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CES Spells Out the Future for Packaged Home Entertainment

12 Jan, 2004 By: Kurt Indvik

One of the clear themes of this recently concluded Consumer Electronics Show is that hardware manufacturers are preparing for the day when consumers look to some device, probably more PC-like than CE-like, to manage and distribute the various digital media they consume, not only at home but while mobile.

Walking the aisles of the vast expo halls, sitting in on some of the sessions focusing on content and content management, it's funny how few times I heard or saw the acronym DVD. It's not that suppliers or retailers here necessarily believe DVD is a technology on the wane. Indeed, the headline in one show daily proclaimed 2004 as the year of DVD recorders.

I write this even as the home video industry celebrates a record year for packaged DVD and its overwhelming dominance as the entertainment medium choice of the planet at large. And I think 2004 will continue to see DVD make major strides toward a 70 percent-plus household penetration in the United States and far outpace other entertainment media in growth and consumer dollars spent.

But I do think that digital technology is making suppliers of hardware markedly more agnostic as to the delivery of the content. That is, the CE/PC media business is developing products that meld consumers' interest in consuming media from a variety of entry points: be that packaged media (DVD, CD); hybrid packaged media (think how many games are now being developed with online components, how many DVDs have ROM extras, how many music publishers are combining CD/DVD); Internet-based streaming/download services (sticking just to movies we can cite Movielink and CinemaNow as starters and brand specific services like Disney's own Movie Beam); and the plethora of cable VOD, and telco and satellite delivery services that are, by the way, quickly jumping on HDTV.

Now take these delivery options now available and then add on the impact of the PVR/DVR (digital/personal video recorder, i.e., Tivo and ReplayTV) where you can control how you view nonpackaged media and throw in software that lets you organize this variety of content from all of the sources mentioned in the previous paragraph and distribute and manage that content from as many different platforms as you can imagine both inside and outside the house, and you have an idea of what the future looked like at this year's CES.

That's certainly the vision Bill Gates outlined during his keynote at this year's CES, and Microsoft's Media Center technology is at the nexus of this trend.

What does all of this mean for the packaged home entertainment software retailer? First of all, I believe that the current generation will continue to gravitate to packaged media from a “collectors” mentality, and also that packaged media will be the higher-quality and better-selection choice (over pure digital online/VOD delivery) for home entertainment in the next several years, even if it is copied and stored on some sort of server. But it also means that you need to continue to seek ways to make your services more convenient and, where possible, integrated into the digital lifestyle the growing majority of your customers live today.

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