This week in Vegas, it's finally prime time for video on the PC.
Executives from Europe, Silicon Valley, Beijing, and Hollywood will descend on CES to talk about how they plan to make money from convergence — the long-promised coming together of entertainment and computing that's finally a reality.
They'll sketch out a vision of the future in which consumers tap into huge libraries of videos — first-run films, news footage from remote corners of the world, home movies, old episodes of "Kojak" — and then play them on their computers, televisions and mobile phones.
"The government is telling us we have to do it. It is a huge freaking opportunity," said Stephen Baker, an analyst with retail tracker NPD Techworld. "To be thinking about other things is a waste of time."
Intel is ready to make its pitch in Las Vegas. Chief Executive Paul Otellini will unveil Viiv PCs, the chipmaker's latest attempt to help produce desktops designed to store music, record TV shows and serve up family photos and videos. The company also plans to announce partnerships with entertainment conglomerates, sources said, as well as show off set-top boxes, TVs and other devices that have been certified to work with Viiv.
At the same time, Texas Instruments, Philips and mobile phone makers plan to describe how the World Cup in Germany this summer could light a fire under the sales of TV-capable mobiles.
Yahoo chief executive Terry Semel and Google founder Larry Page will deliver duelling keynotes on the same day at CES, which has traditionally been dominated by speeches from consumer electronics hardware executives. In recent years, however, it has expanded to take in networking, entertainment and computing, among other industries.
Navio is among the smaller companies at CES touting their entertainment-related technology. The Cupertino-based company has created a "rights-based" Web service that allows studios to sell music or videos through thousands of Web sites at once, rather than through a few authorised retailers.
"There are a million publishers of information out there, but only a few retailers. We decentralise it. You can buy something in context without leaving the fan site or blog," Navio chief executive Stefan Roever said. So far, Navio has landed deals with music producers, but plans to announce pacts with movie studios in the near future.
A substantial part of the energy behind the new services derives from an about-face among major Hollywood studios, which this year have begun to embrace new delivery technologies. Several producers have agreed to let consumers download TV shows and movies.
Bill Gates, who delivers a keynote speech at CES on Wednesday, has said along with others that consumers will become their own broadcasters, picking and choosing their programs to the detriment of cable companies and advertisers.
Not true, say the cable companies. Someone has to organise all this stuff, they believe. So they are busy building different communications services, navigation software and their own pay-per-view libraries through pre-existing relationships with studios.
The Hollywood movie factories have their own challengers. Upstart Web sites like Veoh Networks and Brightcove hope to take on mainstream movie producers by creating sites for movies from unsung or undiscovered talent.
The only problem? Many of the videos made by unheralded stars stink.
"You've got a million videos. How do you rank them? How do you find good stuff?" asked Jay Janarthanan, the founder of ObjectCube, which makes video-on-demand software for publishers. "There are eight million blogs out there, so how come everyone goes to the same 100?"
There can also be legal and contractual hurdles. Most of ObjectCube's customers sell adult entertainment, and liability issues mean they have to keep a huge cash reserve for legal fees.
It's not all good news on the hardware side, either. Living-room PCs like Viiv have failed in the past, so computer manufacturers are putting only limited energy into Intel's concept this time around, sources said. Consumer electronics makers are expected to counter PC-based entertainment delivery with smarter set-top boxes, and TVs that can serve as digital hubs.
Even networking standards for home entertainment are in play. Airgo Networks and Wi-Fi companies say 802.11n will become the transmission protocol of choice for moving around movies in the home.
Companies behind power-line networking disagree, and have customer adoption to prove it. Earlier this year, Spain's Telefónica kicked off a video-on-demand service and is getting 2,000 new subscribers a day. Many of the customers are opting for power-line networking, which uses broadband delivered via a house's internal electrical wiring, said Jorge Blasco, chief executive of powerline modem provider Design of Systems on Silicon.
"There is no competing technology that is capable of passing video. We've sold a half-million chips," Blasco said. "The carriers are going to be the big drivers of video-on-demand in 2006."
Several more companies — Verizon, France Telecom, BellSouth — are currently testing power-line modems, he added. Blasco's company plans to show off prototypes of PCs and set-top boxes rigged with power-line modems at CES.
Trend-spotting
Other things to watch out for at the show, which runs from Thursday to Sunday:
• The dominance of Asia. Two years ago, Gateway, Dell, HP and other PC sellers laid grand plans to roll out TVs and MP3 players and erode the traditional consumer electronics dominance of companies like Samsung, Sony and LG.
Fast forward to now: Samsung, LG and the other Asian conglomerates still occupy the most floor space at CES and hold strong positions in most markets. American computer makers still sell consumer electronics, but their entry into the market didn't ignite a revolution in brands or customer loyalty.
"They've been moving slow, waiting for convergence," NPD Techworld's Baker said. "But look at iPod and TiVo. Those are very much American products."
• The TV with the built-in DVR. In 2006, a number of manufacturers plan to release television sets that include built-in digital video recorders with 100GB-plus hard drives. Plasma TV remains alive, but there will be far more models with LCD screens.
Toshiba and Canon are expected to show off the first surface-conduction electron emitter display, or SED, televisions. These TVs, like prototypes from Samsung and Applied Nanotech, use nanotubes and other particles to convey electrons to the screen. That results in a set that is similar in size and shape to an LCD model, but has a better picture.
• Blu-ray versus HD DVD. The organizations behind the rival next-generation DVD technologies will hold press conferences to detail the release of players and movies for their respective formats in 2006. Many studios and technology companies back Blu-ray, but HD DVD fans say their format will be easier to adopt. Some companies, such as HP, will support both.
• MP3 players. There will be a lot of them. Most will use flash memory, and more of them will play video in addition to audio files.
• A lot of discussion about Apple. The company will show off products the following week at Macworld in San Francisco, but that won't prevent people from talking about it. The Yonah chips from Intel are set to be unveiled on 6 January, and Apple is expected to incorporate the processor in its first Intel-based Macs.
