Event Date: 7 May 2007
Answers to all your questions
By Jon Peddie
If you’ve never been to a Parks Associates conference, we recommend you do so at your earliest opportunity. But get a good night’s sleep beforehand. A Parks Conference is the most high-energy, high-content, and rapid information delivery system you’ll encounter. They hammer you with a team of four or five super-smart, super-informed, well-spoken analysts who deliver a non-stop rush of really interesting data.
At the recent conference in Santa Clara, the organization delivered no less than eight information-packed one-hour sessions beginning with an overview and then Broadband, TV, Home Networking, Gaming, Social Media, Digital Health, and Home Systems.
The big picture
The presentation were kicked off, as usual, by vice president and principal analyst Kurt Scherf, who unabashedly told the audience he wouldn’t get through all his slides and issued a torrent of facts and figures. He started out with the big picture: what are the opportunities in the move to a digital lifestyle? Scherf, like all the Parks folks, thinks about this a lot, and has put together a nice map of the universe as he sees it.
Figure 1. Identifying digital lifestyle opportunities. (Source: Parks Associates)
One of the treats of a Parks Conference is Michael Cai who studies the developments in broadband services, broadband technologies such as FTTx and broadband wireless, electronic gaming, and other value-added services. This guy must never sleep, and he has a passion for these topics, having spent a full day designing one chart which remarkably shows the state of the industry and where it’s heading.
Cai gave us his key takaways:
Scherf noted that several important milestones have been reached on the way to enabling true digital lifestyles in the home. He projects that as of the year 2011 there will be more than 900 million networked nodes worldwide. At that point, 39% of home networks will be designed to handle home entertainment multimedia.
He sees that market maturing to the point that it will be easier for people to tinker around with their own home networks without bringing disaster down on their heads. Unfortunately, that is not the case today as anyone with a home network finds out the hard way.
Today the home networking industry is plagued with a very heavy return rate. Nevertheless, consumers are interested in taking advantage of their home network for entertainment, and as they do so they’ve added on a lot of devices that are not recogizable to other devices on the network. In other words, the home networking market is going to have some challenges as a result of its success—how to deal with a large installed base of non-addressable home networking gear.
The next part of the challenge is equally clear. As the industry tries to clean up its act, a bunch of non-compatible -standards crop up. The conference addressed these problems and more over the day.
Home networking is a maturing market: 70% of Internet households connect through Broadband and four SPs split 67% of the market.
The Cable MSOs still dominate but the fiber deployments by the Telcos have gotten their attention, forcing them to rethink their strategies and offer solid advantages in bundling, etc., to gain ground.
Opportunities for competitive entrants: WiMax is particularly interesting with FMS potential.
The next-round competition will be about bundles and value added services. All national service providers have quad-play capabilities and aim to become “experience providers.”
Changing competitive dynamics drive Capex; that’s good news for network and CPE vendors
Service providers are becoming more proactive: they have to, facing pressures from not just in-kind competitors but also emerging OTT (over the top) providers such as Google, Yahoo, Vonage, eBay.
Service providers are going to be required take on more responsibility for home network management. Parks’ research indicates that most homeowners call their service providers for help. There is a business opportunity for trusted home network advicers.
Broadband is still a growing market, and in case of home delivery systems in the U.S., Cai offered the following data (Figure 2).
Figure 2. More than 53 million broadband households connected. (Source: Parks Associates)
Mobile delivery systems
Not limiting himself or the firm to staying at home, Cai also examined the mobile broadband industry, believing as many of so that TV on our phones is something that is going to happen and happen soon. He put together a great map of the choices and their future.
One of the major users of broadband, at home or on a mobile is gaming, and Cai has investigated that too. He and his team conducted a survey in late 2006 and found there was high usage of game play (Figure 3).
Figure 3. 3G and beyond—mobile broadband technologies are going to enable the same types of bandwidth outside the home as homeowners are coming to enjoy in the home. (Source: Parks Associates)
Cai has taken the trouble to look beyond the common assumptions about game play. He has concluded that the rapid diversification of the gaming market is not just core vs. casual. Instead, he says gaming is social, it’s also about community and communications. The change comes because gaming is no longer just about the content and it’s becoming an important family entertainment activity. Furthermore, he thinks the transformation of consoles is about being connected and moving beyond gaming.
Cai sees the emergence of new business models: free-to-play and/or microtransactions, syndication, game advertising, episodic games, virtual world, etc. Pervasive gaming is the new concept, and therefore he concludes, “Everybody needs a gaming strategy!”
What do we think?
A day with the Parks folks is well spent and they have an exhibition associated with the conference that gets bigger every year (in the past they’ve been able to squeeze it into a hotel; this year they had to use a convention center).
Parks conferences are not like most others. They speak with you, not talk at or down to you. It’s very comfortable and an environment that makes for learning and sharing.—JP