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Blu-ray, Connected Devices in the Spotlight at CES

4 Jan, 2010 By: Erik Gruenwedel

Consumer electronics manufacturers and retailers, including Blockbuster and Netflix, are expected to unveil new partnerships linking content with HDTV brands at the Consumer Electronics Show Jan. 7-10 in Las Vegas.

With Blu-ray Disc having moved beyond the early adopter phase, as evidenced by the high-definition format’s prominence during holiday sales, the Blu-ray player is expected to become a key conduit to home entertainment, say experts.

Indeed, CES will showcase two new conference programs directed at distribution of Hollywood movies, including “Entertainment Technology @ CES,” Jan. 7. A separate panel, “Up Next at CES: Creativity, Content and Cash” (Jan. 7-8), will highlight industry efforts at monetizing new media, including repurposing content on the Internet.

“I think that will be the focus, along with 3D displays,” said Michael Pachter, analyst with Wedbush Morgan Securities in Los Angeles. “I’m not sure that BD Live has really captured anyone’s imagination, but it will become more robust this year.”

Ralph Schackart, digital media analyst with William Blair & Co. in New York, said Blu-ray player sales more than doubled in 2009, and will double again in 2010.

“As Blu-ray continues to ramp up, it will serve as a growth driver for [numerous] technology companies, including Netflix, Rovi, Sonic Solutions and TiVo,” Schackart said in a note.

“Blu-ray will increasingly be used to target those that don’t have access to, or can’t get the needed speed for, streaming media content,” added independent analyst Rob Enderle.

Michael Nathanson, analyst with Sanford Bernstein & Co. in New York, agreed that Web-enabled hardware would be a key theme at CES. 

As long as cable operators aren’t delivering Web content directly, the ability to make it happen via third parties is in demand, he said.

Richard Doherty, director of The Envisioneering Group in Seaford, N.Y., said Internet-enabled HDTVs will proliferate at CES, with Irvine, Calif.-based Vizio expected to bow a Chinese-made one for under $1,000.

“It could open the floodgates to make it a lot easier to put [studio] content on TV,” he said.

The burgeoning technology could result in some consumer dissatisfaction, he said. Consumers may expect total connectivity (i.e. browsing) instead of merely Yahoo widgets, Netflix streaming, Amazon Unbox and You Tube.

“There not getting everything they’re looking for,” he cautioned. “For what is largely a ‘channelized’ universe, these connected TVs are ahead of the programming and content license contracts. The hardware is capable of doing more than it can show this month. Today’s TVs offer Netflix, YouTube and Blockbuster streams; in three months [they] will do five more services, and six months later, eight more [services].”

Blockbuster, meanwhile, is looking to offer content to connected devices in every way possible, shedding its old-school “in-store only” image. At CES the Dallas-based chain will showcase a seamless distribution network (dubbed “Blockbuster lifecycle”) that allows users to rent or buy movies online, by mail, kiosk or store via cell phone. Blockbuster recently launched separate iPhone/iPod Touch and Motorola apps (complete with real-time in-store inventory, by-mail access and GPS), and plans to further integrate all the company’s offerings, said Scott Levine, VP of digital and user experience with Blockbuster.

The company in December launched Direct Access, allowing users to receive rental discs not available in store via mail within 72 hours, and plans to allow users to check in-store availability via cell phone.

“So there is basically no excuse not to be able to get a Blockbuster movie,” Levine said.

Kevin Lewis, SVP of digital entertainment with Blockbuster, said the company would unveil an expanded list of CE manufacturers seeking to incorporate Blockbuster On Demand in future hardware.

“You will see us in a lot more devices in 2010,” Lewis said.

Finally, Blockbuster will highlight efforts (which include recent VOD deals with Suddenlink and Mediacom) to further incorporate its On Demand service within the cable industry, including implementation in cable set-top boxes.

“Historically, the cable industry and Blockbuster haven’t realized that they are as collaborative as they actually are,” Lewis said. “This is really a demonstration of our ability to work together with the cable industry, even in the VOD space.”

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