a lot of work to do to make the products user friendly enough for the majority of the consumers the industry wants to reach and sell. <br /><br />IDC and Parks Associates, that has built its client roster by promoting the reality of the home network, both agree that the centralized and distributed entertainment system is still a long way from reality. We continue to focus on connecting computers, printers and scanners. <br /><br />Like the home theater, the anywhere-in-the-house home entertainment system is still best installed by technically competent people with immense patience or dealer specialists. At CES we talked with Steve Wildstrom of BusinessWeek who just converted to an HD set and despite the struggle will expand his home network to home entertainment later this year. The task is pretty easy as long as you have two wireless networking specialists helping you (as we did). <br /><br />Industry analysts and experts at Jon Peddie and Enderle Group had warned us that the wireless home entertainment network is easier to promote than it is to install, we understand why they both have gray hair. It is good. And it is getting better.<br /> <br />Hopefully by CES 2006 the installation will be fairly user friendly. Then all we'll have to worry about is having enough high def video content worth saving, which broadcast flag technology will be implemented and if it will allow us to simultaneously watch shows on several TV sets. <br /><br />If not, you can probably kiss off the number one reason for struggling with a home entertainment management/enjoyment system. That could be one hurdle content providers won't let us get over!<br /><br /><i>The above article was written by Steve Sanders, an industry insider.</i>