At CES, Connected TVs, Tablets and Smartphones Still Missing Key Content

As Gadgets Become Smaller, Cheaper and More Powerful, Media Remains the Killer App

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LAS VEGAS ( -- While the gadget gods unfolded their latest wares for the Consumer Electronics Show's tech-obsessed masses, the underlying message of this year's event was something decidedly un-gadget-like: Media companies are back in the driver's seat.

Tablets and connected TVs drew the biggest crowds and generated the most fervid news reports, but as devices get smaller, cheaper and more powerful, they're also becoming more commoditized -- and consumer electronics companies are counting on content to drive consumers to upgrade and adopt them.

Verizon says it's building a network tot keep up with the proliferation of video.
Verizon says it's building a network tot keep up with the proliferation of video. Credit: International CES

"Distribution is becoming very fragmented and very ubiquitous and the consumers view devices as interchangeable -- they don't get all the distinctions," said Mike Vorhaus, president of Magid Advisors at Frank N. Magid Associates. "So what you're left with is content."

During his keynote, Verizon CEO Ivan Seidenberg said the company is building out a fiber and wireless network more than capable of keeping up with the explosion of video, which accounts for 50% of internet traffic today and is expected to grow to 80% or 90% in the next few years. But it turns out getting content on those devices is an even tougher technical hurdle.

Little wonder, then, Mr. Seidenberg's surprise guest on stage was Time Warner CEO Jeff Bewkes, who showed a humorous montage of personalities including Conan O' Brien, Ellen DeGeneres and Mr. Bewkes watching themselves on screens of all sizes: TV, PCs, tablets and phones; tellingly, they were all pleading with the CES masses to help them become more easily available on these devices, a concept Mr. Bewkes famously coined as "TV Everywhere."

The Time Warner CEO has spent the past 18 months evangelizing the concept that one cable TV subscription would get people access to content anywhere. But a uniform, consumer-friendly system for authenticating cable subscribers on multiple devices doesn't yet exist.

"We have every distribution network and content company trying to create a uniform approach for this," Mr. Bewkes said. "Let's try to keep it simple. This is the best room in the world to develop the innovation to make this happen."

As if to offer its own version of Mr. Bewkes' plea, another CES keynote, Samsung President Boo-Keun Yoon, announced partnerships with Comcast, Time Warner Cable and Hulu, sharing the stage with both Comcast CEO Brian Roberts and Time Warner Cable CEO Glenn Britt to present what the Korean conglomerate is calling "Smart TV." The companies have collaborated to allow cable subscribers to seamlessly switch what they're watching, from their iPads and Android-operated tablets, such as Samsung's Galaxy, to their TVs or phones. But consumers still won't be able to watch their Comcast-subscription channels on these devices outside the home, falling short of Mr. Bewkes' TV Everywhere ideal.

While the new generation of connected TVs is capable of bypassing cable TV, old media still dominates the discussion and many devices are agreeing to play by old media's rules. For example, Microsoft Xbox's latest content addition, Hulu Plus, is all about subscription media. It has added Hulu Plus, a monthly subscription for online access to premium TV from the joint venture owned by NBC Universal, News Corp. and Walt Disney Co.

In this brewing content battle, the cable operators are still insisting on maintaining their foothold on consumers and have thus far been sluggish to fully adopt authentication software that would allow cable subscribers to view premium content such as original cable shows on any device -- whether inside the home or out. They're approaching TV Everywhere in a defensive posture, offering just enough TV Everywhere-like features as a way to retain current subscribers and also to stem consumer demand to pay a la carte, or get their TV content exclusively from the free web.

That leaves advertisers and media buyers trying to anticipate how this brewing content-device battle will play out. Bill Tucker, CEO of Publicis' MediaVest, said marketers have been increasing their investment in what they earmark as "innovation budgets" to keep up with the rise of media on other platforms. "If we can't figure out how to fuse content and context together now, we're not going to be able to do business long-term," he said.

Until recently, the tech industry had little interest in helping TV networks preserve their model. But despite a proliferation of screens, consumers are watching more TV, according to Nielsen. Google's recent attempt to get in front of TV screens with GoogleTV was met with resistance from the networks and cable companies, who blocked their free web TV content to the GoogleTV browser. "The lesson we learned from GoogleTV is that if you don't have the content people want, no one's going to buy your device," said Revision3 CEO Jim Louderback.

Meanwhile, TV manufacturers, hoping to trigger a three-year upgrade cycle like that of PCs, are developing richer interactive TV platforms to differentiate from one another. The result: Samsung, Vizio, Sony and Intel all have different app ecosystems, all starving for what people buy TVs for: the programming.

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With reporting by: Andrew Hampp

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