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The State of the Connected Living Room 2011

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Once upon a time, there was a miraculous technology called AM stereo. It allowed AM stations to broadcast stereo music in near-FM quality—meaning that AM stations could regain their foothold in the all-important rock radio market.

Sadly, the FCC refused to specify a single AM stereo technical standard. So a number of incompatible formats were allowed to duke it out for listeners. Of course, the absence of a single, does-it-all standard confused consumers, who already had access to FM-quality stereo on FM (which was standardized). Imagine if you went to the store for an HDTV, were given the choice of five models, and none of them could access all of the HDTV content available. That was the dilemma that faced potential AM stereo purchasers. Not surprisingly, they shied away from the confusion in droves.

The result was that despite the fact that broadcasters spent millions converting many transmitters to carry AM stereo and that radio manufacturers released AM stereo portable, tabletop, and in-car radios that truly delivered the goods (this writer owned a few of them), AM stereo died. Today, AM stations are stuck in the news/talk ghetto—leaving the lucrative music market to their FM competition.

Now another miraculous technology is clamoring for the public’s attention: streaming media. Made and sold under brand names such as Apple TV, Boxee, Google TV, PS3, Roku, Slingbox, TiVo, and Xbox, streaming media devices share a few qualities with AM stereo. First, they combine existing technologies—in this case, TV and the internet—to create compelling consumer products with real, tangible benefits. Second, streaming media devices offer opportunities for movie and TV producers to sell their content via an unexploited medium, just as AM stereo allowed broadcasters to use the AM band for stereo music content. In theory, streaming media devices should be a boon for content products, just as AM stereo receivers promised to revitalize a dying medium and make its airtime more valuable to advertisers.

Third, and most importantly, today’s streaming media devices are just as unstandardized and proprietary as their AM stereo ancestors. This means that they cannot automatically access all of the available content on the internet—just as AM stereo receivers built to the Motorola C-QUAM standard could not listen to AM stereo stations broadcasting using the Kahn-Hazeltine standard.

To make matters worse, content providers’ desire to get their piece of the pie has hobbled some streaming media devices, as is the case with Google TV and the refusal by ABC, CBS, and NBC to allow its devices to access their websites.

“It is time for the streaming media device industry to look at themselves and say, ‘Let’s be realistic: We need to standardize our technology on a common platform that can access all available web content,’” says Dan Rayburn, EVP of StreamingMedia.com. “The problem is that nobody wants to do this.”

Why So Many Formats?

The history of consumer technology is littered with format wars. The most recent was Blu-ray versus HD-DVD (winner: Blu-ray). Earlier wars include Betamax versus VHS (winner: VHS), 8-track cassettes versus compact cassettes (eventual winner: compact cassettes), and 33 rpm versus 45 rpm records (a split decision, with albums going to 33 and singles to 45). 

It is worth noting that the format wars were settled by compromise and negotiation; the development of the NTSC analog TV and ATSC HDTV standards are good examples. But whether the wars were won by outright victory, attrition, or compromise—possibly played out to a mutually fatal stalemate in the case of AM stereo—history shows that successful technologies only achieved their full-market potential after a single standard had won. The reason is easy to understand: Consumers prefer to think in terms of generic commodities. People don’t say, “I am going to watch the game on my ATSC-specified 720-line progressive scan HDTV.” They say, “I am going to watch the game on TV,” period.

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