| By Matt Pollins and Khush Kundi
For the media industry, CES 2014 was one of the most interesting in years. As always, the gadgets made the headlines. We saw everything from connected toothbrushes to 100inch curved screen TVs – and the implications for the consumer electronics industry have been well-covered.But beneath the gadget buzz, we saw some trends that could have a real and, in some cases, immediate impact on the media industry. Here are the top 5 “Media Disruptors” observed by ‘2020.
1. The year of wearables and connected things
First and foremost, this was the year of wearables and connected things at CES. We saw everything from connected toothbrushes and fridges to wearable devices that monitor user movements and fitness.The opportunities this could open up for media companies are exciting, albeit that the focus so far has been on the implications for the consumer electronics industry rather than the media industry.
One thing we do know is that devices that hold (or send to the cloud) a huge amount of user data will enable an even greater level of interactivity between user, screen and content, and that has to be good news for advertisers and the TV industry alike.
Could a user’s TV check with their fridge as to whether they have the ingredients for a recipe the user has just seen on Jamie Oliver’s latest show? Could users receive customised advertisements based on how long they brush their teeth for or what time they tend to go to bed?
Scary or cool? Of course, media companies and advertisers (like everyone else) will need to tread carefully and bear in mind the privacy and data security concerns that these developments give rise to. But managed properly, the ability to merchandise, sell through and in general create more immersive content experiences for realising the true value of ad dollars becomes more realistic than ever before.
2. The 4K revolution
4K was all the rage, with the major TV manufacturers touting their latest line-up of 4K sets. But 4K wasn’t new – last year there was also a lot of 4K hype. So what was different in 2014? We can think of three things: affordability, proposition and content.
Things are looking positive for consumers in terms of affordability – we already saw sub $1000 sets being launched and we know that prices will continue to come down.
The bigger question is about the customer proposition. To succeed, 4K needs to be pitched as more than just “resolution”. Services that bring together several technologies like high frame-rates, high dynamic range and multichannel audio to create a truly differentiated service offering are, in our view, far more likely to succeed than those that devalue the proposition by presenting something that is perceived to be HD with an expensive badge on it.
The last hurdle for 4K is content. This year saw the emergence of genuine content providers coming to the market with content shot and/or mastered in 4K. Netflix made the biggest splash with Reed Hastings appearing with several vendors promoting the launch of House of Cards Season 2 in 4K along with a slew of other titles. Sony, Amazon and several others did the same. What’s also quite astonishing is that it’s the OTT players like Netflix that are making the biggest noise about this, rather than the traditional delivery platforms. Whilst this is great PR for OTT services, it also brings to mind a potential problem in the Asian market: BANDWIDTH. Netflix says it will deliver 4K at 15Mbps. This is fine for the Asian countries that have high broadband speeds (South Korea, Japan, Hong Kong, Singapore) but the rest of Asia will struggle to get broadband speeds anywhere near this level. Of course, Netflix isn’t in Asia yet but it’s certainly an important consideration for OTT services in the region who are considering 4K streaming.
3. Curved to fall flat?
If 4K felt like it had some momentum behind it for 2014, curved screens got a bit of a bashing.
Nonetheless, both Korean electronics manufacturers, Samsung and LG, seem to be investing big in this technology. Both released large, curved screens intended to “wrap around” users and provide a “uniquely immersive viewing experience”. Although some of those who experienced curved screens at 100inches pointed to a “cinema-like” experience, those who experienced it on smaller sets generally complained about image distortion.
The biggest challenge will be in convincing customers who have grown up with “flat” to learn to live with “curved”. If it was difficult to convince customers that 3D was the future of TV, it will be equally difficult (if not more so) to convince them to replace the flat screen they’ve known and loved for one that’s, well, curved.
Our feeling is that if there is a market for this, it will exist at about 100 inches and above – in other words, it’s something of a niche play for now.
4. Smart TVs are getting smarter – and easier to use
Smart TVs continue to get smarter. 2014 saw all the major manufacturers announce re-imagined remote controls, voice and gesture controls and new UIs which are slicker and more in-line with consumer expectations.
But why is all this important? The answer is user experience. Smart TVs have typically had less-than intuitive UIs and users have voted with their feet, either by not plugging in their Smart TVs in the first place or in just using them as “dumb screens”. For years, the devices that were touted as the “set-top box killers” have somewhat missed the mark by being notoriously bad to use.
LG took a lot of the headlines by demonstrating a new PalmOS-based interface that was slicker and cooler than anything it had launched previously. The use of a platform that was originally built for mobile devices is an interesting choice. It raises the question of whether we will see more offerings incorporating operating systems that users are already familiar with.
If users really do start using smart TVs as much as the manufacturers hope they will, content owners will need to build this into their distribution and marketing strategies. For now, content offerings on smart TV are pitched as a “value add” service – in other words, “you can also watch this great content on smart TVs”. That may change over time if smart TVs become a more primary viewing habit. And in terms of distribution, we expect to see more content owners pushing for platform exclusivity (or at least platform perks, like preferential UI positioning) on the devices that really nail the user experience, as a way to further differentiate their content propositions.
5. Content meets the cloud
There were two developments to underline the fact that “content and cloud” is a partnership that is here to stay.
First, WWE announced the launch of “the world’s first 24/7 streaming network”, offering a range of live and on-demand content over-the-top. It is of course not the only content owner looking to take its content direct-to-market – we have seen a proliferation of these services over the last couple of years with a range of business models, from bundling OTT offerings with platform subscriptions through to making them available on a stand-alone basis. Time will tell whether WWE’s move away from its trusted cable pay-per-view model will succeed.
Second, Sony announced that it is testing a cloud DVR service. These services aren’t new (in fact they have been around for many years) but have so far struggled to achieve the level of mainstream take-up that many predicted – in no small part because of the copyright issues that the services tend to give rise to. Nonetheless, with the likes of TiVo pushing its Roamio service and now Sony getting involved in the cloud DVR space, some very big operators are clearly exploring the opportunities that these platforms give rise to. The biggest challenge will be in respect of content rights. Cloud DVR operators and content owners have historically not seen eye-to-eye and have been generally unable to do content deals that appropriately reward both parties. If that changes, and with the biggest players getting involved, these services could be finally set to take off.
Conclusions – it’s not (just) about the gadgets
CES is first and foremost a consumer electronics show. Put simply, it’s about cool gadgets. But CES 2014 further underlined the fact that great gadgets are nothing without great content. Yes, 4K looks great, but people also wanted to know what content they could get in 4K and how it would be delivered to their devices. Reed Hastings’ headline-stealing performance confirmed that the worlds of content and consumer electronics are now inextricably linked. So amongst the 37 football fields worth of “game-changers” on display at the 2014 show, the media industry might just have had an insight into some of the challenges and opportunities that are coming next. |
