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The State of Media and Entertainment Video 2012

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This article appears in the February/March issue of Streaming Media magazine.

In 2011, the streaming media world finally figured out what consumers want: everything. Subscription content on their TVs, mobile devices, and tablets? Yes. Premium first-run movies available for anytime streaming? Yep. Apps that deliver pay-TV content controlling living room DVRs? Certainly. Catch-up TV shows available online immediately after a show airs? Of course. Unlimited personalized music services that play whatever the listener wants to hear for no cost? Definitely. And for anything not covered by the above, there's always BitTorrent.

The media and entertainment industries made big strides online in 2011 and are poised for complete ubiquity in 2012. Consumers are getting more comfortable accessing streaming content, whether from a connected living room setup or a mobile device. The major studios are still leery of piracy and cannibalizing their DVD market, but they are determined to avoid the music industry's fate by making more titles available at reasonable prices. We're also seeing the growth of original online entertainment, which promises to help smaller names find an audience and bigger names develop new revenue streams.

The past year also saw its share of pitfalls and stumbles. Netflix, once the shining king of the streaming entertainment world, will spend 2012 trying to undo self-inflicted damage from a few poorly thought-out changes. And the rise of bandwidth caps by cell carriers threatens to strangle the streaming party just when it's getting good.

The Connected Home

One of the big trends in 2011, which will grow in 2012, is the emergence of the connected living room. While 3D TVs were poised for strong growth this year, consumers seemed cool to them, preferring to wait for glasses-free options. Instead, more shoppers opted for smart TVs and set-top boxes, price-sensitive upgrades that allow consumers to enjoy online content and low-cost premium services (typically Netflix or Hulu Plus) from their couches.

New devices in 2011 made it easier for viewers to stream their favorite content. Roku introduced an updated line of set-top boxes, the Roku 2 family, in July. This lineup included a top model with a motion-aware remote, which allows people to play casual games on their Rokus. Roku's dominance in the set-top market allowed it to attract new premium channels, such as one from Disney that debuted in September. "We are excited to extend our extensive library of short-form videos from Disney.com onto Roku for more families to enjoy," said Kyle Laughlin, vice president of product development for Disney Interactive Media Group.

Boxee, which enjoys a devoted following of people who want more online access in a set-top box, announced important content deals in 2011 that made it better able to compete. In February, for example, it announced that Netflix would come to the platform. "While we are bummed we couldn't get this out sooner, we're very happy to have the Netflix app just in time for Valentine's Day so our users can have a date night with their Boxee Box (and hopefully a significant other)," said Boxee's vice president of marketing Andrew Kippen.

In August, Boxee finally unveiled the long-awaited Boxee app for the iPad, which brings the full range of Boxee content to the leading tablet. It followed that with a $49 dongle (made available in January 2012) that brings live over-the-air channels to the Boxee Box.

Western Digital Corp. (WD) offered a range of set-top competitors in October, including the WD TV Live, which can be found for as little as $89. It's similar to a Roku box, but it adds the ability to stream stored content from locally networked computers.

Just as 2012 was beginning, Roku took the wraps off a whole new type of device, a flash drive-sized TV accessory called the Roku Streaming Stick. Set to debut in the second half of 2012, the diminutive device is meant to create a smart TV experience on regular sets. It requires an HDMI MHL port to work, however, which could prove confusing for shoppers.

Not everyone thinks the rise of set-top boxes will last, believing that connected TVs will soon swallow the market, providing consumers with more convenience and less clutter. "What we think of as over-the-top boxes right now—Roku, Boxee, etc.—will probably not be around in 5 years. Those are kind of just a stop-gap measure until the TVs, the Blu-ray devices, potentially even cable boxes have the app platforms built in, because why would you buy the stand-alone box when your TV already does it?" asked Justin Eckhouse, senior product manager for CNET/CBS Interactive, at the 2011 Streaming Media West conference in Los Angeles.

Apple rumors are always a popular topic in tech circles, and the current common wisdom is that Apple will finally release an integrated TV set this year, one that builds the Apple TV streaming platform into a set. Apple is tight-lipped about future plans, so only time will tell if the rumor is accurate. While technology watchers are eager to see a potentially groundbreaking product from Apple, one that was in the pipeline while Steve Jobs was CEO, it's hardly a given that shoppers will gravitate to an Apple TV, especially if it comes at a premium price.

The big question behind all the connected living room talk is whether or not pay TV customers will use it to cut their cable and satellite bills completely, or whether cord-shaving (scaling back on premium extras) is more likely. Early adopters who have tried relying solely on streaming entertainment have often found the experience challenging, with difficult connections and a lack of live news and sports.

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