Thought Leadership: Keeping an eye on consumer desire while pushing digital entertainment forward

In our latest Media Playground Thought Leadership piece, Richard Bullwinkle, chief evangelist for Rovi Corporation, says that companies must grasp the opportunities presented by the shift in consumer spending to online services and connected devices.

As the companies in charge of selling cool new things to the consumer, technologists, device manufacturers and content creators have to balance their desires with what consumers want.  While businesses want to continue to push the industry forward and sell new products, they need to keep in mind that consumers generally don’t want to buy expensive new hardware, especially when it is forced on them and/or is too foreign to what they are used to expecting.

As companies push new technologies like connected entertainment, applications and even something as revolutionary as 3D, we must remember that consumers have ways in which they like to interact with technology, and we must make the transition to new innovations a smooth process.

For years the consumer electronics industry has counted on consumer purchase of new technology based on three key moments of adoption.

• First, when something wears out, consumers investigate the new technology available and price points, and figure out what the right replacement product is.  For example, someone whose DVD player stopped working might realise that the prices of BluRay players are compelling enough to make them upgrade. The new player plays the old content, and allows them to purchase content in the new format.

• Second, many consumers will upgrade before something wears out if the features of the new product are exciting enough to warrant discarding a perfectly good product.  An example of this is when a consumer decides to upgrade to a flat-screen TVs because it’s more attractive and takes less space in the living room.

• Third, some consumers will purchase a product in a completely new category, not replacing anything they’ve had before, if they realise it fills a need. An example of this would be the iPad, which sold a million devices in its first month. Consumers realised that they were using large computers for simple things like browsing the web, checking email and watching videos. With the added perks of reading books, and an affordable price many consumers saw something they didn’t even know they wanted.

Where businesses start to go overboard is when they don’t consider what consumers will have to do to get the new technology in their homes.

For example, Roger Ebert, movie critic from the Chicago Sun-Times in the US, recently issued a tirade against 3D claiming that while it might be a fun gimmick in the theaters, it usually detracts from the experience.

Ebert suggests that encouraging consumers to upgrade their home equipment to support 3D is counter productive to the goal of keeping the theaters relevant, and that retrofitting older content with hope that consumers will buy it again for their personal collection is immoral.  I believe he’s right.  Consumers are already frustrated with having to buy content several times on different platforms.

Someone who bought Star Wars on VHS, and then again on DVD, and perhaps again in HD certainly doesn’t want to buy it again in 3D and certainly not in a format only appropriate for one device.  And what can 3D really add to a great movie made in 1977?  It might appear to add profits, but it is more likely that the new format will frustrate fans with little wow for the money.

Similarly, expecting consumers to purchase equipment upgrades as connected services and media formats come and go is also going to push consumers away from adoption. CE companies need to adopt platforms that allow for software upgrades of equipment already in the home to extend the life of the hardware while also generating recurring revenue from software and content sales.

Though some CE manufacturers are very wary of upgrades in the field, this technology has been successful for years in many products.  TiVos and iPhones have allowed for significant upgrades from software downloads, and consumers are excited for the updates.

The upgrades allow customers to connect to new services and content and increase brand loyalty to the product manufacturer.  If the manufacturer receives a revenue share from the new services and content, then the profits come from that.  If not, making compelling and exciting software upgrades that offer new functionality will inspire consumers to pay for the upgrades.

Another example of the industry steering off course a bit is building connected devices that connect to everything.  Several devices I’ve unboxed recently came with a wall of icons representing all the services the device will connect to.

While allowing the consumer to customise and adapt the product is a marvelous idea, overwhelming a new user with all the things the internet can do is intimidating.  In the case of TVs, traffic, stocks and eBay apps shouldn’t be the first thing the consumer sees.  Rather, TV consumers probably would like apps that help them find and watch their favorite shows.  And while it might be cool that a device can connect to every content website on the planet, it might be better to connect to the big-name content, and then recommend the smaller sites that fit the person’s tastes as the device learns more about the things the person likes.  It may be the case that they end up watching only content from the cats-skateboarding.com, but most consumers watch significantly more content that is highly produced and comes from the media brands they know.

Finally, we must not force the consumer to pay with every mouse click.  Smart companies offer ad-supported or free trials.  LoveFilm gives you two weeks to get hooked.  Spotify asks the user for a few of their favorite bands and creates a custom radio station with occasional ads.

I believe that’s a much better introductory experience than paying a dollar for every song you want to hear.  And many studies show that once a consumer is comfortable with digital media, they will pay for it.  The consumer typically only needs a short period to get comfortable with the new paradigms and services.

In many ways, it seems that the consumers are more willing to adopt digital media than some of the CE companies and services that deliver that content.  Already consumer spending and advertising dollars are shifting to online services and the devices that connect them to that content.  Quite simply, the companies that fail to adapt to this massive shift in a way that appeals to consumers will be left behind.  On the contrary, the opportunity for adaptable companies and new innovative companies is mind-boggling.

Richard Bullwinkle is the chief evangelist for Rovi Corporation, creator of entertainment recommendation and discovery technologies like TotalGuide, and producers of massive amounts of metadata for movies, television and music.  Before that he worked on bleeding edge technologies at Macromedia, TiVo, Rio Audio and Mediabolic.