The State of Media and Entertainment Video 2012
"The connected living room is in shambles. There are six remotes beside the couch, and it requires at least two of them to make anything work. My 10-year-old sound system is connected to my 6-month-old HDTV, and everything has to run through that if we want to hear anything. The solution is to buy all new equipment with HDMI pass-through, but I doubt that will happen anytime soon. And I guarantee that most living rooms are a similar blend of archaic and modern technology," wrote Jose Castillo for the December 2011/January 2012 issue of Streaming Media.
Anytime, Anywhere Entertainment
Pay TV providers have been fighting the rise of cord-cutting and cord-shaving with TV-everywhere services that make premium content more accessible. In April 2011, HBO released the HBO GO iPad app, which followed the HBO GO website introduced the previous year. "Each month our customers vote on our service with their pocketbook," said Eric Kessler, HBO's co-president, at a Streaming Media East keynote. "HBO GO is portable, free, exclusive, and provides subscribers a tie-in to their pay TV subscription." Subscribers welcomed the addition, downloading the app more than 1 million times in its first week. HBO offered Cinemax subscribers the same experience with the Max GO app in August 2011.
The PlayStation 3 and Xbox 360 game consoles proved to be essential tools in the connected living room, as they already had a strong footprint and were typically net-enabled. Both subscription services, such as Netflix and Hulu Plus, as well as pay TV
services, such as Comcast, made use of them to deliver anytime streaming content.
For the studios, the connected world is a minefield where offering too much content in new areas could jeopardize lucrative existing relationships. They're aware that piracy will run rampant if they don't offer premium content at fair prices, yet they
want to do so in a way that doesn't erode the current pay TV or DVD markets.
"The content owners themselves, they got to be very careful about jeopardizing the relationships there. If they put too much content [online] or give too much to Netflix, too much online for free, Comcast, instead of paying $2 to carry Comedy Central, says, ‘Well, there's too much competition. I'll give you a dollar for that,'" said Paul Wehrley, general manager for Clicker, at the 2011 Streaming Media East conference. "And the same thing with Time Warner and the same thing with Cox, and suddenly
Comedy Central/Viacom's business starts shrinking a bit." He added, "I feel like TV Everywhere ... it's a hedge against everyone just fleeing to Netflix."
The Fall and Rise of Google TV
One of the more interesting stories of 2011, one that will continue into 2012, is the fate of Google TV. More than a set-top box, Google TV promised viewers a platform for combining and managing content from many sources. While the idea sounded exciting, the reception to the first Google TV device was lukewarm at best. The failed product cost Logitech $100 million and led to an acrimonious fallout between the companies. "A full-scale launch with a beta product cost us dearly," said Guerrino De Luca, Logitech's CEO.
While many would have expected the platform itself to go the way of Google Buzz and Wave, others sensed that Google had the resources and tenacity to make a success of the platform. "I'm not a big fan of the Google TV platform," wrote Streaming
Media's executive vice president and columnist Dan Rayburn on his Business of Video blog in January 2011, "as to date, it simply does not work the way it should. But Google is in this for the long-term and Google TV is not something Google needs to win at overnight."
His words proved prescient. Google TV was back and stronger than before at the 2012 Consumer Electronics Show, where the company flaunted partnerships with LG, Sony, Vizio, and Samsung. The new devices run off improved chipsets created by
Marvell and MediaTek. Sony, which had stayed with Google TV even in the bad times, claimed that it was having great success with Google TV-powered smart TVs. "They're among the best-selling TVs we have," Brian Siegel, Sony TV vice president, told USA TODAY. "Media has done a real good job of beating [Google TV] up."
And Then There's Netflix ...
One company eager to leave 2011 behind is Netflix. While the popular living room streamer could do no wrong at the start of the year, it made a few disastrous missteps in late summer. First it raised the price of its streaming service, causing
many subscribers to drop their DVD-by-mail subscriptions; then it announced that it was splitting off its DVD business as a new company to be called Qwikster. After howls of protest, Qwikster departed, yet the price hike stayed. "I messed up. I owe everyone an explanation," wrote Netflix CEO Reed Hastings in a blog post.
Viewers opened their wallets to skinny bundles and SVOD services last year, and there's more where that came from.
Now that the skinny bundle is finally here, what's next? Look for more bundles, more niche OTT offerings, and lots more VR in the year ahead (but—sadly—no a la carte plans).
At the Streaming Media Europe opening day keynote, Samsung offered hard numbers on smart TV usage, and why video is the killer app.
Too many devices and problematic connectivity will continue to hold back connected TV from reaching its full potential—for now.