Leaving Las Vegas: Final notes from CES

I’m one of the lucky souls who is not staying for the last day and a half of CES. Farewell, ye who will endure to the end of the convention. I’ve posted several entries in response to specific announcements, but as I sit at the airport and enjoy the airport’s free WiFi (yes, free! Viva Las Vegas! Next time you drop a coin in the airport slot machines, know that I appreciate your subsidy), I find myself summing up the experience with a few thoughts:

1. CES was a shadow of its former self. There were empty spots on the show floor, there were very few lines waiting for cabs, buses, even bathrooms. CES didn’t even feel as big as NAB, which might be a slap in the face, depending on who you are. There weren’t even lines for the massage chairs. No, I did not try one. I was too worried someone would take a picture of me looking like this:

2. The dominant theme was the economy. Everything was about value. Yes, TVs were even thinner, they were wireless, they had Internet connectivity, but the real message was how cheap they were going to be. One TV maker didn’t even launch a line they had intended to launch, preferring instead to focus on the value TVs they already have in the market. I guess 30″ is the new 40″. Perhaps the one outsized booth space  that didn’t get the message we were in a recession was Samsung’s. See the adjacent video to get some sense, but the video doesn’t do the scale of the booth justice.

3. Some of the most important products at CES aren’t even products. There are two industry groups who had significant presence at CES, though not on the showfloor. They are the DLNA and the DECE. DLNA is the certification body that makes sure TVs, Blu-ray players, set-top boxes, mobile phones, PCs, and printers will all be able to speak to each other, share content, and create a digital home that has no boundaries. DLNA has mostly been a great idea until this CES where they showed up with a list of hundreds of devices that are now DLNA certified. I got to walk through an example of picking up a Nokia phone; using it to browse the music, video, and photos on a media server across the room; then playing a video on a DLNA TV. It works, folks. The only problem is that other than the content you have ripped from your DVDs (illegally), the likelihood that you’ll have much to watch across the network is slim. That’s where DECE comes in. This group just formed last Fall and brings hardware makers, retailers, and content producers together to create a standard for digital media that would allow you to buy something on any device and automatically receive rights to watch it on any other device you own. Unlike most industry-led schemes for media distribution, this one actually makes consumer sense. These are two initiatives that I’m rooting for.

4. There were a few fun surprises. One of my favorite surprises was the disappearing display that is hidden inside a mirror. See the video below to see it (and me in the mirror, unfortunately). Nice touch, probably not a mainstream device, however.

The other thing I saw worth noting was this array of small “micro-projectors” which is a new category that we’re likely to see grow over time. These devices (which they wouldn’t let me take pictures of in action, but here’s the display case of devices turned off) project TV-sized images onto walls from unbelievably small gadgets. This company, Butterfly Technologies, has made a cell phone that can project images. Certainly something business people might find interesting. But I’m curious to see what happens in a few years when these are as cheap to include in devices as digital cameras are. Do we all have projectors embedded into any of our devices so we can easily show the pictures of our trip to CES with our friends?

5. Vegas is still surreal. I have a few things on my list here. First, were the large ads in the airport or atop the cabs promoting a place called The Gun Store. The purpose of this store, other than to sell guns, is to let you pay to shoot guns. Machine guns, hand guns, whatever floats your boat. Or sinks it. Second, the large ad in the airport that showed a single glass of water and a lengthy explanation of why waiters in restaurants might not provide water automatically. Because the good people of Vegas are trying to conserve water. After all, they live in a desert. Of course, all it takes is a walk down the strip or through a casino or even a ride past the golf course behind the strip to see the fountains too numerous to count. I’m sure glad they’re saving water by denying me a glass of it. Third, I had the misfortune of walking down the Venetian halls when the adult film industry convention was closing down for the night. It was relatively terrifying to see the kinds of people coming out of that convention. This is a family show, so I’ll spare you the details, but suffice it to say that all the innocent bystanders like myself were turning to each other to spontaneously remark, “Only in Vegas.”

Vizio takes connected TV to the max

I’ve spent much of the week blogging about pre-CES and CES announcements related to bringing the Internet to the TV. I’ve seen many of the things I was expecting: more Netflix in more devices, Blockbuster announcing it would connect to the TV, in short, big names making big plays to get to IP-delivered video and interactive content to the TV screen instead of the PC monitor.

In one of my posts earlier this week, I wrote:

Soon, there won’t be a TV maker who doesn’t offer this connectivity; that includes Vizio, in my opinion, who will clearly see the writing on the wall here. In fact, if Vizio announces something innovative early, it could really maintain its growth position in the US market.  (from Samsung Adds Yahoo! Widgets to its TVs).

As if in fulfillment of my wishes, Vizio yesterday announced exactly that. What makes the announcement worthy of a post is that Vizio not only added one or two things, it added the whole boatload. In fact, when the CES dust settles, we’ll probably find Vizio — a relative newcomer to the TV market and certainly a newcomer to the Connected TV business — will hold the title as the maker of the most connected TV. Here’s a list of partners Vizio is incorporating: Accedo (for games), Adobe, Amazon VOD, Blockbuster VOD, Netflix (so last year by now), Pandora, Rhapsody, and the Yahoo TV Widget Engine I wrote about this morning, which means Vizio will have many more content plays beyond this list relatively soon.   

Vizio is the TV maker to watch as of this moment.

Even the fact that I can no longer call them just a TV maker (they announced a $200 Blu-ray player yesterday as well) is evidence that Vizio is ready to make this recessionary year a big one for the company. And they’re in a good position to do so: value-priced and distributed through value-oriented channels, Vizio can provide high-tech at low cost without having to swallow any pride.

Vizio earns my attention because they are the first to really bring a “many devices, many services” model to the TV. This is something I have written about a lot lately, as I have been predicting it for the past year and have started to see it come to fruition. For example, last year in a speech to a 100 people, I walked them through a 2009-and-beyond TV scenario in which the new TV you bring home literally asks you which services you already subscribe to and immediately connects you to them. By bringing Amazon, Blockbuster, and Netflix into the same TV, Vizio is making my scenario real. The only thing it lacks from my scenario is a pleasing computer voice to help you navigate your many options. And I was just kidding about that part anyway.

As soon as another TV maker catches up to Vizio, my “many devices, many services” model will be complete. Now, the only thing all of these announcements are missing that I explicitly asked for is…Hulu. Add Hulu to this Vizio solution and you almost don’t need cable. Almost. But I’ll save that for another CES post after I meet with Sezmi… TTFN.

Yahoo! TV Widgets are the Belle of the CES Ball

Yahoo! has surprised me. Back in August it announced a new TV development platform called the Yahoo! Widget Engine. Developed together with Intel, this Widget engine was billed as the way to get Internet content and functionality to the TV set.

I’ll admit I was skeptical. We’ve heard so many announcements about getting Web content to the TV that my response was, “I’ll believe it when I see it.” Today I’ve seen it.

Not just a demo of proposed functionality as is so often the case. But I’ve seen a line of partnerships on the device and content sides that backs up Yahoo!’s claims. And though it will be hard for average viewers to grok why, this is the most important TV-related announcement to come out of CES.

Why, you ask? Because most CES announcements are specific to one device or service. A new video editing software suite, a new portable media player, a new 3D television. Even the announcement from LG that it would build Netflix into a line of TVs is a single-device announcement. Interesting, innovative, and pointing us in the right direction, but ultimately limited by the reach of that single device.

Yahoo!’s announcement, on the other hand, is already having a broad impact. Check yesterday’s press release for more detail if you need it, or better yet, see the whole scenario by visiting the Yahoo! Connected TV site, but here’s the list of TV makers who have signed on to build Yahoo! Widget capabilities into their TVs: Samsung, Sony, LG, & Vizio. Three on that list are hungry market share grabbers who are rising rapidly. Sony is a long-established player whose inclusion on the list teaches us something about the future of the connected TV.

In the old days (read: 2008), connected TVs were built around walled content gardens that required the TV maker to strike content deals and figure out how to promote the content to the viewer. TV viewers are notoriously routine-driven so breaking into their routines was particularly difficult to do. Hence, connected TV activities on HP and Sony devices have been modest to date.

In the new world, TV makers will simply provide access to a common platform, the way a PC does. Think about it: when you buy a PC from Dell, you aren’t limited to the software that Dell has programmed, or even software that Dell has chosen to license to you from 3rd parties (the way the iPhone app store works, hmmm, how old fashioned, eh?). You buy a PC from any maker, it runs software from any developer.

That’s the promise of Yahoo!’s TV Widget Engine. As long as sufficient TV makers adopt it, it will become an open standard for putting content on the TV. Open standards, once adopted, enable content innovation.

What content, you say? Here’s a list of people beyond Yahoo! itself developing TV Widgets so far, a list which is likely to increase by a factor of 10x as soon as a million people have Widget-capable TVs: Flickr, eBay, MySpace, CBS, The New York Times, Netflix, Amazon, Blockbuster, Showtime, USA TODAY and Twitter. All major names whose inclusion is likely to tempt others to fall in line. 

I’m meeting with Yahoo! at CES to talk about the future later today. For the first time in a long time, I see Yahoo! playing a significant role in the future of interactive content. Bully for them. It’s just a question of how long until Google decides to jump in and whether TV makers will want to support multiple widget or application systems on their TVs. Plus, I wonder what the long-term payoff to Yahoo! is for building this open system. We’ll talk all of that through. 

This is yet another example of how the software and Internet community is innovating ahead of cable. TV widgets are something cable and satellite have been toying with for years. But they develop too slowly and reach too few customers with their trials to have had an impact. We’ll see how quickly Yahoo!’s Widget Engine can make us forget cable’s attempts to add interactivity to the TV screen.

Samsung adds Yahoo Widgets to its TVs

In yet another Pre-CES announcement — eerily similar to the one I blogged about yesterday when LG pre-announced that it was putting Netflix into some of its HDTVs — Samsung late yesterday announced it was putting the Yahoo Widget Channel into some of its 2009 HDTVs. Rather than online video delivery like LG announced, this channel will be an interactive ticker that will provide layers of information (read: traffic, weather, shopping) as well as opportunities to augment TV shows with application widgets.  

Let’s see: Internet content, easily delivered to the TV. TiVo, Roku, SlingCatcher, LG, Boxee, now Yahoo and Samsung. I sense a trend here, no?

In fact, I spent some time taping CES interviews with CNBC that will roll out over the week. Like every other press outlet, they wanted to know what I expected the big trends to be this year. I had to confess that the big trends are mostly going to be the same trends that we saw at last year’s CES. Only this year, they would matter.

That’s not to say that Sony and HP’s Net-connected TVs weren’t important trailblazers on the path to the future, they were. Even Verizon FiOS, which has been playing with TV widgets for two years now, was a critical first explorer of this new territory. But their wagons have bogged down in the mud and LG and Samsung are building a nice little interstate behind them. 

The big difference between these announcements from LG and Samsung and prior efforts is that the 2009 solutions are based on open content that already has an audience. Netflix has 9 million subscribers who want that content. Yahoo provides toolbars and web experiences to millions of people each day. Plus, both solutions will gradually be augmented by adding more open content experiences such that the TV is worth one thing the day you buy it, and more later down the road when the additional content and widgets are added.

It’s the culmination of many things I’ve been writing about, so obviously I’m excited about it. However, a sober note is always in order. I’m not suggesting Samsung will sell a million of these. Even between LG and Samsung, they won’t sell a million this year. TVs just don’t sell that fast. But learning from these examples, everyone else who makes TVs will work out similar solutions (dare I ask once again for a Hulu TV?). And Blu-ray and even DVD makers will do the same. Soon, there won’t be a TV maker who doesn’t offer this connectivity; that includes Vizio, in my opinion, who will clearly see the writing on the wall here. In fact, if Vizio announces something innovative early, it could really maintain its growth position in the US market. 

Specific to TVs, my public prediction from 2008 was that in 2013, 40% of all TVs sold that year will have Net connectivity. After that period, the number will rise rapidly, not even because all people will want that, but because — like the digital camera in your cell phone — TV makers will find it easier to include Net connectivity than to exclude it.

Stay tuned for more CES announcements throughout this week. I am on CES-lite this year, only spending two days there, but will have ample opportunity to spot the best and brightest in the world of video.

LG adds Netflix to TVs in a small step with big implications

Surely hoping to jump ahead of the CES announcement blizzard that is about to strike later this week, LG and Netflix have announced that LG is releasing the first TV sets that stream Netflix titles directly to the TV, without the help of a separate box (as is the case with the myriad solutions we have already discussed on OmniVideo like Roku, Xbox 360, and even LG Blu-ray players). See Brad Stone’s piece at the New York Times for some more reporterly detail. 

This is a big deal. LG wants to do this because it needs to keep TV prices from the gutter; giving people content that they already have access to — but on the more pleasing screen known as the TV — is a great way to keep prices up.

Netflix obviously wants to do this because in its plans for world domination, offering a service that can serve you across channels (with DVDs and online streams) is a great way to provide the best of the analog and the digital worlds. Even though our own research has shown that the recession is convincing nonsubscribers that they don’t need Netflix, moves like this one certainly reassure existing subscribers that they’re getting their money’s worth.

I make a big deal out of this because of the model change that it represents for both the manufacturers and the content providers. It circumvents cable, it puts CE makers in a new role of content acquirers, and it signals a new way of looking at devices: as conduits through which many services can be delivered. I call this the “many devices, many services” model. With that paradigm in place, expect rapid innovation in products and services. Even in a recession, perhaps especially so.

However, a note of context is in order. A big question I’m hoping to answer with surveys this year is how many people will own Net-connected TVs by the end of the year. It can’t be many. If you imagine that 10% – 12% of US households buy a TV each year, it’s hard to believe that even 10% of them (1% of total) will be Internet-connected. Mostly because there aren’t that many Net-connected TVs on the market. A few from LG, Samsung, HP, Sony, with more likely to be announced this week at CES. And they haven’t sold well to date because there wasn’t much to offer through them other than walled content gardens with a smattering of swimsuit videos and re-runs of Facts of Life. 

Which is why the next big thing I’m waiting to hear at CES (or if not then at NAB) is a Hulu-connected TV. I’ll let you know when it happens.

Why Sling.com matters

It’s a question I’ve been getting from the press since Sling.com was first placed in private beta test. “Why is Sling trying to create a website when Hulu, Veoh, Joost and others have already cornered millions of visitors?”

It’s a sensible question, but it doesn’t take into consideration Sling’s ultimate strategy.  The first issue to raise is a simple one: this is not that expensive of a site to run. The content is hosted by the content providers (including Hulu.com) so there’s no cost there. The only money they give those people is the privilege of letting them keep the lion’s share of the revenue associated with the content Sling.com is passing through.

The real point to raise, however, has to do with Sling’s secret plot to take over the world. Yes, Sling has a secret plan: they want to make it easy for you to take content from anywhere and watch it anywhere. Diabolical, no?

First piece of their plan is letting slingbox owners — the few, the proud — access their slingbox content from any Web browser, rather than through a proprietary application. This is critical. This will mean you can check your slingbox from any IP device, including iPhones and T-Mobile G1 phones. Get it? That’s a critical feature to add.

The second piece is in enabling people to watch online content on their TVs. This is not for Slingbox owners, it’s for an even smaller group: Slingcatcher owners. But it’s a very smart step, one I’ll be writing about at Forrester in early Q1 as I consider all the ways you can put Hulu on your TV set. Because the Slingcatcher lets you share PC and online content to your TV, aggregating the best content on Sling.com just makes it that much easier for Slingcatchers to access the best of the Web on the TV. It’s a small step, but it represents big thinking. 

Big thinking because once Sling can show that it has the technology in its Slingcatcher and the content on Sling.com, it will then start calling Samsung and other TV and Blu-ray makers to say, “Hey, want an Internet-connected TV strategy that puts the best of the Web on your device quickly? Partner with us!” Sling licenses the technology, pre-connects Sling.com (through a proprietary UI) to the device, and boom, instant Internet-connected TV strategy without the hassle of knocking out content relationships. It’s the same motive that led both Samsung and LG to work with Netflix. 

It’s going to be the race to watch in 2009. I’ll be tracking it: who gets Hulu to the TV, then CBS, then ABC (because that will be the order in which it happens). And all of this makes it easier for you and I to watch what we want, when we want. See why Sling.com matters now?

As Netflix rises, Roku drafts nicely behind

Every time I turn around, it seems Netflix is announcing something new. These past few weeks my little fingers have typed furiously to keep up with Netflix, which I will now refer as the company formerly known as the DVD-by-mail company. Two weeks ago, I wrote about Samsung adding Netflix to some of its Blu-ray players. Then there was the announcement that Netflix had finally enabled streaming on the Mac (okay, okay, Intel-based Macs, but still). Then there was the revelation that said company would provide HD streaming on the Xbox 360 and other devices. Finally, I posted just last Thursday that Netflix was partnering with TiVo to expand its streaming to yet another device. (Convenience note: you can mouseover these links to see the text of the page without actually clicking on them)

Just remembering typing it all inflames my carpal tunnel. Now that I’ve had some time to think this through, I’m still impressed with Netflix. But wait a minute. In all this, there’s one definite winner behind all the announcements: Roku.

btw, this is not an ad, this is just the most attractive picture I found on the website: I don't get paid anything if you click on this and order

Yes, I’m talking about the maker of the $99 streaming video box that in my back-of-the-envelope estimations has probably sold more than 50,000 units in the six months since its launch. This is the box that I proclaimed the winner in the over-the-top set-top-box shootout I wrote in July. But secretly, after writing that report, I started to fear for the box’s survival in a world where Netflix is off enabling every other device you’re thinking of buying this holiday season.

Then the recession hit. Follow my logic here: you hear that Microsoft Xbox 360 Live members can stream Netflix to their TV sets. That sounds cool enough to try, you are one of nearly 9 million Netflix subscribers aftera ll, but then you add up the additional costs — $199 for the low-end Xbox 360 Arcade plus a $7.99 a month subscription. Add that up for a year and you have $295. (Of course, the plan from Microsoft is that you already own an Xbox and this motivates you to sign up for the Xbox 360 Live Gold Membership, but just humor me.)

So you then hear that select Blu-ray players from Samsung and LG now allow for Netflix streaming. You were considering a Blu-ray player anyway, so you look into these and find they retail for $349 to $399. Then you hear that TiVo will offer Netflix, but you have to get the $299 TiVo HD at a minimum, not to mention the monthly service charges. You’re starting to feel daunted, so you go to Netflix.com and see all these options on one page so you can figure out which one is best for you.

You find the Netflix Ready Devices page, which shows you all of these options, and what do you see? Roku listed at the top, at a nice $99 price. Oh, and by the way, it’s the only one that comes with built-in wireless connectivity for those who don’t have ethernet in the living room. Especially in a recession, the Roku seems like a low-risk option.

I shared this line of logic with Tim Twerdahl, VP of Consumer Products at Roku, an ex-Netflix guy on Friday. I could practically hear the smile on his face over the phone as he agreed with my logic. Then he confirmed it: “Our sales are up dramatically in October.” And that in a recession.

Of course, the point of all the other boxes is that they do other things, not just Netflix. The Xbox does games, TiVo does DVR, the other guys do Blu-ray. When I shared this concern with Tim, he responded very confidently that I should stay tuned. What I have long been calling the Netflix/Roku box will soon shrug off the Netflix moniker by adding other premium content. This will only drive up sales on this box even more. Soon it will outsell the Roku Soundbridge home audio device that never really got past 100,000 users in four years of selling. There’s a business in this box; Roku is here to stay.

Netflix streams through TiVo

I recently called Netflix the little engine that could, with its announcement that its streaming content would be available through select Samsung Blu-ray players. 

Well, that little engine made it even further up the hill this week, adding TiVo as a streaming partner, as reported in the NY Times today. The score is now officially Netflix 5, everyone else 1. Meaning that Netflix has 5 different ways to get content into your home. That blows everybody else away.

I spoke earlier this week with Jim Keyes, Blockbuster CEO, on stage at the Forrester Consumer Forum. He made the case that Blockbuster didn’t want to marry itself to one device as iTunes does with the Apple TV. Instead, he wants Blockbuster to be available through any disc device (DVD or Blu-ray) and eventually any digital platform. But he didn’t see the digital platforms ready yet (despite buying MovieLink). And I buy that argument for the most part, but when you see what Netflix is accomplishing, it appears to be single-handedly fueling the market for digital platforms, one streaming partner at a time.

Netflix finally includes Macs in its streaming plans

The word at MacWorld is that the Netflix “instant watching” feature is being upgraded to support Firefox as well as Intel-based Macs. This is something the Netflix blog brought up early on as a goal. The Intel-based part means it’s not exactly Mac-friendly, but Netflix says that three-fourths of their Mac users are based on Intel machines so they’re satisfying the biggest number.

Many Mac people will be angry about this, to be sure. Netflix doesn’t seem to be apologizing, though, and is instead likely to position this as yet another in a log line of devices Netflix intends to support: LG Blu-ray players, Samsung Blu-ray players, the Roku/Netflix box, the Xbox 360, and now, the Mac.

Angry Mac fans aside, this is further evidence that the Netflix people know what they’re doing.

Device by device, Netflix is making its modest little service relatively ubiquitous. Unlike iTunes or MovieLink or anyone else, Netflix is shooting to become the base option in video devices intended for the living room. Very smart move.

Samsung adds Netflix to latest Blu-ray players

We’re witnessing the one dramatic change in the world of physical media. Now Samsung has joined LG in making Blu-ray players that also stream Netflix movies and TV shows. This Netflix strategy is the little engine that could:

• People first said it was weak because the content was so second-string. Netflix has recently fixed that by adding Starz and some Disney movies. 
• Some complained that a dedicated $99 box from Roku (though priced to sell), wasn’t enough to move the market. However the LG Netflix/Blu-ray player showed that there was real depth to the strategy.
• The deal with Microsoft’s Xbox 360 to put Netflix content in the game console proved there’s a true multi-platform play there.
• Now Samsung’s entry shows that this is going to become a big deal across multiple players in the CE and computing world.

Lessee, Netflix 4, everybody else, 1.

With Steve Jobs again this week referring to the Apple TV as a “hobby” in order to downplay previous expectations, this leaves Netflix clearly in the driver’s seat when it comes to over-the-top delivery to the TV. Maybe not in volume yet, but it will.

The biggest issue here is what this means for cable. Netflix has set its sights not on Blockbuster or even on iTunes, but on Comcast, Cox, and Time Warner. The Netflix solution pulls content automatically from your DVD rental queue, provides an easier-to-use interface than VOD, and now has as much good content as a typical VOD system, this makes cable cord-cutting that much more possible.

This Netflix move could prove to be the most important wildcard of 2008. Now if only there wasn’t a recession hanging over these Blu-ray players…

Are you Netflixing your TV? Will you? Do tell.