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Vol. 19 No. 3 — April 2011

In 1999, I wrote “The TV-Web-Net Appliance: All in the Family Room?” for Searcher magazine (vol. 7, no. 9, October 1999, pp. 34–38). I made three big mistakes in that analysis.

Click to view PDF of 1999 Article

First, I paid little attention to the emergence of the advertising imperative. Television, regardless of technology, is about an audience. A decade ago, advertising was stuck in the ruts of traditional media. In 2011, advertising is personal, ubiquitous, and what makes any online service possible. A government agency or not-for-profit organization may be able to ignore eyeballs, but a commercial rich media service gasps for oxygen without traffic. Eyeballs can be monetized. In 1999, I was too enthralled by technical and behavioral challenges to understand that traffic-related revenue was the nitro methane for innovators’ race cars.

Second, I missed the amount of time required to deal with certain problems. Let me give an example of where I crashed on the straightaway. With regards to technology, I assumed that the pesky problem of formats and encoding and decoding would take 2–3 years to resolve. Wrong. Codecs remain a problem and the incompatibilities are still with us. Even if a propeller head can make one rich media format “play” on a nonsupported device, the “owner” of the rights may rush to break the propeller head’s fix. I also missed on user set-up of the system, an easy-to-use interface, and customer support that “supports” the user. Wrong on each count.

Third, I overestimated the speed with which prices for the hardware and the digital televisions would decline. Prices are now a fraction of what they were for a big screen TV. In 1999, the price of a 50-inch TV was somewhere north of $6,000. The beginning of 2011 saw a 52-inch Sanyo available for $499 from eCost.com, an online storefront. But even with that price drop, in the 2011 economic climate, that price tag may be too high for tens of millions of Americans.

The Haves and Have-Not-Yets

The information superhighway invites different rich media experiences. BroadbandTVNews.com reported in October 2010 that spending for U.S. digital home entertainment was up 23% [http://www.broadbandtvnews.com/2010/10/25/us-digital-home-entertainment-spend-up-23]. At the same time, the U.S. economy was still hurting from the 2008 collision with financial reality.

For those with money and other resources, personalized, anywhere, anytime rich media is a reality. Choices range from Apple’s ecosystem of flashy devices and easy-to-use software to the Netflix streaming service to the wildly popular YouTube.com service. For those without the appropriate resources, the rich media revolution is approaching, just more slowly.

Predictions and Outcomes

I want to review the main points in my 1999 Searcher magazine article against the 2011 video races we will be watching in the coming months. Once again, I want to sail into harm’s way and make several observations about the future of the blend of internet, traditional broadcasting, and various forms of rich media content.

Technology and the User

In 1999, usability and user experience were mentioned in passing. However, none of the hardware and software in 1999 was intended for wide consumer use. Connecting a TV with a VCR was a job for a teenager. For those without an available teen, the time on a VCR would blink an eternal midnight. The flashing zeros spoke volumes.

Software has progressed since 1999, but the interfaces available for setting up a cable TV still requires a trained technician or a computer whiz and a phone call to the local cable company. Without explanation, my father’s cable television began displaying closed captions. To turn off the function, a cable company engineer had to walk one of my engineers through a process that involved resetting the cable box, entering a secret code to access the cable box’s administrative panel, and then using the remote’s arrow cursor to navigate menus to deactivate a service. Why the closed captioning service covers up my father’s TV program is a mystery. He did not activate the feature. The cable company’s technician told me, “We have had a lot of calls about this. I don’t know what’s happened.”

Technology is still not perfect when it comes to “smart” TV delivered via cable and satellite. (I struggled with a Google TV in the local big box store. The salesperson told me, “You are not the first person to hit a roadblock.”)

In 1999, I referred to a “rat’s nest of complexity.” A decade later, connecting a Blu-ray Disc player with Netflix support to that service is still a task for the technically adept. Configuring a Google TV with the Logitech Revue is at least as complicated.

In my experience, talk about consumerization of different types of rich media is easier than getting vendors to deliver systems suitable for the mass market. Part of the stunning success of Apple and its iPad, iPod, and Apple TV products is ease-of-use. Uptake of the devices has been hampered by cost. Cheaper devices are available, but most of these are still too complicated for many people.

In 1999, I focused on traditional televisions and computing devices. Mobile phones morphed from single-purpose devices for affluent individuals into mass-market smartphones. Today’s mobile devices are computers. Many of these devices can support internet access, and some can deliver usable video.

In 2011, the emergence of traditional stationary TV-like devices is interesting but not particularly surprising. The explosion of mobile devices that can display video is a fundamental shift in the market. Instead of simplifying such issues as formats, rights, and fees, the new consumerized products have added complexity. Users may be able to access a video with a tap on a screen.

For the service providers and content creators, the new devices have created new opportunities and posed some new challenges. For example, business models have to be developed to pay for infrastructure, licenses, and software.

Activity in rich media has been bubbling like the witches’ cauldron in Macbeth. In the last decade, there have been significant shifts throughout the rich media markets. Network television is becoming more like cable television with time slots for sale via complex deals with production companies and advertisers. I lump this set of changes together as the “American Idol-NFL” approach to programming.

Motion pictures have been whipsawed by cost escalation and the collapse of the infrastructure for the industry that Sam Goldwyn and Louis B. Mayer perfected. The implosion of the record business has become fodder for stand-up comedians. Terrestrial radio has morphed into fringe and niche channels that urge me to adopt a particular faith or embrace a particular political party’s agenda.

Winners and Winning

But when I look back over the years between my 1999 article and today, there are three developments that are particularly useful as anchors of change.

First, the Apple iTunes service warrants comment. Apple has wrested the consumer product crown from Sony and Samsung. Its method has involved hardware, software, and services. The service became available in 2001. Apple’s success has taken time. iTunes is proprietary software that works with Apple’s proprietary hardware. Into this system, Apple injects content developed by third parties and licensed to Apple. The details of Apple’s deals are kept under wraps. Apple broke with NBC over licensing terms. NBC crafted a satisfactory deal with Apple, and NBC content returned to the iTunes’ service. Apple’s financial success and its proprietary mindset are important to be sure. However, Apple effectively rolled up what had been separate businesses and fused them into the rich media behemoth it is today.

The key point is that Apple integrated what once were individual functions and put them in a walled garden. One enters the walled garden on Apple’s terms. Louis B Mayer, were he alive today, would have understood what Apple under Steve Jobs’s tutelage was building. Some media moguls still struggle to understand the “cult of Mac,” the reality distortion field, and Apple’s $70 billion in revenue and its $300 billion market capitalization.

Am I ignoring Apple’s success in hardware with the iPod and iPad products? Not at all. Am I overlooking Apple’s software? Nope. These are strands of the Apple rich media DNA. Could another company have pulled off this type of rich media ecosystem? Maybe. Steve Jobs did media players, mobile phones, and tablet computers. That is part of the reason that Apple is a disruptor of note.

Second, I point to the YouTube.com service as a rich media service of comparable significance. YouTube.com, purchased by Google in 2006, has a different financial model from Apple’s: Google appears to have been subsidizing the costs of the user-submitted video site. Advertising is now more evident on YouTube.com videos and Google sells organizations “channels” on which the organization’s content is displayed. The Pope has a YouTube.com channel, for example.

The impact of YouTube.com has been twofold. First, YouTube has become the center of a firestorm about copyrighted content on its system. Viacom took Google to court, asking for $1 billion in damages. Google prevailed. Now Viacom is mounting an appeal of that decision. Google and its YouTube service have become ground zero for rights in the boundary of new and old media.

Second, YouTube demonstrated that user-generated content, often of dubious quality, would generate considerable traffic; for example, web league tables are often of dubious quality, but on Jan. 5, 2011, Alexa pegged YouTube as the third-most-visited site on the internet.

I don’t want to downplay the technical infrastructure and engineering behind YouTube. In my view of rich media, YouTube.com became the pointed end of the stick for copyright and the evidence that videos of bad singers and exploding bottles of soda were of interest to hundreds of millions of people.

Third, I want to highlight the Netflix service. I ignored Netflix in my 1999 article because it was a small rental-by-mail outfit. By 2007, Netflix had choked off Blockbuster’s oxygen with its delivery of its billionth DVD.

Netflix is an important disruptor for two reasons. First, the company recognized the potential for streaming rich media. Netflix courted Hollywood and other content gatekeepers, cut deals, and developed an easy-to-use service. In the span of 3 years, Netflix reinvented itself and pushed into the den where a TV was located. Netflix crafted a way to get video on a broad range of mobile devices, including Apple’s iPad. Most importantly, Netflix has become a button on the TV’s remote control. Convenience is a key to consumer product success. Netflix’s approach has made Amazon’s rich media service look cumbersome by comparison.

Second, the company has been a champion of open source software. As the fortunes of the company’s video streaming service skyrocketed, Netflix emerged as a touchstone for the reliability of open source software in high demand.

Where are the traditional big guns of the rich media industry? In my opinion, the former kingpins have become the equivalent of contributors. Their content is essential, but if a single content provider goes belly up, Apple, Google, and Netflix will not be affected that much. The rich media industry has taken the traditional studio system and used its precepts in a digital context. The traditional big guns now find themselves with guns that are potent but their adversaries have nuclear weapons.

Look at That Technology

Before making several observations about the future of rich media in the consumer sector, I want to take a quick look at the state of rich media technology. In my 1999 article, I prepared a pair of tables. One table focused on technology, and the other table touched on consumer needs.

In 2011, the technology challenges have shifted. Bandwidth is available, but the challenge will be throughput and affordability. Net Neutrality advocates have unwittingly given providers the rationalization to end “all you can eat” plans and bring back metered service. In 1999, different file formats were a big problem. In 2011, consumers can buy a big screen TV, get a cable or dish hook up, and consume content. Fiddling with file conversions by hand need not trouble the consumer. The video recorder now contends on-demand services, so time shifting is increasingly easy for consumers. Copyright hassles are ongoing, but in the home, content delivered via cable or a dish is reasonably well buttoned up.

On the consumer side of the equation, interfaces for basic content access are OK. Configuration interfaces are still too complex for most consumers.

The price points vary widely. Apple TV offers a streaming access point for $99, but other devices cost orders of magnitude more. Content costs remain an issue for some consumers. Netflix’s monthly subscription fee has been one factor contributing to the firm’s success in my opinion.

Multiple remotes litter many sofas. Access to web content is a work in progress, and it is not clear what types of internet-centric services will be the ones that dominate. Google TV offers a personalized content search service. Apple offers access to content intermediated by Apple. Cable and dish companies want to control programming and contributory services such as internet access.

Since 1999, there are few signs that a clear winner has emerged in the consumer sector. Maybe no one winner will emerge. The myth of convergence and content blending collapses in the real world of special interests and proprietary ecosystems.

What Is the Outlook?

Based on my performance in my 1999 article, I know that I will be at best 50%, maybe 60%, correct in my prognostications. As I write this, I see five distinct trends which may become dominant in 2011 and beyond.

First, the device environment is likely to remain in flux. The new “smart” devices such as phones and digital televisions are hybrids. Like genetically modified corn in a prairie ecosystem, no one, not even the Ph.D.s at the Department of Agriculture, knows what will happen. In practical terms, the device environment is likely to be a source of surprise. Who, for example, could have predicted the emergence of short-form videos reworked for mobile phone screens for Japanese commuters? My take is that these new devices will trigger more innovations and variants. I am not sure my big screen TV will become an interactive wall, but there will be some remarkable genetic variants churning the device business.

Second, content is undergoing equally rapid change. The lines between a digital book and a software application are fuzzy now. Going forward, I am not sure if traditional categories will apply. Data fusion, mashups, multiple paths through a video game—each of these technical constructs provides individuals with accelerants for their creative fires. “Old” media will not disappear in my opinion. The torrent of new media will have more in common with recombinant DNA than a traditional printed book or a 1950-style motion picture starring Cary Grant.

Third, the legal environment seems to be shaping up to be as important as the technical environment. One example is the litigation swirling over, under, around, and through such companies as Apple, Google, Hewlett-Packard, Microsoft, and others. I am no attorney and I don’t understand how these complex multiyear, big money lawsuits work. I am, however, increasingly aware that legal decisions, particularly with regard to copyright, can have significant impacts on innovation and access. Will 2011 be the year in which lawyers wrest control of rich media from engineers, content creators, and business executives? I have to entertain the possibility, as distasteful as I find the idea.

Fourth, will the future be defined by Ultraviolet [http://www.uvvu.com/home.html], a more traditional media giant such as Time Warner, or an outfit now off the radar? Ultraviolet is a new breed of consortium which does not include — quite pointedly — Amazon, Apple, or Google if the information on Ultraviolet’s website is accurate. Whatever Ultraviolet or other consortia concoct, I think that “open” will be defined in terms of the members’ interests. If this sounds like Orwellian newspeak, I apologize. “Open” seems to be on the trajectory of connoting access provided to those inside a walled garden. Even open source software, when embraced by IBM and other commercial entities, is wrapped in proprietary bunting.

Finally, user demographics are poised for a significant shift. Baby Boomers are aging, which will have a profound impact on the market for certain types of content, products, and services. The younger cohorts are acclimated to different types of information access methods, modes, and formats. The digital environment creates opportunities, and I think the burgeoning market for the “new” ensures the type of efflorescence that I associate with Italy in the 16th century and England in the 19th century.

The big change is that the center of gravity has shifted from English and the Western powers to China and the Eastern powers. The next information revolution may be available in Chinese and English via Google Translate.

Will I take a look at my views of rich media in another decade? I am one of those aging Baby Boomers. If there is an update to my 1999 and this 2011 write-up, I will defer to my son. He is one of those rich media consumers with agile thumbs. For me, I will go back to my ink-on-paper books — if any are left.