The evolving face of digital entertainment

By Mrunmay Mehta

Whether it’s a 3G mobile handset, the iPod, or the Xbox, digital entertainment has long evolved from the primordial form of the fixed TV-Radio routine. With the internet playing a large role in deciding the course of entertainment, spurious unpredicted factors like the runaway success of the Apple iPod and the cult forming there from, one thing is for certain-there exists a huge opportunity for digital media management/providing companies, and the key to this market would be innovation and ease of use. With mobility increasingly becoming a part of lifestyle, entertainment on the move also will assume much greater importance, and already mobile phones are available with processing power that exceeds some of the recently used computing systems.This article tries to discuss a few recent news making happenings in the digital entertainment industry.
Interactive Television:

Imagine being able to turn your television on, pick the program you want to see from your customized pre-recorded list, pull up an on-screen menu to check the latest weather and stock quotes, instant-message a friend, order pizza from your remote control, and book your next vacation, all without leaving your couch. Welcome to the world of interactive television. The idea of having consumers actively engage in the television experience isn't new. After all, shopping channels like QVC have turned viewer-to-buyer conversion into a science.
Cable and satellite systems have greatly increased the number of channels available to consumers, and pay-per-view (PPV), where viewers use the telephone to rent access to certain programs, is a fixture at most hotels. In an effort to drive traffic to the Internet, television-show hosts often exhort viewers to log on to web sites and take companion surveys, enter sweepstakes and download recipes. More recently, the spotlight has been on personal video recording (PVR) technology, which is offered by devices like TiVo and SONICBlue's ReplayTV. These products take the VCR one step further, offering hard-disk-based recording of favorite programs, pause-and-rewind capabilities for live television, and the ability to skip commercials during playback. In Europe and elsewhere, satellite system providers such as BSkyB and Canal Satellite are offering enhanced features, including t-commerce applications, to their customers. By connecting their set-top box to their phone line, viewers can access e-mail, shop, bank, place bets, and more. Many providers are also experimenting with video-on-demand (VOD), which allows consumers to request and view content whenever they want without having to record it first.

Indeed, several entertainment companies have filed suit against SONICBlue, claiming that the ad-skipping technology in the ReplayTV device violates content-providers' copyright. Five users, assisted by the Electronic Frontier Foundation, have countered by filing a suit against the entertainment companies, seeking to affirm their right to use their ReplayTV boxes to skip advertising and digitally record content. Show Me the Money Television can certainly influence consumers to buy products (Home Shopping Network and QVC are examples of success in that arena), but exactly how much commerce can be integrated into entertainment remains to be seen. Imagine a scenario where two consumer households are watching the same program. The young, single professional sees ads for a sports car, while the family with two children sees ads for a minivan. This is something advertisers have not been able to do before. The technical feasibility of this, is being proven in a trial currently being conducted by SpotOn, a joint effort by ACTV, Motorola and Wink, on an AT&T system. Historically, we have been used to the idea of program flow, and entire schedules of shows are created with the idea of people continuously watching the lineup. The idea of flow is now changing. The network may become more of a brand that the consumer turns to just to consider which programs are worth adding to his personal schedule. If people are cherry-picking programs that way, they might not go to their local stations at all. Interactive TV also poses questions on a societal level. We have society-making media (shared media which enable movement of people and ideas across groups) and segment-making media (media which crystallizes people's sense of belonging to a niche). In a world dominated by niche media, it is increasingly possible to drill down only into areas that you care about, and dwell on particularistic interest groups, often excluding your neighbors. It's a form of electronic gating. You can create or change programming based on whom you're targeting. What does it mean to have a society in which the shared experience becomes less and less common? How will the brave new world of interactive television change society? Tune in at a later date to find out.

The Digital Living Room
When Microsoft introduced its long-awaited Xbox 360 console on May 12 in an MTV special, its intentions went beyond just fun and games, The company called the long-awaited product a "future-generation game and entertainment system. "While Xbox 360 promises to offer video games compatible with HDTV, fast processing and a lot of memory, Microsoft also noted that the system can play DVDs and CDs, stream music from MP3 players, and network with the company's "Media Center" PCs to stream digital content around the house, among other tasks. Microsoft's market: The increasingly crowded living room. In fact, the parade of technology companies targeting home entertainment is a long one. Dell Computer sells TVs. Apple Computer's iMac Mini is viewed by analysts as a potential entertainment server. Media-ready PCs abound from the likes of Hewlett-Packard. These technology stalwarts are selling wares that were typically offered by consumer electronic giants such as Sony. But do they have what it takes to compete in your living room? Is the so-called digital living room -- in which audio and visual content is available on demand and combined with Internet and other applications in one seamless environment -- fact or fantasy? Who will the winners ultimately be?
The vision of the digital living room isn't new. Some form of it has been pitched for decades. Interactive TV was introduced in the 1980s. Microsoft created a digital home as a prototype in 1994 and has dabbled with everything from WebTV to game systems. The digital living room "vision" has evolved to a level where content of all forms is delivered according to highly personalized specifications along with Internet service on one box -- a kind of home entertainment server. Indeed, many components of the digital living room are in place today. Video-on-demand service is available through most cable providers. Music and video can be pumped through computer networks wirelessly. Televisions and computers are largely made from similar components. Gaming devices can play DVDs and connect to the Internet.

Problems? Well, these devices don’t play well together as of now. Just like companies that have a hard time connecting various hardware and software platforms, consumers who try to go digital with all of their entertainment will have integration issues. Meanwhile, many devices don't play nicely together. Apple's iPod songs don't play on the Windows Media player, and vice versa. In most cases, a Sony TV can't communicate automatically with home PCs. And then there's the conundrum around having separate boxes for every entertainment function-- music, digital video recording, DVD players and the like. Standards are just being formed, but there are turf wars as players such as Microsoft, Sony and Comcast jockey for position. The problem is compounded by another fact: Consumer electronics product cycles take along time. A television could last 15 years compared to a PC that maybe replaced in four years. That means the latest technology takes a long time to reach television sets.

Meanwhile, Fader says the whole concept of the digital living room needs other things to fall into place first. For instance, broadband penetration needs to be at100% for consumers to get audio, video and web access pumped into their home networks. Nevertheless, the living room gadgets keep coming. Whether these gadgets collect dust or become dominant will rest on one thing -- ease of use.

So what makes the idea of the digital living room so appealing to technology suppliers? According to experts, it's a matter of extending brands to grow sales and revenue. If a company like Microsoft can dominate the living room, its software could be everywhere in every facet of life. A company like Dell can take the same parts it uses for displays to manufacture and sell televisions. The other appeal of branching out to more consumer products is the so-called "halo effect" – the Holy Grail that Apple is pursuing with success. By selling iPods, Apple has managed to sell more of its other products such as its iMac. For the fiscal second quarter that ended on March 26, Apple reported net income of $290 million, compared to $46 million a year ago. Apple shipped 5,311,000 iPods during the quarter, up 558% from a year ago. The iPod's success also had an effect on the shipments of Apple's Macintosh computers. Apple shipped 1,070,000 computers in the quarter, up 43% from a year ago. "Apple is firing on all cylinders," said Steve Jobs, Apple's CEO, in a press release. Indeed, Apple offers a host of components that could eventually be used to create a digital living room. The company that can piece together a digital living room and offer customers all the entertainment they want in any format will be the big winner.
Podcasting: Can This New Medium Make Money? For whom?

Podcasting, a way to broadcast audio over the Internet, has become the latest web movement to get everyone's attention. Including Apple Computer CEO Steve Jobs, who recently called it "the next generation of radio". On June 28, Apple announced that it had integrated podcasts into the latest version of iTunes software so that users can manage and receive these new kinds of broadcasts. It's a logical move. After all, the podcast moniker stuck partially because of the popularity of the iPod, although most of these broadcasts are produced in a format that can be played on music players using the MPEG-1 Audio Layer-3, or MP3, audio compression format. Podcasting can also apply to video broadcasts, but audio dominates for now. The actual content on podcasts is a mix of amateur broadcasters -- waxing poetic about everything from global warming to venture capital to ice hockey – and media giants that are repurposing existing shows. The market for podcasts is growing quickly. A survey by the Pew Internet & American Life Project found that more than six million people out of the 22 million who own iPods or MP3 players have listened to a podcast. Such activity begs the question: Is pod casting here to stay? Experts at Wharton and analysts who follow the market answer with a resounding yes. As to whether a business model emerges for these broadcasts, observers suggest that advertising and subscription revenues may eventually come into play. Apple, for example, could begin serving as a guide to pod casts and sell a few more iPods in the process. "A lot of the attention has been overdone, but pod casting is not going away," says Wharton marketing professor Peter Fader. "It will continue to grow and resources will be thrown at it. Some will do podcasting well and be rewarded for it."

Regardless of how predictions pan out, the way media is consumed is rapidly changing. Podcasting for audio does what Tivo does for watching television: Entertainment is consumed on your schedule. Experts predict that "media consumption will be routinely time shifted." Indeed, time shifting is the most important aspect of podcasting, but the traditional broadcasters may be up to the challenge. Podcasting has gained momentum quickly because the average American can create a show easily and everyone wants to be a celebrity. But podcasting is becoming increasingly mainstream as big media players jump in too. With the low barriers to entry, some stations can make podcasting an intern task.For Apple, podcasts now provide more content to populate the company's iTunes and iPod products, says Fader. However, longer term it's possible that podcasting will require some kind of paid subscription. The catch is that Apple hasn't focused on subscriptions, choosing to sell songs through iTunes and generating hardware sales as consumers gobble up the iPod. “Apple could find itself in a tough spot," experts suggest, adding that pod casting could push along the subscription model for music and audio distribution, something that Apple hasn't trumpeted. To be sure, Apple mitigated future risks by tightly integrating podcasts into iTunes in late June 05, but it is noted that you don't necessarily need an iPod to get a podcast. Indeed, analysts expect Microsoft and Real Networks to offer guides to podcasting in the near future. Podcasting is a boon for Apple if it sells more iPods, but it's also a threat to Apple's control of the platform. If you use your portable music device mostly to hear non-commercial or retransmitted podcasts, what do you need Apple for? Hence, the inventor himself stands to lose out from his creation