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Entertainment to Drive Home Networking

7 Apr, 2003 By: Holly J. Wagner


Technologically advanced households do not yet assign the same level of importance to entertainment applications like audio, video and gaming as they do to productivity functions, a survey by the Yankee Group posits.

But homes with PC-based networkds are expected to be the first to push into networked entertainment. The report, "The 2002 Technologically Advanced Family Survey Sheds Light on Home Networking Demand," indicates 8 percent of PC owners have a home network – a 43 percent increase over 2001. Technologically advanced families have adopted connectivity solutions at the highest rate, with 23 percent owning a home network, compared with 3 percent penetration of secondary adopters and 2 percent of late adopters.

As a result of increased adoption of broadband and multiple PCs, households are installing a network to let multiple users access the Internet concurrently and use existing devices more effectively because of mobility of content. "Product and service companies must gain traction among early adopters, not only to drive near-term sales growth, but to establish brand recognition and secure channel relationships," said Dominic Ainscough, Yankee Group Consumer Technologies & Services senior analyst. "Device manufacturers, service providers and retailers can spur home networking adoption most effectively by applying needs-based segmentation to identify consumers with the greatest interest and who are most likely to purchase in the near term."

While the biggest driver of the home network over the past three years has been broadband sharing, a study from In-Stat/MDR contends that is about to change.

New products emerging to fuse the entertainment center with the home network will attract users to link devices through an Ethernet or Wi-Fi connection and media servers that store and play rich content over a home network are shipping from a number of consumer electronics companies.

The new products will help propel the overall home networking market from $1.8 billion in 2002 to $5.3 billion in 2007, In-Stat projected. Media networking, while accounting for just 6 percent of the market in 2002, will make up 49 percent of the revenues for total home networking by the end of 2007, the study found.

"The emergence of converged network products is due to the acceptance of traditional home networking," says Mike Wolf, an In-Stat/MDR director. "Wireless LAN and home routers sales have surged in the U.S. as well as countries such as Japan and the U.K. With the home networking market for broadband sharing moving from the early adopter to the early majority, the market is well positioned for the next phase, which is networked entertainment. The need for networking connectivity to enable new and compelling applications such as online gaming and networked digital audio will grow across demographics and geographies throughout the forecast period."

In-Stat/MDR also found:


  • Service providers are waking up to the importance of the home network. Both telcos and cable service providers are starting to offer managed home networks to their broadband subscribers.

  • North America, led by the U.S., will continue to lead in overall home networks through 2007. The total number of installed home networks will grow from 9.2 million in both US and Canada in 2002 to over 28 million by the end of 2007.

  • The biggest multimedia home networking product, in terms of overall connections, will be networked gaming consoles. The rapid adoption of online gaming and, to a lesser extent, local area links between multiple gaming consoles and PCs for gaming, will help drive this market. Other key networked entertainment devices will be networked PVRs and DVD players.

    The report, Digital Domicile 2003: Home Networking Goes Hollywood looks at how each of the different categories of connected home are evolving: home network infrastructure, residential gateways, media networking and home automation.

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