11.14.2003 12:00 PM
Growth predicted for home media networks

Home media networks (HMNs), the convergence of digital media into a single, networked, interactive home entertainment portal, is poised for explosive growth and will radically alter the home entertainment market, fragmenting consumers into an audience of one for on-demand multimedia content, a new study says.

According to a report by Booz Allen Hamilton, it is imperative for music and movie producers, broadcast and cable TV companies, and consumer electronics manufacturers to recognize and capitalize on this transformation before HMNs upset their existing business models.

Home media networks allow consumers to use digital content in a variety of new ways, through any electronic device connected to the network. For example, consumers can use a handheld remote to retrieve digital photos, MP3s, and video clips from computers and play them in high resolution and fidelity on any TV or stereo. They can view video recorded in the basement on a set in the bedroom or pull up photos downloaded to the home office computer and play them as a slide show on the home theater in the living room. On their basement stereo, they can play MP3s downloaded to their laptop.

The report cites the proliferation of home computers with broadband Internet access and home networks to demonstrate that the pieces are in place for HMNs to provide consumers with the “killer connection.” Since any home with these components can assemble a HMN with relative ease and at a low cost by purchasing a media hub—hardware that can connect non-networked devices such as televisions and stereos to the network—consumers can quickly adopt the new technology. Growing libraries of digital photos, home videos, music, and digital recordings from personal video recorders (PVRs) will also accelerate the rise of HMNs.

As consumers add to their choices with on-demand entertainment and personal digital content such as photos and home video, audiences for mass entertainment will fragment even further. As a result, media that depend on advertiser support will find their revenue and profitability under pressure, beyond what has been anticipated from digital cable channels and PVRs.

Content owners and cable operators will be able to create new revenue opportunities through HMN users; for example, they could consider providing specific channels with a hybrid of on-demand and subscription pricing for “narrowcasting.” Customized services, including home network portals to help navigate a household’s digital content, will provide advertisers and marketers with the precisely targeted audience they desire.

For the complete downloadable report, visit www.boozallen.com.

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