Real Competitors Don't Do Incremental Services
Some more on convergence, but this time from the consumer point of view.
The arguments from as recent as February are for a go slow, incremental rollout of interactive TV. @Home, based in Redwood, may be best positioned for early adaptor efforts:
Excerpts:
Last year 48 percent of U.S. households owned a personal computer, according to Dataquest. But nearly every home in the nation owns a television set; there are about 110 million TV households in North America.
.Analysts said there was a false start on the interactive TV front four or five years ago, when bandwidth the largest obstacle to delivering a dynamic product.
Much of @Home's network was developed with interactive TV in mind, meaning only about 20 percent of the company's equipment will need to be modified for the TV-based offering, he said.
"Realistically it's a couple of years before we see a significant impact," said Gary Arlen, president of Arlen Communications, a research firm specializing in interactive media. "And it's probably 2004 or 2005 before we see mass deployment."
Much of the early success of interactive TV offerings will depend on the quality of the programming, Arlen insists. "The good part [for @Home] is their owners [the cable operators] can deliver to either screen in the house," he said, referring to the PC or the TV.
While cable companies, and their partners, are well-positioned to lead the interactive TV industry, some analysts say there is little incentive today to develop next-generation television content.
"Cable companies right now are finding incremental new revenues by rolling out high-speed Internet access using cable modems and also finding new incremental revenues by rolling out local telephone services," said Gerry Kaufhold, an analyst at Cahners In-Stat Group. "So, the push toward true interactive programming on cable has been somewhat delayed because there's money to be made in the near term doing cable modems and telephone services."
But within a couple years cable operators will need to focus on new programming options, such as interactive television, to differentiate them from direct-to-home satellite broadcasters' encroachment in the multi-channel video markets, Kaufhold said.
"Interactive television will be most powerful on cable because of their high-speed two-way pipeline, but in the near term there is not a compelling business model, nor is there any compelling competition that prevents them from just going after incremental revenues doing cable modems and telephone service," he said.
For the full text see:
Per news.com
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While the above may describe the situation from the point of view of yesterday's cable operators and the RBOC's, it does not take into account the influence of the Portal Carriers, the likes of a "new" AT&T and even a Sony.
If there is to be a bandwidth glut beginning next year, the Portal providers and the AT&T or the Sony types will fill the vacuum with content and features and leave the "incremental revenuers" in the dust. This is called competition. Even now, AT&T is offering bypass RBOC service and with cable modem telephony and their cable captives companies (TCI etc.) can offer content, communications and entertainment through one access point and deliver to upward of 80%? Of US households. With this capability, will AT&T CEO Armstrong wait for the incremental markets to mature to the point when broadband killer applications are then ready to come on stream?
Not in my opinion. This is what I meant in my previous posts that these developments will sneak up on us and catch everyone by surprise. At stake is the video rental business and even the movie theatre business in addition to the RBOC's and the local cable providers.
What does all this mean to Ampex? Ampex is backing into a position of being a primary supplier of digital video storage and "know how" through their DST, MicroNet and affiliate Net partners. Once the content competition heats up for bandwidth killer apps, storage and delivery componentry will be the nuts and bolts of these competitive offerings. Here, it may pay Ampex to maintain a low profile, no affiliations no strategic partnerships with the major contenders, and therefore sell solutions to all of them. In the upcoming broadband war, storage and delivery will be a commodity like cabling and wiring. Realize that the dollars from a major storage order to Ampex from AT&T would not even put a dent in say, AT&T's annual travel and entertainment expense budget.
Further, since the cycle of these events will occur during the 2000-2005 time frame predicted for the bandwidth glut, this influence may even recession/market correction proof the component suppliers in this competition. It certainly will be the hot topic in broadcasting and entertainment.
Realize that there is also the 2006 limit on conversion to digital broadcasting for the general broadcasting industry occurring in the same time frame. General computing SANS are coming into maturity in this time frame as well.
It is important that Ampex work with Tvfor theWeb, as in the Melita rollout, if for no other reason then to raise the bar and demo the feasability of the effort. Once it can be proven that it is possible, then no more incremental revenues for real competitors. Whoever rolls out first with the best available will grab market share.
I wonder if TVontheWeb will cover NAAB this April. Is anyone planning to go? It would be a good time for a major Ampex rollout. However, they could use NAAB 2000 with similar effect.
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For a 1998 NABB or Comdex chat with Gary Arlen, an important interactive broadcasting consultant see:
patmeier.com
For a repost on the important bandwidth glut issue see:
pathfinder.com
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For repost of previous posts on this topic see:
Message 8196103
Message 8198619
Message 8248972
Message 8251994
Message 8270431
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