“You think we need this phone anymore?” I asked my wife.  Although I’d retired ye olde twisted copper line a few years back, going that one step further and losing the VOIP phone - well, that felt a little reckless.  But the fact remained that aside from a weekly call to my wife’s family in Germany, our use usage of that line had dwindled down to getting the occasional cold call for donations from the Police Benevolent Association of New York City (where I hadn’t lived for several years).

Live Simple.  Lean and Mean. (or our pale bourgeois version of it, at least) - to us, it seemed like a good idea at the time.   It turns out we weren’t alone: a recent US government survey claims that 17.5% (or 1 in 6) US households now depend exclusively on cellular networks for telephone service.

Nevertheless, I’ve found these major home network revisions require (ahem) particularly well documented key stakeholder buy-in, so I waited a week or two and asked Anja once again if Skype could be a workable Vonage replacement for her calls home.  Only after getting further assurance did I finally make the ‘Dear John’ call to break it off with Vonage (at one point, to spare the call center operator from having to go through his whole customer retention script with me, I think I might have actually said “it’s not you, it’s me”).

As it happened, though, both Anja and I came to rue that fateful day: my comeuppance coincided with a switch to the iPhone – or should I say to the remarkably dismal (in the NYC metro area at least) AT&T voice network that comes tethered to it like a ball and chain.  For her, it turned out she hated having to either boot up the laptop and run Skype or try to cradle a tiny cell phone on her shoulder during those leisurely Sunday morning calls home to Germany after all…

She’s one resourceful e-shopper, though, and soon came across what I think could be the Next Cool Geek Accessory – the retro cell phone handset. While she uses hers only at home for purely ergonomic reasons, I can imagine these things starting to turn up on the streets of the Williamsburg (and other ghettos of hip) in 2009, just as black horn rim glasses did 10 years ago.  For the rest of us (those of us old enough to remember), making a call with these huge ancient headsets is somehow strangely reassuring.

Yep. I like this thing - both for the sheer comfort and clunkiness of it, as well as for the juxtaposition of vintage design and current technology - there are even Bluetooth and USB versions available.

Who knows, if my AT&T voice coverage ever improves enough to make it worthwhile, I might just get a Bluetooth handset for my iPhone…

The groundswell of interest in finally getting internet video over to the television in such a way that avoids the clunky computer-centric workarounds we’ve seen to date is picking up steam - just in time for next month’s CES show.

While this is much as we expected, a more surprising (and related) development is the resilient strength in game console sales:

• As of October, the video game industry is up 18% year-over-year, and remains on track for a record year.
• Microsoft reports November was its biggest xBox month ever in Europe, with sales up 124% over last November.
• According to a recent Pew Internet & American Life Project survey, more than half of American adults play video games, and 20% play every day.  More importantly (because after all, this is the future we’re talking about here), a full 81% of respondents between the ages of 18 and 29 are home video gamers.  And the gender gap is less than one would think: while 55% of adult males play, surprisingly, 50%of adult females report playing as well.

Needless to say, given the current economic climate, numbers like these are quite impressive – and suggest the game console could be a much more viable solution to that pesky internet video ‘last yard’ problem than previously thought.  With that, a brief overview of the three competing platforms:

Sony Due to an ongoing price war, Sony now loses money on each PS3 it sells, according to Macquarie Securities analyst David Gibson.  However, the company is firmly committed to the PS3 as an integral part of their long-term internet video strategy, and just rolled out a newly revamped Playstation Network direct video download service for the PS3.  What’s unique about the PS3?  Sony is able to leverage its unique position as both a CE manufacturer and a major film studio, and recently made Sony Pictures’ summer Will Smith vehicle ‘Hancock’ available via download prior to the DVD release.

Microsoft The complex and expensive prospect of upgrading the home PC to Vista Premium or Ultimate just to get internet video to the television has unsurprisingly proven less than compelling to most consumers.  In contrast, over the recent Thanksgiving weekend Microsoft reports a 25 percent increase over last year’s already robust sales of 310,000 xBox units - in short, it’s clear where the growth is.  Like Sony, Microsoft has a direct video download service for their game console (and like the Playstation Network, the xBox Live Marketplace offers a large number of titles in HD).  What’s unique about the xBox 360?  The Microsoft download library is larger than the recently launched Sony service’s, and in addition, the xBox can now also stream content from your Netflix ‘Watch Instantly’ queue (in other words, but an xBox, get Roku functionality for free).  While (like Roku) titles must be added to the queue from the Netflix website, the ability to both stream and download (and the better selection for both) gives the xBox an edge over the PS3 in terms of internet video functionality.

Nintendo Here we have a bit of a wild card.  Thanks to their groundbreaking motion-sensing remote control (and a unique selection of games made possible by it), the Nintendo Wii is the market leading game console in the US, selling 34.6 million units for 2008 Q3 (compared to 16.8 million for the PS3 and 22.5 for the xBox).  The company has been remarkably circumspect regarding its plans for internet video, though – so look for some kind of announcement shortly, perhaps at CES in January.  What’s unique about the Wii?  With no hard drive, any internet video solution would be streaming-based – which is just as well, since the Wii has only 480p (DVD) resolution anyway (although it’s worth noting that real-world demand for HD video has proven surprisingly low).   But perhaps the most interesting aspect of the Wii is the motion sensing remote – as user interfaces get more advanced to support direct internet video access from the TV, we expect this point-and-click technology to replace the cluttered button-filled remotes of today.

Who knows, Apple TV and Vudu have certainly gotten a lot of things right, but neither has yet made a meaningful impact on the market – perhaps the Trojan Horse of online mutli-player video gaming will be just the added value proposition needed to make for a compelling ‘Last Yard’ solution.

It was almost two years ago now that Apple dropped the ‘Computer’ from its corporate name, reflecting the company’s growing presence in the consumer electronics space.  We believe the next iPod-like disruptive CE devices will be an completely new generation of network-enabled TV and set-top hardware offering direct and simple access to internet video ‘baked-in’ - and we believe some compelling implementations are right around the corner.

Meanwhile, consider an exchange from a panel at last week’s ‘Future of Television East‘ conference in NY: asked whether the emergence of such hardware would have much impact on the (currently computer-centric) internet video space, a panel member representing a major software firm essentially reduced the issue to that of merely a difference in user interface ergonomics  - keyboard/mouse vs. remote.  To paraphrase the panel member, “the user will get to the content whatever way the user gets to the content” - but yet minutes later, this same panel member was admitting that user uptake of their internet video TV technology was “not happening as quickly as we’d all like to see”.

Why is that?  Well, if a company’s solution to the problem of getting video from the internet to the TV involves putting a personal computer between the television and the internet and administering it all from the desktop rather than from the couch, they are just not going to see much uptake from Joe the Plumber – instead, the average user will wait for a ‘lean back’ solution to become available, saving him or her from having to get up and touch the computer at all.  Although this is precisely the point at which we currently find ourselves, we don’t see the situation lasting very much longer - again, we believe internet–enabled TV hardware will be the big story of 2009 (one of the issues that’s kept this from happening so far is the development of a useable motion/pointer remote, but that’s on its way too - more on that here).

Clearly, there are major ease-of-use differences between the personal computer/media server internet TV model and the (as yet unavailable) embedded hardware internet TV model - in terms of set-up, user experience, and maintenance.  But while the various software incumbents might have a stake in downplaying these differences, they fail to recognize the inevitability of standalone internet video devices at their own peril – because this new generation of hardware will also require a new generation of lightweight system software and highly efficient video codecs/players (a potentially substantial new market).  Furthermore, to the extent internet-enabled TV and set-top hardware is successful in the broader mass market, a new user application market could also emerge for these ‘quasi-computers’ (Apple’s App Store is a good example of an appropriately simple and elegant approach to distribution and administration for such an entirely new software model).

Amazon has an industry-leading online retail business to support its ‘Video on Demand’ internet video initiative. Netflix has an industry-leading DVD rental business to support its ‘Watch Instantly’ internet video initiative.  The iTunes video service?  Apple is, well, Apple.   And Movielink is owned (and supported) by Blockbuster.  Alone among the major video services, relative old-timer CinemaNow was out there by itself in the still very nascent long-form premium content internet video space.

Until yesterday.

As Sonic Solutions’ Chief Technologist Jim Taylor was sitting on a Future of Television East panel here in New York yesterday, his company was announcing the acquisition of CinemaNow.   Known for the Roxio DVD authoring software, Sonic had recently chosen CinemaNow as the storefront service partner for their Qflix DVD-burning system (CinemaNow’s other main partner to date is HP, which offers direct access to CinemaNow from their MediaSmart line of HD TVs and Connect set-top box - in fact, both ship with $20 CinemaNow coupons).

Since we believe the next phase of internet video will be about long-form premium content accessed directly from dedicated  network-enabled CE hardware, we were particularly interested to read Sonic Solutions’ CEO David Cook’s take on the move:  “With broadband-connected consumer electronics hitting the market in ever greater numbers, there is a growing need for a service that gives consumers one-click access to premium entertainment on any device in the digital home.  The combination of CinemaNow’s content and embedded device strategy with Sonic’s technical prowess and broad PC and CE distribution promises to fulfill CinemaNow’s original mission.”

A smart move for Sonic Solutions…  unlike the current Qflix system (which requires a PC), look for a combined Sonic/CinemaNow to offer Qflix-enabled hardware with embedded access to CinemaNow - no computer needed.   Such a device could compare very favorably to an AppleTV or Amazon/TiVo solution.

I’ve long been of the opinion that longer-form (professionally produced) internet video will happen on a truly widespread scale only when the problem of getting that content over to the television is solved – and that current discussion of internet video (and how to how to best monetize it) is often based on two false premises:

1. The personal computer will continue to be the primary internet video delivery device.
2. Internet video is about short- and mid-form content.

Such discussions often completely fail to adequately recognize how profoundly game-changing direct access to the internet from the next generation of TVs and set-top boxes will be.  In other words, while short form internet video (user-generated or otherwise) will always be a workplace diversion, the main event has not happened yet - we’re still in merely a transitional, evolutionary phase of the process - a process which will end at the couch, not the desk.

Where are we now?   Several major CE manufacturers are currently offering their first generation of standalone internet-enabled devices (each partnered with one or more internet video services):

Hardware:                                Service:

• Sony Bravia, PS3               Sony Playstation Network, Amazon on Demand
• Roku                                   Netflix, more to come…
• LG                                      Netflix, more to come…
• AppleTV                             iTunes
• TiVo                                   Amazon, Netflix
• HP MediaSmart                  CinemaNow, including others
• Microsoft xBox360            xBox Live Marketplace, Netflix

The problem with the above scenario is that no computer means no web browser, which means no Flash – so each OEM wishing to offer multiple services directly via their network interface-enabled hardware (TV, DVD, PCR or set-top box) has had to implement the interface to each service partner individually – a tremendously inefficient reinventing of the wheel.

Therefore, I’ve long felt that what’s needed is a standardized technical protocol for CE hardware to interface with these multiple video services.  Last week, Reed Hastings of Neflix expressed a similar view, noting that in the absence of standardization, “Everyone’s going to have to do customer interfaces for each device”, and further, that it’s “slowing down the market tremendously.”

While the web standards we now take for granted were developed in the shelter of academic and government agency environments, there’s a huge amount of money (and an equal amount of competing agendas) at stake in the internet video space – so the development of a new standard from the ground up at this point seems highly unlikely.  Instead, an embedded web browser running Flash (and/or Microsoft’s Silverlight) sounds like the better idea (Sony has already moved in this direction, embedding the highly-regarded Opera browser into its Bravia line of network-enabled TVs).

Admittedly, though, web on the TV leaves a bad taste in the mouth – previous attempts suffered from three major issues:

• Bandwidth
• Screen resolution
• User interface

Of these three, two are already solved: most broadband connections are now capable of streaming at least SD video, and increased resolution of HD TV makes web text quite readable. The third issue alone remains: the user interface.  Recognizing this, Hastings predicts a new generation of Nintendo Wii-like pointer/motion remotes to replace the primitive up/down/left/right arrows (and four dozen other never-used buttons) on today’s remotes (interestingly, Apple has recently filed for a patent on some technology for just such a device).

Look for this to be the big story at the CES show this January…

Who knew? Porn on the New York subway. But then again, wasn’t it inevitable?

The place: A crowded afternoon N train from Manhattan to Brooklyn. The culprit: a Sony PlayStation Portable held by a young man sitting and watching in solitude, yet surrounded by plenty other strap hangers trying to get home.

What exactly happened here?

The first thing that got me was the audacity of it. With his PSP packed with genuine XXX fodder, simply put, what he was watching was nothing short of hard core pornographic visual certainly not intended for public transportation.

The next thing I noticed, no one seemed to pay attention. Hence - at least for the duration of my ride - no one seemed to mind.

What about the woman next to him, seemingly asleep? Another nearby busied herself reading, of all things, scripture. There were plenty  of other men and woman immediately around us while others got on and off the train.

Now, I know New York subway commuters have long learned to mind their own business.

But the video that unfolded in front of all of us (the sound was muted) clearly lowered the bar on anyone’s standard of privacy; clearly was so out of the ordinary that for its mere ostentatiousness, I figured someone would have to bring it up.

Above and beyond my own discontent about the young man’s obvious lack of social skills, I quickly found myself rather intrigued by something else in this - the apparent disconnect between device and audience.

What used to be a consumer video experience “curbed” by the lack of technology’s reach, a TV set and a VCR simply didn’t lend itself to any practical use in full public view.

This kept anyone’s viewing choice a private matter. No matter how sexual, violent, or mundane the footage was, consumption and intent remained locked inside the home.

Fast forward, today’s “anytime anywhere” video consumption capabilities have changed the playing field. The new paradigm: Anyone’s personal video experience is super-portable, devoid of any particular time, place, and for that matter choice of companion viewers.

Think about it.

Sprint Nextel recently started delivering WiMAX-enabled wireless broadband service powerful enough to give you downlink speeds of 25 Mbps or more while driving down the highway.

Essentially an open pipe into and out of the World Wide Web, it’s going to be interesting to see what passing cars are watching in the back seats once content is no longer limited to wholesome satellite subscription services or Disney DVDs brought along for the kids.

And what about in-flight Web access, such as the service recently announced by American Airlines for select domestic trips?

No matter whether on a highway, on an airplane or inside a subway car in New York, what’s OK for the person to the left of you might be unacceptable to the one on the right.

Clearly, with the pervasive nature of digital content and enabling delivery devices, the meaning of “privacy” is undergoing change.

As to my personal opinion, I am in favor of self-regulating one’s public conduct. Anything beyond that might quickly collide with core principles such as net neutrality or freedom of speech.

Still, our old-world definition of privacy seems to be changing as more of our new world trends towards digital and portable at once.

It’ll be interesting to see how this pans out.

During a Digital Hollywood panel concerned with the future of the television as an internet video delivery device, one panelist rather glibly declared the problem already easily solved - via only a $10 DVI/VGA-HDMI cable.  Since another one of my other pet peeves is the tendency of us technical folks to disconnect entirely over the value of simplicity , I have to take my hat off to panelist JD Colaco of Hulu, who correctly pointed out that such a solution was beyond “95%” of the general population (I would further add that it would also still require the viewer to boot up the computer and administer everything from there – not the most elegant solution).

But perhaps JD’s point was best made only minutes later, as another panelist’s ‘brave new world’ powerpoint presentation was delayed for several minutes, as (and this is in a roomful of digital media professionals and with hotel A/V support on hand) there was a problem with his laptop and the flat screen:

…connecting the DVI/VGA -HDMI cable.

When talk turns to video distribution over the internet, I’m always amazed that the issue of physically bridging that last yard or two from the home internet connection behind the computer to the television in front of the coffee table isn’t discussed more.

At last week’s Digital Hollywood show in LA, the majority of panels were about how to better monetize the video currently being streamed to the web browser (understandable, given the current economic climate).  The basic problem is that while the CPM rates that web video publishers can charge advertisers run several times higher than what traditional broadcasters can get away with charging, online viewers will tolerate only a small fraction of the amount of advertising that traditional broadcast and cable television viewers will put up with (imagine how well a traditional two minute commercial break would work on Hulu…).

To me, the issue is fairly clear –

• Only longer-form programming (lasting a half-hour or more) will support higher advertising density and attract more mainstream brands.
• Ales’ Theorem: The willingness of the viewer to sit alone at a desk or in front of a laptop is inversely proportional to the length of the programming.
• Therefore, a truly sustainable internet video business model relies on solving the physical problem of getting that content onto the television.

In other words, to paraphrase Gil Scott Heron: The Revolution Will Be Televised

…look for some big announcements at CES in January.

How much traction is online digital distribution gaining?  Look at what’s going on these days vis à vis DVD release windows…

Hancock Several months ago, Sony crossed a line when it announced it would be releasing the Sony Pictures/Will Smith vehicle “Hancock” over the internet (exclusively to the Sony Internet Video Link device) prior to the DVD release date of November 25.  A good move on Sony’s part: leveraging their unique position as one of the six major film studios and a major CE manufacturer to help drive sales of their new video over IP hardware.

Wall-E At the time, I wondered if there might be similar synergy (remember that word?) in an exclusive release of Pixar’s “Wall-E” exclusively to iTunes/Apple TV before the DVD release, given the close Disney-Apple relationship (when Disney acquired Pixar from Steve Jobs, he became Disney’s largest individual shareholder and was given a seat on the Disney board of directors).   As it happens, Disney/Pixar is planning to release “Wall-E” to Apple TV concurrently with the DVD release, on November 18th  (and will do the same for “The Incredible Hulk” on Ocotber 21st).

The Office On the TV front, last month the well-received Fox/NBC-Universal initiative Hulu announced the online availability of several NBC shows’ 2008 season premiers (including flagship comedy “The Office”) prior to their air dates.  I thought this was a particularly bold move, and was frankly surprised by the relatively little press attention it received (see my take on Virginia Heffernan’s theWB.com article here).

Iron Man Sony Pictures and Disney have obvious options for hardware partnerships (Sony and Apple, respectively), but what’s a Paramount to do?  Enter Dell: the two companies have just announced that for an extra $20, Dell customers can now have the Paramount summer hit (along with bonus footage) pre-loaded onto the hard drives of newly ordered Dell machines.  But while watching a sitcom on the computer is (marginally) acceptable, what about longer-form content such as movies?   Um, no.  Not gonna happen, at least not on any meaningful scale.

For that, you need two additional specialized pieces of hardware:      a television.     and a couch.

Dell Fact 1: Dell and Paramount know the limitations of movie-watching on a PC.   Fact 2: Dell also makes televisions.  It all adds evidence to the rumors of Dell rolling out even more CE hardware and (drumroll…) an iTunes-like service at some point in the future…. but to do that, Dell will have to do two things: retool its workplace-centric brand, and hire some new product design talent  (because I’m not sure Dell understands the benefits of simplicity).

Just read David Pogue’s recent article on the Vudu set-top IPTV box with interest, as I’ve been doing some research writing on just this subject recently.

A good first-hand user-level review of the device - however, he neglects to mention the really unique thing about Vudu, which is the peer to peer data transfer model.  Why is this so important?  Because residential internet connections are heavily optimized for downstream performance at the expense of upstream - and when I say heavily, I mean heavily (downstream speeds can easily be five to six times faster than upstream). The thinking (correct, as it happens, until recently) is that most users are browsing web pages and streaming youtube from centralized servers (downstream traffic) rather than hosting any meaningful amount of data (upstream traffic). Not so with peer to peer technology, wherein each client is also a data host (or mini-server, if you will) visible to all the other clients using the system at the time.

So to the extent Vudu becomes popular, it’s going to impact the residential ISP’s soft white underbelly, their Achilles heel - upstream bandwidth.  As an indication of just how concerned residential ISPs are about this kind of thing, one need only look at Comcast, who was caught inspecting packets and secretly resetting clients’ BitTorrent connections to slow down the upstream traffic (and is currently appealing the resulting FCC fine).

So if Vudu hits big, we ain’t seen nothing yet - the potential success of the device portends quite the Net Neutrality showdown.