Could The Video Download Craze Make Media Center PCs Cool Again?

October 6th, 2006 Davis Posted in Movies, Media, VOD, Disclosure - I own stock in co. mentioned, TiVo |

Thomas Hawk’s Media Center PC Hosted on Zooomr

2006 has turned out to be an experimental time for the movie industry, but clearly the studios are becoming more comfortable with the prospect of selling paid films over the internet. In the past, they’ve been reluctant to embrace digital downloads in large part because it’s hard to justify charging DVD prices for a download and they don’t want to give up the revenue that they make from selling DVDs. Nonetheless despite all of the developments we’ve seen, nobody has seemed to figure out a way to bring these movies to the couch where people actually want to watch movies.

TiVo is rumored to be in talks with Amazon, iTunes has their iTV product coming out, but that isn’t going to have a TV tuner involved, so the only real solution out there right now is the Microsoft media center PC.

This gives Microsoft a big advantage over any other platform out there and while to date the Media Center PC has largely been seen as an early adopter product, David H. Deans looks at this issue and asks if all of these downloading agreements may in fact benefit Microsoft’s Media Center more then anyone. In yet another well thought out post, he cites some figures by IDC that may indicate that the Media Center may finally be ready for prime time.

” - This year, 5.85 million media center PCs will ship worldwide. These systems will have the software and hardware necessary to qualify as media center units, with both the media center operating environment and combined TV tuner and remote control. The value of this market is estimated at nearly $6 billion, with the U.S. market accounting for 46.3 percent of the total.

- In the longer term, based on the most likely scenario, worldwide shipments of media center PCs will expand at a compound annual growth rate (CAGR) of 41.3 percent from 2005 to 2010, with the U.S. market increasing at a CAGR of 34 percent during the same period. In 2010, IDC expects worldwide shipments to reach 27.5 million units, with 9.5 million units absorbed in the United States, generating a worldwide revenue opportunity of $29.4 billion. The U.S. revenue opportunity in 2010 will be $12.6 billion.”

These numbers almost seem hard to believe, yet given Microsoft’s early entrance into this market and their commitment to the product, it really shouldn’t be that much of a surprise. A media center PC may be a little on the expensive side for most people, but if you are going to upgrade your computer already, it’s really not that significant of a cost and without the on going guide data expense, one can make an argument that it may in fact be more economical then even the cable DVRs in the long run.

Earlier this year, TiVo gave a presentation to the advertising community where they indicated that their internal research suggests that consumers really don’t want the ability to surf the web from their couch, yet I can’t help but think that with all of these download solutions coming to market, that their research may be a little off. Had I been in that focus group, I can tell you I definetely would have wanted that ability and without an all encompassing internet solution, TiVo could be at a disadvantage in this area, especially if the downloading business remains fragmented like it does today.

While TiVo may think that mainstream customers don’t want this functionality, nothing would please me more then to see them release an accessory product that consisted of a wireless keyboard, a wireless mouse and a linux based operating system where cutting edge consumers could pay to adopt the technology if they wanted. I’m not holding my breath that we’ll see this happen because by opening up their system, it will make it hard for TiVo to highlight things like TiVoCast, but with the exclusivity deals that the studios are cutting and TiVo’s lack of progress on this front, I think that there would be real value for consumers who want access to programming found anywhere on the net, instead of just the half a dozen or so partnerships that TiVo has thus far cultivated.