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Viodi View Newsletter - November 28th, 2005

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A Different View Inside the Home

By Ken Pyle, ken.pyle@viodi.com, Managing Editor, Viodi View

Parks Associates’ conferences are always interesting since they bring together a diverse mix of speakers from cutting edge companies together with Parks Associates analysts who do a great deal of primary research on consumer behavior as it relates to consumer electronics. The following bullets represents a sampling of some of the many insightful comments at this two day conference.

• Beth Erez of NDS suggested that convergence is real and will accelerate in the next few years. She defined convergence as once separate services coming together on a common network, spawning entirely new features. What makes convergence exciting is that the sum of the networks is greater than the individual pieces.
• Barry James Folsom of Motorola compared the 4% return rates for televisions versus the 30 % for return rate home networking products to make the point that home networking is still a huge challenge for the manufacturers and retailers of equipment. This points to an opportunity for a service provider, such as an independent telco, to provide value by offering no-fuss home networking solutions.
• Steve Mannel of IBM talked about the impact of new game platforms, such as the X-Box, in making the digital home a reality. He suggested that the companies that win in this environment will have to, “create a culture of innovation.”
• One of the things these game platforms will conceivably be able to do is to download movies and other content. Josh Goldman of Akimbo characterized content downloads over the Internet as “IVOD” or Internet Video On Demand.
• One of the big challenges of content on the Internet is the challenge of search. Bradley Horowitz of Yahoo! talked about social search as a better way of discovering content. Social search is about users tagging the content such that it can be picked up by search engines. It is about turning users into channels. It is also about slicing and dicing demographic information to create entirely new channels, such as the middle age, Nebraska Dentist channel. He said that this culture of participation means that their may be one creator, ten synthesizers and 100 consumers.
• Deepa Iyer of Parks Associates reinforced Horozwitz’s comments by stating that content will increasingly be a mix of professional and user-generated. She suggested that revenue from analog channels will go away by 2009, but that video revenue will increase by 60% in the same time period. Internet ad spending will increase from $9.6 Billion to 23.5 Billion in 2010. She said that operators will have to market to a million niches.
• Mobile video will be important way to get to these niches. Dave Whetstone of MobiTV, a mobile video provider, stated that they have 500k subscribers with 72% male and 28%, respectively. For the week of October 2nd, MobiTV’s subscriber base watched a mix of content that was 34% news, 22% sports, 16% entertainment, 11% music videos and 18%.
• Jeremy Toeman of Sling Media provided an impressive demonstration of their service, when he controlled his Digital Video Recorder from and streamed the DVR’s video to his cell phone. The quality of the video was exceptional and it did not require a special video subscription service for his cell phone.
• Proving that DVRs are more than just fancy video recording devices, but are next generation ad vehicles, David Courtney of TIVO discussed a successful ad campaign that TIVO launched with an unidentified, luxury automaker (speculation is that it is Lexus). In this campaign, an icon was added to a 30 second spot. Users that clicked on the icon then saw a longer form advertisement with a call to action. Based on the response rate, the automaker sold 222 cars worth a total of $14 million in revenue. Interactive television is real.

Tac Berry, tac@viodi.com, contributed to this article.

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