June 2012

Intensifying Innovation

 

Innovation by its very nature has always been an intense process especially in the world of technology products and services.  While inventors and innovators have generally worked in an intense, almost non-stop, frenetic manner, as we approach the midpoint of 2012, it seems that the process has intensified even more.

 

But how much of the frenzy is real and how much is a result of the increased press coverage of all manner of innovation?

 

The real answer is probably somewhere in between.  A huge wave of products and services have recently come to the market, with more on the way, and as that occurs, the publicity and hype machines crank to another level.

 

The hype was readily apparent in the recent fiasco called the Facebook IPO.  No one wanted to say until after the fact that there may have been some flaws in the process and I am not talking about the NASDAQ trading issues at the opening bell.  Facebook IPO issues have had extensive coverage.  CNBC and other outlets have a Facebook watch as an ongoing feature of their programming.

 

We have spent a lot of time in our consulting work and in recent panels as well as in several newsletter essays discussing the ways in which content production and distribution are evolving with a seismic change destined to occur in the not too distant future as a perfect storm is brewing that will bring on the changes. 

 

Of course, they will not occur over night, they never do, but the seeds are planted and they are germinating, ready to bloom as the metrics seem to indicate. 

 

Who will win?  That is never predictable as there are too many variables, with behemoths and start ups alike all vying to make a difference. 

 

The intensifying innovation manifests itself in a variety of ways.

 

Patent wars, a reordering of the hierarchy and ownership of the mobile device manufacturers, the rumors as to what product Apple will release next, the growth of Samsung now ranking #2 in handset sales, the increasing sophistication of the wireless networks, display devices, substantial increases in the investment in original content development by companies with deep pockets, the introduction and potential litigation over innovations such as Dish’s Hop and the Barry Diller backed Aereo and many other factors make it anyone’s guess as to who the eventual winner will be. 

 

In fact, if we all exercise our rights as consumers, we will be the winners, getting more TV everywhere.  It may be that we will pay more for that, or as I suspect, it will be a reallocation of the fees we now pay, increasing broadband/data and decreasing video.

 

As a general statement, though, with breaking barriers and broken windows, the winners may be the various ISPs that will continue to provide the pipes to deliver the goods to us, whether it is the cable companies or the telcos. 

 

In the final analysis, it is all about access. 

 

And, if not the cable companies or the telcos, it might be our cellular providers, divisions of the largest telcos.  These providers already know that voice calls are diminishing and even if they were not, voice calls do not consume significant bandwidth and, in fact, we may receive unlimited calling in the not too distant future as mobile providers concentrate their fees on data.  LTE/4G is just the start of the next step in increased speeds, although sorting out and increasing spectrum will occur along the path.  

 

Recent earnings reports from cablers and telcos have shown changes between the video/TV subscriber counts and the number of broadband subscribers, with the latter increasing and the former declining.  While these numbers may seesaw quarter by quarter, the trends are going to continue to reveal cord cutting and cord shaving, all driven by increased cable fees with those fees, in turn, driven in large part by substantial increases in the cost of content.

 

Google has already installed fiber in Kansas City, MO and KS.  This will provide those communities with ultra high speed access to the internet.  Their several hundred million dollar investment in original content is another part of their approach to intensifying innovation in the TV everywhere arena and in competing with the incumbent producers.

 

Verizon also seems to be taking an early lead in the broadband offensive.  Fios has long had among the highest broadband speeds for consumers.  Their recent announcement that they will offer a 300 mbps package this summer is a major step that draws a line in the sand.

 

Although, I may be reading into this, it is fair speculation that they know that increasing numbers of their customers want to go over the top and get their programming delivered to their TVs, and other display devices using services such as Hulu, NetFlix, Google/You Tube/Blackbox TV, Amazon Prime, UStream and others too numerous to mention. 

 

Microsoft’s recent Xbox 360 announcement at E3 2012 about signing up a major cadre of broadcasters, including ESPN and sports leagues to stream through the Xbox is significant and exemplifies intensifying innovation.

 

For a significant number of households, the foregoing may be entirely sufficient for their needs in the DVR/online access age.  There is just not enough time to watch all that we may want to watch, so consumers will continue to vote with their pocketbooks and pay for what they want and will use.

 

The world of the 500 channel universe touted at the dawn of the digital age in the early/mid 90s has become the world of an infinite number of channels.  There will be a need to move to better tiers of service and ultimately, a full or hybrid ala carte system with perhaps a better pay per view component.. 

 

Ultimately, with the continued pace of intensifying innovation, the dam will break and the transition to a different business model that may even change the way advertising is paid for and delivered will evolve.  In fact, it has already happened.  We just do not know it yet.

 

Observations from NAB 2012

 

Shifting Content - The theme of the conference, the Great Content Shift, was pervasive on the show floor, and from the discussions generated at my Super Session panel, including questions from the audience at the conclusion of the panel. 

 

While addressable systems have been touted and used in various degrees for a long time, they seemed to be more front and center at the conference.  Perhaps the difference now is that the content has been tied in more with second screens. 

 

With the statistics pointing to increasing proliferation of second screen devices and with intensifying innovation, we will see a growing sophistication as this technology reaches its potential and achieves critical mass.

 

Auto stereo - Dolby through Dutch company Dimenco, and Sony each showed some very compelling auto stereo monitors.  It would have been good to see both side by side, as each had a much wider field of view than was available with other products in the past and, of course, better stereo.

 

Observations from E3 2012

I spent a day at E3 recently.  The proliferation of Kinect technology stood out most to me as I cruised the show floor.  There was definitely a major increase from last year.  Gesture control is firmly in place as a basis for all manner of game play.

 

And tying in with Intensifying Innovation, Microsoft’s announcement about the many content providers that are enabled through the Xbox 360 solidifies their place in the upper echelon of over the top and dominant set top boxes. Their Smart Glass announcement as a way for mobile devices to provide companion features to Xbox games and content and beam content to the Xbox is a major step forward.

 

As for The Shindler Perspective

Forthcoming panel - June 26, 2012 is the annual Creative Storage Conference.  Once again, I will be moderating a panel discussion entitled Future of Content Capture Storage.  Panelists are from Arri, Codex, IDC and San Disk.  Readers of our newsletter can receive a $100 discount by using the following link fonehundredoff709381.

 

Creative Storage will be held Doubletree Hotel, 6161 Centinela Ave., Culver City, CA 90230.

 

On Wednesday, June 13, 2012, I will be on a panel at Contentric discussing movie projections and at UCLA Extension earlier in the day for a presentation to an International Marketing class.

 

LCD TV Association – The LCD TV Association published Breaking Barriers and Broken Windows in its Spring 2012 Newsletter.  This association has some very important and prestigious members.  Check out the article and the whole issue via the link or the PDF. 

 

Not always what you want to hear – Sometimes it is not what you want to hear, but what you need to hear.  That is something that many of us face on a daily basis in our dealings with customers, clients, friends and family.  The daily comics often reflect this reality as F Minus by Tony Carrillo did on April 5, 2012.  Apparently, the axiom that honesty is the best policy is not observed by all. 

 

And on a similar note, Dilbert discusses budget cuts, something we have all been involved in, on one side of the topic or another, or both.

 

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Roberta and I wish our friends, clients and prospective clients well. 

For The Shindler Perspective, Inc.

Sincerely,

Marty Shindler

Chief Executive Officer

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© 2012 The Shindler Perspective, Inc.