Thoughts on CES: Democratization of Content Delivery
The high level takeaways from CES are simplistic - devices are getting better, faster, smaller and smarter. The word is getting more connected, and there are more businesses and more applications capitalizing on that connectivity. What was once novel and geeky is now mainstream and profitable. At the same time, the market is now predictably getting more and more crowded, with Chinese vendors focused on pushing down price, Korean vendors focused on delivering value and volume, and Japanese vendors once again beginning to get sidelined as they search for the next new disruptive technology or product category to enable at a more fundamental R&D level. That said, if a vendor is in the market peddling a dumb device, there is no choice but to compete on price, and for a majority of businesses that will not get you very far.
For Frost and Sullivan, the interesting developments are occurring in the business-enabling layers that are taking the solved device problem and the solved network connectivity problem and translating them into new markets, new market shares, and new customer value. Network ubiquity is here, device ubiquity is here, now content ubiquity is key. Consumers want devices that can get them access to interesting content in personalized fashion with a high quality of experience. Devices could be inherently smart, or may be smartified by the devices connected to them. For example, a TV with a streaming media device, or a set top box with a smart phone or tablet companion app, can provide highly compelling content experiences. We emphasize that high quality content experiences in terms of QoS and QoE are key. Competitive differentiation ultimately comes down to the fidelity of the content, and how users can consume and experience it. Consumers no longer wish to be tethered to a single Pay TV provider, and both Pay TV providers and device vendors understand that. This is driving innovation behind every class of consumer devices - TVs, streaming media devices, game consoles, tablets, smart phones, and even set top boxes. While 4K is a great press theme, all resolutions and bandwidths of content are relevant to the new content economy. Business models are clearly dictating the democratization of content delivery, give that it's not just with the traditional CSPs who have the pipes. If you are someone who has an interesting business model and content library, devices and networks exist to get you to your audience - worldwide. No one is debating any longer whether video anytime, anywhere on any device is a viable model.
That said, online content success is still elusive amidst a crowded and confused market, and growth is highly dependent on execution as well as platform reach. The fallout of the successful maturation of the device ecosystem, as clear at CES 2015, is that industry limitations are now on the actual content itself and how you can package it. Also crucial are experience-optimizing technologies such as metadata, analytics, cross-platform integration and application portability. Security remains a key consideration (in the DRM sense), but is by and large considered a solved problem except for 4K content.
In pleasant contrast to last year's CES where 4K and higher resolution TV screens were showing HD or even SD content, this year there was a much more coherent focus on 4K content, engaging interfaces, and high end content offerings. Sony and Samsung still lead in terms of market share, given their early support of inbuilt DRM and app development SDKs. This year, Panasonic (who has thus far focused more on enterprise/signage applications) and LG are seeking to break into the top-3 by market share for Smart TVs. Companies ranging from DivX/NewLion to Gracenote were showcasing TV-specific solutions for TVE. It was particularly interesting (and encouraging) for us to see dramatic leaps forward in the sophistication and ease of the user interface experience For example, touch-pad smart TV remotes from Samsung were instrumental in bringing the interface to life.
Streaming media devices have taken a huge leap forward in 2014 driven by the popularity of streaming sticks. While AppleTV has the highest nominal unit sales number, the vast majority of their devices are used in the enteprise. Roku, with 7-8 million devices deployed at the end of Dec 2014 per Frost & Sullivan estimates, is who we consider the leading streaming media device today. We expect Samsung and Sony will come out with new-generation models within the next 12-18 months, possibly sooner. This should help drive up the "smart" level of their televisions in a more agile form factor, while preserving the expected lifetime of the TV set itself. At the same time, the distinction between M&E apps and middleware is imminently blurring. Middleware continues to be deployed on SoCs in a market led largely by STMicro and Broadcom, but nearly all vendors are looking at HTML5 and Java as more portable technologies for consistent experiences across all classes of devices.
4K/UltraHD remains aspirational for now, although early services are beginning to take root. The economics of 4K remain elusive (see link and link) but for now monetization and engagement are the most urgent problems that content services are looking to solve. Analytics plays a crucial role here, with applications across usage reporting, targeted advertising, search, personalized recommendation, value-added second screen services, monitoring of QoS, and more.
On the enterprise side, remote telepresence solutions made a splash on the show floor, driven primarily by BEAM. The differences between tablets (as consumption devices) and PCs/laptops (are productivity devices) are becoming more pronounced, with the prognosis for convertible tablets with keyboards being far brighter than traditional high-end tablets. Lower-end tablets are similarly losing ground to so-called phablets, which we count in smart phones. There were a number of announcements in the broad sphere of Internet of Everything, signaling continuing interest in finding new product niches and new services within the digital home and digital enterprise.