Last Friday at CES, Variety and Deloitte sponsored a panel titled "The Great Rewrite: How Digitization and Changing Consumer Behaviors are Revising the Entertainment Industry's Script." The long and short of it: Deloitte has an interesting study on just how heavily consumers, especially young ones, are switching to consumer media online and on their phones, but the panelists are very concerned about their ability to make money from that behavior.

You can read Variety's write-up of the panel here.

And if you can watch a video of the entire panel here:

There wasn't much in the way of new technology at the Adult Entertainment Expo this year. With the industry suffering as much as, or maybe more than, others during the recession, it was, as Sean Devlin a spokesperson for event organizer AVN, said, "a year of sticking to the tried and true."

But there was one booth showing off a hot new technology, and it was the same one on everyone's lips at CES: 3-d.

Glacier Media Systems appears to be the first company adding that extra dimension to adult entertainment, as it showed off a movie using one of the cutting edge 3-d TVs and shutter glasses that were all over CES. What does 3-d add to the experience? Let's just say that when certain women in the film got excited, certain liquids appear to be "flying at you," so to speak.

A Glacier rep noted that the film was being demo's via a media server attached to a television, but said the company hopes to release its first adult film in 3-d on a standard DVD that anybody -- or any store with private booths, I suppose -- with a 3-d enabled TV will be able to play.

You know it's a bad economy when the adult industry is experiencing shrinkage.

At the Adult Entertainment Expo, the annual confab that runs concurrently with the Consumer Electronics Show in Las Vegas, there were fewer exhibitors, fewer fans, and a lot less glitz.

According to a rep for AVN, which runs the show, the exhibitor count is down about 18% from last year. Attendance by fans, who attend some days of the show, with the rest open only to industry pros, won’t be tallied until after the show is done, but is likely down as well.

Organizers seemed glad they were able to keep all of the industry’s heavyweights, such as Vivid Video, Wicked Pictures, Digital Playground and Hustler, in attendance.

Joy King, VP of special projects at Wicked Pictures, estimated that industry revenue is down more than 20%, which has led to slumping profits, layoffs, and even Hustler topper Larry Flynt’s recent, semi-satirical request for a federal bailout.

“Usually we’re recession proof,” she explained. “In my 24 years in the industry this is the first time I’ve really seen us being effected.”

The porn industry has always been on the cutting edge of technology, but there was little in the way hot new tech on display for fans. While the industry still makes significant amounts of money online – much more than mainstream media – King noted that the amount of free adult content online is likely hurting the biz as fans look to cut back on spending.

Though meetings were still happening, parties being thrown, and the annual AVN Awards taking place this weekend, there wasn’t too much energy on the show floor, with most booths significantly toned down and even muted.

There was even a whiff of desperation as some adult film companies used the show, which is mainly a place for companies to promote their products and stars, to do what’s not allowed: sell DVDs. Here’s the innovative way that a few exhibitors found to get around that rule:

  

Did the Digital Entertainment Content Ecosystem group hold a press conference at CES, and simply forget to come up with anything to announce? 

One tradition of CES keynote addresses is bringing in "guest stars" to help promote certain strategic initiatives or new franchises. Sir Howard Stringer's CES keynote on Wednesday included Jeffrey Katzenberg of DreamWorks Animation and John Lasseter, the creative head of Disney and Pixar animation.

Katzenberg was there to plug 3-D in the cinema, and show a clip from DreamWorks Animation's forthcoming "Monsters vs. Aliens" that featured a 50-foot woman and the destruction of the Golden Gate Bridge. (Sony makes cameras often used in 3-D production, and its 4K digital cinema projectors are just starting to be used in theaters to project 3-D content.) Katzenberg said there have been two important technological revolutions in the cinema so far -- sound and color -- and that 3-D would be the third. Here's the audio of his appearance...



Lasseter's job was to emphasize how important Blu-ray discs are to Disney and Pixar, allowing the audience to appreciate each precious pixel of their animators' digital artwork. He also mentioned that Blu-ray discs might soon be a way of distributing 3-D titles to the home.

On Friday afternoon, Variety had an opportunity to sit down with four studio home entertainment presidents to talk about their impressions of this year’s trade show. Among the topics: 3-D content in the home, Blu-ray, digital rights management, Internet connectivity built into TVs, video on mobile phones, and consumption of physical media versus digital downloads. “We think consumers are still voting for physical media,” said Disney’s Bob Chapek.

The execs also suggested that home entertainment products may do better than expected in a downbeat economy. “Home entertainment can be counter-cyclical,” said Chapek. Sony Pictures’ David Bishop posited that “people are cocooning more than ever.”

The discussion was organized by the Digital Entertainment Group, and also included Mike Dunn of Twentieth Century Fox Home Entertainment and Craig Kornblau of Universal Studios Home Entertainment.

Chapek was the first to talk, followed by Kornblau, followed by Bishop. The MP3 audio file runs about 25 minutes. (Click play below.)

I (Ben Fritz) spoke to Microsoft entertainment and devices president Robbie Bach at his company's booth to go a little more in depth on his company's entertainment business, particularly videogames and the Zune music players and online network, in the face of a recession. He was largely upbeat (shocker!), but opened up a bit about how the slowdown is impacting the mix of what Microsoft sells. In addition, we talked about how his company is doing in its efforts to expand its audience to families (and other people mostly buying Wiis), music videogames, and how online is effecting the Xbox business's bottom line.

How do you see the recession impacting the videogame business? You have growth rates other media sectors would love, but the holidays were certainly down from earlier this year and last year.

I think what’s happening is people are still buying consoles, they are excited about consoles and gaming. They want to be entertained even when the economy is not entertaining.

What we will see and we saw a little in the December period is that when people go into store to buy a console, if last year they were buying five games, maybe this year it’s four. We do see people making value choices. The other thing I think we see happening is AAA content is still selling exceptionally well, but as people buy a little bit fewer games, the stuff they’re not buying quite as much is A titles or portfolio titles from the previous year.

So for Microsoft, are you seeing the $200 arcade version of the Xbox 360 perform proportionately better in the slow economy than it did in the past?

We don’t break those figures down, but we have seen the $199, 179 Euro product do very well. It varies a little by retailer as well. At a place like Wal-Mart, the arcade edition does a little better than some other places. At Gamestop, the arcade does very well, but it’s a different customer mix where more are looking for a hard drive [only included in the $300 pro and $400 elite editions].

Reaching the family audience was a big push for Microsoft this fall, from the redesign of Xbox Live to new games. While the redesign seems to be doing fine, I haven’t seen much sales momentum for “Lips” or “You’re at the Movies.” Do you think you’re succeeding at expanding your audience?

It’s still a little early to tell. We have to go survey. It’s a research project. I will tell you anecdotaly I know the audience is expanding quite nicely. The two areas helping us expand the fastest are music titles, like “Lips,” “Guitar Hero,” and “Rock Band,” and the second area is the Netflix arrangement [Xbox 360 owners can now stream Netflix movies through the console]. A number of people have come up and said, “Wow, Netflix is so cool, that’s how I was able to convince my spouse we need an Xbox and put it in the living room.” That expands the demo to people who aren’t traditional gamers, even if they start to watch movies, they end up playing games.

You mentioned the importance of the music category, but it seems like “Rock Band” and “Guitar Hero” sales are slowing. Do you agree and how is that impacting you?

Music is still very strong. You’re not going to see the same growth this year as last year because of where the business is. But I think category is still very, very strong. It has a visceral appeal. We see it in the download numbers on Xbox live. We’ve had an amazing 60 million songs downloaded.

Between all those music downloads, the games and videos available to download that you’ve said are growing in popularity, and the new advertising opportunities on Xbox Live, is that business becoming meaningful for you compared to consoles and retail games?

Xbox Live is a good business for us and a good business for our partners. If someone says, “Walk me through the contributions to your P&L,” I’d say [in order] consoles, plus or minus, are break even; software, both first party and third party licensing, are very good; peripherals are very good; and finally Xbox Live is a good business.

Can you tell me a little more about “Kodu?” Is it a game or an application?

It starts as a set of tools. It’s a “Hey you can create your own environment!” product. But then once you create the game, now it is a game and you can share that with other people and play on Xbox Live. So this is both things.

But it doesn’t ship with a full campaign story mode? Because the obvious comparison is “LittleBigPlanet.”

I don’t think it’s a lot like “LittleBigPlanet.” It’s a new game every time. It’s a development environment, in which you can download and share.

And “Kodu” would be something that users pay to download on Xbox Live? Would there be a full social network where you rate user created games, tag them, and so on?

It’s a little early to talk about. We’re still developing how that plays out. The [Xbox Live] community channel as a whole has that rich environment where  a lot of feedback. The opportunity to get feedback on variety of different games is a hallmark.

Keep in mind the audience we’re targeting it to initially probably ends up being a very young audience. People who are interested in some fun learning activities. What I’m interested in is whether it catches on with the broader Xbox audience… How far into that audience does it go? Would Ben want to be creating a game?

In the keynote you touched on Zune Social, the online store and environment, but not the devices. Are you trying to separate them more so you can grow Zune Social apart from how the players perform?

It’s not a separation. We continue to work on devices, build devices in that ecosystem. Certainly, we recognize music is a genre that isn’t just isolated to these devices. You have it on PC, Xbox, on mobile phones. We do think Zune Social could play a role in that.

Ask a studio home entertainment exec what the big trend of this year's CES is, and the near-universal answer is "3-D in the living room."

The USB flash drive is a pretty passé piece of swag at CES, but Dolby Labs found a new twist for its 2009 booth giveaway: a 1 gigabyte USB drive integrated into a rubber bracelet. It's a storage device... it's a fashion accessory...

The unspoken subtext of this year's CES is the drastic shrinkage in the number of retail outlets for home electronics. 

Content in 3-D is one of the big themes of CES this year... and that includes dimensional videogaming.

These visitors to the Nvidia booth had waited in line to play "Guitar Hero" while wearing active 3-D specs. Nvidia sells a $199 package that includes the glasses, an infrared emitter that syncs them to the image on the screen, and the required software and cables.

All you need is a PC and a 3-D capable TV, from someone like LG or Mitsubishi. Nvidia's system automatically converts any of 350 existing videogames to 3-D, on the fly.

Meaning no offense to my friends at G4, I was pleasantly surprised at the caliber of power execs who came to their "Best of CES" showcase and party last night (that's "Attack of the Show's" Kevin Pereira" hosting on the right). If CES had a Hollywood party, this was it.  Amongst those I saw at the event:

-"Pirates of the Caribbean" and "CSI" producer Jerry Bruckheimer

-Google CEO Eric Schmidt

-Comcast CEO Brian Roberts (OK maybe he's not a surprise, since Comcast owns G4)

And apparently there were even more who I didn't see. Speaking to G4 president Neil Tiles near the end of the party, he told me Lionsgate CEO Jon Feltheimer and MGM CEO Harry Sloan stopped by as well.

Seems like G4 has got the connections and or the sway to get all the big names from the entertainment biz who wanted to see the hottest gadgets at CES -- and see each other and be seen, perhaps -- to come by its shindig.

Blu-ray sales could triple or even quintuple in 2009.

That was the word from analysts at the Blu-ray Disc Assn.'s Consumer Electronics Show gathering, one of the very few events at the confab with positive news to showcase.

Coming off a year in which Blu-ray domestic disc sales more than quadrupled to 24 million and player sales roughly tripled to 10 million, industry reps were even more bullish on '09 despite the economic downturn.

Speaking on a panel, analyst Tom Adams of Adams Media Research said disc sales would double or triple this year, taking them to more than 50 million. Richard Doherty of Envisioneering was even more bullish, predicting disc sales would grow by a factor of five or six, potentially taking them up to 150 million by the end of the year.

That's very good news for studios, which saw the overall homevid biz decline 5.5% last year despite Blu-ray's growth. The question for this year is how much standard DVDs will continue to decline and whether Blu-ray's expansion can make up for some or even all of that drop.

The holidays, in particular, proved strong for Blu-ray, with a full 8 million discs sold, fueled in large part by the drop of player prices to under $200. Warners' "The Dark Knight" was the first Blu-ray title to exceed 1 million units sold in the U.S.

Sezmi is yet another company trying to build a next-generation set-top box that blends broadcast, cable, and Internet video. Their hope is to market the box to telcos that want to get into the home entertainment biz. The company hasn't yet announced any customers, but in November it raised  another $28 million in funding (and also cut 20 percent of its staff to deal with the economic downturn.) 

John Modell knows a bit about high stakes ball games: up until 2004, his family was the majority owner of the NFL's Baltimore Ravens, and Modell wears a flashy championship ring from Super Bowl XXXV. 

Even with consumers snapping up millions of video-capable cell phones like the BlackBerry Storm and Apple iPhone, the delivery of video content to their small screens is still a nascent business.

The two main problems are that there’s no single format for video that works across all phones and mobile carriers, and revenue models are still in flux.

Most media companies bringing in money today are relying on lucrative deals with mobile carriers, who in the past have been willing to pay up-front licensing fees and guarantee minimum annual revenue numbers, in order to offer video content to subscribers on their phone’s “deck,” or main menu. Those deals are becoming increasingly rare, as more phones hit the market that can pull video directly from the Internet, and as consumers hunt for a broader range of content than the carriers ever offered.

“I like to say that mobile video is like a crab,” says Frank Barbieri, chief executive of Transpera, a San Francisco-based start-up that works with media companies to deliver video to phones. “It’s hard to crack, and it has all these little compartments, but once you get into it, you find all this really sweet meat.”

Some media execs at CES have the sense that the audience for video on phones isn’t big enough yet. “The numbers aren’t there,” says Bill Bradford, chief product officer at Fox Digital Media, who also expressed concern that content protection, or digital rights management, isn’t yet strong enough on mobile phones. “It’ll take a few years.”

But working directly with mobile carriers, MTV Networks served up “nearly 100 million video streams in 2008, and that was double the number from the year before,” says Greg Clayman, executive vice president of digital distribution. But Clayman acknowledges that carriers are hoping to move toward delivering more ad-supported content, as opposed to subscription-based content, and that “there’s no agreed-upon ad formats yet.”

Samir Ahuja, a vice president at QuickPlay Media in Toronto, says his company is experimenting with 5-to 10-second ads in mobile video, delivered as pre-roll, post-roll, or interstitials. Transpera serves up 15-second ads before videos begin playing; the company is working with media clients including Disney, Sony Pictures, AccuWeather, and CBS.

Most mobile video execs envision a mix of premium and ad-supported content. “Consumers will pay for some content, like live sports, and series they get into, and feature films,” says Barbieri. “Music videos, and of course, sexy content, too. But you’ll also see the rise of free, ad-supported content on phones.”

But an ad-supported world has its perils; the phrase “earning digital pennies instead of analog dollars” was tossed around at the Digital Hollywood conference today, which runs in tandem with CES. With video on the Web, media companies are vexed that viewers won’t tolerate much advertising, making it hard to earn as much as they do from traditional TV broadcasts. They fear the situation could be worse on mobile phones, where consumers – for the moment at least – seem even less tolerant of advertising than they do on a PC.

“What the right model is for mobile video is still T.B.D.,” says MTV’s Clayman.

As reported by Michael Schneider in today's Daily Variety, ABC-Disney TV president Anne Sweeney discussed in her CES speech today that her company may be working with Intel on new interactive widgets to go along with two popular shows: "Good Morning America" and "Lost."

But sitting in the audience, it was hard to miss that this was less an announcement than a simple possibility, as Sweeney herself repeatedly emphasized.

Inte'ls new chip "may create opportunity for content providers and CE companies to work together to connect people more deeply to content they watch," she said. "It may also open doors to connect with our advertisers in new ways... At ABC we could potentially focus on two franchises: 'Good Morning America' and 'Lost'... It might be possible to help viewers get more information on featured stories [on "GMA"]... We might also look to develop an app specifically for the series finale of 'Lost' next year... Using the Intel widget for our series finale could be a great way to give our fans a fantastic viewing experience." You get the picture.

In other words, don't necessarily count on this all happening. Sweeney merely wanted something specific to discuss beyond general pronouncements about the impact of digital technology on her business. And/or she may have had some reason she wanted to pump Intel's new chip and its ability to create content "widgets."

Talking about the big picture, Sweeney said that that digital technologies are making her company’s networks less important as destinations. “ABC, ABC Family, Disney Family are not just network brands, they’re strong content brands that can live and thrive on any device,” she told attendees.

She repeatedly discussed the imoprtance of good user interfaces, mentioning Apple and its iPhone as an example (no surprise since Apple CEO Steve Jobs is the biggest individual shareholder of Disney).

But while she was optimistic about all the technological possiblitlies she was discussing and acknowledged that consumer habits are indisputably changing ("People no longer way for their favorite shows," she stated at one point. "Shows wait for them."), Sweeney was refreshingly frank that the economics are much less certain than the viewership.

"We haven’t seen yet how much revenue we’ll make from it," she said of the digital revolution ongoing at CES. "But every indication is the more access consumers have the more content they consume. Working together can create more relevant functional and profitable ways for people to get the content they crave."

AT&T is the latest company to offer a satellite TV system for consumer cars and trucks. Dubbed CruiseCast, it launches nationally this spring. Installing the gear will cost about $1300 (not including the screens), and subscribers will pay $28 a month to get 22 TV channels including CNBC, Nickelodeon, the Travel Channel, USA, and Comedy Central. 

During Sony chairman Howard Stringer’s keynote this morning at the Consumer Electronics Show, Tom Hanks got most of the laughs, mocking the speech that scrolled by on the Teleprompter, which was peppered with plugs for Sony products. (Hanks was at the Vegas gadget fest to promote next summer’s Sony Pictures release “Angels and Demons.”) But Stringer earned a few chuckles of his own when he professed Sony’s undying devotion to open standards.

“Open technologies are winning the game,” Stringer said, listing openness as one of seven strategic initiatives for his media and electronics conglomerate. “Closed systems are being disintermediated.” 

This, from the company that has embraced and tried to profit from closed, proprietary systems and formats from the Betamax tape to Digital Audio Tape (DAT) to the MemoryStick to Digital8 to the Ultra MiniDisc (UMD), a small silver disc that once held movies that could be played only on Sony’s PlayStation Portable gaming device.

But there was Sir Howard, claiming that the rise of Linux, an open source computer operating system that has been growing rapidly, has persuaded Sony that openness is the wave of the future. To techies, openness means making it easy to write new software for a device, move content around freely, and generally create large ecosystems of developers and partners who contribute to a technology's evolution.

“Consumers expect choice, and they expect services to work with any device,” Stringer told the assembled throng.

A few hundred yards away, on the trade show floor at the Sands Expo, a small New York start-up company called Boxee was showing off its software, intended to make photos, music, and Internet video content easier to navigate on a television, using a remote control. It can stream video from services like Hulu, Joost, and CBS, among others.

The software, CEO Avner Ronen explained, is open source, so that anyone can add features to it. He said he hoped the software would turn into “the Firefox of the connected home,” referring to the popular open source browser.

“The only way innovation will happen,” Ronen said, “is if something is open to developers.”

Boxee’s software already runs on Macintosh computers, AppleTV devices, and Linux computers. (A Windows version is in the works.) Ronen said the company had recently been trying to talk to Sony about getting the software to run on the company’s PlayStation 3 game console, but hadn’t been making much headway. “They’re not sure whether they like the idea, and they don’t know how it will affect their business model,” Ronen explained.

 Perhaps not everyone at Sony has gotten Sir Howard’s memo about openness.

Two other interesting things about Boxee...

First, it integrates content sharing and recommendations in a very prominent way, so that you can let friends know what you’re watching via Facebook or Twitter. (That's the above screenshot.) Second, one way they found people to help them do demos at their booth was by asking their users to submit videos talking about Boxee. The best videos earned their creators a trip to CES. Jeremy Tanner, pictured at left, was one of Boxee’s demoers.

Now that’s openness.

 

 

I won't be able to transcribe my interview with Microsoft entertainment president Robbie Bach (who oversees videogames, amongst other things) until tonight, most likely. But between my talk to him, Microsoft's keynote last night, and Sony's keynote today (which included a section with Playstation topper Kaz Hirai talking videogames), I got a few interesting statistics worth comparing:

-Number of worldwide members of Microsoft's online videogame service Xbox Live: 17 million. Number of registered accounts on Sony's competing Playstation Network: 17 million. (Even though there are substantially fewers PS3s on the market than Xbox 360s, Sony does have the advantage of people going onto PSN from the PSP. In addition, PSN is free to play online, but Xbox Live costs money, though anyone can "join" just to browse downloadable content)

-In the last three months of 2008, Microsoft added 3 million Xbox Live members. In December, Sony added 2.1 million Playstation Network members.

-Playstation Network users have downloaded more than 330 million pieces of content. Microsoft's content downloads went up 70% since it launched the new version of Xbox Live in November (not comparable, I know)

-Over 25 million "Halo" games have been sold and the average player spends more than 150 hours online (given that some people don't play online, that means some people have played a lot more than 150 hours. wow.)

-More than 1.3 million "unique users" have played "LittleBigPlanet." Note that this is not the same as Sony saying it has sold 1.3 million units of the game. There are more than 300,000 user-created levels already. It would take two straight years, non-stop, to play them all.

-Over 80% of all "Guitar Hero" and "Rock Band" downloads have been on Xbox Live, which means only about 20% are on Playstation Network. Microsoft says it has sold over 60 million song downloads. Assuming that just an infinitismal number of those are for new karaoke game "Lips," that means Sony has sold about 12 million songs on PSN for those two franchises (and probably a few million more for its "Singstar" karaoke franchise).

Companies like Vuzix  and Myvu  have been coming to CES for several years now, peddling wearable digital displays that look like something stolen from Robocop's bedside table. The idea is that rather than watching video on the tiny screen of your iPod, you can don a pair of shades and see a much bigger image -- something that looks like a 50 or 60 inch display. The price point ranges from $200 to $500, and the glasses are usually powered by AA batteries.

An Irish company is demoing a voice-driven remote control here, the Amulet Remote. It should be on sale in March, for about $399.

Sony CEO Howard Stringer has seven imperatives for providing the ultimate consumer experience. And, perhaps more importantly, seven signals of where he wants to take his conglomerate:

Sony Corp.'s CEO didn't much mention his company's ongoing problems, from slow electronics sales amidst a recession to the struggles of the Playstation 3 against the Wii and Xbox 360. Coming after a speech from Consumer Electronic Assn. president Gary Shapiro in which the trade group chief predicted the industry will contract .6% this year, it was certainly the hottest question.

Instead Stringer made only brief mention of the immense challenges he faces. "I wish I could tell you im recession proof," he noted near the top of his 90 minute-plus address (which had many in the audience starting to flee by the hour mark). "I can't bring you immediate news of a turnaround. I can promise you the CE industry will ultimately prevail."

There was little in the way hot how new products announcements or grand strategic moves. The only major pronouncement Stringer made was that by 2011, over 90% of Sony's products will connect wirelessly to the Internet and each other.

Instead he went through a number of Sony product lines, explaining how they fit his seven pronouncements. Those include TVs, videogames, Blu-ray discs and player, and cameras

There were several products in the works previewed by Stringer that wowed the crowd. Those included a paper thin, flexible, hi-def display screen and a wi-fi alarm clock that accesses new music, weather, news, video, and pretty much everything you could want in the morning.

In an attempt to spice things up, Stringer's keynote was celeb packed, starting with a hilarious Tom Hanks, who was on hand to promote next summer's Sony Pictures release "Angels and Demons" but spent most of his time mercilessly mocking the telemprompted speech written for him, as he put it, "by a lowly Sony marketing executive."

While regularly making fun of the fact that he was supposed to claim he used Sony products in every possible aspect of his life, Hanks got his biggest laugh when delivering a line about how he likes to read books. "I download books onto my reader. The Kind-- uh, I mean, the Sony Reader. Which is a fine product in its own right."

At another point, he was rattling off all the different Sony products he allegedly sees while at work: "I show up on set and I see the name on the camera: Sony... Really? I have yet to see that. Hey, they write the lines, I tell the truth."

Stringer took it all in stride when he joined Hanks a few minutes later. "I took a risk. It failed."

Other celebs who stopped in included Disney Animation guru John Lasseter, who promoted Blu-ray; DreamWorks Animation topper Jeffrey Katzenberg, who Stringer intro'd as "the John the Batist of digital 3-D" and, naturally, talked about how Sony digital projects help with the new filmmaking technology his company has adopted; Reggie Jackson (Sony is the exclusive technology provider at the new Yankee Stadium); Usher, just because he's a popular singer; and Dr. Mehmet Oz, Oprah's pal who has his own syndicated show coming this fall and put a tape measure around Sir Howard's waist.

The result: 39". But he was definitely sucking it in.

While the real-world real estate market is in a tailspin, at CES it seems that everyone is still angling for a prime piece of property -- the television screen.

For most Americans today, the cable or satellite company controls the interface they see on the tube, offering program guides and pay-per-view menus. But as more TVs are connected directly to the Internet, or to an Internet-linked device like a TiVo box, a number of powerful players are planning land grabs.

"The incumbent video service providers have a big, fat bull's eye on their foreheads," says analyst Will Richmond of Broadband Directions. "All these new initiatives are basically aimed at stealing from the $100 billion a year subscription business, which the incumbents have basically owned since the beginning of time."

In Las Vegas, Yahoo is showing its Yahoo Connected TV service, which will be integrated into some new sets from Samsung, Sony, and LG that will hit the market this spring. It plasters a kind of "toolbar" across the bottom of the screen, offering quick links to weather forecasts, stock market info, eBay auctions, and family photo albums. These "widgets," or mini-applications, can be operated with the remote control -- no keyboard necessary.

TiVo is hoping that its new on-screen search engine will win the TV interface wars. It hunts for content not just on cable or broadcast channels, but YouTube videos, digital rentals from Amazon and CinemaNow, and (soon) streaming titles from Netflix. With every search, it displays a graphical parade of "related content" images at the top of the screen; a query for the cancelled-but-still-popular series "Arrested Development" suggested that the viewer might also enjoy "Raising Arizona" or "The Office."

Sling Media, a Silicon Valley start-up that got gobbled up by EchoStar, is pushing its own programming guide today at CES, dubbed SlingGuide. Netflix's streaming movie service, already built into game consoles and set-top boxes, is now making its way inside new TVs and Blu-ray players. And Sonic Solutions, the company that acquired movie purveyor CinemaNow last year, has its own Cineplayer interface that serves up flicks on various set-top boxes and connected TVs.

"Everyone has new ideas about what the interface should look like, and what it should do," says Mark Ely, EVP of strategy at Sonic Solutions. "That's bound to create some confusion for consumers, who just want the easiest solution for getting the TV shows and movies they want."

And cable and satellite providers are bound to try to defend their long-held turf. "They always worry that someone is trying to make an end-run around them," says Eric Becker, a corporate communications exec at Starz Entertainment.

Richmond of Broadband Directions says, "I don't think cable or satellite operators have been asleep to the problems of navigation or the value of the TV interface. But by the standards of Web navigation, their offerings still seem really basic."

"The more that all these new players innovate," Richmond concludes, "the more that the incumbents are going to be forced to innovate."

Digital Experience is a mini trade show within the much bigger trade show that is CES, put on especially for the media. It filled a ballroom at the Mirage tonight with everything from in-ear headphones to universal remote controls to digital photo frames.

The big trend at Digital Experience seemed to be the pequeño pico projectors -- digital projectors that can plug into an iPod or cell phone, and aren't much bigger than those pocket-sized devices. Pico projectors from Samsung, Cinemin, 3M, and Optoma were all on display, priced anywhere from $300 to $400. Definite gee-whiz factor, but who will use 'em? Texas Instruments exec John Horan told me the initial target audience had been road warriors, but that consumers have started to show interest now that the prices are coming down. Anyone who travels with a laptop might find it just as easy to simply show slides or video on their laptop screen, since the pico projectors' images tend to fuzz up (and lose brightness) when they're much larger than 20". Is the killer app perhaps proud parents showing photo slide shows of their kids when they're at a work lunch? Kids looking at YouTube videos together? This may be a solution in search of a problem.

On the flip side, Fulton Innovation has been working for years to bring wireless charging pads to market. A charging pad built into a desk or bureau surface would be able to charge up a cavalcade of devices, from digital cameras to cell phones to electric razors -- no adapters or cords required. The company inked a recent deal with Energizer that could help shepherd the technology to market soon. Making sure that you have the right adapter to charge the right device in the right place... definitely a problem in search of a solution.

The tiny Texas Instruments DLP chip that powers many of the pico projectors; a larger version of this chip can be found in DLP televisions and digital cinema projectors.

A pico projector from Samsung (see earlier post) shows a clip from DreamWorks Animation's "Kung Fu Panda."

A toy helicopter gets some juice from one of Fulton Innovation's wireless charging pads.

One sign of the times at the smaller CES: the room at the Venetian Hotel where Microsoft held its keynote was cut in half (they brought down a wall). Last year this room was twice the size and almost as packed as it was this year.

If there was a core message at Microsoft's keynote, it was this word: connection.

Whether they were showing off Windows 7 (the new operating system that will replace the much reviled Vista), online services under Windows Live, new Xbox applications, or even futuristic textbooks in the work at R&D, everything Microsoft CEO Stephen Ballmer and his team showed at the confab-opening keynote was about devices that connect to each other and the "cloud" (that's all the information stored on servers you can access anytime you're online).

"By bringing together the PC, the TV, the phone, plus the cloud, we can really create connected experience that makes a diff in people’s lives," said Ballmer, who was giving the keynote speech for the first time, replacing departed founder and chief software architect Bill Gates. "The linchpin for bringing this together, should be Windows. It will work across all three screens seamlessly."

So what did Microsoft show that will make it possible? Here are a few fun examples:

-New versions of hotmail (now under the Windows Live brand, not the shrinking MSN) in which you can search for information without leaving the page and then drag that information into your email. So you open a little box in hotmail, search for a restaurant, and then drag all the links and info about that restaurant into your email and send it to a friend to suggest where you meet that night. She clicks on it and she gets driving directions, the menu, etc. etc.

-New interfaces in Windows 7 that make it much easier to go to the music, website, document, etc. you commonly or recently used in an application when opening it.

-New tools in Windows 7 to make it easier to organize a bunch of different applications (apparently the avearge person has 5-15 applciations open at a time) and even make them transparent to see what's beneat them. I know it sounds simple, but when you see it, you realize, "Wow, that could really make my work life a little easier."

-Growth in Xbox Live, the online service for the Xbox 360 videogame console. With 28 million units sold so far, it may lag far behind the Wii (though it's ahead of Sony's struggling Playstation 3), but there's no doubt Microsoft is the king of online gaming. Entertainment and devices president Robbie Bach showed off the recently launched Netflix application, a live online version of the TV game show "1 vs 100" in which hundreds of people compete simultaneously online, and bragged that Xbox Live now boasts 17 million members worldwide, up 70% from a year ago.

-A very cool demo at the end of the keynote from someone in Microsoft R&D who showed what a digital textbook might look like in the future, with an interactive 3-D model of the human body on which professors can tag information, students can share notes, and it's each to search and sort through all the existing research in the world on any specific point of data. And the data can easily be transferred from laptop to phone to the digital tables that every library may have some day.

Ballmer didn't directly address the bad economy, whether Microsoft might experience layoffs, and how much consumers are willing to spend on all the devices embedded with Windows software in the next year. But he did claim, and demonstrate, that his comany is continuing to invest aggressively in new products and ideas in hopes of being well positioned when the economy rebounds.

Say hello to “Kodu.” It might look familiar. Kinda like Sackboy’s little brother.

At tonight’s pre-CES keynote, Microsoft unveiled a new "game creator" (their term) that will look pretty familiar to anyone who follows the videogame world, or pays attention to  Sony ads.

“Kodu” is, as Microsoft entertainment president Robbie Bach describes it, a way to "empower everyone, the entire breadth of our audience, to create their own games."

What does it look like? Well, it’s an accessible, adorable application that lets regular people design and share their own own videogame levels. Microsoft can protest as much as it wants, but in the big picture, it's about as distinct from “LittleBigPlanet” as avatars are from Miis.

The most obvious difference, however, is that "Kodu" is 3-D. It's not just a platformer. In the demo that Bach did with a 12 year-old girl named Sparrow, the game she created in her little 3-D world was essentially fetch, in which two robots tried to get objects spit out of a machine and return them to a spot for points.

Watching Sparrow create the game, it's largely based on equations (like the ones on the right). Telling the factory that every 10  seconds it spits out a new item, for instance. When I say "equation," I mean you're literaly using + and = signs to make in-game rules.

The menus are still tricky (just like in "LittleBigPlanet," you have to navigate through a lot of stuff), but it's a language that anyone who graduated elementary school can probably understand.

Unlike "LittleBigPlanet," "Kodu" isn't the result of years of work by a development studio. It came out of Microsoft R&D, where it started as a way to help teach kids how to program. Because it's not a "game," per se, it won't come with a rich campaign or, I'm going to guess, arch voiceovers by Stephen Fry.

It's coming in the spring and it'll be downloadable. Microsoft hopes to use it to fuel lots of user creations on its Community Games channel, though it's not clear if there will be a rich social community a la "LittleBigPlanet" (rating, tagging, etc.) or if users will just be sharing the games they create with friends.

"Kodu" is definitely not a "LittleBigPlanet" killer. Sony's game is inarguably the richer experience. But Sony will no longer be able to claim it has the only console with an accessible and intuitive level builder. And based on what I say, "Kodu" may even offer a few tricks that make videogame building even simpler than "LittleBigPlanet" has shown us it can be.

(Cross-posted on The Cut Scene)

Speaking at a pre-CES videogame panel Wednesday afternoon, Alex Rigopulos, CEO of "Rock Band" developer Harmonix (owned by MTV), reportedly said his studio isn't focusing on making a third annual version of its key franchise this year (details here or here). Instead, all its energy is going into the "Beatles" focused-spin off game (details on that are here).

As Rigopulos said, that's no surprise for creative reasons, since making that Beatles game good is really important. But it also makes sense business-wise. MTV paid a LOT of money to get rights to the Beatles and needs it that game to sell better than any of the "Rock Bands" have. perhaps more importantly, "Rock Band 2" has sold significantly worse than the original "Rock Band" since launching. It would be hard to justify a third iteration, especially under the assumption that the economy will still be weak next fall. In fact, "Rock Band" for Wii (that's the original one, not "Rock Band 2") was the only version of the game to break NPD's top 20 in November. So there's no reason to think that interested buyers won't be perfectly fine with "Rock Band 2" this fall.

(Cross posted on The Cut Scene)

Remember the Sony Walkman? The brand name still lives (as a digital media player now), decades after the demise of Jazzercise.



Sony says its 3-millimeter thin OLED (organic light emitting diode) TV screen is about as thick as three credit cards.



The TV, called the XEL-1 OLED, goes on sale this month for about $2500.

That hulking projector parked on the conference table? It's a dinosaur.

For a few years now at CES, electronics companies have been demonstrating smaller and smaller projectors, sometimes called "pico" projectors. Samsung today took the wraps off a Lilliputian projector, based on the same Texas Instruments DLP technology that powers many digital cinema projectors. No word on cost, but it's 4 inches long and less than two inches wide, and when connected to a mobile phone or laptop, it can throw a 50-inch image onto a wall...or a YouTube video onto the back of an airplane tray table. (The pixel count, for those of you inclined to count pixels, is 320 x 240.) It weighs about 1/3 of a pound.

No word on price yet, but the MBP200 is expected to be out later this year. Gentlemen, start your PowerPoints!

Here's the official press release.

Crowds at the Vegas airport are noticeably thinner than usual for CES' big arrival day. But my plane was packed with conventioneers: the CEO of a company making longer-lasting, more environmentally-sensitive laptop batteries...a venture capitalist touting his latest investment, a company focused on video delivery to cell phones...and a Clearwire exec singing the praises of WiMax, a long-range, high-speed wireless protocol.

Hucksterism, tech, and money - that's the CES trifecta.

CES kicks off tonight with two major events that we'll be blogging as close to live as we can, Internet connections allowing:

-Sony's press conference from 4:15 to 5. This will likely be more specific new products the electronics and entertainment giant is unveiling and demonstrating at the show, rather than big picture vision, which I expect we'll get from CEO Howard Stringer at his speech tomorrow morning.

-Microsoft's opening keynote at 6:30. CEO Steve Ballmer will be giving the speech for the first time, taking over for retired founder Bill Gates. He'll be joined by entertainment and devices president Robbie Bach for any news related to consumer products like Xbox, Zune, home entertainment, etc. The biggest focus will likely be on new operating system Windows 7, the much anticipated follow-up to the tepidly received (to put it nicely) Vista.

Videogames never have a huge presence at CES, since the main events for that industry at E3 and the Game Developers Conference. But there will be a few big players from the game space speaking and/or showing off cool stuff. Here's what to expect

-Microsoft, as always, will have a big presence and give the keynote address. I expect they'll be touting the latest stats that over 28 million Xbox 360s have been sold, giving it a comfortable lead over Playstation 3 (never mind that pesky Wii), touting the success of Netflix streaming on the box, showing more content from "Halo Wars" and "Halo 3: ODST" and maybe a few new things. In addition to covering the keynote and checking out the products, I'll be talking one-on-one with Microsoft's entertainment and devices president Robbie Bach, who usually has good insights on his own company and the market.

-Capcom will be in town showing off "Street Fighter IV" and "Resident Evil 5," complete with a "SF IV" match-up between players picked by Microsoft and Sony (details here). If I get any hands-on time, hopefully I won't be quite as humiliated at "Street Fighter IV" as I was at E3.

-Sony Computer Entertainment. Though the Playstation 3 and PSP -- and their games -- got virtually no mention at the ocmpany's press conference Wednesday afternoon, they're sure to ge ta spot in CEO Howard Stringer's keynote Thursday morning.

-Sony Online Entertainment will be at CES with "DC Universe Online" and "Free Realms."

-Activision Blizzard publishing president Michael Griffith is giving a speech on Friday. Perhaps not coincidentally, the website for Activision game "Prototype" is counting down to tomorrow, indicating he'll be bringing a new trailer or something with him for the game.

[Cross-posted on The Cut Scene]

In terms of an immediate impact on consumers, it's likely nothing announced or unveiled at CES will match Apple's news at MacWorld yesterday that all music on iTunes will be sold without DRM (anti-piracy software that limits the number of copies you can make of a downloaded song and prevents it from working on any portable players except an iPod) and with variable pricing.

Sure, in a sense it's a yawner, since EMI's tracks on iTunes have been available without DRM since last spring and other musicstores like Amazon.com have been without the limitations for around a year. But iTunes is the biggest musicstore in the U.S. and when it makes a move like this, millions of consumers are effected.

I'm sure some of the products, trends and news we'll be seeing at CES will impact consumers and the entertainment biz much more significantly in the long run than the iTunes move, but right here and right now, iTunes is what matters.

Get the full story on the iTunes changes here.

Variety reporters won't be on the ground at CES until later today, but some early news about cool new products is already starting to trickle out.

One hot trend this year is clearly going to be Internet connections on devices we already have in our living room, thus obviating the need for separate boxes like the Apple TV, Roku's Netflix box, and Vudu (all of which, no surprise, have sold very modestly). LG already announced earlier this week that it will start selling TVs that connect directly to Netflix's streaming-on-demand service and today it revealed specific details.

As CNET News reports, LG will ship a 47" and 42" LCD TV, as well as a new line of Plasmas, that come with the Netflix connection. And in addition to allowing subscribers to the DVD-by-mail service stream movies, owners can also access YouTube videos and pretty much everything that Yahoo offers. In not-as-thrilling news, however, the TVs won't come with build-in wireless. That means if you don't have an Ethernet connection in your living room, you'll have to use a wireless bridge and set it up via the TV. I can tell you from experience it's no easy task doing that with most consumer electronic devices. And if I can't do it as a tech journalist, it's definitely not easy for the average consumer.

In addition to TVs, CNET reports that LG is launching a Blu-ray player with Netflix compatibility. Hi-def movies and on-demand streaming in one device sounds like a very appealing combo.

These products are, in many ways, building on Sony's launch last year of Bravia TVs with an Internet connection. Except streaming movies from Netflix is a much more appealing service than Sony's more limited Internet offerings (AOL Video! Woo-hoo!), which is probably why we haven't heard much about the Bravia Internet connection since then.

Given that Microsoft has apparently been finding some success with the Netflix streaming option it launched on Xbox 360s in November (I expect we'll hear about it at the company's opening keynote tonight), we'll probably see more and more devices with Netflix and other connections built in. Perhaps 2009 really will be the year when the Internet invades the living room.

Update: Add Viziio to the list of partners with TVs that connect to the Internet and let Netflix subscribers stream movies. I'll suspect we'll hear even more partners before the week is out.