.Whether it is a confidential gathering of 10-15 CEOs or a hotel ballroom of 400-500 people, when I ask this question, I have never had anyone raise their hand.  That is worth repeating.  25 times I have asked audiences to “Raise your hand if you love your cable company” and not a single person has raised their hand!

Not only that, but most of the time this question provokes laughter. People think the question is funny. The laughter clearly implies the absurdity of the question.  Playing to the audience I usually quickly say something like “Of course you don’t.  How can you love “maybe we’ll make it to your house on Tuesday between 8-4 and maybe we won’t” or “of course, why would you love a business model that is like going to a restaurant, ordering the chicken and being asked how you like your steak prepared because you have to buy everything on the menu whether you want to consume it or not”.  Even if you only watch 5-8 channels you have to buy a 100.  People nod their heads turn to each other and make comments, none of which seem positive.

Now some of you might immediately react that the question is unfair because I used the word “love”.  Well think about how the ...]]> In the past three months I had delivered around 35 speeches and presentations.  During about 25 of them I have asked the audience the question that is the title of this column (why I will explain later).

.Whether it is a confidential gathering of 10-15 CEOs or a hotel ballroom of 400-500 people, when I ask this question, I have never had anyone raise their hand.  That is worth repeating.  25 times I have asked audiences to “Raise your hand if you love your cable company” and not a single person has raised their hand!

Not only that, but most of the time this question provokes laughter. People think the question is funny. The laughter clearly implies the absurdity of the question.  Playing to the audience I usually quickly say something like “Of course you don’t.  How can you love “maybe we’ll make it to your house on Tuesday between 8-4 and maybe we won’t” or “of course, why would you love a business model that is like going to a restaurant, ordering the chicken and being asked how you like your steak prepared because you have to buy everything on the menu whether you want to consume it or not”.  Even if you only watch 5-8 channels you have to buy a 100.  People nod their heads turn to each other and make comments, none of which seem positive.

Now some of you might immediately react that the question is unfair because I used the word “love”.  Well think about how the audience response might be if, instead of “cable company” any number of words were substituted:  Raise your hand if you love your: iPhone, Prius, iPod, Blackberry,  Google, netbook DVR, the Daily Show or any number of TV programs.  There are many things in our lives that we love, but cable does not seem to be one of them.

Why do I ask this question?  I ask this question to make two points.  The first point is “Power to the People” and the second is that technological disintermediation, which has wreaked havoc on the broad landscape of media the past 10 years is about to come into the living room.

Power to the People

This is not a throwback to the clenched fists in the air of the 1960s.  Rather it is a phenomenon that, though around for centuries, has particular significance when combined with technological innovation.

In the last 20 years consumers have been provided with an ever increasing amount of choice in their lives.  There is no category in your life where you have less choice than you did 10 or 20 years ago. [OK, maybe newspapers or uniquely formatted radio stations, but get the point there?] This explosion of choice means that the power has moved from the producer to the consumer, from the institution to the individual. Therefore, we as individuals have more power than ever before.  We increasingly want what we want, when we want it, the way we want it.  That is just the reality of a connected, always on electronic environment.

The story of Napster, file sharing and the music industry is most often couched in terms of a disintermediating technology.  That is true, but the reason why file sharing spread so rapidly is power to the people, particularly with the young demographic.  For years the music industry charged $14, $15 then $16 for a CD, a product that required a sharp object to open and that when opened provided maybe 5-6 songs that were any good.  Young people learned to hate the music industry and the way they jacked up prices for products that provided less and less satisfaction.  When provided with a new technology – file sharing – that allowed young people first, then the rest of us to do an end around of the music industry the collapse of that industry happened with lightening speed.

Is there anyone reading these words who has not downloaded some free music or burned a friends CD?

When deep customer dissatisfaction meets technological innovation, entire industries can be quickly eviscerated.

Technological Disintermediation in the Home

It is estimated that as we approach the end of 2009 some 2% of Americans watch video exclusively on their computers and mobile devices.  Well at some point 2% of Americans had cell phones, computers, smart phones and MP3 players.  What are those percentages today?

There will be simple plug in devices entering the living room in the next few years that will allow the average consumer to plug the Internet directly to the 50” flat screen.  There will continue to be compression technology developments so that HD can be streamed, even over high speed wireless.  When will that $100+ cable TV bill seem to feel like the $16 CD?  In the next three years.  What will the cable companies do when people demand lower cost ala carte channel choice or choose to disconnect?

I know many people in their 20s that exclusively use television sets for playing video games or watching DVDs, not watching television programs. They do that when they want to on their computers. They focus on the second and third screens.  Space constraints – and the length of attention you bring to the reading of a blog – limit this column continuing with forecasts, so I will end with just one.

Cable television subscriptions will experience noticeable percentage declines in the next three to five years. This decline with only be slowed if they accept unbundling and price per channel.  This will cause a variety of cascading problems for all those reliant upon cable television distribution.

This thinking was triggered several weeks ago when reading an editorial in The Economist about the need for an age-rating for video games similar to the age ratings of the motion picture industry.  The thrust of the article was that something new is not necessarily bad and in need of banning, it just might need some social rating system.    The article mentioned some past cultural innovations that were initially regarded as bad or even evil.

In the 18th century there was something that began to get wide acceptance that alarmed those that populate the status quo.  It was thought that it would poison the mind, corrupt the morals of the young, letting them immerse themselves in dangerous worlds of fantasy.  What was it?  The novel. 

In the early part of the 19th century, waltzing was condemned as a cultural phenomenon that encouraged promiscuity.  In the early 20th century motion pictures were called evil and destructive of social interchange.  Those of us who are baby boomers can vaguely remember when Rock and Roll was something that would turn young people into “devil worshippers”.

As a parent I remembered all of this as my son grew up through his teen age ...]]> Recently I have been thinking about the cultural process whereby something that initially is perceived as dangerous to society ultimately becomes a part of the cultural mainstream. New is often perceived as threatening.  Its newness is not understood, so if it can’t be understood and fit into the status quo then it must be bad. 

This thinking was triggered several weeks ago when reading an editorial in The Economist about the need for an age-rating for video games similar to the age ratings of the motion picture industry.  The thrust of the article was that something new is not necessarily bad and in need of banning, it just might need some social rating system.    The article mentioned some past cultural innovations that were initially regarded as bad or even evil.

In the 18th century there was something that began to get wide acceptance that alarmed those that populate the status quo.  It was thought that it would poison the mind, corrupt the morals of the young, letting them immerse themselves in dangerous worlds of fantasy.  What was it?  The novel. 

In the early part of the 19th century, waltzing was condemned as a cultural phenomenon that encouraged promiscuity.  In the early 20th century motion pictures were called evil and destructive of social interchange.  Those of us who are baby boomers can vaguely remember when Rock and Roll was something that would turn young people into “devil worshippers”.

As a parent I remembered all of this as my son grew up through his teen age years as an avid player of video games.  While the games held no great appeal to me, I let him show me what so absorbed him.  I was concerned that video games might not be the best use of his time or that it might be making him less socially integrated.  I did not however tell him that they were bad, only that they had to be integrated time wise into the rest of his life. 

Politicians, though they don’t intend to, certainly help us realize when something new is not as bad as they lead us to believe.  I remember when a certain Senator from New York came out against ‘violent video games’ and suggested that our youth be protected from them. She was not the only politician who had climbed on the moral outrage bandwagon concerning video games.  Politicians are always self described protectors of ‘family values’, because they think it gets them votes.  What struck me about this politician’s stance was that here was a politician who complained about our 18 year olds being subjected to fantasy violence in video games at the same time supporting 18 year olds going to kill people in Iraq using real violence.

In the 1950s the same politicians that were calling Rock and Roll the music of devil worshippers were ones that thought nuking tens of millions of people because they were communists was a perfectly acceptable moral ground on which to stand.  When John Lennon made the accurate — and critical — analysis of pop culture by saying that, unfortunately the Beatles were better known that Jesus, the politicians and religious leaders whipped their constituents and parishioners into a frenzy of record burning. So when politicians or self-aggrandizing preachers speak to their constituents about the new evil of_______________, you can almost rest assured that decades later, what was so evil will become an acceptable part of the mainstream. 

It is humorous that what was creating devil worshippers we now listen to in elevators and at Super Bowl halftime shows.  Have we all become lovers of Satan?  It is amusing that films were going to destroy social interchange; how many animated discussions have you had recently about films you loved?  So when a politician starts ranting about the violence of video games, ask them what they think about Iraq, global warming and universal health care.  Then, when they start their shucking and jiving, tell them to come back to you with their moralizing about the new evil on the cultural horizon once they have tackled the issues that affect the health and well being of all of us.

Since that post I have come across sales numbers that emphatically point to the fact that consumers have embraced the new, innovative vision of the Wii.  The PlayStation debuted on November 17 and the Wii on November 19 and the November sales figures for the PlayStation were 197,000 while the Wii sold 476,000.  Of course the lower price point of the Wii helped in these numbers, but the buzz has not been about price, but about the radical new and innovative approach the Wii has taken, described in the earlier post.

A new product in a competitive marketplace that is completely innovative wins.  When the price point for this innovative product is lower than the price for the competition, it wins big.  As mentioned in the earlier post, innovation in such an influential field as video gaming will inevitably flow into other areas of our lives in the near future, and that is a very good thing.

It is sad to see Sony on the back slope of the innovation curve. It was Sony of course that created the ‘personal music player’ market with the release of the Walkman in 1979.  Where were ...]]> In a post two days ago I suggested that the Wii Video Game console from Nintendo was the clear winner in the new console competition with Sony’s PlayStation 3.  I based this on the fact that the Wii was an innovative product that both opened up the gaming space to new participants and was highly desired by experienced gamers.

Since that post I have come across sales numbers that emphatically point to the fact that consumers have embraced the new, innovative vision of the Wii.  The PlayStation debuted on November 17 and the Wii on November 19 and the November sales figures for the PlayStation were 197,000 while the Wii sold 476,000.  Of course the lower price point of the Wii helped in these numbers, but the buzz has not been about price, but about the radical new and innovative approach the Wii has taken, described in the earlier post.

A new product in a competitive marketplace that is completely innovative wins.  When the price point for this innovative product is lower than the price for the competition, it wins big.  As mentioned in the earlier post, innovation in such an influential field as video gaming will inevitably flow into other areas of our lives in the near future, and that is a very good thing.

It is sad to see Sony on the back slope of the innovation curve. It was Sony of course that created the ‘personal music player’ market with the release of the Walkman in 1979.  Where were they when Steve Jobs created and launched the iPod?  Where were they this past year while Nintendo was creating the Wii?  Sony won the day in the 1970s and 1980s due to their innovative technology.  Now the torch has passed to Apple and Nintendo.  I hope Sony finds their innovation soul again soon.  I suggest to all technology companies to keep the words of Bob Dylan up on their whiteboards while brainstorming:  “Those not busy being born are busy dying”.

As all gamers, and anyone consuming media today knows, there is a new console war going on.  Last year Microsoft came out with the Xbox 360, the most powerful, integrated game console ever.  With global on-line connectivity, it allowed gamers around the world to play and compete together.  It was embraced and deemed a huge success.  Now a year later, the other two major players in the console wars have introduced their products.  Sony, the winner five years ago with its PlayStation 2 came out with its much anticipated and delayed PlayStation 3.  The same week, the number three player, Nintendo, came out with its radically different Wii.  In a surprisingly short time, a winner has emerged, and it is the Wii.

The PlayStation 3 was a year late, made promises it did not deliver on ...]]> In the last ten years, video gaming has gone from being a peripheral social phenomenon for young and teenage boys to a central factor in today’s media and entertainment.  Movies based on video games have been produced. TV executives talk about bringing the interactive gaming experience to television programming.  Advertisers create games for brand positioning of their product. Advertising in video games is growing at a faster rate that almost any other medium today. The sales revenue of the video game industry is greater than theatrical movies.  Virtual worlds, one of the biggest things in today’s Internet world can be traced to video games.  Simply put, gaming is a major part of today’s media and entertainment.

As all gamers, and anyone consuming media today knows, there is a new console war going on.  Last year Microsoft came out with the Xbox 360, the most powerful, integrated game console ever.  With global on-line connectivity, it allowed gamers around the world to play and compete together.  It was embraced and deemed a huge success.  Now a year later, the other two major players in the console wars have introduced their products.  Sony, the winner five years ago with its PlayStation 2 came out with its much anticipated and delayed PlayStation 3.  The same week, the number three player, Nintendo, came out with its radically different Wii.  In a surprisingly short time, a winner has emerged, and it is the Wii.

The PlayStation 3 was a year late, made promises it did not deliver on and is expensive. The executive who has overseen its development and launch has been relieved of his duties.  The PlayStation continued down the path of console and game development which is to have ever more complex games with ever higher quality graphics being played with ever more complex controllers. Most new games take a major time commitment to play because of their complexity. This approach is focused purely on experienced gamers.  The business plan was to compete with the Xbox 360 on all these fronts.  Fight against the competition in the arena of experienced gamers.

Nintendo’s strategy for the Wii is completely different.  Nintendo decided that growth for video gaming lay in attracting non-gamers to join the fun.  This meant to develop a whole new system that did not rely upon the now high barrier of using complex controllers.  The Wii is completely, radically different.  The hand held controller is more like a TV remote in its wand like design.  It can be moved through the air, and that motion is simulated on screen.  Think about playing a video game of tennis.  Instead of using your thumbs to execute a backhand, you wave the wand as though you were actually swinging your tennis racquet.  Think about sword fighting, and waving the controller through the air as if you were wielding a sword.  It even sounds like more fun.  So the controller is radically different.  The game design is also different.  Games are designed so that playing them even for a short time will be enjoyable.  So, ease of use and no major commitment of time lowers’ the barrier to usage by non-gamers.  Since there are more non-gamers than gamers, the industry growth comes from having non gamers become gamers.   Early sales reports indicate that there are a lot of women and people over 30 buying the Wii consoles.

Another reason I think that the Wii will be the big winner is that in addition to being attractive to non-gamers such as myself, experienced gamers are really excited about it.  My twenty year old son, who has been playing video games since the age of eight told me that he is more excited about the Wii than any other new gaming console he can remember in his twelve years as a gamer.  All his friends who are gamers feel the same way and have all chosen to get the Wii, not the PlayStation 3. To them it feels like an innovation that will lead to an entirely different experience that the existing one they are quite happy continuing to play. Another innovative feature is that whenever the Wii is plugged in it can receive free updates as it is wireless. So it looks like Nintendo really does have a winner on its’ hands.  Any new product that can attract experienced, sophisticate users and first time neophytes at the same time is a breakthrough product.

Why is the Wii the future of video gaming?  First, it opens up the market to new users.  Second, in our ever faster culture where time is a premium, it allows people to play for a short time and be satisfied.  Third it more closely integrates body movement and the game experience itself.  It is this last point that I sense will be its greatest contribution.  It feels like the Wii is the early beginnings of humans physically interacting with virtual worlds.  Ten or twenty years from now, when we have immersive, interactive virtual world experiences on many levels, the Wii may well be looked back upon as the device that started to prepare us for this new, exciting plane of human experience.

Visionary innovation is really why the Wii is such a winner.  Whenever a company innovates rather than just competes it opens up markets and then sparks innovation elsewhere.  Hats off to Nintendo.