Most recently, the Digital Entertainment Group published this chart that shows the changes in consumer spending. Although there is an increase in spending for Blue-Ray and VOD, if we extract the lines to run until 2012, it appears that there could be about a $3B USD drop in the industry of consumer spending in the home.
Again we are seeing a major shift in an industry that has been pretty well established with hardware and physical goods and the growth curve that existing from 200o~2006 with the shift from VHS to DVD’s is not showing the same spurt in growth like it did before. We could guess that Blue-Ray and VOD will fill this new paradigm shift, but we must imagine with the fragmentation of media and the rise of consumer spending on mobile could really be the culprits that will this industry as well.
It would be nice to think that the $3B USD that disappears moves toward mobility and other consumer services, and that the “Connected Home” as a strategy and philosophy will be made up of consumer spending on more of subscription and digital transactions to offset the purchasing culture of hard media.
Major Retailers such as Best Buy and others will really need to look at the strategy of mobile and consumer behavior of on-demand, real-time media with models that tie this all together to the convenience of anytime, anywhere as well, I believe.
In a recent interview on Charlie Rose with Paul Otellini, CEO Intel Corporation, Paul mentioned that in the next 5 years we will see changes in consumer products like we have seen with mobile devices. Everything will become “Smart” in the next 5 years. Today Intel has been a leader in providing the brains behind the PC, but with Intel’s strategy behind the “Atom” processor ( A chip that is minimum in size with the most advanced processing power) to become the low-cost solution that powers everything. ” We will see chips in TV’s, in the car, in appliances- for what will be the SMART era”- he stated. ” Today we have over 10K engineers working on these software solutions that the consumer does not see”. As Paul sits on the Board of Google, it is pretty clear that we can see that this might lead to a strong alliance to Android, but most recently at MWC ( Mobile World Congress) in Barcelona, Nokia-Intel announced their strategic partnership around the next generation OS called- MeeGo. So there is that angle to think about. ”No we are not creating another WinTel”- he stated, but the battle will ensue between Android, iPhone and now potentially MeeGo that will be the OS that not only occupies those 1.2Billion mobile devices shipped yearly, but all of the consumer appliances and electrical objects around us.
So where does this leave the Best Buy’s of the World? Yes- they need to grow the Best Buy-Mobile business, but it really opens an interesting opportunity for customer support and services. In a recent presentation I heard from the VP of Marketing of Best Buy Canada, Angela Scardillo, she stated that the core of their marketing strategy is to build the brand around the “Connected Home”. What a phenomenal strategy! Geek Squad will now be the customer support function to help us fix all of those problems that the online services have left us in utter abyss? We hope that Google and the rest of them will offer more customer support services instead of inanimate forums to answer questions, but if this does not happen, it will potentially be your local Super Geek ( A close colleague of mine that invented this concept way before Geek Squad) to now come to the rescue.
So I think that this shift has the players and the strategies in place now to really take us forward in this new decade. The big losers could potentially be the hardware manufactures that will need to look for new avenues to build revenue streams around ” Smart” objects. We have seen the release of the iPad from Apple in 2010, but how cool will it be to start seeing the new “Smart” TV’s, Cars, Refrigerators, Washer and dryers, Rice cookers all connected into a grid that is controlled by our mobile devices.