We’ve written before on how ill-suited the personal computer is for viewing long-form internet video – and on the strange inability one often finds in the personal computing industry (and in a lot of new media analysis) to distinguish between how a 2 minute YouTube video and last week’s full episode of Lost are actually consumed.  The point is not lost on the CE industry, though: there will be a deluge of internet-enabled video hardware coming to market within the next 6-9 months (both televisions and set-top boxes), and while the few devices already out there (i.e. Apple TV, Vudu, and Roku) have all been based on closed “walled-garden” models, this new generation of hardware will instead be open, offering the promise of access to multiple internet video sources directly from the couch.

Which begs the question: what should the user interface for a system that aggregates multiple (and often competing) video services look like?  Clearly, a wide-open web browser model isn’t the appropriate solution for what is, after all, a consumer electronics device.

From an application design perspective, it’s an interesting question. Although I’ve already written about the approach Yahoo/Intel are taking with their Connected TV initiative, last week I had the opportunity to speak with Bob Poniatowski of TiVo regarding their upcoming internet video solution (currently in beta testing).  Two things I took away from our chat: (1) TiVo continues to place a substantial premium on UI design and ease of use, and (2) they’ve determined that focusing on a searching (rather than browsing) model neatly solves the problem of how to integrate multiple internet video services into a single cohesive user experience.  In fact, the name of the initiative (to be rolled out later this year as an additional feature on existing Series 3 and HD boxes) is “TiVo Search” – as CEO Tom Rogers puts it, “what Google did for the Internet, TiVo is now doing for the TV”.

It’s all about the search: users will be able to look for short-form content from sources such as YouTube, The N.Y. Times, and The Onion (among others).  As for premium content, if you have an account  with Amazon VOD, CinemaNow, or Netflix, you’ll enter a TiVo PIN on the respective website and be good to go.  However, one caveat: searching on Netflix is not yet supported – like the  Roku device, only whatever “Watch Instantly” titles already added to the Netflix queue via their website are available.

As an example, search “No Country for Old Men”, and you’ll be able to compare, purchase, and view the title from either Amazon or CinemaNow if you have accounts there (TiVo transparently handles any transactions).  You’ll also get reviews and related articles (from the N.Y. Times, for example), and from Youtube, you’ll get trailers, clips and fan raves/rants (Poniatowski likens the YouTube content to that of a “global DVD Extras menu”).  Search Tommy Lee Jones and you’ll get bio information, any other available films and/or television programs he’s appeared in, and again, any related short-form and user-generated content.

In addition, TiVo Search will include a (very TiVo-like) internet video “Discovery Bar” of suggestions based on your previous searches, and will also allow you view images from any computers on your home network… all in all, it’s easy to imagine this being pretty cool.

Things to watch:

• How will TiVo’s subscription revenue model compare to Yahoo/Intel’s Connected TV advertising-supported model?
• How will TiVo’s traditional in-house software development/deployment model compare against the Yahoo/Intel Connected TV “widget” model (and/or Apple TV’s App Store model)?
• When will Netflix “Watch Instantly” content become searchable too?
• Will TiVo expand into the lower end of the IPTV market by releasing a more affordable streaming-only (no HD, no DVR) device to compete with devices such as the Roku?  Having already done the heavy lifting of implementing the search system together, this would seem an likely move.

All in all, this looks to be a powerful and (as one would expect from TiVo) a well-designed long-form internet video solution.  Although TiVo’s market share has been under pressure from lower cost carrier-bundled DVRs in recent years, TiVo Search could be just the differentiating value-add the company’s looking for.

I’m looking over some recent numbers from nielsen online and I’m struck by something: while hulu may indeed be a big fish, long-form internet video is still a pretty small pond.  Consider:

Of the four major broadcast networks, hulu partners Fox and NBC saw the largest month-over-month increases in October 2008:  Fox was up 165%, while NBC (helped by Tina Fey’s triumphant if temporary return to SNL as America’s favorite eye-winking, Russia-seeing hockey mom) saw a whopping 312% increase (by contrast, ABC was up 105% and internet video laggard CBS was only up 38%.)

312 % and 165 % increases over the course of one month? Let’s celebrate – professionally produced long-form video has finally come into its own, right?

Wrong.

From that same Nielsen report, here’s another statistic: during October, YouTube had almost 82 million unique visitors to hulu’s 6.3 million – that’s a factor of fifteen (even with Tina Fey’s Palin sketches driving users to hulu).

A direct comparison between the two by total streams delivered would skew unfairly towards YouTube due to the shorter running time of the average user-generated video – but what the heck, let’s do it anyway, just for fun…  because the difference between those Nielsen numbers is even more stark than you might imagine: YouTube delivered almost 38 times the total number of streams delivered by hulu.

That’s thirty eight times more streams from YouTube than hulu.

Granted, hulu is one well-executed website.  Yet clearly, long-form premium video over the internet still has a long way to go.  What’s the takeaway here?  In my opinion, the answer is somewhat obvious: people don’t want to sit alone in front of their computers for a half hour or more at a time to view long-form video – in other words, the effectiveness of the personal computer as a video-viewing device is inversely proportional to the program length of the video being viewed.

The numbers in this report clearly put Hulu and YouTube in stark contrast against one another in terms of actual usage.  However, it would be a mistake to fail to take into account the fundamental differences between the short form/long-tail (user generated) and long form/short-tail (professionally produced) video viewing experiences – or the fact that we don’t have a truly compelling lean-back device for delivering long-form internet video viewing just yet.  Therefore, it would be a mistake to infer from reports such as this that internet video will remain primarily a short-form UGC medium.

For long-form premium video over the internet, it’s going to take a new generation of device that offers content directly from the couch before we can make any such comparisons.   The user interface on these devices will not be a web-browser, instead it will be simpler and optimized for lean-back media. Companies such as boxee (at left) and Yahoo/Intel are working on just such user interfaces. While I’ve already written a bit on the Yahoo initiative here, Boxee is more recent development. Right now it’s just a Windows/Mac application that aggregates disparate video sources (including Hulu) into a cohesive whole. While that’s pretty cool in itself, what makes Boxee really interesting is that the company plans to bring dedicated set-top Boxee hardware to the market within the next year or so – and in ther meantime, the software can be installed on the Apple TV device today. As I’ve said before, I think the prospect of Boxee on – well, a box – changes everything.

We shall see – but in the meantime, a quick reality check is in order: while well-suited to workplace video snacking, the computer and web browser are inappropriate (and ultimately intermediate) solutions for viewing long-form video – no matter how well-implemented a given website (such as Hulu) happens to be.

Back from CES - the annual Consumer Electronics love fest in Las Vegas,  (OK, I am a bit late posting this) – I am actually pretty psyched about what’s coming down the consumer electronics pike this year.

As CE devices get faster, smarter, and increasingly untethered, the “on-your-terms” digital lifestyle proposition pitched to us for all these years seems a considerable step closer to its “anywhere, anytime” goal.

Yet, despite years of impressive CES innovation hoopla, I continue grappling with a personal observation I lovingly coined the “Star Trek bottleneck”:

CE designers’ propensity for innovation seems directly proportional to their lifetime exposure to, yup, you guessed it – the popular Starship Enterprise television series.

OK, I am kidding. But as with any good joke, there’s some truth to it.

To stick with the Star Trek analogy – short of time travel and “beam me up Scotty” – is there anything in CE land that Captain Kirk and his crew didn’t have that’s not readily available to us in stores today?

There’s the wireless video monitor and the wrist-band smart phone, plus the super-smart refrigerator, remote home security, and a growing number of cute gadgets.

All set in slick form factor, of course, all with build-in intelligence processing more information ever faster. Good ol’ Gene would have been proud.

In other words, it’s as if this past-century icon of sci-fi television continues to haunt our 21st century CE designers to this day.

Of course, I have no empirical data, no scientific studies. Just a pretty good hunch, mixed in with a healthy dose of cynicism, about why today’s CE industry seems unable to think more innovatively about, well about innovation itself.

Maybe it needs a new and decidedly young(er) generation of CE designers to get us beyond my “Star Trek bottleneck” dilemma? One void of stylized sci-fi TV exposure and implicit 60ies and 70ies ideas of what innovation should be.

But than again, no matter what any new group of CE designer may come up with, it still needs to stay sufficiently functional and attractive to consumers, right, or it simply won’t sell?

So, maybe it’s not just about passing the CE design torch on to the next generation, but also about our own limitation as consumers to desire (and then use) something entirely different from what we collectively perceive as “innovative” today? 

So where might we be heading next?

My guess on this, next-gen CE devices will focus on software rather than hardware, and regard bolstering quality-of-life as a key goal.

That next evolutionary step in consumer electronics might then have less to do with form factor (that’s largely covered ;-), and much more with adding previously unavailable intelligence inside and outside existing hardware concepts.

The key driver – and blocker at the same time? Our collective ability to imagine beyond the obvious.

Any of this probably not for CES 2010. But hey, let’s see what CES 2020 will bring.

Consider Sony and Apple – in many ways, two similar companies: both span both the computing and CE spaces, both have intimate connections to a major studio (Sony Pictures and Disney, respectively), and both adhere to closed-end vertical silo business models.  Granted, Sony doesn’t write their own operating systems, and unlike Apple TV, the current Sony internet-video-to-the-television box (the Internet Video Link) is partnered with 3rd party services such as Amazon’s Video on Demand – but in other ways Sony represents more of a closed ecosystem than Apple: while the Apple TV will work with any HDMI-equipped TV, the Video Link will only work with Sony Bravia televisions – and while iTunes is platform-agnostic, Sony’s previous ill-fated internet TV device from a few years back (the Sony Room Link) demanded not only a PC, but a Sony Viao PC.

This past week saw some news from both companies:

• Sony announced an expected $US 2.9b operating loss for 2008
• Apple recorded a year-over-year revenue increase of over 6% for the most recent quarter – and this despite the historically horrendous macroeconomic climate of the past few months



It’s an ongoing debate among those of us who think about consumer electronics and technology: closed proprietary platforms vs. open standards-based platforms.  Stability and elegance on one hand, lower costs and increased innovation on the other – two entirely different paradigms.

In addition to their numerous other circumstantial similarities, Sony and Apple both subscribe to the former – so maybe it’s not about the intrinsic advantages of a closed or open technology model (or other factors, for that matter) as much as it’s about the quality and desirability of the product.

The Holy Grail: internet video directly from the TV.

While the primary challenges would seem to be hardware-based,  there are equally significant (and equally daunting) software challenges to be met as well, because no computer = no OS = no web browser.   Traditional operating systems aren’t appropriate for a lean-back passive viewing system on any number of levels, and studies repeatedly show that nobody really wants a full-featured browser on their television (and a keyboard on their coffee table) anyway, so in one sense it’s no great loss.  However, forgoing all that standardized functionality leaves one with a lot of design and development work to do: what about an operating system?  What should the user interface(s) look like?  Can we get by with the current button-laden remote as an input device, or should a Wii-like pointing remote be developed?  And how does the type of input device dictate what type of functionality can get built into the system itself?  All in all, a pretty heavy lift – because what we’re talking about here is the creation of an entirely new interface to the internet (potentially every bit as important as the web browser).

Into the void step Yahoo and Intel.  Just announced at last week’s CES is the Connected TV Widgets Channel, a ‘software foundation’ for internet-enabled television hardware built around a new generation of specialized Intel processors.  While the framework will be open to 3rd party software developers (according to Yahoo’s Patrick Barry, “We get a nice advantage, knowing the ins and outs, but we will not limit the platform to being addressable by us”), it’s worth noting that Yahoo and Intel are going with a lightweight “widget” model rather than a heavier-weight application model.   Running a widget on a modified JavaScript engine rather than an installed application down on the operating system itself tends to protect the OS from poorly-behaved software and also allows for more generalized control of what the software can and can’t do.  Much like the Apple App Store model, the widget model represents an attempt to strike a balance between encouraging open and innovative software development, while at the same time providing appropriate “guard rails” for what are, after all, consumer electronics devices rather than computers (look for this trend to continue as cloud computing and the overall “CE-ization” of home computing continues).

Initially at least, the Widget Channel appears to be primarily about adding ancillary features on top of the traditional cable/satellite television you already have – in other words, imagine being able to call up feeds from fan message boards or team websites in a dock at the bottom of your TV screen while simultaneously watching the big game on cable…   Or having a dashboard of specialized weather, news, or twitter feeds available while watching “Madmen” via satellite dish…

• On a purely technical level, though, there’s nothing to prevent a Connected TV widget from streaming video, either (bandwidth permitting).  At that point, things get interesting – as the innocent little ‘widget’ starts to eat into existing television distribution models.

• In fact, the terms “Widget” and “Channel” are both misleading, because the Intel/Yahoo initiative is not about merely adding additional incidental functionality -  it’s about (cue the thunderclap and the dry ice) letting internet video into your television.  In other words, that local weather report or eBay quote on the bottom of your screen is really something of a Trojan Horse (a point already probably not lost on the cable industry).

Connected TV is, um, well-connected: on the hardware side, CE manufacturers such as Samsung, Sony, and LG are already on board, and for web content, deals have been inked with traditional heavyweights such as eBay and the New York Times (among others).  For the video over IP scenario to play out, though, what Connected TV needs are video content partnerships – and there too, Yahoo and Intel seem to have things well in hand: agreements have already been signed with CBS, Netflix, Amazon, Blockbuster, and Showtime

It’s been a while since we’ve seen much good news coming out of Yahoo, but they seem to be getting a lot of things right here.

Yahoo intends to monetize the Widgets Channel through advertising, but in an effort to reach a critical mass of users as quickly as possible, will reportedly go easy on the advertising initially.  So who knows, maybe in a few years from now, Yahoo stockholders could actually be thanking Mr. Yang for turning Mr. Ballmer down at $31 per share….

If there’s one widely agreed upon fact of life in the still nascent long-form (short-tail) internet video space, it’s that consumers will not tolerate anything close to the advertising density they will for traditional broadcast television:

• A current NBC show on hulu carries roughly ¼ of the advertising that same show broadcast on a terrestrial NBC affiliate carries.

At the same time, online CPM rates are substantially higher than traditional broadcast rates, based on the internet-given ability to target online ads to individual users:

• NBC and hulu can charge over twice the CPM that NBC can charge for broadcast television.

It’s often taken for granted that these two characteristics are both inherent to internet video and even somehow compensatory – yet imagine if we could challenge the first assumption (the relative intolerance for online advertising ): in other words, imagine online video advertising density more in line with that of broadcast video, yet maintaining the higher CPM rates charged for target online advertising…

Now there’s a business model.

How to get internet video consumers to tolerate the amount of advertising tolerated on television, though? To me, the (somewhat obvious) answer is to solve the problem of making the internet video experience itself more comparable to the television experience.

In other words,

I would submit that there’s a direct correlation between the amount of advertising online premium video consumers will tolerate and the fact that (until now) they happen to have been sitting alone in front of a computer at the time– in other words, increase the comfort, ease, and sociability of the experience, and (for better or worse) you can increase the advertising.

Now that’s finally happening, as CE companies start rolling out TV hardware with embedded network interfaces this week in Las Vegas.

Today I read with interest a Will Richmond VideoNuze article questioning whether the current online advertising model will support this new generation of internet-enabled television hardware, and how it might have to change.  What I feel Will misses, though, is that as a result of all this new couch-centric hardware changes the fundamental viewing experience, there will be a commensurate increase in tolerance for advertising on the part of the average internet video viewer.

So as the density of long-form premium internet video advertising approaches that of traditional television yet the online CPM rates remain higher than the effective traditional broadcast rates (because of the internet-only value-add of ad targeting), I feel that the advertising-supported long form short-tail internet video sector has a bright future indeed.

“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), 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.