The International Consumer Electronics Show

World Screen Weekly, January 10, 2008

An unexpected bombshell hit the industry just before the opening of the International Consumer Electronics Show, which concludes this week in Las Vegas.

CES, which was expected to attract over 140,000 attendees, is a longtime showcase for the latest in electronic wizardry and gadgetry. But this year it witnessed a significant uptick in the number of participants from the world of content—and much of the buzz at CES was initiated by a film studio.

On the Friday before CES began, Warner Bros. tipped the balance of power in the high-def DVD format war by announcing that in the future it would exclusively back the Blu-ray high-definition DVD technology developed by Sony Corporation and cease all support of Toshiba’s HD DVD format.

Until now, in a hodge-podge of support, some studios backed one or the other format, and some released titles on both. In allying itself with Blu-ray, Warner Bros., said many, sent a dagger through the heart of HD DVD. The stakes are huge, with Sony and its allies standing to benefit the most.

Indeed, in the wake of the studio’s announcement, the HD DVD Promotional Group, an association of companies backing the HD DVD format, cancelled its CES party, although it continued to stage upbeat presentations at its booth. And Sony’s chairman and CEO, Sir Howard Stringer, speaking at his company’s press event, said, “We’d like to thank Warner [for acting] in the long-term interest of the consumer and the customer.”

Many film executives were similarly elated—or relieved. “From the start we thought Blu-ray was the better of the two technologies,” Steve Beeks, the president and COO of Lionsgate, told World Screen. “We backed it for that reason, but also—frankly—because we thought it would win. But it was definitely a risk.

“Now everyone needs to unite behind a singular format and end consumer confusion,” he added. “The co-existence of two formats was causing consumers to hesitate and may have been behind the recent slowdown in DVD sales overall. I think the Warner executives said that it’s time to put an end to that confusion, to stop endangering this primary source of revenue.”

“I was very pleasantly surprised by Warner Bros.’ decision to come to the Blu-ray side,” added Andy Parsons, the chairman of the Blu-ray Disc Association U.S. Promotions Committee and the senior VP of product planning at Pioneer Home Entertainment Group, which was an early backer of Blu-ray. “This will make choice much more clear to consumers.”

Adding to CES’s growing content flavor, first-time exhibitor NBC Universal set up a booth that included a stylish mini-TV studio behind curved glass walls that was used for live broadcasts from the show floor by NBC News’s Brian Williams and Al Roker and CNBC’s Maria Bartiromo. NBC-owned Telemundo, MSNBC and iVillage also participated in the telecasts, and bloggers sitting on raised platforms could be seen pecking on their keyboards on the perimeter of the booth.

Another major content provider exhibiting on the show floor at CES was Sony Pictures Television, which some months ago announced it was eschewing its NATPE presence for the much larger January event in Las Vegas. Sony brought along star power in the form of Jerry Seinfeld, Tony Bennett, Alex Trebek and Vanna White, and announced initiatives such as new channels on YouTube, a research alliance with Nielsen, and various projects for digital platforms. “Anytime Anywhere Anyscreen” was the new slogan splashed across the SPT section of Sony’s giant booth.

“The number and variety of screens available to deliver entertainment has skyrocketed, providing endless opportunities for content providers,” said SPT’s president, Steve Mosko. “With both an electronics company and a content company, Sony has a unique understanding of the entertainment experience and a myriad of opportunities for our partners to explore.”

Indeed, the electronics side of Sony lost no time in making a splash of its own at CES, with a slew of new product announcements ranging from small HD Handycams to the sleek and sexy new line of OLED TV sets.

But the Holy Grail du jour in consumer electronics is the extension of the Internet video experience to the home television screen, which has the potential to transform every TV set in the world into a receiver of an infinite number of online channels.

Sony Electronics joined several other companies that have jumped into that fray. Its existing Bravia line of TV sets is already equipped with an “Internet video link module” that streams content directly into the set without the need for a PC. At CES, Sony announced CBS Interactive as the latest provider of content for this service. The nonexclusive arrangement makes material from the CBS Interactive Audience Network—a syndicated web service—available to Bravia owners as streamed content.

The Sony deal is somewhat of a breakthrough for CBS because all the other partners of CBS Interactive Audience Network “are much more PC-based, like AOL, MSN and Joost,” Martin Franks, CBS’s executive VP of planning, policy and government affairs, told World Screen. “This time it’s straight to a home monitor rather than to a laptop or desktop computer.”

Franks added that the CBS Interactive Audience Network is generating revenue but wouldn’t be more specific. “A lot of this is experimentation just to see what works,” he acknowledged.

Keynote speakers at CES included Microsoft Corporation’s chairman, Bill Gates, and Comcast Corporation’s chairman and CEO, Brian Roberts. The latter said that his company, the largest cable TV provider in the U.S., will help facilitate online movie downloads by upgrading its Internet speed by a factor of 10, allowing consumers to suck in a feature film in under four minutes.

Comcast also said it will launch Fancast, a website that will search for and manage Internet video content, including TV shows, and, under the new moniker Project Infinity, pledged to give subscribers a vastly expanded choice of HD programming in 2008, including VOD content.

Gates, who is soon to leave Microsoft to engage full-time in the work of his philanthropic foundation, made his 11th and probably his final appearance at the big show. The world’s first digital decade, characterized by keyboard and mouse, has just ended, he said, “but this is just the beginning.” In the second digital decade, he predicted, the user interface with the computer will be mostly through voice, face and gesture recognition, all content and media will be software-driven, and HD experiences will be everywhere around us—not just on TV screens but projected onto a variety of surfaces.

—By Peter Caranicas