As broadband infrastructure matures and more devices become high-speed enabled, US content providers must better match their rich media offerings to the appropriate device in order to reap untapped revenues, according to a new Report from Forrester Research, Inc. (Nasdaq: FORR). By 2003, broadband content will be divided sharply by device — PCs will comprise one-half of all broadband devices, while TVs and game consoles will dominate the other half. Multimedia-focused entertainment will gravitate toward TVs and gaming consoles, while streaming interactive content and software updates will flow to PCs.
“Everyone expects broadband to grow rapidly and create a market for new types of high-speed enhanced content,” said Bruce Kasrel, senior analyst at Forrester Research. “What is unexpected is that most of broadband’s impact will be directed to other devices besides the PC. As all types of devices connect to the high-speed Internet, content will shift to the most appropriate device, like digital music files being played back on the stereo system. Media providers must anticipate the most appropriate device for their content and tailor the consumer experience and business models to take advantage of that environment.”
For the October Report “Broadband Content Splits,” Forrester predicts that rising broadband penetration will create greater exposure for high-speed content by 2001. Providers embracing broadband as a mass-market phenomenon will ramp up their streaming media production and package interactive content differently for various broadband-enabled devices.
By the end of 2001, broadband connections will double. All major metropolitan areas will have at least one form of high-speed access, totaling 11 million US households, compared with five million households today. These broadband-hungry consumers will go online more often and for longer periods of time than their dial-up counterparts.
Savvy users will become hooked on broadband’s first killer application — Internet audio. By 2002, 19 million consumers will use the Internet for music downloading, and one in four will be broadband users. These users will also expect highly interactive Web interfaces and drive demand for specialty broadband-enabled devices, like interactive set-top boxes, to experience more robust entertainment options.
By 2002, competitive pricing pressure will put high-speed access on the fast track to commodity status, forcing carriers to offset revenue shortfalls with additional services. Consumers will benefit from a host of broadband-enabled devices and services from which they can receive various entertainment experiences. For instance, cable will exploit its video-centric network to connect set-top boxes and deliver video on-demand (VOD) to TVs and audio on-demand (AOD) services to MP3 devices. To gain entry into the TV delivery business, telcos will counter with video DSL (VDSL) upgrades. High-speed set-top boxes and game consoles will bring broadband connections to 9 million TV screens, linking videogame enthusiasts around the world and pushing pervasive gaming into the mainstream.
“Entertainment content will flow away from uncomfortable PCs in the den toward comfy couches in front of the living room TV set,” added Kasrel. “PCs will be left for practical, task-oriented activities. Broadband content will split into two streams — visuals with minimal interactivity on the TV screen and interactive content enhanced with visuals on the PC.”
By 2003, more than 20 million set-top boxes will connect to broadband content, and 16 million gaming consoles will sport high-speed connections. As televisions, gaming consoles and Internet-enabled stereos are adopted as broadband conduits, the PC’s dominance as the sole broadband channel will be challenged. In 2005, 191 million devices will connect via broadband. PCs will constitute only one-third (36%) of these devices, but 70 million high-speed-enabled computers will still need their own content. As other devices siphon away multimedia content, consumers will use PCs only for complex, highly interactive tasks and software downloads.
“With much of the entertainment content on other devices, the PC will focus on interactive content,” said Kasrel. “PCs will become a platform for highly specialized and customized software, while broadband pipes will allow programs to be streamed to the user. We predict that by 2005, nearly $1 billion dollars in revenue will stem from software streaming.”