The pace of digital lifestyle developments continues unabated. A great deal of activity has occurred in the since CONNECTIONS™ 2006. The Parks Associates’ analyst team has compiled this list of the top trends in the last year:
- Broadband penetration in the U.S. will surpass 50% of residences in the middle of 2007. On a global basis, broadband penetration is approaching the 300 million household mark.
- The two large U.S. telcos – AT&T and Verizon – officially entered the IPTV space in 2006, accounting for more than 200,000 subscribers in the first full year of availability. On a global basis, Europe surpassed Asia in terms of overall subscribers, and there is much more activity in Europe in terms of cross-border competition among different telecommunications providers. At the end of 2006, the total number of IPTV subscribers worldwide was slightly more than four million.
- Entertainment content disruption accelerated with News Corp. buying MySpace and Google buying YouTube – leading to the “NewTube.”
- The launch of all the three new game consoles (Microsoft Xbox 360, Sony PlayStation3, and the Nintendo Wii) was significant. The Xbox 360 and its associated content services are now positioned – according to Microsoft – as second only behind Apple for video downloads.
- Agreement on the underlying protocols that make up the next Wi-Fi standard – 802.11n – was reached. We’re already seeing high volume shipments of Draft-N products, and wireless is aiming at the entertainment and multimedia space.
- Apple announced a month ago that they had sold 100 million iPods (plus two billion music downloads as of year-end 2006), a testament to consumers’ desire for more accessible and easy-to-use media services and products. In addition, the company released AppleTV, where PCs and CE seamlessly interoperate to enhance entertainment applications, and this move should be a significant boost to the growth of multimedia networks.
- Microsoft officially launched the Vista operating system, which places a new level of media creation and consumption capabilities in front of end users.
- Virtual economies are booming — World of Warcraft has nine million subscribers, and Second Life has more than five million users. With this growth, the online gaming community is becoming more entwined with unique social and commerce applications.
- Digital rights management (DRM) issues continue to ebb and flow:
- High-end media server company Kaleidescape was found to be within compliance of the DVD Copy Control Association's license to the Content Scramble System, the method used to encrypt video and audio data on DVDs. Speculation is that this may open the door to “managed copy,” where the studios agree that consumers can take their owned DVDs and make a copy on a server for safekeeping.
- On another positive front, Dan Glickman, the head of the Motion Picture Association of America (MPAA), recently affirmed the studios’ blessing on “authorized copies of the content they [consumers] purchase.”
- Steve Jobs at Apple recently discussed the abolition of rights management for digital music. After all, he argues, fewer than 2 billion songs were sold under DRM with digital music services (such as iTunes); at the same time, the music industry sold 20 billion unprotected songs on CDs.
- Legal challenges persisted to dampen any positive DRM news. A federal judge recently blocked Cablevision from continuing its RS-DVR service, which basically put time-shifting capabilities in the head-end. We view Europe and Asia as much more significant markets for “nDVR” applications. And music publishers are suing XM Satellite for allowing subscribers to copy broadcasts to MP3 players.
- Companies in home controls continued to consolidate, with Nortek acquiring LiteTouch and Gefen and Legrand acquiring Vantage and UStec. Best Buy released its Home System in a Box, called ConnectedLife.Home. BT and Bell Canada marked the entry of telcos into the home security space.
- Retailers, service providers, and third-party entities are discovering there are significant business opportunities in digital home tech and customer support services. Revenues from Best Buy’s Geek Squad services (including product installation, configuration, troubleshooting, and repair) exceed $1 billion in U.S., and other major big box retailers have either launched or rebranded their own digital home technology service offerings. Circuit City launched its firedogSM service in September 2006, and OfficeMax® just launched ctrlcenter™ for remote tech support in April 2007. Both CompUSA and Staples rebranded their tech support services to TechPro and EasyTech, respectively.
Finally, Stuart Sikes, president of Parks Associates, said the industry is moving forward because big players are spending big money to build out the digital home.