Endeavour Partners - Blog

Let me begin with a confession: as a passionate advocate of usability in consumer electronics, I am a long-time TiVo fan, so much so that its availability has dictated my choice of video content service. First DirecTV, then Comcast when they made available the Series 3 integrated with the cable service (although the CableCard installation was a nightmare of epic proportions…).

Over the last several days there were, however, four related news items, some of which seem tinged with irony:

• today, its judgement against EchoStar and DishTV for $200 million was upheld – unsurprisingly EchoStar plans to appeal – vindicating the value of the key innovation that TiVo provides
• a couple of days ago, TiVo announced its Series 4  devices: demonstrating the importance of ‘over the top’ video, its new UI integrates this seamlessly into the overall user experience

TiVo Premiere

• a few days earlier, Clicker, a service that in some ways appears inspired by TiVo, aiming to bring a TiVo-like experience to web TV garnered $11m in funding

Clicker

• the explosion in diversity of content and the growth of time-shifting and now place-shifting is forcing cable providers towards switched video, which in turn threatens TiVo’s whole technical architecture because of its inability to communicate upstream

So, what does this mean? Does TiVo win the IP battle and lose the platform war? Do the innovators it inspired arise to eclipse it? Whither linear TV and OTT content?

(Parenthetically, the new UI is Flash-based, but then TiVo does control the hardware platform)

For years we (and others) have been discussing how TV shows get financed in a time-shifted and place-shifted world.  If viewers can use TiVo to skip the ads, where does the money come from?  If I cut my coax and go with iTunes or Roku or Vudu, is there enough money left to fund HBO, ESPN, CNBC, etc?

Will we really be lost without Lost?

One possible solution is increased product placements à la James Bond.  There are literally hundreds of examples to choose from, but a personal favorite of mine is the BMW chase scene in Tomorrow Never Dies:

[youtube=http://www.youtube.com/watch?v=smvR7ocyNkM]

In the season premier of Heroes, we saw an aggressive move in this direction by NBC.  An entire scene is dedicated to Claire and her friends playing Guitar Hero 3.  Another scene gets weird:  Hiro and Ando are standing in front of cardboard cut-outs of themselves and a giant cardboard smartphone with the Sprint logo emblazoned across the top – an ad within an ad within the TV show.

Look for more of this to come in future episodes of Heroes and other high production value TV.

“This may sound a little weird, but can I take a picture of that?”

A point of sale terminal at a Jiffy Lube with an apparently disappointing user interface

I was in a Jiffy Lube, of all places, paying for an oil change, and I saw a powerful example of something that we’ve been discussing with clients over the past few months:  Great user experiences in one product area can drive user expectations across a wide variety of other products, services and use cases.

In this case, the touch screens on iPhones and other leading mobile devices are changing people’s expectations about how things should work on everything from televisions to digital cameras to point of sale terminals like this one.  Apparently, Jiffy Lube customers and employees keep trying to use this as a touch screen even though it isn’t one!

A similar example comes from the TiVo and DVR experiences many of us have become used to.  Haven’t you often wished you could pause or rewind your car stereo?  Or listen to the usual 8:00AM broadcast team even if you were on your way in to the office earlier or later than usual?

People are now coming to expect an incredibly rich, interactive, and easy to use experience from all the technology in their lives.  The benchmarks are products like the iPhone, the iPod, TiVo, and Blackberry, and you will be judged against these standards regardless of what price point you are trying to hit or product category you think you are in.

Does your product have a touch screen?  Tens or hundreds of Gigabytes of storage capacity?  The ability to stop, pause, rewind, time and place shift content?  The ability to move instantly and seamlessly between applications or functions?  WiFi or wide-area cellular connectivity – or, better yet, both?  Perhaps it should.

Leading smartphones, such as Apple’s iPhone or RIM’s BlackBerry, are having an enormous impact on the mobile industry.

Within five years about half of US users will have upgraded to a smartphone and these customers will represent nearly 60% of industry revenues.   These smartphone users will also represent approximately 75% of wireless data traffic from cellphones (excluding laptops and MiFi) as applications, games, and multimedia content on the go become mainstream.

The Market is Upgrading to Smartphones

In addition to bringing significant change to the mobile ecosystem, this mass-market upgrade to smartphones is finally making convergence a reality.  Apple iPhone users are seamlessly moving content between their computers, iPods, iPhones and televisions using iTunes and simple docking station connectors (or, better still but a bit expensive:  AppleTV).  Other lead users are cobbling together ‘DIY’ solutions with products such as SlingMedia’s SlingBox, Roku’s Netflix box or TiVo with Amazon Video On Demand (VOD).

Smartphone’s were the missing link for convergence, and now they will play a critical role in consumer decision-making for content and service providers.  Companies that do not offer a complete solution, including smartphone integration and seamless transfer of content across TV and PC, are beginning to face what we call, “The Kung Fu Panda Problem.”

This past winter our family went skiing in the mountains of Maine.  For the four-hour trip, I purchased ($14.95) and downloaded the movie Kung Fu Panda, so my daughters could watch it on my iPhone.  The user experience for my daughter was pretty good, but the really interesting thing is what happened later, when we were home and they wanted to watch it again.

In today’s world, we seemingly have a myriad of options on how to purchase and watch video across TV, PC, and mobile:  Mobile TV, streaming video, Comcast VoD, or DVD – either purchased or through Netflix.  For a long time, DVD was the best format for covering a wide-variety of circumstances and use cases.  But carrying around a huge collection of DVDs isn’t great.  Once I purchased Kung Fu Panda from iTunes, we could watch it on TV (with a simple connector cable), on our family’s MacBook, on an iPod or on my iPhone.  Perhaps most importantly, I always have it (and any other videos I’ve downloaded) with me.

Here’s a comparison of alternative approaches to anytime, anywhere video:

Currently, only Apple and the iPhone enable me to seamlessly move content between mobile, my computer, and my TV

Hence, the Kung Fu Panda Problem:  Not only am I now unlikely to buy the Kung Fu Panda DVD or to rent Kung Fu Panda from Verizon or Comcast On Demand, but – having experienced this just once – I am also unlikely to purchase or rent any video from these providers until they can match the value and seamless integration provided by Apple.

Worse yet, every day thousands of new iPhone users discover this for themselves, and this pattern will extend beyond iPhones and into WebOS, BlackBerries and Android devices as the multimedia smartphone experience improves.  It is likely to be easier to move from smartphones back into other devices in the home than the other way round for a long time to come.