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— Blog

Digital Media Questions Discussed at 2013 CES

Ken Kajikawa
January 28, 2013

Last week at the 2013 Consumer Electronics Show (CES) in Las Vegas, I participated on a panel with Activision Blizzard, AT&T, LiveGamer, Unity, and others. Some of the questions we discussed were:
· What is the definition of core vs. casual gamer?
· What do consumers want now and in the future?
· Is this next generation of game consoles the last generation? If so, what is the future?
· As digital media content - movies, music, and games - is quickly migrating "into the cloud", what are the new forms of distribution and infrastructure required to meet end user expectations?

My definition of core vs. casual gamer is defined by time and money. Core gamers spend hours to complete a game and spend high dollars on content. Casual gamers spend minutes to complete a level (or game) and spend low dollars. I believe within the five global markets, approx. 20-25% are core gamers and 75-80% are casual gamers. In 2012, there were 880m gamers globally and $68bn in revenue:
· 298m gamers in Asia-Pacific ($22.2bn)
· 274m gamers in Europe ($18.8bn)
· 169m in North America ($21.8bn)
· 89m in Latin America ($3.8bn)
· 47m in Middle-East & Africa ($1.0bn)

What consumers want is three things:
1. to access their digital media content - movies, music, and games - anywhere anytime, on any screen - 1. connected tv, 2. desktop / laptop, 3. tablet / smartphone, 4. console / microconsole, and 5. wearables.
NOTE: "microconsole" is a term used to describe the new low-cost, accessible and physically small game console. It was derived from the term "microcomputer". Examples are Valve Piston, Ouya, and others.
2. the best of quality of service (QOS)
3. the best user experience

Now to the question I really much enjoyed discussing with the other panelists - Is this next generation of game consoles - Sony's PS4 and Microsoft XBOX 720 - going to be the last generation? If so, what is the future? The answer, yes, this next generation of consoles is the last. As a core gamer for over 20 years, did I really just say that? Yes, yes I did. I agree with Billy Pidgeon, Analyst, Inside Network, that "the console is not going away but they're not coming back to reclaim the numbers of the past". I would add three more points which are:
1. the videogame industry has matured, we're now parents, and we no longer have the hours available to engage in core gaming and instead have minutes
2. the target market has expanded from18-34 year-old males to 2-102 year-old males, females, and children
3. historically, we bought consoles because it provided us with an experience we couldn't get from our PC's. With today's CPU and GPU power, the experience is much closer.

What is the future of digital media? For hardware, the three factors important to me are - mobility, capability, and cost. For content (applications and services), the three factors important to me are - mobility, quality of service, and user experience. Less than 100m PS3's have been sold (lifetime sales), less than 100m XBOX units have been sold (lifetime sales), and less than 100m Nintendo Wii's (lifetime sales). Whereas, in 2012, over 100m tablets sold and over 1 billion cell phones sold. Being ex-Intel, economically speaking, selling 100m or 1 billion CPU's will afford greater economies of scale, less cost, and greater capabilities.

That said, my vision for the future of digital media is simple:
1. Tablets will provide the 2D non-immersive experience, with limited features and capabilities.
2. Microconsoles, such as Valve Piston or Ouya will enable tablets to dock, download, and store 3D immersive experiences
3. Via the cloud, content from my tablet or microconsole will display either in my home (or my friend's home) on a 55-inch connected TV and wicked 5.1 sound system or in my connected car (for my kids)

Here's the wildcard. At CES 2013, LG, Panasonic, Samsung, Sharp, Sony, Vizio and others announced their new 55 and 65-inch 4K OLED TV's. Simply put, these displays are amazing! Sony is the most aggressive in its desire to launch the world's first 4K video distribution service, Sony announced it is working on a cable rivel to offer multi-channel TV service, Sony has the new PS4 launching soon, and Sony just acquired Gaikai for its cloud streaming service. Given all of this exciting activity in digital media, what are the new forms of distribution and infrastructure required to meet end user expectations?

To meet the expectations of consumers, content owners and distributors need to adopt a five point distribution and infrastructure strategy: 1. cloud, 2. colo, 3, connectivity, 4. mobile, and 5. global. By adopting this strategy, content owners and distributors will promote success, increase customer satisfaction, and grow their digital media service. Telx enables low latency content delivery, enables a great user experience, and supports today's leading digital media companies - movies, music, and games. If you have questions, email me.

Ken Kajikawa
General Manager - Digital Media | Telx
kkajikawa@telx.com | Twitter: @kenkajikawa

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