A year ago, I dusted off my crystal ball and made ten predictions for 2010, mostly tongue-in-cheek. Surprisingly, I wound up with 6 winners and 4 losers; although some of my DD colleagues declared that I had actually done much better than that.
This time around, I’m going to push aside the crystal ball and focus instead on a few trends that you should keep your eyes on for 2011. To me, how people use display technology is just as important as the technology itself, a fact that we analysts often overlook when we get all starry-eyed at CES, SID, and other trade shows gawking at the latest and greatest wafer-thin OLED TVs and picoprojectors.
TREND #1: Transitioning from packaged media to on-line delivery. The move away from renting and purchasing optical media to digital downloads and streaming will continue unabated in 2011, hampered only by limited Internet capacity and speeds. Netflix now has upwards of 17 million subscribers and a stock price nearing $175 per share, while Blockbuster continues its struggles in bankruptcy.
Look for Netflix connectivity to be included in a majority of TVs and connected peripherals as a selling feature. Netflix access, along with YouTube, is a big reason why more consumers bought Blu-ray players this year, and Netflix streaming now accounts for 20% of all peak-hour Internet traffic — a trend that’s leading to "pay as you go" Internet pricing from service providers.
The popularity of networked TVs has led to at least one unanticipated development — hackers are apparently starting to target these devices with malware, according to the 2011 Threat Predictions report by McAfee Labs.
TREND #2: Google TV will struggle against ‘directed channel’ apps. Google TV launched last fall with plenty of hoopla, but has largely been met with indifference. There are any number of reasons why, but the most obvious could simply be that people just don’t want to use a keyboard and mouse to search for video online.
And why should they? The three most popular Internet video sources are Netflix, YouTube, and Hulu. These three account for the vast majority of online video viewing and streaming activity. YouTube alone essentially obviates the need for a Google search engine — it could take you years to get through all of the clips posted on that site!
I expect more TV manufacturers to sign deals with Hulu to help drive TV sales and steer viewers away from their computers and back to the big screen. With the Big 3 at their fingertips, viewers won’t really have any need for Google TV. (Can you say, ‘Web TV?’)
TREND #3: Writing the epitaph for DVD. According to a Wall Street Journal article from December 24, sales of Blu-ray discs were up 75% year-to-year during the 2010 holiday selling season. One reason is that BD player prices have fallen well below the $100 level, obviating the purchase of conventional upscaling DVD players. And fully-loaded BD players (Netflix, YouTube, and 802.11n connectivity) can be had for less than $200.
Some bare-bones BD players are now selling for less than $70, while 1st-tier brand DVD players are yours for just $25 — a real loss-leader. As a result, look for one or more 1st-tier manufacturers to drop conventional DVD players completely from their product lines by year’s end.
Another reason to start the red laser last rites: Prices of Blu-ray movies have dropped into ‘formerly-DVD’ territory. Just before Christmas, Amazon Inc. was selling the three-disc extended collector’s edition of Avatar on Blu-ray for $24.99, while the DVD version was priced at $15.49. And many Blu-ray collections now include a BD copy, a DVD copy, and a ‘digital copy’ for computers.
TREND #4: 3D will muddle along for another year. By anyone’s accounting, 3DTV sales were a disappointment in 2010. There are many reasons why, the most obvious being (a) not enough compelling 3D content to watch, (b) the cost of active shutter glasses and their relative fragility, and (c) a belief among consumers that there is a 3D TV standards war that has yet to be resolved.
The picture won’t change substantially this year. LG and Vizio have announced plans to bring passive 3D TVs to market in 2011, while Toshiba claims they will deliver glasses-free autostereo 3D TV. That’s all great stuff for newspapers and tech Web sites, but it just reinforces the belief of the average consumer that 3D is still working out the bugs and ‘isn’t quite ready yet’ for the mainstream.
A just-released study by Leichtman Research Group states that more than 60% of U.S. households currently have at least one HDTV set, but less than 1% of those households own a 3D-compatible TV. Only 8% of the respondents in the Leichtman survey expressed any interest in buying a 3D TV, even though 80% of them were familiar with the concept of 3D TV.
TREND #5: Cord-cutting will pick up steam in 2011. Let’s face it, cable TV is getting very expensive, and some consumers are doing something about it by dropping TV channel packages and using a combination of free over-the-air TV and Internet video to watch their favorite programs.
Granted, cord-cutters are still a very small percentage of the population. But apparently enough of them are doing it to have motivated Time-Warner and Charter Communications to launch new, low-cost, bare-bones TV channel packages in several test markets as a way to reverse the tide and also hold onto customers who have considered dropping cable TV as a cost-saving measure during the recession.
Despite all of the studies conducted by Turner Networks, ESPN, and various cable MSOs, cord-cutting isn’t going away. The wider availability of Netflix, YouTube, and Hulu (as mentioned in trend #2) will simply accelerate the phenomenon in 2011, as will access to these content providers on smart phones, tablets, and even eBook readers. (Yep, look for Netflix and Hulu to appear on color Kindles and Nooks by year’s end.)
It’s going to be an interesting year.