The Multimedia Home –Coming Soon to a Home Near You

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The Multimedia Home –Coming Soon to a Home Near You

November 18th, 2003 Issue

Parks Associates’ “Fall Focus – The Home Multimedia Experience” was a half-day workshop followed by a full day of keynote speakers and panelists discussing the various technologies that is making multimedia in the home a reality. The panelists included visionaries from technology and content industry heavyweights such as Intel, Microsoft, Cisco (Linksys), HP, Yahoo! and Real Networks. The topics ranged from digital music, to distribution of content within the house, to content protection.

Bob Gregory of Intel gave an interesting demonstration and presentation of an in-house content protection system, DTCP (Digital Transmission Content Protection). This technology, which is being championed by Intel and Sony and others, was formerly known as the 5C effort and it is intended to be complementary with Digital Rights Management solutions from Microsoft, Real and others that protect the content rights while traversing over the public network. And Intel provided an impressive demonstration of this technology could be used to protect video content over an in-home, WiFi network.

One of the goals of DTCP is to allow consumers portability with regards to where and how they play back digital content. Gregory of Intel cited the recent rise of premium services, particularly music, as evidence that the market for DMAs (Digital Media Adapters) is at a “strategic inflection point”. He also pointed out that the digitization of the home will occur in waves as various technologies become cost-effective for consumers. He pointed out that digital pictures are this first wave of “digital”, as evidenced by the fact the volume of digital pictures is now greater than the volume of film pictures.

Music is another area that is going digital. There were representatives from several high-profile music aggregators including Rhapsody (Real Networks) and MusicMatch. Rhapsody claims to have the greatest number of licensed songs – something like 400,000 and growing. This is the equivalent of about 25,000 CDs out of a universe of 250,000 available CDs. Like with any other question of content, licensing is the big challenge.

Ty Roberts, the Chief Technology Officer of a company called Gracenote, also spoke. Gracenote is a very interesting company in that they have a back-office system that shows what people are doing with their CDs. They essentially create meta-data (the data that describes the actual content) for CDs and MP3s – what they are doing could be applied to video content at some point.

John Barrett of Parks Associates pointed out that the online music store (on-demand) by itself is a very low margin business. It is not enough. It needs to be bundled with other things, whether it be music subscriptions or, in the case of Apple, the selling of iPods. Similarly, the recording industry needs to adapt the way the provide content and they have to add value to their content. He suggested that one way for the recording industry to recoup some of the expected decrease in revenue is to adopt a new business model that incorporates advertising and sponsorship.

Central to the theme of the conference was that the idea that there will be a device - a multimedia hub - that will allow consumers to easily retrieve, transfer and consume (view and listen) a variety of media wherever and whenever they want. Some of the speakers believe the multimedia hub will be an enhanced Digital Video Recorder (DVR), while others believe it will be a PC. This device will require storage, content protection and networking capability. HP suggested that this device might be hidden in a high-end printer. From a consumers’ viewpoint, it really doesn’t matter what it is called, as long as it is simple to use and is reliable.

One last tidbit that I found extremely interesting and perplexing is that Parks Associates found in their primary research that most consumers find their PCs to be more reliable than a set-top box. Although, this seems unbelievable, it seems to be consistent with the statement that HP made that said that consumers trust IT-centric companies to do a better job of home networking than traditional consumer electronic companies. What all this means is how the Multimedia Hub is positioned will be important to its successful rollout.

These were just a few of the nuggets from this conference. I will post some more tidbits from this conference in the next issue of the Viodi View.

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