Next-Gen DVDs Face Struggle Even Without Format War, Says Panasonic Executive

“What’s the big driver?” asked Brad McManus, investment dir.-Panasonic venture group, indicating he doesn’t see one and predicting “slow adoption,” even without the battle between Blu-ray, which his company backs, and HD DVD. Moving next-generation players -- apart from the Blu-ray players built into Sony’s PS3 game consoles at no cost evident to the consumer -- is a tough sale, he told the panel, organized by TiE (The Indus Entrepreneurs), an international technology business-networking group founded by south Asians.

A bit more optimistic was Martin Kuhn, Sony Electronics vp-strategic technology partnerships. “Consumers today are concerned where it’s going to go,” he said of the format war -- and so is he, Kuhn said: “I certainly don’t have a crystal ball here.” But the appeal of bonus material on conventional DVDs shows the potential for next-generation disks, which can provide exciting new kinds of content, Kuhn said. And a push to HD in other entertainment technologies will help the new disks and players, he said: “Of course, it’s not going to happen overnight.” The crucial variable is pricing players in relation to the value that consumers appreciate, Kuhn said.

Participants voiced confidence that the format dispute at least will be circumvented as a hurdle to market development. “I think the conflict works its way out… in the favor of Blu-Ray,” McManus said, pausing humorously in a nod to his company’s bias. He didn’t say in detail how it will work out. Moderator Gary Sasaki said resolution will come within a year thanks to dual-technology products such as an LG player and Warner disk, both shown at CES.

Industry’s big opportunity is in mobile and home devices with constant broadband connections to each other and the Internet, participants said. “The hardware is all in place,” Kuhn said: “What’s missing is tying it all together.”

Playing Xbox Live Arcade games “in the living room you really start to feel that things are going to be different,” said Shawn Carolan, Menlo Ventures managing dir. The set-top box, little changed for years, will be supplanted by technology allowing users to bypass cable, satellite and telco-TV providers and get the equivalent of RSS feeds of exactly the shows and other content they want, he said: “Broadband into the home makes the distribution channel commoditized.” TV will become interactive, with live statistics and viewer contest voting, and companies like Skype offering videoconferencing, Carolan said.

Carolan wants to see a $200-$300 box that starts up fast and anybody can write software for, he said: “That’s when the applications take hold.” But TiVo, PS3, Xbox and Wii haven’t allowed that “and I guarantee you that Apple TV won’t do that,” he said. Carolan cited startups Cozi, Torrentocracy, SceneIT? and MythTV as pointing the way to connected home entertainment and other applications.

Imminently available, WiMAX standards-based wireless broadband will be a “game-changer” for the mobility it offers, McManus said. A few hundred million U.S. and European homes will be within service range in a few years, he said, calling Samsung is “a leader” at anticipating WiMAX use and Motorola “very active.” And McManus’s group at Panasonic is keen to learn what consumers will want, he said. “What we see are handsets… In our opinion, that’s not what the consumer of WiMAX wants or is really going to demand.” Visual uses call for larger displays, but they mean higher power consumption, McManus said. Companies like Nokia and SanDisk are creating connected portable media displays, but their products aren’t there yet, leaving a major opportunity, he said: “We should be developing the devices now… By 2008, you're going to be seeing fairly decent rollouts.”

“The biggest problem for the CE industry… this huge industry is addicted to the business model of one-time product sales,” Kuhn said. “It’s just as hard for the hardware guys to let go of the business model as it is for the… content guys.” The focus should be on finding applications that can commercialize the promise of ubiquitous broadband networking, as YouTube and Google have done with the PC and Netflix has done with physical media, he said. ITUNES “is the role model for this space,” Kuhn said.

Executives haven’t seen any breakthroughs at CES -- as suggested by the show’s being overshadowed by the Macworld conference and Apple product announcements like the iPhone, they said. “I didn’t see much new and exciting, and I kept getting these e-mails from my colleagues at Macworld,” McManus said. Much of what he saw at CES was iPod accessories, he said. Kuhn offered similar observations.

Sling Media’s SlingCatcher digital media adapter introduced at CES is “the right product for solving that problem” -- of getting Web content onto TV sets, McManus said. But other companies will put similar capabilities into their set-top boxes, he said. SlingCatcher is using chips maker Quartics also will sell other OEMs, Carolan said: “This is the most exciting development for that company [movie download service CinemaNow], and I can name 50 other companies that are freed from the laptop.” Finding new uses for connected TV sets -- from photo manipulation to commute and local weather information on demand -- is “the most exciting area,” Sony’s Kuhn said.

From the standpoint of Panasonic’s quest to remove wires from flat-panel displays, Philips’ CES demonstration of HD streaming “got a lot of hype” but was “a disappointment,” McManus said. The effort involved Radiospire technology that adds “proprietary encoding technologies” to “the old UWB wireless protocol” but remains in development, he said. By contrast, SiBeam is only a few months from having engineering samples of its 60 GHz streaming technology for “completely uncompressed HD in 1080p, which none of the other companies have been able to do,” McManus said.

On other products introduced at CES: (1) McManus lauded a 27” OLED display, “an amazing product,” that competitor Sony showed at CES. Acknowledging concerns about the technology such as lifespan and manufacturability, he said: “The colors are just brilliant… It’s an incredible sight.” (2) Parikh singled out Microvision’s matchbox-sized projector, shown at CES, as “phenomenal,” and opening the prospect of notebookless PowerPoint presentations using cellphones.