Consumer Electronics Industry Evolving into Service-Driven Model
Jan 6, 2005
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The consumer electronics (CE) market is transforming into an industry driven by the provision of services, according to a recent report from ABI.

The research firm says that two models have historically dominated the personal enjoyment of audiovisual media. Both models required the consumer to buy a piece of equipment that would reproduce content in a form that could be heard, seen, or both, it said.

On the broadcast side, consumers simply bought a radio or a TV, and services were free (excluding the UK, with its annual TV license supporting the BBC). For about a decade, this was a widely-accepted model, ABI says. Cable TV was something completely new, offering premium content for increasingly higher subscription fees.

On the other side were "packaged media." Consumers could buy a cassette player, a CD player, or DVD player, but they were useless until the user invested in the tapes or discs that held the content.

Today, according to Vamsi Sistla, ABI Research's director of residential entertainment technologies, the marketplace is witnessing a profound change, as widespread connectivity means that previously "packaged" content is increasingly delivered on a subscription or service basis. Now, says Sistla, even portable entertainment such as MP3 player downloads is turning into a service-driven business.

"We're not saying that packaged media are going to die out completely," notes Sistla, "but this is the way the industry is shaping up. And the larger message is that the CE industry must work more closely with the service-provider industry. They are both vying for the consumer's dollar, but they will both lose out if issues of standardization and obsolescence are not dealt with more quickly than they have been in the past."

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