SMWest 2006: It’s all about the platforms

Steve Safran October 31st, 2006

Streaming Media West 2006 Panel: “Convergent Roles for IPTV, Wireless & Set-Top Boxes in Delivering Consumer Entertainment”

Moderator: Tejpaul Bhatia, President, Tej Media Networks, Inc.
Panelists: Chris Wagner, EVP and Co-founder, Neulion
Stephen Condon, VP, Marketing, Entriq, Inc.
Rich Buchanan, VP of Marketing, Sling Media
Isaac Josephson, Direcotr, Product Management, ABC News Digital

Question: Define “Convergence” in terms of your company and from a consumer standpoint

Isaac Josephson, Director, Product Management, ABC News Digital: Providing our content to news consumers in any way that they want. It doesn’t matter how many devices, on demand. Interoperability is a challenge. We’re providing our content online – free and premium services. We provide mobile options through MobiTV. We’re everywhere we think we need to be.

Rich Buchanan: VP of Sling Media: Our concept was created when our founder who was at Microsoft was frustrated because he couldn’t watch the Giants on the roads. There were too many blackouts and online restrictions. Many of us pay approaching $100 a month for a pipeline of content into our homes, so why can’t I watch that stuff wherever I am? To us “convergence” means being able to watch and enjoy the content you all own anywhere you travel on whatever device you have. It doesn’t mean “a new device that has two things.” We don’t want to put another device into your pocket. To us, it’s not so much about defining a new device – it’s about taking the devices you have in your pockets and laps and consolidating the content you already have access to.

Stephen Condon, Entriq: It’s more about “divergence.” It’s about opening up and distributing your content. These large media companies have so many opportunities to monetize their media. There are so many opportunities to capitalize on your content. It’s about marketing your core product.

Chris Wagner, EVP and Co-Founder of Neulion: It’s driven by the consumer. They want to pick what they want to watch. Traditional distribution is going to get stretched. Consumers want access to content regardless of where they are. If they’re in the living room, they want to watch from the couch. If they’re in the office, they watch on the computer. On the train, they watch on the phone. The consumer decides.

Moderator: At the center of this discussion is the consumer. What has changed in the past five years?

Wagner: Streaming video has been a huge success. People are still trying to figure out a business model. There still are lots of dialup customers. But broadband penetration is growing. There is a consumer preference for different devices. But the cellphone companies make it very difficult to work with them, in my opinion.

Moderator: What will help Slingbox five years from now?

Buchanan: Yes, 40% of the US doesn’t have broadband penetration, but they may never have it. We’re past the 50% threshold. The biggest danger right now is Net Neutrality. I encourage everyone to look into the matter – both sides of the coin because they are both good arguments. But the success of video on the internet may ironically prove our own downfall.

Condon: I don’t think that number will stay at 40%. The generation that’s growing up with broadband will not stick with dialup.

Moderator: What makes today’s experience different at ABC from 2000? What needs to change?

Josephson: Two things have changed since 2000. The news cycle has sped up tremendously. The catalyst was the 2000 election and because there was no winner, there was a story literally every 20 minutes, so that trained everyone to keep hitting the websites. The second thing that happened is that the tech became available to enable people to access the sped-up news cycle. To take it to the next level, there needs to be interoperability and resolution of bandwidth issues. From ABC News standpoint, one of the challenges in proving content to anyone anywhere anytime, means we need to provide it in a variety of different codec. If there were one codec that were effectively DRMed, we would prefer that. More bandwidth cheaper would mean better quality video.

Moderator: Convergent and divergent experiences you see right now?

Condon: Companies looking at how they can use the mobile devices to market their video. We’re seeing a lot of the media companies wondering how they can optimize their content between the web and mobile – and close the loop.

Moderator: Sling Media – are you finding consumers and programmers are gravitating toward specific devices?

Buchanan: We shifted the TV to the PC for people globally. It’s difficult to pick one specific device. Certain devices are good for different experiences. (Waiting in the airport, watching at home, staying in hotel on the road.) People using their cellphone and their Slingbox typically watch an average of 15 minutes – check in on the game they’re missing, get a score. Our job is to take the stream and put it on as many platforms as possible so you can watch and engage the content. There are two predominant uses: news and sports.

Moderator: So convergence isn’t about the hardware anymore so much as getting the content distributed to those platforms.

Will there be a winner in the “digital living room”?

Condon: Video is going to become more compressed and more ubiquitous. That creates a freedom for the computer user. Apple’s DRM is a big problem. The challenge is still how do you get the content from the PC or Apple to the TV? Main hurdle is ease of consumer use. Until there is simplification of the technology it’s going to be difficult for that space to get a lot of momentum.

Moderator: So there are roadblocks – interoperability, consumer ease of use.

Condon: Some sort of broad resolution of the DRM resolution. You’ve got the issues of Blu-Ray and burning DVDs. How do we make sure IP distribution of content can power the experience so people can burn a copy of a movie or TV show. We need to simplify the experience. Resolution of it? Maybe someone will reverse-engineer Apple’s DRM. Consumers should be able to access and burn their content as much as they want. Rights shouldn’t be technology-dependent. The right they are buying to that content should not limit their platform choices.

Moderator: Is there a killer app for content?

Josephson: YouTube was a killer app, UGC was a killer app. I’m not sure there are others right now.

Wagner: Digital Living Room is an overhyped term. We’ve been on a 15 year quest for digital TV and we’re still not there. Content is king. What ABC News does, for example, is one of the best news services on the globe. So whether you want your news delivered via a talking head or a reporter that’s your preference. It’s your digital lifestyle. You might like a Slingbox so you can watch news. If you like reading news and seeing photography, an interactive web-based experience is for you. Micro-PCs are another option. It’s not about where or how you watch it. It’s where you go to get the information, and the information is the valuable asset.

Moderator: Future of entertainment. Rather than make predictions, let’s talk about the challenges and friction points your companies face.

Wagner: Our customers are content companies that want to go after target markets anywhere in the world. There are no geographic boundaries for target markets. Most of the issues we run into fall into two larger categories: rights around content (cable and satellite in the past few years have done an unbelievable job of signing content providers to exclusive deals that ban other forms of distribution) and the consumer adoption of a new service.

Condon: What’s holding us back from growth is the compatibility issues with DRM. When you’ve got an Apple out there that takes such a large share of the environment in a closed way it makes it difficult to grow. Some of the media companies split themselves into verticals – this is our web group, this is our mobile group – and that can hinder compatibility issues.

Buchanan: The challenges on the media side have been in place since the ‘50s. That’s changing. A lot has changed in a year. The biggest challenges come from engaging with various media companies across their “silos” and how to maximize benefits. Content distributors are starting to see us as partners. Long tail business models are being shattered. Unlike the recording industry where they reacted like an ostrich sticking its head in the sand, the TV industry has been better. The challenge is to be engaged across all the fronts of business complexities.

Josephson: I have every confidence that interoperability will be resolved. What convergence has shown us is that there is a healthy appetite for news. That has basically given us a new challenge – how do we differentiate ourselves in this market? You can get your news anywhere. What is it about ABC News that differentiates us? Now that people are getting multi-platform news, it is kind of melded with other forms of entertainment, so it’s also a matter of distinguishing our news content.