CAMBRIDGE, Mass., April 28, 2008 — As the war for the living room escalates, the winners may not be the newest gadgets and other entertainment center hardware, but the software that drives them. And the surprising victor may not be some startup, but a long-established player holding a strong front-line position right next to the sofa, according MIT Sloan School of Management Professor Pai-Ling Yin.
“It surprises some people, but the cable companies, who already have that TV set-top box, may be in the best position,” says Yin, an assistant professor of strategy. “They are the incumbent in the home, and inertia is very, very powerful. Once someone has that set-top box, it's very easy for a cable company to just send out an agent to switch or upgrade devices.”
But whether it's cable firms or other companies, what will most drive consumer entertainment options will be innovations in software, says Yin. “Price and user friendliness are always important, but the real competition is on the software side of digital entertainment. The winner will be the technology that figures out how to compress and distribute visual content so that it gets to the consumer quickly and at high quality.” One key benchmark will be whoever succeeds in developing software that is able to download content to wireless devices as fast and at the same quality as through wired technology.
As technologies continue to converge, Yin also foresees a less cluttered living room. “Everything is now possible on a PC, and more and more can be done through the television itself and even cell phones. With improvements in computing power and with memory becoming better and better on smaller devices, maybe your flash drive complete with a miniaturized operating system becomes your primary device. That's why the real challenge is developing the best software platform and the technology to download it.”
Yin is unsure what that platform will be, but she is convinced it is coming. “No one wants five remotes and different machines. You want to deal with it all in one place. But achieving that depends on how fast software is developed to compress and deliver digital content. The companies who figure that out will own a key layer of the entertainment stack.”