Hooray For Broadband Hollywood

Tinseltown and integrators are taking notice that consumers are spending serious money on downloadable Internet TV and movie content.
Meanwhile, it's Sony's intention, Casey said, to eventually provide all releases for Internet download at the same time as the DVD, and views this distribution method as a complement to traditional release windows. He also predicts no negative result on the number of films released to theaters. As far as digital home products and services, any method that provides an easy and consumer friendly way of viewing digital content "is a win for the business," Casey said.

Bruce Eisen, president of CinemaNow, uses his Media Center PC to download movies from CinemaNow, but said a number of devices in the set-top box form factor will soon come to market and that mass market adoption will begin with an easy hookup from Internet TV. After that, the pricing must be more attractive. Downloading a new release from CinemaNow can cost $20. "Pricing needs to drop to the $10 to $15 range" before widespread mass market embrace, Eisen said.

Lily Lin, spokesperson for BitTorrent, an open-source file sharing protocol with 65 million users worldwide, agrees. "For $20, consumers are saying, 'Hey, my hands are in my pockets,' " Lin said. BitTorrent has a new partnership with Warner Brothers Home Entertainment Group allowing content downloads day-and-date with DVD releases, and they are "evaluating" price points prior to the Warners launch.

Akimbo currently has a foot in both PC and set-top box camps. It is an online content provider offering users access to an eclectic 10,000 title library through either Media Center PCs or the Akimbo Player, a set-top box with a direct connection between broadband and the TV. Jim Funk, vice president of marketing at Akimbo, said while Media Center PCs are "an interesting evolution and have their place, in the end, there will be a separation of devices with the PC not the center of all your entertainment. I think even Microsoft will be the first to tell you that," he said. Akimbo, which last month received $15.5 million in funding from Cisco and AT&T, plans to release an 80-Gbyte upgraded set-top box, co-branded with RCA, called the RCA Akimbo Player ($250). It will directly link broadband connections with the TV, providing access to the Akimbo library plus new movies from Movielink.

Integrators don't have to wait to start leveraging the opportunities video and other broadband services will generate. Van Zuiden feels that "depending on the literacy of the client," integrators can sell new digital home solutions today while carefully leading them through the digital progression. "First customers have to understand they have their own content that can be 'digitalized' around the house," he said. When ready, customers can "break free of the CD and DVD mold. [But] if we are called upon to do a lot of post-sales support, we will have difficulty maintaining as profitable a business model as we like," van Zuiden said.

David King, president of King Systems, a Denver-based electronic systems designer and installer, calls IT service and support "key for our industry." Excited about Internet content spurring more digital home adoption from the PC side, King added, "The computer part of the industry is going to be huge for us." He plans to have a fully integrated showroom finished this summer and for subsequent clients who want to install emerging home technologies, "you have to have an integrator who can set that up and walk them through it—once you do that you have to be able to service and support it," he said.

On the plus side, support also provides an opportunity for future sales, according to King. "You can build long-lasting relationships with your clients by setting a precedent that you are going to need service and that is not a negative thing," he said. "You say that now they can download first-rate movies, etc., and in six months we'll come back and make sure everything is working and talk about available upgrades."

But there are potential downsides. "A lot of customers are very needy and don't want to try and learn. They say, 'Why isn't this working and why did I buy this?' If you are not set up to support that, you will fail," he said. King recommends integrators have a special qualified team, other than installers, to address IT service issues. Because "no integrator wants to go out and fix something for free," he suggests an up-front discussion with clients as to expectations and costs. "If a customer calls to fix a PC, that's a set price," he said. "If it is covered under the warranty, no problem; if not, it is so much per hour."

King said to improve the services that integrators will have to provide to home customers, computer and server manufacturers must be more responsive in the services they provide—especially phone support. "Our guys were trying to get answers on the Media Center PC and talked to someone on the East Coast, then Bangladesh, and found no one to figure out the problem," he said.

Joe Piccirilli, vice president of business development for Avad, a national distributor of home technology products in Van Nuys, Calif., sees Internet video content as a mixed blessing for integrators—an opportunity, yes, but one with potential problems.

"First and foremost, the user interface has to be simpler. It shouldn't be a lot of work to be entertained," he said. "In the computer world, people put up with the blue screen of death. In the entertainment world, nobody is going to put up with that. I get worried because the media servers today are on the cutting edge but their designers have little ability to relate to the average consumer. They prefer cutting edge over simplicity and reliability," Piccirilli said.

Piccirilli feels the ideal interface is here right now—iTunes—and if he were in the media server business, he would fear Apple's entrance into the market. "They'll bring it out at a profitable price, and make it hip and easy. They made iPod like an accessory sale—if you don't have one you are not dressed," he said. Though he has great admiration for Microsoft, he offers, "I think there is a certain arrogance they have. They think all of us will put up with products that are not quite right. That has to stop because consumers will go elsewhere."

The good news for integrators is that wherever consumers go in the digital world, they will need experienced specialists who can provide not only today's solutions but also tomorrow's. "Never underestimate the success of an integrator in terms of what we know about in the near-term future, because so much of what we do, especially in new construction, is to provide solutions for the future," van Zuiden said. "I think about us as long-term professionals handling the technology needs of our customers' homes, meaning we are not in it for today's sales and gone," he said.

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