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CES Preview: Cache and Carry

31 Dec, 2003 By: Gary Arlen

Two years ago at the Consumer Electronics Show (CES), a startup called Moxi made a lot of noise -- and attracted extensive headline attention -- with its home entertainment networking scheme.

At CES, which runs Jan. 8-11 in Las Vegas, Moxi is back. This year, however, it's doing low-key, private demonstrations via Digeo Inc., a cable-centric firm that bought the Moxi brand and technology soon after the much-hyped debut.

Digeo has spent two years adapting Moxi's Digital Video Recorder (DVR)/multimedia storage and distribution system into an integrated cable Media Center -- based for now around an advanced Motorola set-top box. At CES, where Digeo is seeking additional manufacturers for the Moxi Digital Media Center, the company is introducing models that can handle high definition TV (HDTV) and can feed two TV monitors simultaneously.

Home Media Convergence Trends
Moxi's odyssey into the converging and diverging world of video storage and PC-based television is but one of many tales emerging from this week's CES.

Collectively, the technical and marketing juggernauts underscore the looming changes -- some might say “threats” -- to the home video business. Taken together with Internet television and high-speed broadband delivery systems (also on view at CES), the new technologies enable users to more easily access, store and view digital video programming.

Among the 2,300 exhibitors at CES are dozens of computer firms that are accelerating their moves into consumer electronics.

Intel's new semiconductor, which is expected to improve the quality of large-screen digital television sets and dramatically lower the price, is sure to capture headlines. The availability of storage and playback devices from Panasonic, Thomson, Sony, Philips and the usual roster of electronics makers also augurs the shifting video environment. Most of these manufacturers are unveiling TV sets with storage capability, able to capture and play videos (as well as games, music and photos) from a variety of input sources, including the Internet.

Denon, part of a Japanese conglomerate that bought DVR pioneer ReplayTV from SonicBlue in its bankruptcy, will unveil its latest digital video recording system, which includes two drives, one of which is removable and portable. That could be a solution to the frequent complaint that a DVR only works from one location in the home. Denon's approach appears to be an alternative to the home networking schemes that Moxi -- along with Microsoft and a dozen other vendors -- are purveying in Las Vegas.

Roku and RGB Labs, with their similar approaches to storage devices that feed the growing universe of digital TV monitors (6 million and climbing), offer another approach. Both companies have small displays at CES. If nothing else, they show consumers that there's more to plug into their screens than DVD players and video game consoles. If any gizmos catch on, they'll offer more competition to the eyeball time spent watching pre-recorded home videos.

Also on the CES roster are start-ups such as Prismiq, which is showing a $250 MediaPlayer. Its effort is focused on helping viewers “enjoy a broad array of digital media and access to the Internet through TVs, stereos and entertainment centers.” Prismiq's claims are generic and could be used -- and actually are being used -- by countless competitors.

Alternatives to Packaged Media
All are reminders, of course, that CES is really peddling alternatives to the legacy of shrink-wrapped media.

Samsung, with its new TiVo Digital Video Recorder set-top box for DirecTV, typifies another trend emerging at CES: the growing focus on, and alliances with, satellite, cable and even “telco TV” (telephone company video ventures). CES has become a destination for top executives of cable TV giants such as Comcast, Time Warner Cable, Cox Communications and the other large multiple system operators. These media moguls are looking for tools and marketing partnerships to expand their languishing video-on-demand (VOD) initiatives. At the same time, DirecTV (under pending NewsCorp ownership) and EchoStar are also at CES, trying to push their digital TV edge.

The visibility of these “transmitted video” suppliers, along with their efforts to create hardware partnerships with the makers of set-top equipment, are further reminders that an emerging cadre of hardware and carriage suppliers is assaulting the home video industry from new directions.

Next-Gen Recorders and Standards
And then there is the next generation of DVDs -- notably the DVD recorders, which are approaching the magic $200 price point. Stalwarts such as DivX Networks will show its latest system, which lets customers back up their personal DVDs and download or distribute video via the Internet. This new iteration of DivX is not like the limited-play DivX technology that Circuit City tried to promote a few years ago, but its alternative vision maintains the spirit of such ventures.

Even more fundamental on the DVD front is the looming standards war regarding high definition DVDs. The Blu-Ray Group, which includes Sony, Matsushita and a half-dozen other manufacturers, is dueling with Toshiba and its allies to create a standard for high definition DVDs. Add to this mix China's enhanced versatile disc (EVD), a standard that could bypass the Euro-American technology's copyright and patent hurdles.

China's emerging electronics industry can also rattle the pricing and performance of the global hardware market. Aggressive sales of Chinese-built home display equipment could squeeze the margins out of the traditional TV industry while accelerating the distribution of affordable digital receivers.

Amid the carnival and chaos that typifies Las Vegas during CES week (and most other weeks, for that matter) is a fundamental competitive proposition. For more than two decades, the home video industry has confronted countless warnings that it would be overrun by cable pay-per-view or other media pipedreams.

As CES demonstrates, those alternatives are finding new avenues into the home. The panoply of products is overwhelming, as is the expected throng of 115,000 people.

More significant, however, is the lineup of devices and program delivery sources joining in ways that will alter the vision of home video -- and the ways in which viewers see and save their entertainment in 2004.

Gary Arlen is president of Arlen Communications Inc., a Bethesda, Md., research firm that has tracked the convergence, emergence and divergence of media technology since the days of two-inch videotape. (GArlen@columnist.com)

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