Intel Corporation
The term “living room” means many things. It represents the social center of the home, a multi-purpose space where many family activities come together. One of the most important of these activities is watching television, and you can trace the evolution of the living room by examining the history of the TV.
Think back to the old analog television, the clunky brown console in the corner. That was the analog era, which we call Consumer Electronics 1.0. Over time, other analog devices such as VCRs were added to make the TV more useful, but the basic TV experience was analog.
Over about the last 10 years, we have made a major shift to digital television and a wide range of digital consumer electronics. During this time sound also went digital, rattling the windows with surround sound and other audio effects. The range of devices attached to the TV also became digital, providing us with more control over the TV experience, such as time-shifting with a digital video recorder. We call this era Consumer Electronics 2.0.
We are now poised to evolve the experience once again. The emerging era of Consumer Electronics 3.0 will by driven by blending new media choices from the Internet with traditional TV in the living room, and it will extend the range of content enjoyed on the TV to an extent we have never seen before.
The emergence of Consumer Electronics 3.0 offers us a new opportunity to think about the living room as an entertainment hub that serves other rooms in a networked home. Certain functions such as digital video recording might extend to other rooms. At the same time, personal content from digital cameras, MP3 players and other devices around the house can be enjoyed on the big screen TV in the living room.
It is also easy to envision how Consumer Electronics 3.0 can extend the range of services delivered to viewers in the living room. We can enhance familiar aspects of TV, such as electronic program guides and video on demand. We can also conceive of new services coming to the living room, ranging from online gaming and karaoke to e-learning and social networking.
Consumer Electronics 3.0 also promises to blend value-added Internet usage models with the TV experience. Imagine a search window that allows you to retrieve additional information about a program, how you could use built-in communications applications, such as instant messaging and video chat, while you watch your favorite TV show.
Consumer Electronics 3.0 promises all these capabilities and more, but all of it needs to fit within the living room, a space which conveys great social and cultural meaning all over the world. At Intel, we believe that to effectively work on the promise of Consumer Electronics 3.0, we must understand the living room and the TV experience.
Intel has studied the consumer TV experience for nearly a decade, employing social scientists who have lived in more than 600 households in 20 countries. They look closely at the role of the TV and other consumer electronics and PC devices in the home, examining the variety of entertainment experiences people enjoy in the living room, as well as the other ways people entertain themselves. Our social scientists also look at the types of services that might be offered by a service provider, including opportunities ranging from educational services to home security and cross-platform integration.
We have discovered that consumers have complex relationships with their TVs. One of the important lessons from these cultural studies is that you can tell how important something is in a culture by the number of different words people have for it. Eskimos have a huge number of words that mean “snow” for instance, and the same logic applies to the TV.
Whether viewers describe TV as a technology, an experience or a companion, the emotional value they place on television is deep-seated, powerful and highly imaginative.
People describe TV as an object, a technology, a language, a relationship, an addiction, an experience, a companion, a time-killer, a necessity, an educator, a child-minder, a stress-fighter, a lullaby, and a low-maintenance friend. Clearly, this wide range of words implies a variety of emotional relationships, and they are indicators the of TV’s importance.
During our research we have also found that the social and cultural practice of “watching TV” is far more consistent than the underlying technology. The TV experience is entrenched and cannot just change overnight. It must evolve with the people themselves.
We have also found that around the world users enjoy the passive nature of the experience. The TV doesn’t demand much from them. A couple clicks of the remote and viewers can be entertained for hours.
We can reduce our findings to three essential qualities: TV is simple, flexible and social in nature. This is a very different relationship than what people experience with their PCs.
The same research shows that people really love the Internet experience. They love the choice, customization and sheer breadth of content that the Internet brings them. Sports fans like the combination of Internet and TV, which can help them follow their favorite teams. Other viewers want more choice of what to watch, and still others want to have access to more information to enhance their TV viewing experience.
Statistics show that the amount of video content viewed on the Internet has increased dramatically in the past year. In August of 2007, The Wall Street Journal reported that US consumers viewed more than 9 billion online videos in a single month, a jump of 26 percent in a seven month period [source: Comscore Inc. as reported in The Wall Street Journal, December 11, 2007]. About 25 percent of these videos were from YouTube alone.
The video content now being watched on the Web includes a growing amount of professionally-produced entertainment, as over the past two years, broadcasters have plugged into the Internet video phenomenon. Today almost all popular shows are available, with advertising, on network websites. NBC reports that it streamed 50 million shows from its site in October 2007 alone [source: NBC, Oct 2007].
In what has become a communal event for much of the world, 43 percent of 2008 Super Bowl* viewers said they planned to used their notebook computers or cell phones to surf the Web [source: CEA and Sports Video Group]. In a recent study, 51 percent of U.S. teens reported that they are online “usually” or “sometimes” while watching TV. (Source: Forrester, North American Technographics* Consumer Technology and Media Youth Online Survey, Q1 2007).
The importance of this phenomenon is more than just re-purposing content from one medium to another. The momentum for a new TV experience is coming from content producers. And they are catching up with what consumers already want.
Consumers are demanding the Internet on more than just their PC in the den. In fact, 61 percent of consumers worldwide say want the Internet on their TVs [source: iSuppli Market Research report 2007].
We need to pay attention to the fact that consumers don’t want PC-style Internet on their TVs – they want a unique Internet experience. They want the freedom of choice the Internet can provide and not a PC user interface or a keyboard on their sofas.
The combination of the TV and the Internet is already happening in meaningful ways, and consumers are doing it themselves. The usage model might be a notebook on a viewer’s lap during the Super Bowl. Or it might be a makeshift connection from the notebook to the TV to watch favorite photos from their private libraries.
The key question for the consumer electronics industry is not how to connect the TV to the Internet. That technology already exists. The challenge is how to combine the two experiences without compromising them. As a starting point, we need to think in terms of adding familiar Internet capabilities and applications to the TV experience.
Some Internet activities might be added to the TV for added convenience while watching your favorite shows. For example you might think of monitoring eBay* bids or news and sports sites. You want this experience to be as flexible as possible, and it all has to be operated from the remote control in your hand. Your TV user interface has to accommodate the TV programming you want to see, concurrently with Internet applications, with simple push-button control.
That is the environment we are working in. Consumer demand is high. And that means there is a large opportunity to make money from Internet services delivered to the TV in the living room.
The trend is already underway. The number of CE devices incorporating the Internet in some way reached 64 million units in 2007 [source: Information Week, Jan. 30, 2007], which represents a 73 percent growth rate over 2006.
Blending these experiences is about more than simply putting components together. Consumers already have expectations about what a quality TV or Internet experience feels like, and we cannot compromise either one. This implies several things from an architectural standpoint. The audio/video subsystem must deliver all the “wow” factor people expect in the living room, and the Internet applications need to run just as well as people expect. To do this you need more performance than a TV typically provides.
Because of the importance of aesthetic considerations in the living room, adding the Internet to the TV experience must not change the form factor and other physical attributes of familiar consumer electronics devices. Blending the TV and Internet experiences is really about striking the right balance of capability, form factor, and cost.
Intel has been working on this balancing act. We are developing a product code-named “Canmore,” a system-on-a-chip (SoC) that combines a consumer electronics system and an Intel® architecture processor core on the same chip. Basically, it’s a way of selectively integrating various complex functions into one component, keeping costs and form factor under control.
We started with a high-performance audio/visual subsystem including hardware decoders that deliver 1080p high-definition video and 7.1 surround sound. Alongside those decoders, we placed a high performance Intel architecture core. Intel architecture is the same processor technology that runs the Internet. All the Internet applications people love have been painstakingly optimized over many years to run on this architecture.
We expect Canmore to provide the performance to increase the functionality of the set top box, the TV or any other CE device it powers.
Consumers are ready for this converged experience. The technology is ready. We can build the devices. The remaining piece is to develop the right business models.
We have all seen some of these new models:
- Joost* offers 20,000 TV shows and more than 400 channels, all of it packaged with Internet social networking applications such as instant messaging and chat. This is a free service supported by advertising.
- Hulu* Networks offers TV shows and movies, both old and new. Viewers can share their favorite clips or embed them on personal websites. Hulu users also have access to their content through other Web vendors including Yahoo!*, AOL*, Comcast* and others.
None of us know which models will ultimately succeed, but each experiment produces key insights. New uses for TV screen space, new user interfaces and sources of content will all contribute to the evolution of advertising models.
The collection of click-through data can support new advertising models, and the concept of ad telescoping is gaining popularity. Advertisers can make money as viewers guide themselves through the process of investigating products. E-commerce sites can follow the click stream all the way through to purchase decisions.
New TV user interfaces will further enhance interactivity needed for advertising models. Some user interfaces will include separate content and advertising panes, the same way the cable-programming guides work today. When a certain product pops up in a TV show, the ad pane could highlight the product and provide quick and easy ways to get more information or make a purchase. Like TV programs, ads can be time-shifted and saved for later viewing.
Software applications and high-performance set top boxes can manage all this interactivity. Software can manage record keeping so that tiered ad rates can be established. Ad placements that spark greater consumer interest, as measured by click-through metrics, may command a higher rate.
All of this experimentation is simply catching up with consumer interest. The Harris/Ensequence Group recently reported that consumers are quite positive about these interactive advertising concepts. More than 70 percent of the people surveyed wanted to interact with sports or reality programming, and 66 percent said they want to interact with sample commercial advertising.
As we look forward to Internet media and services on TV, we should remember that we are talking about the living room, the center of the home. Bringing the TV into the Internet era is not so much a technical challenge as a cultural one.
We will only succeed by enhancing what happens in the living room, not by changing it. The living room is a social, communal site with overlapping uses. We should pay close attention to those realities.
Our goal should be to blend the best of the TV experience with the best of the Internet experience. Our job is to make the TV an even better and richer part of the living room experience, not replace it.
Kids growing up in the world of Consumer Electronics 3.0 will still kickback on the sofa, and they will continue to spill popcorn on the floor, just like we once did. But their TV entertainment experiences will be almost unlimited. We have the opportunity to create these experiences. All the interests are aligned. Let’s go build the future together.
All products, dates and programs are based on current expectations and subject to change without notice.