The future of digital entertainment

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Smart TV represents a huge opportunity for the industry but can CE, IT and content providers work together to overcome the challenges? Richard Stevenson reports.

Looking at the Future of Digital Entertainment, this year’s Intellect CE Conference was the largest and best attended in the event’s history. A total of 363 delegates from CE and IT manufacturers, content providers, broadcasters, retailers and the media witnessed key speakers underlining the challenges that face a rapidly converging yet fragmented industry. The  top-drawer lineup of senior speakers included Sony’s new UK MD Gildas Pelliet, Erik Huggers the CEO at Intel, Ed Vaizey the government’s Minister for Culture, Richard Lindsey-Davis the director general of the DTV Group and the BBC’s director of future media, Ralph Rivera.

The take-home conclusion from the presentations and debates was that delivering the next generation of digital entertainment was going to be a long and challenging process. Driven by Smart TVs that offer a seamless experience of linear broadcast, online and interactive content, the UK is in a uniquely more difficult position than the rest of Europe due to its highly developed broadband market. The early unbundling and commercialisation of the national telephone network has resulted in a diverse and complex broadband landscape and the lowest consumer prices per Mbps in Europe.  As such, broadband providers are simply not big or rich enough to drive up broadband speed to sub-urban and rural homes despite the government’s commitment to 90% of the UK having 24Mbps or faster by 2015. Outside of major conurbations 2-3Mbps is currently the average domestic broadband speed and a single HD TV channel requires at least 4Mbps, nearer 6Mbps for 3D HD.

Perhaps likely to cause greater confusion at consumer level, all of the CE makers have followed a proprietary route to creating Smart TV platforms – and none of them are interoperable. For service providers this creates a unique challenge in generating content that is compatible with such a diverse range of operating systems. Moreover, future consumer choice of TV or receiver may be dictated by compatibility with their existing paid-for Smart TV content, such as video, software and apps, rather than features or performance. This scenario is already affecting the Smartphone market where users tend to stick to either Apple iOS or Android platform devices. The Smartphone industry has the advantage of one open platform, Andriod OS, a luxury the Smart TV sector is yet to fully realise as YouView seems only to limp forward.

The third and perhaps most challenging issue for the industry as a whole is that of actually monetising the whole Smart TV experience. Culturally the western world perceives content that is delivered over the internet as ‘free’ and even if it is not (copyright downloads etc) a great proportion of the public are at ease stealing via file-sharing anyway. The BBC, with its unique funding model, is the one content provider in a very strong position.

Clearly it emerged that the digital entertainment industry and the services it currently provides are horribly fragmented and, from a 2011 CE Conference delegates’ point of view, there was very little sign of truly joined up solutions. Around 1% of the UK public are currently accessing online services via their TV. The best estimate of that figure by 2015 was no more than 5%-6%. Smart TVs will be something of a slow burn.

 However what everyone did agree on was the massive opportunity that this next generation of digital entertainment offers. New CE hardware to sell to consumers, new platforms, exciting new content and new applications will all evolve, many of which will become the next big thing like Facebook or Ebay. It is estimated that Smart TVs will double the online time for most households in the UK as more users access services like Youtube, LoveFilm and iPlayer in their living room. To underpin that estimate, Youtube announced it is now getting 3 billion downloads per day – equivalent to one download per day for every other human being on the planet. The company is launching a raft of pay video-on-demand (VOD) services for PCs, tablets and Smart TV devices later this year.

A final area of widespread agreement was that Smart TV had to be simple with a user interface that even your granny could use. This holy-grail interface is unlikely to happen in the first couple of generations of Smart TV, so the demand for well-informed, up-to-date retailers skilled in explanation and demonstration will remain high for this emerging market. As Sony’s new UK MD Gildas Pelliet noted: “Consumers will need help with Smart TVs and those stores that react positively to Smart TVs will have a competitive advantage.”

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