Content is King at CES

Distribution deals overshadow new gear


The annual Circus of Extraordinary Superlatives (CES) delivered greater-than-ever Chaos, Ebullience and Surprises (CES) this year. Even with more emphasis on Convergence, Entertainment and Services (CES), this year's International CES (Consumer Electronics Show) was still focused on control, efficiency and size (CES)--both big (up to 103-inch plasma TV prototypes) and small (TV reception delivered via mobile phones).

At times, CES is simply surreal. Its "big tent" draws executives and exhibitors from an array of affiliated industries, and this year the emphasis was on content and applications delivered via the hardware that is the event's original focus. For example, top executives of the largest cable TV companies used CES to unveil their latest Open Cable Applications Platforms agenda, which could create a retail digital set-top box market; their plan, not surprisingly, keeps cable operators in control of the end-to-end system.


Meanwhile, Hollywood engaged in guerrilla lobbying in its perpetual copyright battle. Taking advantage of the Consumer Electronics Association's success in attracting dozens of Washington policy-makers to Las Vegas, the Motion Picture Association of America invited the Congressional and FCC staffers to a private suite at the Bellagio Hotel. There, MPAA showed them how digital devices (many of which were on display elsewhere around town) are being used to scuttle copyright barriers.

The Hollywood message came with an endorsement of "The Digital Transition Content Security Act" (HR.4569), which House Judiciary Committee Chairman James Sensen-brenner (R-Wisc.) introduced in Congress just prior to the December recess.

And as a further reminder of the transient state of the industries, News Corp. President Peter Chernin promised that his company's 20th Century Fox studio subsidiary is planning to shake up the traditional home video release pattern this year. Movies in HD format will be released within 60 days after their theatrical debuts, and some films will come out on DVD and VOD simultaneously, Chernin revealed in his remarks at CEA's invitation-only "Leaders in Technology" banquet.

"The content industry is ceding control to consumers and coming to terms with technology and today's landscape," Chernin said.

The Fox announcement was the first commitment by a major studio to launch "day-and-date" distribution patterns, although Disney and Mark Cuban's production and exhibition conglomerate are planning similar approaches.

While digital rights management and copy protection oozed from many presentations--including Sony Chairman Howard's Stringer's blunt acknowledgement that downloading is a core element in the digital home--a number of other legacy issues persisted on the CES agenda.

Rep. Fred Upton (R-Mich.), chairman of the House Telecommuni-cations Subcommittee, said that he did not expect Congress to take up any additional digital TV transition legislation this year now that the fundamental issue--a Feb. 17, 2009, date certain--has been set for turning off analog broadcasting.

Speaking at two consecutive CES policy sessions, Upton suggested that he might call "an oversight hearing by summertime on what is the industry doing... to see if there are some lagging players." But he insisted that no new bills about unresolved transition factors will get through Congress in 2006.

That stance generated an anguished response from fellow panelist Martin Franks, CBS Corp.'s senior vice president and chief Washington lobbyist.

"It's discouraging... that, despite your best efforts, we cannot get enough going in Congress to finish off... some of the details," Franks said, referring to the broadcast flag and other copy protection issues along with cable must-carry.

"If we're not going to take [them] on until February 2007, we're going to burn up the margin for error in getting things done," Franks added, alluding to the countdown toward February 2009.

On the same "End of Analog" panel, FCC Commissioner Jonathan Adelstein pointed to the progress in crafting consumer education programs. He said that the FCC and industry collaboration will assure that Americans will be prepared for the cutoff of analog TV broadcasting in the weeks after the 2009 Super Bowl telecast.


Alongside all this politicking and positioning, CES's primary mission--to introduce new gizmos and gadgets--persisted. Perpetual sensory overload and competitive confusion reigned. For example, in the high-definition home video category, the emerging marketplace battle between the incompatible Blu-ray and HD-DVD formats escalated as both camps introduced products and new studio allies. With vastly varied pricing--$499 for a Toshiba HD-DVD player versus $1,800 for Pioneer's Blu-ray device--potential customers face a complex evaluation process before making any buying decisions.

The even more undefined market for home networking saw the arrival of several new standards consortia, including the High Definition Audio Video Network Alliance, the Z-Wave Alliance (wireless home control systems to transmit broadband video and other signals) and VSBNet (a LG Electronics proposal using existing coaxial home wiring). These groups join the alphabet soup of networking hopefuls such as DLNA (Digital Living Network Alliance), MOCA (Multimedia over Coax Alliance) and the various wireless, power line and Ethernet initiatives.

Elsewhere in the sprawling Las Vegas venues, proponents of plasma, liquid crystal display and digital light processor monitors lauded the falling prices of their respective monitors. At the same time, Toshiba and Canon showcased prototypes of their surface-conduction electron-emitter display equipment--promising to bring the eye-popping screens to market this year at competitive (but unspecified) prices. The prototype Toshiba and Canon SED flat-panel monitors were both in the approximately 37-inch 16:9 format, but Toshiba said its production models will be up to 55 inches wide. Both companies' demonstrations fulfilled SED's promise of CRT-level brightness and contrast, but with power demands about one-third less than plasma.

Organic light emitting diode technology, another promising display option in recent years, was relatively hard to find this year. Sanyo used an OLED display in a small way--as a viewfinder on a portable high-definition camera. Eastman Kodak, which has productized its "NuVue" OLED technology in recent years, was invisible to most attendees since the company did not have a floor exhibit this year.

Nonetheless, Kodak Chairman and CEO Antonio M. Perez joined the "convergence chorus" in his keynote speech, asserting that the digital content era will rely on identification, organization and access to all content instantly.

Portability and mobility were buzzwords throughout CES, featured in Yahoo! CEO Terry Semel's introduction of "Yahoo! Go," a line of transportable services. QualComm, the mobile chipmaker, offered more details about MediaFlo, which will use TV spectrum to stream video programs to dedicated mobile devices later this year. Verizon signed up to carry the MediaFlo service, but no pricing was attached. Crown Castle, a competitor to the MediaFlo network, provided details of its wireless video service, dubbed "Modeo."

This year's CES could be gauged in small increments. Most of the product improvements were derivative; nhancing existing products such as portable media players and digital video recorders.

To the ongoing bemusement of video aficionados, the glory of the biggest plasma screens on the show floor came down to one inch. While the gargantuan prototype screens attracted attention, neither Samsung or LG (with their 102-inch displays) nor Panasonic (showing a 103-inch model) used their bragging rights to announce definitive near-term commercialization of the giant displays.


First there was Akimbo and Roku. Two years ago, those companies debuted at CES with visions of set-top boxes that draw streaming content and other material from the Internet to display on digital monitors. Although those pioneers have struggled in the IPTV arena--but are surviving with next-generation products--a slew of companies have followed in their steps.

DAVE-TV (Distributed Audio Video Entertainment) showed up last year, and came on stronger this year with a "cross-platform ecosystem" featuring on-demand DVD and HDTV quality content. Interactive Television Networks offers a similar line-up, for $29.95 per month, of old TV shows, kids' programs, documentaries and other Internet video content--including some HD programming, through its proprietary set-top box.

Media center computers took on a new online life at CES--thanks in part to Intel's new VIIV chip. A prototype VIIV computer, often compared to the absent Apple's Mac-Mini, was called the "future of the home network." Intel CEO Paul Otellini's celebrity guests during his presentation included Morgan Freeman, who heads ClickStar, a new studio, backed in part by Intel, to create movies that will premiere online.

Such convergence alliances seeped into many of the relationships unveiled during CES. For example, Comcast revealed set-top box deals with Panasonic and Samsung, each for about 250,000 digital devices. On one level, the contracts mark Comcast's slap at the duopoly, which has long dominated cable set-top equipment: Motorola and Scientific-Atlanta (which is being acquired by Cisco Systems). Beyond that, the Panasonic alliance in particular gives Comcast the potential to control a number of home devices through the set-top box--including DVD and music devices.

Comcast calls the new device "RNG"--which can stand for other "Real Next Generation" (implementing the Next Generation Network Architecture that Comcast has been backing through CableLabs) or "Residential Network Gateway," according to Comcast's top technology strategist, Mark Coblitz.

The presence of cable operatives like Coblitz and his boss, Comcast head Brian Roberts, not to mention Verizon Chairman Ivan Seidenberg (who talked up that telephone company's broadband wireless and wired video ventures) added to the intrigue in Las Vegas. This was a show of convoluted, enterprising solutions (CES) and the combative entrepreneurial sorties (CES), as technology and marketing confronted the challenge of political reality.

Gary Arlen

Gary Arlen, a contributor to Broadcasting & Cable, NextTV and TV Tech, is known for his visionary insights into the convergence of media + telecom + content + technology. His perspectives on public/tech policy, marketing and audience measurement have added to the value of his research and analyses of emerging interactive and broadband services. Gary was founder/editor/publisher of Interactivity Report, TeleServices Report and other influential newsletters; he was the long-time “curmudgeon” columnist for Multichannel News as well as a regular contributor to AdMap, Washington Technology and Telecommunications Reports; Gary writes regularly about trends and media/marketing for the Consumer Technology Association's i3 magazine plus several blogs.