CES 2015 in Review: Evolution, Not Transformation

The 2015 Consumer Electronics Show closes today, bringing an end to a week of hyperbole concerning the “Internet of Things,” cars that can drive themselves, and new Ultra HD sets offering improved color accuracy that, at the least, will make watching Food Network an ultra-realistic experience, with videos of fruit bowls and oil drizzling onto fish giving new meaning to the phrase foodie porn.

But the feeling I had on leaving Las Vegas after this year’s CES is that, for all the hype, there was little in the way of earth-shattering developments or a sense that a given technology will transform the way sports content is consumed.

The show continues to expand its focus, with automobile, fitness technologies, drones, and even security products having a large presence and competing for headlines. Let’s face it: a CES where the consumer-press news cycle is dominated by coverage of big screens is good for the industry. Headlines about smart toothbrushes, pet-activity trackers, and self-driving cars, however, do little to get consumers into the big-box retailers.

But the UHD and OLED product introduced seemed to lack a true “wow” factor, and even the manufacturers seemed to be going through the paces with respect to building buzz. For the past decade, press day, held the day before the show, was dominated by big news and proclamations concerning new developments in HD, 3D, and smart TVs. But, this year, the sense of “the big reveal” was lacking.

That’s not to say that there were no important UHD announcements. It is clear that set manufacturers are placing a big bet on UHD, with 1080p or lower-resolution models hard to find among the introductions. And the technical leaps this year were definitely refreshing, because much of the emphasis was on improved color accuracy. At more than one SVG event (both in the U.S. and in Europe), sports broadcasters have made clear that, from their perspective, improved color is more important than increased resolution. So it appears that, later this year, sets will be hitting the retail market with two-thirds of the UHD “holy trinity” improved. One can only hope that, next year, the third part of the trinity, increased frame rate, will be part of CES product plans.

It was also nice to hear Netflix commit to delivering UHD content with expanded dynamic range. And Panasonic’s announcement of a prototype for 4K Blu-ray goes a long way toward demonstrating how consumers will be able to actually enjoy UHD content on their UHD TV sets. And one cannot discount the improvements in contrast levels and the constant hunt for perfecting black levels.

Of course, there may be an absolutely sane reason that the UHD roar was subdued: broadcasters and cable operators and their technology partners still have many issues to sort out before a UHD network can be launched. And that doesn’t even include what will be a spirited debate within the world’s leading media companies as to what, exactly, the business case is for launching a UHD service.

Hopefully, the UHD Alliance, announced at the show, will help overcome many of the issues with respect to how and why UHD will become a reality. It definitely has the proper players: Walt Disney Studios, Twentieth Century Fox, and Warner Bros. Entertainment are on board from the content side. And the likes of LG, Panasonic, Samsung, and Sony are on board as well, along with DirecTV and Netflix.

Beyond UHD
That said, there was still plenty of interesting news at the show. At the top of the list was Sling TV’s launch of a $20 subscription service that includes live TV programming from, most notably, ESPN, TBS, and TNT. Those three networks are powerhouses in national sports programming, and the fact that they are willing to move away from traditional cable and satellite relationships could have a great impact on other sports networks and spur them to follow suit.

Most important, the Sling TV service will be the first true test of the impact that offering sports programming without requiring a cable or satellite package will have on cable- and satellite-subscription numbers. It has long been said that live sports programming remains one of the main reasons to maintain a cable- or satellite-TV subscription. If younger sports fans can satisfy their craving for $20 a month (or an additional $5 a month for a still-to-be determined sports package), is the current cable and satellite business model due for an overhaul?

Of course, the math for the new service might not be as compelling as it appears to be for viewers looking to save money by cutting the cord. First, to get the $20 subscription, a viewer will most likely need à la carte broadband service for about $50 a month, so the total cost is about $70. Toss in another service like HBO, Netflix, or HBO, and the cost saving compared with a cable bundle takes a tumble.

More important is what it will mean to negotiations for future cable-network fees. For example, if ESPN is available via an alternative delivery medium, one could argue that other national sports networks will see increased leverage for rate increases because they can threaten to join Sling TV and make the offering more robust unless they receive a fee to remain “cable and satellite exclusive.” And then there is the flip side: if there are not a large number of subscribers to Sling TV, will those who join the offering lose leverage during cable negotiations?

What CES 2015 Really Means
The lack of big buzz is not necessarily a bad thing for the consumer-electronics industry. It is clear that “the Internet of Things” is capturing the imagination of not only the manufacturers but also the FCC. A panel featuring FCC members revealed that they are buying into the need for more spectrum so that washers and dryers can talk to cellphones, tablets, and computers. So it will definitely become easier and easier to live in a completely connected world.

In many respects, this show felt similar to the CES editions of the early aughts, when, year after year, the HD panels introduced at the show offered refinements and improvements that meant thinner, better, and cheaper. That is where we find ourselves with UHD. The sets are getting better and cheaper. And, similarly, the LCD-vs.-plasma battle has been replaced with an OLED-vs.-LED LCD battle.

What is old is new again. The question now is how the content-creation and -distribution market can rise without a government mandate. And, given that a mandate is not going to happen, that is a very big question.