Media Center will succeed, just not yet

The personal media server is a programmable platform available to any content owner or service provider that wants to deliver a digital home application directly to consumers. What the Web did for information on PCs, the personal media server could eventually do for TV and music in the living room. While Microsoft and its partners have taken only the first step toward this platform, it promises to deliver some intriguing applications:

Send mass-customised sound and video directly to consumers. Today, content owners like NPR and Reuters must deliver programming through broadcast distribution, a restriction that keeps them at arm's length from consumers and forces them into a one-size-fits-all product. With a personal media server, these providers can tailor their products to individuals; for example, to allow a consumer to select her NPR topics and download a customised daily radio program to listen to on the stereo or MP3 player.

Implement a personal "head end" for premium content. A movie distributor like Netflix or Movielink can already stream video to PCs in off hours so that the movie is ready for on-demand watching. What's new here? The content can easily get to the TV, where people actually want to experience it. Movielink, so far hamstrung by living on PCs, should move now to be part of every Media Center Extender.

Make the PC the controller of consumers' entertainment experiences. With a PC connected to the TV, consumers can use it to manage their entertainment. Scrolling through a movie guide online? Click the "record this" button on the site to have your PC record the next available showing. Wondering what others like you are watching at this minute? Configure your TV program guide search engine to sort by audience size. Because a personal media server is a networked PC, it can host consumers' content, preferences and billing details, the foundation of a custom experience.

Build applications that combine content with communications. How about an application that puts caller ID on consumers' TVs and lets them pipe a call immediately to email? Or lets consumers chat with buddies while doubling down on a bet that the Red Sox will take the Yankees in the 10th inning? Or letting the entire viewing audience directly influence the outcome of a reality show? All these are possible with a personal media server and the right application.

Convincing consumers
These application ideas are wonderful, but the challenge is still getting consumers to buy Media Center PCs and Media Center Extenders. We've got some ideas on how to do it:

Subsidise prices. Subscription services like Netflix and Rhapsody will pay for distribution. Hardware vendors like HP and Dell should partner with them, using bounties to keep prices on Media Center PCs and Media Center Extenders low.

Play up the game aspect. We think Xboxes running extender software will be the first sizable market for Media Center Extenders. Microsoft should promote the Xbox as the ultimate video portal, since it plays DVDs and will now get access to Net video.

Tap the telephone market. Telephone companies want to get into the video distribution business. Bundling a Media Center Extender into a DSL sale will make connectivity more valuable -- and give the carrier an instant, connected market for video over Internet Protocol, just in time for the fat fibre pipes they're laying in a neighbourhood near you.