Quick Thoughts: CES Day Three – I Want That Toy Helicoper That Fires Missiles

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  • YouTube keynote highlights the virtuous cycle of growing content, viewers and ad dollars
  • Connected TV will be a battle royale
  • Things I liked on the floor – OLED TVs, Dish Networks’ Hopper, Chinese smartphones, Android tablet proliferation, Windows 8, Toy helicopters
  • Things I didn’t like on the floor – Me too Windows 7 ultrabooks, closed architectures for connected cars, Samsung Note, 3D TV

 

The last keynote for CES 2012 was delivered by Google YouTube head of global partnerships, Robert Kyncl, and featured a round table amongst an eclectic group of industry vets, including the creator of CBS’s CSI franchise, the CEO of Machinima (the wildly popular gaming channel on YouTube), a marketing executive from T-Mobile (representing ad buyers), an advertising industry executive, and Google’s VP of Sales, Lucas Watson.  The prepared remarks rattled off statistics that should not have been surprising to those paying attention to the meteoric rise of on-line video but nonetheless appeared to shock fellow conference attendees sitting around me.  YouTube serves videos to 800M people each month and is currently at a monthly run rate of 3 billion hours of video. Doing the math, Kyncl noted that it amounted to 30 minutes of video per month for every human on the face of the earth, or more importantly,  4.75 hours for each of the active users.

In this context, YouTube sees real on-line content stars emerging with enormous global reach and precisely targeted audiences that are exciting to advertisers.  By grouping the content produced into descriptive channels, users can find the content that interests them and advertisers can target the users with particular interests.  Kyncl concluded formal remarks by noting that in 1980, four networks controlled all of the television viewing in the nation.  By 2010, 75% of the audience had migrated to the hundreds of cable networks that have emerged.  He conjectured, given the ultrafast pace of adoption of internet video, that 1,000s of on-line “channels” could capture 75% of the video traffic by 2020, and cited research that suggested that streaming video would represent 90% of all Internet traffic by mid-decade.

The panel discussion that followed was a chorus of nodding heads, with the enthusiasm of the ad exec and the media buyer for on-line video particularly telling.  It would seem that it is FAR too late to stuff this genie back into the bottle, despite the armies of traditional media types touting TV Everywhere concepts.  We have written on this issue in depth.  See – LINK

On-line video is at the front of most of the major exhibitors at CES.  Every TV maker was touting connected TV, in both proprietary and other commercial formats.  Every carrier was pushing some form of TV Everywhere and boasting of the support of various TV makers.  Makers of other consumer gear, such as game consoles, DVRs or BluRay players were arguing for their own connected video experiences, while software platform makers, like Google, Microsoft and the absent Apple quietly jockeyed for position.  I think the mistake here is to view streaming on-line video as isolated application, and in particular, viewing traditional network programming as a unique service.  Consumers are obviously watching other sources of video entertainment – ergo, those 800 million people watching their 4.75 hours of YouTube every week, and the households that have driven the dramatic growth of Netflix, Hulu, AmazonPrime, and CBS.com, amongst others.  Not only that, viewers are augmenting their viewing with simultaneous social networking, engaging in on-line gaming, and sharing self-produced content alongside their traditional media consumption.  We have written that we believe that consumers will migrate to integrated experiences that tie all of their on-line services together and link them across devices.  In this, we favor Google, Apple, Amazon, Facebook and Microsoft over any of the TV makers, system operators or network owners.  See – LINK

Finally, winners and losers from the show.  For me, the biggest jaw droppers were the 55” OLED TVs at Samsung and LG.  These gorgeous televisions were as thin as my phone, viewable at any angle and in any light, generating serious technology lust in the crowds that stood transfixed.  That said, other aspects of the TV markets are a bit of a yawn.  In particular, this is the third year for 3D TV at CES and very little has changed, lots of hype, uncomfortable glasses, little content, and disappointing sales.  I could be wrong, but I don’t really see this as every being anything but a niche market.

I liked the vast array of Android tablets at the show – big and little, high end and bargain basement, including two different models that could be submerged in water and still work.  This variety and competition is closing the gap with the one-model iPad, just as the Android Smartphones ran down the iPhone back in the day.  That said, I didn’t really like the 5 inch Samsung Note, which was neither a phone nor a tablet and was amongst the most hyped products at the show.  I’m sure it will find a market, but I don’t expect it to be a broad winner.  Likewise, I thought that the cavalcade of Windows 7 ultrabooks were largely MacAir wannabees, that didn’t really change the game.  I’ll wait for the Windows 8 versions which were all prototypes sealed in glass cases, but have the potential to be really cool.  Finally, while we are on devices, there were a lot of good phones, most of which I’ve already seen.  The biggest surprise was the Huawei Ascend P1 S, which was an impressively svelte Android Ice Cream Sandwich model rumored to be coming to Europe at an extremely aggressive price.  If it comes to market at less than half of the price of an iPhone, it will be a big hit.

I liked Dish Network’s Hopper, a DVR with 2 terabytes of storage and 4 separate tuners, allowing consumers to tape an entire week’s programming from the big broadcast networks and beam it to a variety of devices via small boosters around the house.  In contrast, I don’t like any of the automobile makers’ all too proprietary offerings for in car entertainment and information.  Most of it is guaranteed to be obsolete once it rolls off the lot.  Finally, every year wirelessly controlled toy helicopters get cooler and cooler.  I really liked the one from Heli AC that could be controlled from a smartphone, carried a digital camera for spying and could fire six foam missiles.  All I can say is that my kids better watch out.

For our full research notes, please visit our published research site.

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