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Ready or Not, Here Comes Convergence

15 Feb, 2005 By: Holly J. Wagner

We've all heard about convergence for so long that anyone who brings up IP VOD or the notion of wireless feature-length entertainment pretty much gets laughed out of the room.

Projects like Verizon's V-Cast mobile entertainment service, which so far is limited to short-form content, seem to fall short of the promise, and a lot of folks can't see how such systems will ever dent traditional entertainment forms.

But they will. As I've said before, the technology to deliver VOD over a variety of systems is already available. This industry is fond of saying nobody will want it until the content providers start offering movies and until home networking gets easier.

Sure, Blockbuster and Netflix executives have announced intentions to offer VOD by the end of the year. Movielink, CinemaNow and GreenCine already do. I'll give you that the limited content offerings make those services less than thrilling so far.

I don't see rentailers getting into providing telephone service anytime soon. That would take infrastructure. On the other hand, the telecommunications companies — Verizon, SBC and their ilk — have the infrastructure, and they are linking up with the Movielinks, Microsofts and even the big content companies, including Fox and NBC Universal, to offer things consumers will find compelling enough to sign up for their most basic products: carrier services. Market saturation of basic services has given those companies a powerful incentive to develop more products they can offer over the same infrastructure. The proof? In case you haven't been paying attention, telcos are merging faster than, well, video rental chains.

Meanwhile, computer makers are hitting the end of the home and business replacement cycle — Gartner said just yesterday that PC sales will grow by 9 percent this year — down from 11.6 percent last year, which will only fuel the need for companies like Dell, HP and Apple to wade deeper into home entertainment products to make up the difference.

“Market growth could prove stronger if PC manufacturers are somehow able to position the PC as a digital media hub,” according to Gartner analyst Kiyomi Yamada. She also threw down the gauntlet, saying she doubts they can do it. But that won't stop them from trying.

The real convergence is coming, and it's going to pick up speed at an exponential pace. Not because consumers are clamoring for it. Not because content providers want more outlets. It will gain speed because the video rental marketplace is consolidating at the same time as the telecommunications and computer markets. While rentailers and even discounters struggle to manage floorspace, more telcos and techs will be competing — and partnering — to offer more services. I assure you, they will be more than happy to take the pressure off your floorspace.

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