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How IP Services Will Drive CE Evolution

Updated August 2008

The arrival of Internet-based content and services is propelling the consumer electronics industry into the next phase of its evolution. This is a disruptive change that will rival the impact of the transition from analog to digital technology.

If you consider analog to be the first generation, or 1.0 version, of CE, and the adoption of digital technology the 2.0 generation, we are now evolving into the evolution’s third phase, the era of Consumer Electronics 3.0.

In a nutshell, Consumer Electronics 3.0 is characterized by the growing availability of new broadcast and Internet-based broadband content, delivered to a multifunction set top box in the living room, which is in turn connected to the TV and other connected devices in the digital home.

It is probably a great understatement to say that the ability to access a spectrum of Internet-based content and services is about to provide consumers with more choices than they have ever imagined before.

Anything in the way of premium, special interest and niche content may ultimately be made available, everything from IPTV feeds and on-demand movies to documentaries, how-to videos, news programs and sports highlights from anywhere in the world.

The ability to access this content from a variety of wired and wirelessly connected CE devices, in addition to the PCs and handheld devices we use today, will give consumers a new dimension of control over when and where they consume their favorite digital fare.

The mashup of the Internet and the world of consumer electronics will not be without its challenges, as content producers and network operators cope with increasing audience fragmentation. Intel believes that the Consumer Electronics 3.0 era will also provide important new business opportunities for CE product manufacturers, content producers, service providers and application developers.

The big question is: what new services and usage models will consumers want enough to pay for?

Here are some survey findings:

• 43 percent of 2008 Superbowl* viewers used a notebook or a cell phone to surf the Internet while watching the game (source: CEA Sports & Video Group, 2008).
   
• 61 percent of consumers say they want their TV connected to the Internet (source: iSuppli Market research report, Home Networking: In Search of the Killer Application, 2007).
   
• Approximately 800 million viewers will watch broadband video by the end of 2011 (source: ABU Research, July 2007).

One thing seems certain. As IP services, applications and usage models evolve, service providers will need to deploy new services on a continuous basis. Cost-effective multifunction client devices with the headroom to handle new applications and services will play an important role in this dynamic, service-driven environment.

The arrival of IP-based content and services in the living room is ultimately about consumer choice: providing consumers with the content and services they want, in the formats of their choice, on their favorite devices, at the time and place they choose.

This transformation also promises to provide consumers with a continuum of control over their media experiences, enabled by the performance of new generations of connected CE products.

Many of these changes will not be easy to implement, and they will not happen overnight, but their power to disrupt traditional business models should not be underestimated. Intel is now actively engaged with the consumer electronics industry to help all members of the value chain prepare for the Consumer Electronics 3.0 evolution.

Figure 1 - The Internet is the key disruptor that will drive evolution of Consumer Electronics 3.0. Key elements include the convergence of content from many sources delivered to the home over Internet protocol (IP) networks and enjoyed by consumers on a variety of wired and wirelessly connected CE devices.

The availability of new content choices and IP services has the potential to stimulate a new competitive approach focused on helping consumers experience the new content, services and experiences they want.

Here are some of the changes Intel expects:

• More choices: In coming years, we will experience a multiple order-of-magnitude expansion in available media content and program choices delivered over the Internet through IP-based networks. These choices will include new ‘channels’ of content from the Internet, delivered through service providers or Web portals operated by content aggregators. The potential for new content and services is theoretically limitless, and content options are likely to grow from the hundreds of channels available today to hundreds of thousands of potential choices.
   
  With the advent of Consumer Electronics 3.0, users will be able to select more specialized content than has ever been available before, in traditional movie-length, 60 and 30-minute formats or bite-sized clips. Other options will include a spectrum of downloadable special-interest applets and data services, such as localized news, weather, sports, stock tickers, traffic updates and instant messaging applications designed for the TV screen.
   
• Multiple devices: Instead of consuming content and services on a single, isolated device, consumers will enjoy a connected multi-screen experience, accessing content through the set top box/TV combination in the living room, the PC in the den, or a wireless handheld device. Consumer Electronics 3.0 is a three-screen world, with content optimized for consumption for each viewing context.
   
• Personalization: Individual consumers will be able to find and select the content and services they prefer. By making requests with their service provider, consumers can receive continuous updates and recommendations about content of special interest to them. This capability is one way the industry can compensate for the increased audience fragmentation created by expanding viewing choices. The next phase of consumer electronics evolution is ultimately about making consumers an active part of the media distribution process.
   
• Communities: Coupling communications applications with the TV experience lets consumers participate in online social networking focused on sports, movies, hobbies and other topics.
   
• Intelligent Search & Browse: The Internet is bringing thousands of new content and service choices into the living room. Consumers will need an easy way to navigate and manage them. Intel is working with leading interface designers to develop the next generation of graphical user interfaces with intelligent search and browse capability.

We are about to witness the evolution of new usage models made possible by the convergence of broadband and IP services with traditional broadcast content. When the set top box in the living room connects with the Internet, consumers will find themselves in a new world. In addition to passively ‘watching TV’ in the traditional mode, they can explore a fascinating array of premium and specialty programming options delivered by a service provider.

Since IP broadband lets data flow in both directions, consumers can choose from a rich variety of interactive services like playing online multiplayer games, complementing their sports viewing with IM chat, and using the combined capabilities of the set top box and TV to interact with e-learning, e-commerce and e-banking applications.

Viewers can complement broadcast programming by using Internet widgets especially designed for viewing on their TVs. Widgets will enable a theoretically limitless range of new Internet services. Viewers will be able to exchange instant messages and keep track of their fantasy league statistics while games are in progress in real time. Educators and parents will complement nature programs with e-learning resources. Grandparents will meet online to share family photos or play online games. Teens will shop for clothes and music liked to their favorite shows, and everyone in the family can receive updates on topics of personal interest.

IP-based content and services may hold important new opportunities for monetization, but the most important question is: what new services will consumers actually use – and pay for? Intel believes detailed, quantifiable research into consumer values and usage models represent an essential first step toward identifying consumer preferences in specific cultures and geographic regions.

The vision is exciting: the living room of the digital home will provide a new environment for the mass market consumption of software-based services and applications, ranging from online games and video phone communications to e-learning. But to move this vision closer to reality, we need to make these applications and services easy to develop and deploy – and easy for people to use.

The emerging digital home is projected to be a networked environment, filled with a spectrum of connected devices, from digital TVs and set top boxes to home media servers, digital media adapters and handheld devices.

Here are just a few of the requirements:

• Research to identify connected usage models that consumers want
• Standards for accessibility to the digital home; accessibility to content within the home; device and network connectivity; device interoperability, and platform support
• Open, standards-based software development/deployment frameworks
• Sophisticated software applications (local and hosted)
• Processing intelligence and flexible functionality in CE clients
• Advanced UI development and intelligent search & browse solutions
• Ecosystem of hardware and software solutions providers
• New revenue models (services, advertising) to support content

Intel is involved in all of these areas.

Consumer Electronics 3.0 has great potential for OEMs, service providers and content producers. While much more exploration will be needed, here are some ideas:

OEMs are beginning to reduce device commoditization by providing compelling new device features and capabilities. Combining integrated functionality with bundled value added services, such as e-learning, e-commerce or home control is one way to achieve differentiation in a competitive market segment.

Another strategy is providing exclusive access to content through Web portals. OEMs can also differentiate their products by helping consumers aggregate their preferences with advanced search and browse technology and by helping users manage their digital media libraries with storage and data management applications.

Service providers need to sell more premium content and services for higher ARPU while building subscriber loyalty. As new IP services emerge in the living room, consumers will integrate them into new usage models, such as combining a video phone application with an online game application to create a social network. This trend may encourage consumers to engage with more services and content, more often, and for longer periods.

Consumer Electronics 3.0 may also encourage consumer loyalty through personalization services and the sharing of licensed content with mobile devices to create so-called ‘Sync-and-Go’ usage models. Service providers have yet another monetization opportunity in the form of targeted advertising based on expressed consumer preferences and personalization, essential to helping advertisers overcome the effects of audience fragmentation.

Content producers want to maximize content delivery and drive increased consumption. The Consumer Electronics 3.0 environment will help content owners extend their brand reach to consumers on three-screens: TV, PC and handheld. As content owners establish rights for broadband distribution of TV programs, movies, music and games, they have new opportunities to create entertainment bundles delivered directly to their customers or made available through Internet portals.

This trend provides content owners with opportunities to expand their catalog and experiment with Web-based direct-to-consumer distribution models, while exploring new opportunities for co-marketing with OEMs and service providers.

Industry standards are one of the keys to quality of experience, helping to ensure that connected consumer electronics devices interoperate, delivering the platform capabilities needed to support a new generation of consumer usage models. In addition to accelerating time-to-market for OEMs, standards will help enable the differentiated features, functions and capabilities needed to give CE products a competitive edge.

Implementing this vision will require industry standards in a broad range of categories, and Intel is involved in each of these areas:

• Broadband and broadcast access to the digital home
• Access to media content within the home
• Network and device connectivity
• Interoperability
• Platform support

Access to the Digital Home	Digital video terrestrial broadcast standards; CableLabs Open Cable*; DSL
Access to Content	Media codecs; HD-DVD and other media standards; emerging standards for IPTV
Network Connectivity	IEEE 802.1AV, 802.3 and 802.11; HomePlug AV (HPAV)* (powerline); HomePNA 3.0*(phone and coax); MoCA* (coax); WiMAX* (802.16); WirelessHD
Device Connectivity	HDMI, DVI , Bluetooth
Interoperability	Digital Living Network Alliance (DLNA); UPnP* Forum
Platform Support	CE Linux; Windows Embedded CE*; Windows XP Embedded*

Table 1 - Examples of Some Consumer Electronics Standards

The digital home presents the consumer electronics industry with a new competitive opportunity. While it develops better and faster applications, the industry must also make it easy for consumers to navigate through tens of thousands of potential choices to access and manage the new content and services they want. One of the most important tools to accomplish this is a new generation user interface (UI) designed specifically for the 10-foot, big-screen TV viewing environment.

Intel’s Digital Home Innovations Team is at the forefront of advanced consumer electronics UI research and development. Intel is working with leading university researchers and visionary interface designers to advance UI technology to provide consumers with a new dimension of control. The effort points the way to future interfaces that will help consumers harness the performance of future consumer electronics platforms.

In addition to ongoing research in the areas of consumer usage models, advanced interface design and standards, Intel is leading the development of technologies and products designed to meet the challenge.

• Intel® Media Processor CE 3100: Today’s Internet optimized for software based on Intel® architecture, and for this reason the arrival of the Internet in the living room makes Intel architecture an important asset for developers of CE devices. Intel is providing platform solutions that deliver the performance and connectivity advantages of Intel architecture, with the integration and cost-effectiveness of a system-on-a-chip (SoC) designed specifically to meet consumer electronics performance requirements and low power demands.
   
  The Intel® Media Processor CE 3100 is a family of Intel architecture-based SoCs designed for for Blu-ray* player/recorders, US cable set top boxes, digital TVs and other connected CE products.
   
  This highly integrated processor combines a high-performance Intel architecture processor core with leading-edge video decoding and processing hardware, a 3-channel/ 800 MHz DDR2 memory controller, dedicated multi-channel audio processing DSPs, a powerful 3D-graphics engine, a security processor and multiple peripherals.
   
  The Intel Media Processor CE 3100 includes Intel® Media Play Technology, which makes watching Internet video a seamless part of the TV viewing experience. When a viewer watches a traditional broadcast channel or stored content, the video is encoded in a standard format such as MPEG-2, H.264 or VC1. Streaming media drivers in the media processor route the video to the on-chip hardware decoders.
   
  When the viewer switches to Internet-based content, Intel Media Play Technology automatically routes the video (and audio as applicable) to a software codec such as DivX*, WMVx*, or other codec running on the Intel architecture processor core. Aided by optimized Intel instruction set code, the processor core provides the needed computational capacity to perform the task.
   
  The Internet is also evolving. The ability to decode multiple video and audio formats in software provides CE devices based on the Intel Media Processor CE 3100 with the flexibility to adapt to these changing standards.
   
• The Widget Channel: Developing differentiated services in software can provide a competitive advantage for CE OEMs, content services providers, developers and advertisers. The Widget Channel is a software framework based on industry standards designed to accelerate the development, validation and deployment of Internet widgets on consumer electronics devices.
   
  By providing a development environment for Internet-based content and services, Widget Channel supports the adoption of new usage models and easily accessible Internet services on TVs. Individual consumers can find and select widgets offering the video content and Internet-based services they prefer.
   
  Service providers can provide their subscribers with continuous updates and recommendations of content of special interest. Tapping into the power of the Internet allows consumers to enhance and enrich their TV viewing experience.
   
• The Intel® Consumer Electronics Network: Intel works closely with leading hardware and software vendors to help deliver leading-edge CE products and solutions. The Intel® Consumer Electronics Network is a member-based community of hardware, software and services providers that accelerates the development of Internet-connected CE devices. By providing exclusive benefits for the leaders who are driving the next generation of CE devices, Intel is enabling the migration of Internet applications and services to TVs, providing rich interactive experiences to complement traditional TV viewing.

The Internet is about to arrive in the living room, providing millions of consumers with access to new content and services delivered on a variety of connected devices. The proliferation of new content and services is a disruptive trend that will create new revenue opportunities for the CE value chain. By bringing the evolution into clear focus, and enabling solutions, Intel is working to help the industry meet the challenge of this disruptive technology.

In addition to conducting worldwide user experience research, leadership in standards, and advanced user interface development, Intel’s Consumer Electronics Group is developing the media processors, platform technologies and ecosystem needed to create new generations of set top boxes and other connected CE devices.

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