As Prepared for Delivery

Gary Shapiro
IBC Conference Keynote Address
Friday, September 7, 2007
Amsterdam, Netherlands


F...
challenges broadcasters. Viewers now expect the content they want, at the quality they

want, where they want it, when the...
phone screen. Seventy-seven percent of Americans are holding the future in the palm of

their hands in the form of a wirel...
In the mid-1980s and early 1990s, I viewed HDTV as inevitable. I urged Europe to start

with HDTV rather than use a two-st...
increased overall consumption of media and entertainment.



Third—homes will become media centers, constantly receiving c...
we see now. News, information, entertainment programming, even commercials will be

customized by and targeted for the ind...
industries can boast.



As human beings, we are invested in understanding and belonging to the culture and

events that s...
High quality broadcast spectrum. A pipeline into homes. Citizens’ need for local news

and information. A database of hist...
Here’s an example: Millions of people will attend the famed championship matches of

the World Cup this year. And yet bill...
target customers more successfully. The consumer electronics industry long ago learned

the value and benefits of a global...
for the future. I look forward to the opportunity in another 40 years to check in on the

accuracy of my predictions.
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As Prepared for Delivery

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As Prepared for Delivery

  1. 1. As Prepared for Delivery Gary Shapiro IBC Conference Keynote Address Friday, September 7, 2007 Amsterdam, Netherlands For 75 years, the consumer electronics industry has worked side by side with broadcasters. This partnership has informed and entertained consumers across the globe and together we have changed lives and made the world better, safer and smarter. From music and movies to politics and science, our industries enlighten, challenge, inform and delight. Let’s take a look: (Video) This year, IBC celebrates its 40th anniversary. Congratulations! What a terrific event. CEA also reached its 40th year milestone this year with our event, the International CES. In 1967, as today, technology enabled broadcasters around the world to create and distribute content. Forty years ago, when South African surgeon Christian Barnard performed the world’s first heart transplant, most people learned about it first through broadcasting on the radio, or TV. For many years, TV was the #1 source for information and influence. Today, things have changed. Broadcasters no longer enjoy a monopoly on content delivery. Ears and eyes once devoted exclusively to broadcasters are now being drawn in by new forms of content and new methods of delivery. Just two weeks ago IBM shared research that shows more consumers get information from computers than from television. In the 70s it was cable. The 80s- satellite, the 90s- Internet. Now it's wireless and fiber. New channels create new methods for people to consume news and entertainment. This
  2. 2. challenges broadcasters. Viewers now expect the content they want, at the quality they want, where they want it, when they want it. However, if broadcasters can learn to anticipate consumer demand, adapt quickly, and take advantage of their assets, there is a bright future ahead. Today, I will share some specific thoughts on how broadcasters can prosper in this age of rapidly changing technology. Devices and content are converging faster than you can say “iPhone.” Evidence of this new convergence abounds at the International CES, our flagship production and the world’s largest consumer technology tradeshow. Last year’s keynoters, Disney CEO Robert Iger and CBS head Les Moonves focused on how they are combining content and technology. Sony Pictures Television recently announced its plans for a major presence at the 2008 CES, where it will feature entertainment content along side its parent company’s electronics offerings. Beyond their core business of producing television shows for cable and network TV, Sony Pictures Television is looking to CES to exhibit the range and depth of their capabilities. We also just announced that Brian Roberts, chairman and CEO of Comcast Corporation, the largest provider of bundled cable, entertainment and broadband products in the US, will join the lineup of keynoters at the 2008 show. He joins the top executives from consumer electronics giants like Microsoft, Panasonic, and Intel. And NBC, one of the three major broadcasters in the US, has taken out exhibit space at CES. More and more content and home entertainment companies are converging at CES. They see opportunity. They’ve moved beyond the big screen in the theater and even the small screen in the home. They see the computer screen, the PDA screen and the wireless
  3. 3. phone screen. Seventy-seven percent of Americans are holding the future in the palm of their hands in the form of a wireless phone. In Europe, 478 million wireless phones are in use. That represents 478 million ways to connect with consumers, whether they are on the train, on their lunch break, or waiting in an airport. The same is true with PDAs, laptops, and other portable information and entertainment devices. The shift to multiple sources is next. In growing numbers, consumers are purchasing the tools they need for anytime, anywhere access to information and entertainment. Twenty- one percent of US households own a personal digital assistant (PDA). In Western Europe that figure is ten percent. Eighty-nine percent of US households own at least one portable device – a truly staggering figure. Seventy-six percent of US households and roughly 55 percent of European households own computers. One recent study says that nearly half of Europe is regularly watching TV on the Internet. The study also suggests TV users are starting to embrace other related services that can be accessed through IPTV set top boxes. For instance, 57 percent of respondents said they want the ability to go online via the TV set during a live broadcast. Thirty-five percent of viewers want the ability to pause, fast forward or rewind live broadcast programming. Until now, the ability to shift that entertainment content in place and time has lagged behind. For broadcasters, this represents both a challenge and an opportunity for the future. As president of the Consumer Electronics Association I enjoy unique access to some of the great innovators and innovations of our time. Every year, at CES, I see a glimpse of what the future will look like-not only in the products that are introduced, but in the ideas that are shared and the trends that emerge year after year.
  4. 4. In the mid-1980s and early 1990s, I viewed HDTV as inevitable. I urged Europe to start with HDTV rather than use a two-stage process. I helped oversee the US evaluation lab and helped create a model HDTV broadcast station. Given European reluctance, I predicted that the US would lead the world in HDTV. I pushed for a deadline of the 1996 Olympics as the latest possible date for the first HDTV broadcast. I cautioned against advocates of delay—including broadcasters—because alternative media would more quickly erode market share from broadcasting. In the US, HDTV was delayed during testing and design phases, and further delayed by opponents who questioned the standard. Not surprisingly, alternative media have quickly stolen market share from broadcasters. And certainly HDTV is a runaway hit with American consumers. One hundred seventy-one million sets will be sold by the end of 2010. I was right about HDTV and I remain passionate about it. I met my wife when I overheard her describing HDTV and I want my tombstone to have the aspect ratio of 16 x 9. Now, I’d like to share a few more predictions for the future. First, HDTV will continue to spread to homes throughout the US and Europe. The technology itself will advance significantly in the next 40 years with even greater picture and sound quality. Right now, scientists are working to develop ultra high definition technology that has 16 times the resolution of HDTV. Today’s HDTV will soon be called simply “TV.” Second, flat screen TVs will be everywhere, literally. In every room of the home, every classroom, throughout shopping malls and public buildings. Goodbye to wallpaper and interior paint. Hello to “video walls.” This pervasive media environment will lead to
  5. 5. increased overall consumption of media and entertainment. Third—homes will become media centers, constantly receiving content from a variety of different platforms. Television will be interactive, replacing an old, linear system with a two-way interactive system. In the US, CEA waged a battled to enable consumers choice in set top boxes to access content. The fruits of our labor will be realized in the future, when consumers will live an on-demand life and will not perceive the difference between IPTV and traditional broadcasting. The television experience will also bring together radio, SMS, 3G, video conferencing, Internet chat rooms and web cams. TV viewers will embrace a multi-tasking, multi-media view of the world as a matter of course. Consumers will one day enjoy a seamless, media-rich life. That day is now on the horizon. Fourth—the next Internet will evolve to allow a variety of exciting new applications, particularly in the mobile space. We’ll see all sorts of products with their own IP addresses. In fact, IP-ready cars will be standard issue. Consumers won’t just have access to the Internet from their cars-their cars will have access to the Internet. Always on, always connected-sending and receiving not only mobile entertainment, but important safety information, like traffic and weather patterns, and real-time diagnostics on the car’s internal systems. More developments in sensory devices, opto-electronics, nano- tecnology and biology will allow phenomenal new devices and uses of the Internet. We are truly at the dawn of this digital age. And my fifth and final prediction-information will be much more customized than what
  6. 6. we see now. News, information, entertainment programming, even commercials will be customized by and targeted for the individual. The traditional concept of “mass” media may well be replaced by “my” media. The future may seem like a brand new world and indeed it will be. But there is good news for broadcasters who are willing to seize the opportunity to turn the digital world in their favor. And the first step to doing that is to consider your assets: As broadcasters, you own the highest quality spectrum there is, able to reach almost every household by geographic region. This enormous bandwidth is more accessible than any other network owner—including cable, satellite and mobile. None is as ubiquitous as the broadcast spectrum. For competitors, updating their networks requires an enormous investment in physical infrastructure, but not for you. So while you may be facing competition from these new technologies, you have something they will never have. As such, you must find new and creative ways to take advantage of this scarce resource in the form of new services to consumers. No other market has a direct pipeline into people’s homes like broadcasters. Across the globe radio, then television created intimacy in the home. It’s where people not only expect to receive their news and entertainment, it’s where they eagerly anticipate the products of broadcasters like you. There is no ticket to ride or box office fare, no WiFi access or 5-minute download required. Just a touch of the “ON” button and consumers are automatically dialed into your offerings, from the comfort of their own homes. Broadcasters have direct access to people where they live, an advantage that few other
  7. 7. industries can boast. As human beings, we are invested in understanding and belonging to the culture and events that surround us. As global citizens, we need to rely on a variety of media to collect information about the world. However, this innate urge to know intensifies when we're talking about our own communities. Who better to distribute local news, weather, and sports than broadcasters? Consumers will always want this type of information, and broadcasters are uniquely able to make local news and events available for citizens. Broadcasters provide our connection to community, to government, to local culture and sports. This connection to the world outside our front doors is perhaps the most important connection we have as a people. And as long as broadcasting is the most efficient way of reaching mass audiences with emerging news, live entertainment and sports, you’ll continue to have a slice of consumers’ appetite for media. Over sixty years of delivering daily news, sports and culture means that broadcasters own the footage to our collective history. Events like the World Cup in Switzerland in 1954— the first ever to be televised—or the fall of the Berlin Wall in 1989, create what amounts to a treasure trove of archival content for broadcasters. By converting this content from analog to digital and then indexing, cataloging and tagging these materials to make them easily searchable, broadcasters can create commercial value in their assets. Footage that may have been long forgotten can now be available in a variety of formats-small screen for use on a handheld device, full resolution for HDTV or small clips for use in documentaries, science programs and investigative reports.
  8. 8. High quality broadcast spectrum. A pipeline into homes. Citizens’ need for local news and information. A database of historical footage of important moments throughout history. These are all significant assets that belong almost exclusively to legacy broadcasters. But let’s be honest: the broadcast industry, both US and abroad, is challenged. In the last 5 years, technology has fundamentally changed how content is delivered. Consumer behaviors have rapidly evolved, and other markets are starting to eye the broadcast spectrum that has traditionally been yours. The current environment may have you questioning-what is the future of broadcasting? As the title of this session suggests, will you survive the challenge or embrace the opportunity? Harvard Business Professor and best-selling business author Clayton Christianson describes the “Innovator’s Dilemma,” where incumbents lack incentive to create a new business model because it creates opportunity for competitors. Similarly, the noted economist Joseph Schumpeter has theorized about “creative destruction,” wherein innovation will destroy the market for your own product. The temptation is strong for the incumbent, having long enjoyed a monopoly, to rest on old technology. In the case of broadcasting, a failure to innovate will lead to the death of your company, or worse-- your entire industry. Innovate or die—a catchy slogan, but how can this be accomplished? How can you predict what the market or probability of success will be for emerging technologies? That may be impossible. But the key to the future of the content creation, management and delivery industry is to understand consumer trends. Adapt to what consumers want.
  9. 9. Here’s an example: Millions of people will attend the famed championship matches of the World Cup this year. And yet billions more around the world will tune in through the media-radio, television and the Internet. In 2006, the official website for FIFA (Fee-fah) experienced a tremendous spike in user traffic during the tournament—4.2 billion page views—as fans went online to find real time information on scores, statistics, player information and a wealth of other content. This consumer demand for information beyond what is offered in a traditional broadcast is a terrific opportunity for broadcasters to develop services that keep viewers on your network. Mobile technology is another opportunity to keep people from leaving your network. Some 500 million Europeans use wireless phones, many of which already include the ability to stream video. Recent developments in Mobile TV allow viewers to receive live digital TV broadcasts on handheld receivers as they travel through many European cities, with many more coming online all the time. Technology to enable mobile broadcasting is ramping up at a phenomenal rate in Japan, and ATSC in the US has an aggressive project to develop mobile/handheld capability, both of which make use of spectrum already used by broadcasters. By developing compelling content in a variety of formats, broadcasters can position themselves to take advantage of consumer demand for anytime, anywhere information and entertainment. Same content, same spectrum - more applications and more eyes. Even better—digital delivery systems can give you a much clearer view of the actual market potential for your content. New capabilities can store and analyze the data consumption of your audience. That’s information that can be cultivated and used to
  10. 10. target customers more successfully. The consumer electronics industry long ago learned the value and benefits of a global market– with digital capability, broadcasters can do the same. Broadcasters also possess the ability to make anyone well-known. Today’s reality and “star” contests reflect such use of this asset, synched in with viewer voting done wirelessly and by computer. Another opportunity is to break the mold of 30-minute programming. Why do all news shows use the same timing formula? Does it really work that well? Broadcasters should also encourage consumers to record, use, timeshift and placeshift programming. See new consumer technologies like the Slingbox and Tivo as friends that will draw more eyeballs to your programming. This allows viewers to watch what they want, when and where they want it. A celebrated philosopher once posited that “the bravest are surely those who have the clearest vision of what is before them, glory and danger alike, and yet notwithstanding go out to meet it.” Broadcasters may never again enjoy the media monopoly of 40 years ago. But the winners in the next 40 years will be those who have the clearest vision--they are able to identify potentially disruptive new channels, recognize consumer trends and yet, go out to meet the challenge. They’re willing to invest both time and money to take advantage of their existing assets, develop new content and seek distribution partners to quickly deliver what consumers want. There is indeed a bright future for the broadcasting industry for the next 40 years. And today, as in 1967, the consumer electronics industry stands ready to help broadcasters create and distribute the information and entertainment that shapes our world. I appreciate the opportunity to be here today to share my thoughts
  11. 11. for the future. I look forward to the opportunity in another 40 years to check in on the accuracy of my predictions.

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