Wired (Chris Anderson) looks at the trends driving the broadband home of the future, and the market opportunities it is creating:
The first is the rise of digital media. What started with the audio CD has suddenly become a clean sweep: DVD players now outsell VHS players, digital camcorders outsell analog versions, digital cameras outsell film cameras, and both digital cable and digital TV are poised to pass their analog counterparts in the next few years. Except for radio (Sirius or XM users notwithstanding), odds are increasing that the entertainment media you consume is 100 percent digital.
The second trend is a natural outgrowth of digital media: the home theater phenomenon. With the arrival of the DVD and its high-quality video and sound, consumers finally had good reasons to upgrade the rest of their home entertainment system. The result is a tsunami of wide-screen TVs, surround sound audio systems, and digital media devices. Today, 30 percent of US homes have a home theater, defined by the Consumer Electronics Association as at least four-speaker surround sound and a 27-inch or bigger screen. More than 2 million projection TVs with screen sizes ranging from 40 to 80 inches (6.5 feet!) were sold in the US last year. Nearly half of American homes now have DVD players. And sales of all-in-one surround-sound systems are about to surpass even stereo audio systems.
Finally, broadband has reached critical mass in the home. With a high-speed, always-on connection came a fundamental change in the way people listen to music, play games, and watch the news. Broadcast TV viewership is in decline; young people – the all-important 18 to 34 demographic – are looking to the Internet for their entertainment. What they first consumed on their PCs in a home office or bedroom they increasingly want everywhere, from the living room to the front pocket.
Which means the wired home is emerging in any number of ways. In one house, it might be a connection from the computer to the stereo – and suddenly all those MP3 files have rendered your CD collection obsolete. In another, perhaps a PlayStation 2 or Xbox in the living room holds the lure for online play; in comes the Cat-6 Ethernet cable or the Wi-Fi network, and the foundations of a broadband entertainment center are suddenly in place. Or in a third home, TiVo passion poses an obvious question: Why can’t I watch what I’ve recorded on any TV in the house? Install a home network and you can.
This impulse, played out in millions of homes, is creating a brand-new market unlike any other.