Home Theater

In the past 20 years, home entertainment has been revolutionized by digital technology, from DVD players for movies to CD players for music. Digital technology has ushered in a new era of audio and video quality and convenience for the consumer.

Separately, but at the same time, the personal computer has employed digital technology to revolutionize every aspect of business, from telecommunications to publishing to accounting. And even more recently, the network effects inherent to the Internet have made the personal computer even more important and more powerful.

Home Theater
Malibu, California 1997

With these two separate but related stories of change and revolution, an obvious question arises: will personal computing and home entertainment ever meet?

In this paper, we look at the problems faced by traditional digital home entertainment and we look at the opportunity for the PC to solve many of these problems. At the same time, we look at the PC and the problems that it faces in meeting the challenges of home entertainment.

The first and most visible challenge to home entertainment today is the complexity of setup. The entanglement of audio, video, coaxial, and power cables that lie behind every home's entertainment system are the first sign of this. The array of different boxes and remote controls required for the average home entertainment system are another. The complexity of a home entertainment system grows exponentially, as the number of devices in that system grows. Will the consumer ever be able to use a new entertainment device by simply plugging it into the power outlet?

Another challenge faced by current digital home entertainment devices is that of distribution -- in a world where devices are increasingly networked and devices talk to each other to exchange information, current consumer electronics devices fall short of interconnecting different devices together. Consumer electronics devices today are isolated islands of functionality, separate and standalone. With such isolation, can one remote control ever be programmed to control every device inside the house? Consumers are increasingly demanding "anytime, anywhere" access to entertainment, a trend evidenced in music by the popularity of compact digital audio players such at the Apple iPod. Consumer electronics devices must meet this consumer demand. Will consumers be able to watch TV on any screen inside the house, whether it's the screen of the television in the living room, the screen of the television in the bedroom, the screen of a wireless web tablet or the screen of a cell phone?

Yet another challenge faced by consumer electronics devices is that of cost -- the use of proprietary hardware for traditional consumer electronics devices results in higher costs to the consumer, especially when it comes to competing with lost-cow commodity PC hardware. With the introduction of new capabilities and new technologies, costs for consumer electronics devices can get particularly high. Take DVD-burning as an example -- consumers will want the ability to transfer recorded TV shows and movies to DVD for archival and future viewing. Adding this feature to a proprietary hardware-based personal video recorder such as TiVo would require the consumer to purchase of a new piece of hardware -- an expensive hardware upgrade.

Plasma TV

Smart Home Ideas offers a wide variety of Home Theater and Whole Home entertainment systems. Now it is possible to listen to your favorite CD or watch your DVD player from any room in the house, including the patio.

Consumers have more entertainment choices and sources than ever before - cable, satellite, DVDs, PVRs, game consoles, home servers, PCs, cameras, etc..., but few, if any, of these devices are connected to more than a single TV set. In a networked home, consumers can access and share these interconnected devices and their content from all the TVs in the home.

What has not changed significantly is how homeowners consume their entertainment. While there are many new ways (sources) in which entertainment is brought to the home, the television is the center of entertainment for most families, both today and for the foreseeable future. Consider these facts:

• There are 400 million TVs in the US today.
• Greater than 50% of US homes have three or more TVs.
• The average home has three rooms wired with coax.
• Direct Broadcast Satellite (DBS) achieved one million installations in the first nine months and has    exploded to reach an installed base of over 15 million in the US today.
• DVD player adoption is the fastest in consumer electronic product history.
• Personal Video Recorders (PVRs) have fundamentally changed consumer's viewing behavior by providing    the consumer with control. PVRs have flipped traditional TV programming models "upside down".

Service providers are competing fiercely for the homeowners' discretionary entertainment dollars:

> Cable TV providers are expanding their service offerings to include analog and digital video programming, pay-per-view movies, interactive TV, music-on-demand, and broadband Internet access.
> DBS service providers are expanding their offerings to include PVR capabilities, bi-directional broadband Internet, free set-top boxes (with service bundles), and free device installation.
> Other media companies are bringing entertainment directly to the home using PCs, Internet ready devices, and streaming audio/video via home servers or residential gateways.
> Many service providers are including PVR capabilities in their set-top boxes (STBs) to digitally store entertainment for later viewing.

The business models of yesterday are collapsing under the weight (expense) of these new technologies. Consider the current situation:

• Consumers have been conditioned for many years to expect their entertainment equipment to be partly or    completely subsidized by the service provider.
• New services and capabilities are digital. TVs are predominantly analog. Hence, these TVs eventually will    need a STB to view the new services.
• New STBs are essentially multimedia computers; they include expensive MPEG codecs, PVR disk drives,    and microprocessors for control.

Home Entertainment

Service providers are beginning to see the value of multi-room offerings; however, the economics of multiple STBs are painful for both the service provider and the customer. While service providers are forced to raise their service fees for multiple STBs, these fees do not cover the added expense of secondary STBs. These higher fees provide homeowners a reason to shop around and potentially switch service providers. Home entertainment networking technologies enable the rollout of these services in a way that is both valuable to the consumer and offer the service provider lower deployment cost and potential reduction in churn of the subscriber base.


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