Wednesday, December 6, 2006

What convergence really means

First published in 2006 in Marketing Magazine, this is the first time I predicted the internet-enabled toaster.  I'm still firmly behind that prediction, but still waiting...

In the heat of the dotcom boom, back in 2000, convergence was the talk of the town.   The phenomenon mainly seemed to manifest itself in strange marriages of media, and many of the companies formed around these predictably failed.  But convergence is on its way back, and this time it’s working on a much more profound level that’s set to change the way we use much of the technology around us – from our TV to the humble washing machine.

The CueCat was a barcode scanner which enabled users to link to a website from a print article – a million of these gizmos were given away in the US, and the company made money from charging websites for the traffic it drove.  Another system, WebTV, let people surf the web on their TV – really slowly, and to the great irritation of everyone else in the house.  Microsoft bought the company for an estimated $500m. 

The problem with these gadgets was that the consumer gained no real benefit from using them.  Web TV was clunky, slow and lots of websites didn’t display properly, whilst the CueCat was just more trouble than it was worth, even if you happened to have a computer nearby when you were reading a magazine.  Bonkers stuff like this still comes out from time to time (Fridge TV anyone?), but with a few exceptions (cameraphones), the merging of devices isn’t what’s significant about convergence.

The real significance lies in what goes on behind the scenes.  Just a few years ago, the media ecosystem comprised disparate media – broadcast TV, radio, newspapers.  These rarely overlapped, either in the way they were consumed or delivered, and whilst you might have listened to the radio whilst reading the paper, any synergies between them were at the executional level – a magazine spin-off of a TV programme or a radio show moving to TV.

Now, the internet is starting to bring these together.  TV is being delivered over the internet – to set-top boxes, PCs, mobile phones and iPods.  4% of radio listening is now online.  Digital editions of newspapers add to their websites, and even outdoor media are increasingly digital – with Viacom adding 2,000 projectors and LCD screens to the London Underground network over the next couple of years.

CD sales are slowing as downloads grow in popularity, and DVDs will follow.  What’s happening is that all of these forms of content are now online, and we can access them via the internet through a variety of devices.  We can watch TV on a mobile phone, download music to PC, use a PC as a video recorder – all of these are windows onto a digital world.

Most of this though uses either wires or mobile phone networks to get the internet to the user, and this has constrained the flexibility, cost and ease with which the service can be delivered.  But this year, around 1.5 million wi-fi routers will be sold, mostly into the domestic market, and this is going to lead another step change in the pervasiveness of the internet.

Within the next few years, central heating systems, burglar alarms, ovens, lights and washing machines will commonly be connected to the internet.  Until now, the cost of doing this was too great, but with wi-fi chips now costing pennies, it becomes a simple matter to integrate these devices into the network – allowing you to control them and monitor their performance via a web browser.

Sceptics might say that this is just an example of technology without a use.  But whilst there will undoubtedly be more bonkers devices, the significance of a network that reaches into every device in and out of the home will enable the development of features and services we can’t yet even conceive.

Over the next few years, the distribution and consumption of TV, movies and music will change fundamentally as the internet moves in underneath them.  But the shift of media to being underpinned by the internet will be just the tip of the iceberg.

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