Friday, 12 March 2010

A new era for consumers loom

Is it a bird? Is it a plane? Nope, it's not Superman either. It's cloud based gaming and cloud based movies, music and any other type of entertainment you might want. This is fascinating stuff (even if I do say so myself!) and her is my brief view on some of the dramatic technological changes coming our way in 2010.

Look out for an announcement on June 17th as a new service that allows consumers (gamers) to play any game, at any time and without a console is officially launched. As consumers, we’re getting used to video/music/film on demand but gaming has not, so far, really taken hold in the same way. But I like my shiny black PS3 under my shiny black TV. Munial likes his Xbox360. But imagine a world where such hardware is not required. Imagine a world where all you need is a small adapter that plugs into your HD TV and your broadband connection and you have access to hundreds of games. No need to download them. They are just there. They exist in the mysterious ‘cloud’. All we mere mortals have to do is pay a monthly subscription fee and in of we go and play whenever we want (on our TV, PC or Mac). The service called OnLive and brainchild of Steve Perlman (WebTV, QuickTime) promises that it “will change the way that entertainment applications are created, delivered and consumed.” If it takes off and has mass market appeal, I do believe it could just be the single most important development for gamers worldwide. It would, quite literally, change the entire gaming landscape.

If this happens, what would Nintendo, Sony, Microsoft and for that matter, Apple do in a world where their hardware becomes obsolete? Would they try and compete with their own digital offering? What would stores that rely on the sale of tangible gaming DVD’s and Blurays do? Would they try and compete? I would argue that they could be surplus to requirements. Ancient business models in a world where technology is developing at a frightening pace. Don’t believe that such changes can happen so quickly? You only need to take one look at Kodak to see that you ignore a changing technological future at your own peril. In 1988 Kodak employed 145,300 people and made a profit of $1.17bn on $13.3bn in revenue. By late 2009, the payroll nose-dived to 19,900 with a quarterly loss of $111m. And why? It’s because Kodak failed to see the impact that the digital camera would have on its business. What’s worse is that Kodak invented the digital camera! But Kodak has fought back hard and expects strong demand in Asia to lift its digital revenues to about $7bn a year from about $5.5bn within three years. It’s been a painful transformation though for them but they had to learn the hard way. Another example is EMI. Whether companies can learn to change and adapt given they have strategies laid out for 5-10 years can make all the difference.

There is also an interesting development by the Digital Entertainment Content Ecosystem (DECE), a coalition with support from every industry involved in digital entertainment. It’s claimed that this new system will provide a revolutionary new way to enjoy movies, TV shows and other entertainment. The consortium, which consists of companies such as Alcatel-Lucent, Best Buy Co Inc, Cisco Systems Inc, Comcast, News Corp's Fox Entertainment Group, Hewlett-Packard Co, Intel, Lions Gate Entertainment Corp, Microsoft Corp, General Electric Co's NBC Universal, Viacom Inc's Paramount Pictures, Philips, Sony Corp, Sony Pictures, Toshiba, VeriSign, and Time Warner Inc's Warner Bros Entertainment are working on a "uniform digital media experience". The group wants "interoperability of devices and websites" and fair usage rights that will allow consumers to copy content for household playback devices as well as burn their purchased content to physical media for playback or storage. Each consumer would also be given a "rights locker", a virtual library where all video purchases would be stored and available for download again if ever lost. DECE will also have a logo that can be places on products and websites that will inform consumers on whether that site or product is compatible with DECE standards.

Both Sony and Microsoft have already started making strides towards a more coherent digital downloads market but as the competition heats up for this 'cloud' and all its content, I think it will be hampered by fragmentation, different technical standards and different DRM solutions. But, competition is good. There is likely to be consolidation in the industry with a company, perhaps like Amazon or Apple providing new leadership in this so digital of ages.

Let'sbe honest, I’m not a fortune teller. But even if OnLive or the DECE project don’t work commercially, important strides are being made to change the way we consume content forever. Whether we like it or not. Personally, I like it. My life is becoming more and more like Star Trek all the time.

Beam me up (to the cloud) Scotty ...

1 comment:

Munial said...

I reckon we'll get at least one more machine out of the big 3 before sufficiently fast broadband is widespread enough to let cloud based gaming succeed on a major scale.. but when it comes, I will miss my toys..