What really happened at CES


Sometimes the best way to evaluate an event as massive as the Consumer Electronics Show is to take some time to digest the info overload, sort out the hype/wishful thinking and conduct a reality check via the millions of words printed and spoken in its aftermath.  But even a month after CES 2011 ended, and now that the foot pain has fully subsided, it’s still a mighty challenge to determine what will survive and where the converging media and electronics industries are collectively headed. 

One certainty is that spectrum kerfuffle about use of broadcast TV airwaves is escalating. A war of words erupted on day one of CES when Consumer Electronics Association President Gary Shapiro accused broadcasters of “squatting on our broadband future” and urged Congress to let the FCC “conduct voluntary incentive auctions of broadcast spectrum” that will turn over airwaves to “innovative” wireless and mobile applications. 
 “Innovation relies on ensuring we have the spectrum necessary to unleash the possibilities of wireless broadband,” Shapiro insisted.

Shapiro transcript

Shapiro video

In the ensuing weeks, Sen. Jay Rockefeller (D-WV) has introduced such legislation, and the high-volume Las Vegas verbiage is likely to get louder.  In addition to D.C. lobbying in the coming months, the spectrum debate will get another Vegas megaphone during the NAB convention there in April.

Of course, CES is better known for its gizmo and gadget showcases.  Again, sorting out reality from promises requires patience. Clearly “tablets” are ascendant. Since Apple never exhibits at CES, the “magical” iPad was the 800-pound gorilla that was NOT in the room.  But Motorola’s XOOM tablet caught plenty of buzz, although its price and release date were not disclosed.  During subsequent weeks we’ve learned that XOOM will cost upwards of $700 and go on sale in late February.  Samsung’s Galaxy tablet – mightily displayed in the sprawling Samsung booth – generated post-CES questions.  A report just after the shows indicated that 16% of customers were returning the devices, but Samsung claims that only 2% of the Galaxy tabs are coming back. Whatever the actual quantity, critics have continued to question whether the device – about half the screen size of iPad and XOOM – will be viable as a media receiver. 

And therein is the core of another CES lesson.  Is there a “right size” for the tablet?  With more than 80 models on display (many of them in prototype format that may never actually reach stores), the choices are immense. Clearly, a major appeal of the new product will be its role as a portable media player – an appealing target for mobile video consumption.  But the price tag (above $500 for most of the initial contenders) and uncertainty about business models for delivering content, it certainly will take a while for us to understand the tablet’s role in the TV ecosystem.

In that regard, what value should we put on the insistence of Samsung and its ally Comcast that the tablet is an essential part of the “TV Everywhere” initiative?

Mobile television – and specifically the mobile Digital TV (mDTV) project – was on many minds during CES.  There was also some predictable confusion, which is still being sorted out a month after the show.  Even industry insiders are trying to comprehend the roles of the two programming consortia: the Mobile Content Venture and the Mobile 500 Alliance. MCV is controlled by Fox and NBCUniversal and includes about a dozen other large group owners. M500 consists of more than 40 broadcast group owners and the hundreds of local stations they operate.  Some mobile equipment makers voiced concern about multiple standards and about the very viability of mDTV in an environment rife with wireless Internet access, where on-demand Web video may be more attractive than linear broadcast content.

Those questions may be resolved if – as the groups promise – mDTV programs hit the airwaves by summer.  For now, though, we’re still mulling the promises we heard at the CES “mDTV Tech Zone.”  And waiting for more than a handful of prototype devices to go on sale.

Speaking of NBC Universal: in the weeks after CES wrapped up, the FCC approved its merger into Comcast.  Among the many implications of that deal is the role of Internet-delivered TV/video programming.  A major factor at CES was the profusion of ’Net-connected TV sets.  As I reviewed forecasts during recent weeks, a consensus emerges: about 40% of U.S. households will be able to watch Web-delivered shows on their ’Net-connected TV sets by 2014.

With almost every major manufacturer selling TV sets that connect to the Internet, you’d expect an upheaval in viewing.  But current data indicates that barely 20% of homes that have such sets already ever plug them into the Web, and many users don’t even know they have that capability.  One thing is clear for now: manufacturers are hustling to sign “app” deals with content providers – such as Netflix, Pandora, YouTube and hundreds of other video sources. That augurs a near-term promotional hype for such viewing.  Samsung brags about more than 350 video apps available on its digital TV sets worldwide (about 200 for the U.S. right now); Sony, Panasonic, LG, Visio, Toshiba and all the other brands are recruiting apps for their sets.  Meanwhile, ’Net-connected videogame consoles (Xbox 360, PlayStation), BluRay Disc players and other stand-alone receivers are bringing Web content to America’s flat-panel TV sets – suggesting a looming confrontation of whether the living room monitor will be used to watch traditional linear (or DVR-stored) programs or to view Web-delivered shows. 

Meanwhile, Google TV, the browser-based version of bringing the Web to the big screen, had a modest presence at CES, and the long-rumored Yahoo TV (another such approach) was being negotiated off the show floor.  In other words, the jury – i.e. the consumer experience – is still out on what viewers expect from ’Internet TV.   Simply put:  a long path – and a lot of money – separate the salivating throngs in the Las Vegas Convention Center from the ultimate consumers.

I wasn’t surprised by the calmed 3D TV environment this year.  That’s a striking example of how the CES frenzy (the 2010 ubiquity of 3D promises) mellows down as the product slowly comes to market.  If anything, this week’s debut of the first all-3D TV network – 3Net, owned by Sony, Discovery and IMAX – will help gauge the demand for such programming, and maybe sell some 3D receivers.  

Among the 20,000 new products scattered throughout the sprawling CES exhibit halls were devices that can change not only the viewing, but also the production of TV.  A company called Liquid Image caught my eye with its goggle-mounted video cameras and recording devices for underwater, skiing, motor-biking and other sports activities.   For under $800, you can shoot (in 1080p or 720p) your experiences.  This is the kind of gizmo that can graduate from home videos into consumer-generated content on the Web and up towards the next professional plateau of videography. 

While the 140,000 CES attendees came home with visions of what TV will become, the bigger business issues take longer to resolve, which is why it’s worth taking a longer view of the CES headlines.  FCC Chairman Julius Genachowski’s comments that the mobile spectrum issue will be a “top priority” this year underscore the complexity of the issue – and assure continuing attention to issues raised at CES.  A keynote session about advertising in the new marketplace, featuring top marketers form Coca Cola and Microsoft along with global ad agency chiefs, offered even more food for thought about the financial implications of the new ecosystems – namely the complexity of new marketing decisions affecting media buys. 

 At the Media Money Makers conference, focusing on new content monetization opportunities, Vivi Zigler, president of NBCUniversal Digital, put it simply:  “Quality has to matter.”  Her fellow panelist, Amy Barse, senior VP, Comcast Corp. and head of its interactive team, reminded that “TV is becoming screen agnostic,” adding that premium content “is being liberated” and that media companies major job is “to make sure [viewers] can access that big bundle wherever and whenever they want.”

Those views underscored the value – indeed the need – to take CES as an annual benchmark along the never-ending route through the TV world.  You come away with sense that content and technology suppliers all recognize the hurdles (different in each category) and share an intense belief that their products will appeal to audiences at some price and at some time.  

–Gary Arlen is president of Arlen Communications, Bethesda, Maryland; he conducts customized research and analysis of the opportunities in the evolving convergence of media, marketing and technology in the policy and creative ecosystem.