While overall drops in cable subscribers have been relatively small, there’s no avoiding that they did in fact drop in 2010. Blame cord cutting for at least part of the problem, as popular providers like Netflix and Hulu satiate consumers’ premium video appetites. Looking towards 2011, we expect this trend could gather further steam with bundled subscription offerings from platform players like Microsoft and Apple, and we expect a remake of the media guide as social media wraps its tentacles around entertainment recommendation.
Below are a few trends we’ll be watching for in 2011:
The Rise of the Virtual Video Operator
If 2010 was the year of cord cutting, 2011 will be the year of the virtual video operator. After all, online video bundling of popular shows through Netflix Watch Instantly and ad-supported Hulu has been extremely popular, so imagine if consumers could get their favorite cable networks bundled together in an over-the-top in a subscription package.
Of all the living room giants, it appears Microsoft is one of the best-positioned to roll out a bundled video subscription package, given the company’s background in IPTV software, its leadership in the console video streaming market and large installed base relative to Apple and Google.
While new bundled video services may be a boon for cord cutters, don’t expect the cable MSOs to sit by idly. While some, like Comcast, have already dipped their toe in the bandwidth cap waters, and there’s no doubt there are other competitive weapons carriers will employ in the rising threat online video presents.
A New Nintendo Game Console
For the last couple decades, five-year console cycles have been the norm. But with the astronomical cost of developing a new console and the uncertainty of payoff, the big three — or at least Microsoft and Sony — have collectively decided to stretch a few years beyond the traditional five.
Both have good reason. Microsoft is picking up momentum and just released a hot new accessory in the Kinect that should give the Xbox 360 a midlife kicker, while the PS3’s strength in Europe and Japan has many believing it’s just getting its legs as prices come down and it adds features such as Hulu Plus.
Nintendo’s Wii is a different story. With sales dropping off a cliff, HD becoming commonplace and Microsoft and Sony out-interfacing the Wii motion sensor, Mario and company know it’s time to get a new box out. The biggest challenge will be finding a differentiated approach, which some speculate could be 3-D. However, with a lack of 3-DTV penetration, such a move would be risky. And given the rise of new game market outlets such as app stores on connected TVs and second screens like the iPad, developing a new console in general is a risky proposition. Still, expect Nintendo to act, even if it could be the company’s last such announcement.
Innovative Interfaces Are the New Black
It’s hard to think of a category of consumer electronic accessories that is more ripe for remake than the simple remote control. With the arrival of connected-consumer electronics, TV apps, smartphones and innovation in interactive entertainment, the table has been set for a remote control revolution.
The Wii started the ball rolling on creative controller interfaces in 2006, and the recent release of the Kinect has taking the free-space controller one step further by, well, eliminating the controller.
But gaming isn’t the only opportunity for new interfaces. In fact, one of the hottest areas of innovation has been in software apps. Sonos, Apple and many others are innovating with great smartphone apps that refashion phones into fantastic touchscreen remotes. No doubt the remote-app fire has spread to Android devices as well.
But the innovation in device interfaces has just begun. The rapid change in what consumers are seeing on the screen will unleash a creative wave to give them new ways to better control on-screen content and entertainment, whether that’s for web-surfing, gaming or simply changing channels. As companies like Primesense look to push their technology into new devices, expect 2011 to be a big year for interfaces.
The Free E-reader
No consumer technology market changed faster in 2010 than that of e-books. The release of the iPad and a new generation of Kindles ignited a fire in the space, and over the next few years many consumers will no doubt make the jump from paper to digital.
This rapid growth has created a highly competitive e-reader market, resulting in an early shakeout. As a result, the $99 price point many predicted for 2011 has already shown up. The next price point could be free.
Could free really happen? In short, yes. Free hardware — or subsidized models — are not new to consumer technology; one only has to look to the “free PC” model of a decade ago, and more recently in the phone market, to see that.
What form of business model would a free e-reader require? Much like we’ve seen with other “free” hardware models, a company must be willing to possibly subsidize a purchase of a device in exchange for a lock-in commitment from the consumer for some period of time, or at the very least the promise of one. The most likely route for e-reader subsidization is that the hardware provider (and associated bookstore, such as Kindle) will not have a contractual lock-in (as is the case with smartphones), but go down the video game hardware route of “content lock-in,” meaning the consumer essentially commits to a single device by buying content specific to it.
While the social TV revolution thus far has been a quiet one, expect more noise in 2011. Twitter sees the connection between entertainment and social as a very strong one, and no doubt Google and Microsoft will continue to innovate in interesting ways in this regard.
But the biggest social TV play of all could come from Facebook. While the social networking giant is already waking up to the connections between social media and TV entertainment, it could go all in at some point with an “immersive Facebook UI/program guide. Such a guide would offer a combination of streaming, and possibly broadcast, content, a true platform for applications and communication services, and perhaps even contextualized recommendations (think Facebook Likes for TV) for video entertainment.