Content Delivery Still Clouded Pending Pan-Industry Platform - Twice

Content Delivery Still Clouded Pending Pan-Industry Platform

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TWICE:

Are we any farther along in sorting out a digital content delivery solution?

Michael Vitelli, Best Buy:

In terms of electronic movies, electronic books and what has been happening with 3D, think of everything that has happened in this industry. It’s so obvious. When the industry said this is a CD, and it played on any product that was a CD player, the category went through the roof. Same with a DVD — it plays on everything that plays DVDs. It was not unique to a manufacturer — it was not unique to where you were sitting. They played everywhere.

Now those two physical mediums have been changed to a file, but it has to have the same outcome. It has to be able to play on anything. If it gets down to “It will only play if you buy this product that relates to this file,” it will never happen because consumers will not tolerate that.

They have tolerated it in the Apple world because it’s so simple. “I will live with the fact that I can only do it on Apple products because, one, they are good products and, second, it satisfies that need for simplicity, I don’t have to think about it.” So simplicity and ubiquity of use, those are the things to go after.

Rick Souder, Crutchfield:

MP3 was limited to techies until Apple came out with its product and there was no worry of where it was coming from. It could be stored in one place. I don’t understand the ins and outs of business models that are making that difficult to pull together for video content, but it seems like if anybody can accomplish that, they will be the next Apple.

Dave Workman, PRO Group:

The success of Apple speaks volumes about the customer’s desire for predictability of experience, and they deliver on that better than anyone. Manufacturers could learn a great lesson from Apple, not just the fact that so much of their development is software-centric, but in the predictability of experience. People want the technology, but they also don’t want to have to take three or four days out of their world to learn how to use everything.

The idea of predictability and simplicity has a premium attached to it across all the product categories in which Apple competes. They have continued to plow along being the hot hand commanding a 40 percent premium against products that are slugging it out against them.

It would be nice if we would see more vendors get that experience or at least collaborate more towards that direction vs. constantly fighting over their little piece of turf on a new technology, and creating confusion and making the customer experience less desirable.

Ross Rubin, The NPD Group:

It has to be supported by the content. Rovi’s acquisition of Sonic Solutions, for example, will hopefully bring together some of the cable and broadband world.

TWICE:

What has Best Buy’s experience been with Sonic’s CinemaNow service?

Vitelli:

It’s in the early stages — you have to get it built into the set. If it were an app that was easily loaded, it could be available on every television set, but it’s not. The problem is the consumer has to buy a new TV to use the application.

Ultimately, this does not seem a rational way to do business. If you told me that I could buy a TV that has an open platform on it that I could add applications to as they come alive, then that becomes a totally different experience. I can’t buy a new TV every time there’s a new application.

Paul Ryder, Amazon.com:

Retailers feel the need to provide the solution with CinemaNow or other programs, but then there is the risk of proliferating the fragmentation.

When Mike gets a Dynex TV, he definitely wants to have CinemaNow, but he can’t ignore Netflix. I want Amazon Video On Demand on Dynex, Samsung and every other TV. We want customers to have that kind of choice. But we need to make sure that we’re not accelerating the problem with manufacturers.

Streaming movies is where it really gets interesting for consumers. They would buy a movie and it would be in a cloud, and it could be consumed on the TV or on multiple TVs depending on the box. The whole idea was cool conceptually because “Avatar” 2D could be purchased now and played in multiple places.

What consumers didn’t realize was it may not be formatted to play on an LG TV or Apple TV but possibly on a Panasonic TV or Google TV. The question is how to make this simple for the customers. If I’m an Amazon Video On Demand customer or a Netflix customer, I want to be sure that the device I buy will provide access to the movie. Which products do what is not currently clear, and we have to help customers figure that out.

TWICE:

Is there any critical mass forming behind one platform over another?

Ryder:

The bottom line is access. A lot of manufacturers will try. History is riddled with manufacturers trying to force their experience or force their service onto the consumer when the focus was on hardware and not necessarily on the software, content, and delivery. That’s where we will continue to see things shake out, and that is what is fascinating about being in this industry, how dynamic it is. It’s still a bit of the Wild West in terms of digital books, digital music, digital movies and digital gaming. It’s out there, and there are many paths to take.

Karen Austin, Sears Holdings:

It could become very concentrated very quickly.

Dan Schwab, D&H Distributing:

The TV guys will get there — it will just take them a while. It’s taking them longer than the industry expects.

What happens in the interim is that other products increase in desirability, such as tablets and smartphones. Retailers could be safe for the front half of 2011, if not the full year, with those products far outpacing TVs because it’s still too kludgy of a solution. It’s way too complicated for the user, and they will continue to wait on the sidelines and not drive that upgrade cycle until it is ubiquitous.

These other [mobile] products are so much more seamless in ease of use that you will see a lot more hype about them. You’re still going to sell a lot of TVs this year, but the tablets, the e-books and the smartphones are really driving consumer interest right now.

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