The Future Is Coming! The Future is Coming!

Two years ago, I made some predictions (some privately, some publicly) about what the world would be like in five years. These can be placed into four categories:

• Unlimited long distance will be free in the next five years.
• Cable operators are going to integrate personal video recorders (PVRs) into digital cable boxes, and pausing television (and skipping commercials) will be the norm.
• Rich media advertising will become the norm for the online space, if only because iTV audiences are not going to respond to animated GIFs. But even without iTV, it will happen in the next five years.
• Some technology advance is going to radically change the way the Web works and affects our daily lives, and it will be completely unexpected. This could happen any time, but certainly within five years.

It’s amazing how much has shifted in the world since I made these predictions, and I certainly could use the sweeping changes in the economy and in the world to take them back. But, if anything, the circumstances have only solidified the likelihood of these predictions coming true — if only because companies are making innovations spurred by that highest of motivators: fear.

Unlimited Long Distance

My reasoning behind this prediction comes from basic math. The growth of data transfer has outpaced voice by a very high margin. At a certain point, it makes sense to “throw in” long distance voice to attract customers for data services. But things have shifted since I formulated that opinion, and reality is outpacing my prediction.

MCI has jumped the gun by instituting its new service, “The Neighborhood.” It’s the strongest bundle of services I’ve seen yet in the nonwireless space. It includes unlimited calls (long distance and local) within the U.S. and all the bells and whistles (call waiting, caller ID, speed dial, three-way calling, and voice mail). The price is only $49-59 monthly (depending on where you live). Think about that for a minute. Because this includes local phone service, you deal directly with MCI instead of your Baby Bell-remnant local provider.

The only question most consumers will have is whether MCI will be around long enough to support this offer. But the genie is out of the bottle. It’s only a matter of time before this becomes a standard offering across all providers.

PVR Support With Your Cable Box

In my mind the biggest problem with PVRs — whether you’re talking about TiVo, SONICblue, UltimateTV, or another company — is they’re add-ons. Individual consumers must make the decision to go out and buy a PVR, set it up, and get it running. Though every existing PVR owner is out there evangelizing the hell out of this technology, the reality is they’re still early-adopter buyers. PVRs are great solutions, but my parents are not going to understand the value proposition.

However, if a PVR is a standard offering within your digital cable, then the ballgame changes. Seamless integration with your cable remote really will change things. Come on
— if you can simply pause live TV without adding anything to the system, that’s a big deal.

Earlier this month, The Carmel Group issued a new report that cited these amazing estimates:

• PVRs will penetrate an estimated 1.5 percent of U.S. TV households by 2002, increasing to 25 percent in 2008.
• Six PVR players will account for about 73 percent of the total market by 2008. The manufacturers are Digeo (Moxi), Metabyte Networks, Microsoft (UltimateTV), OpenTV, SONICblue, and TiVo.
• Two pure-play PVR providers will emerge as leaders in the digital video recorder (DVR) race: TiVo for its branded PVR solution and Metabyte Networks for its unbranded PVR solution.
• Cable operators will be more inclined to work with unbranded PVR solutions, such as Metabyte Networks and OpenTV, because they provide greater flexibility and control.
• By year-end 2005, U.S. cable operators will have an estimated 4.8 million PVR-based users, up from 300,000 users in 2002.
• By year-end 2005, U.S. direct broadcast satellite (DBS) operators will have an estimated 4.9 million PVR-based users, up from 1.0 million users in 2002.

In addition to these amazing estimates, Metabyte and Digeo (the two leaders in PVRs marketed toward cable operators) have announced major integrations with some of the leading cable infrastructure technology providers. Digeo is offering its Moxi solutions through Motorola and Scientific-Atlanta. Metabyte has also integrated with Scientific Atlanta. This is a major step, especially given the Moxi integration with Motorola supports existing infrastructure out of the box.

I’ve talked about the Moxi solution before, and I can’t stress enough how cool this solution is — and the cool factor goes a long way with home electronics.

Rich Media Will Become the Norm

I won’t spend too much space on this one — I think most of the leaders in the online advertising space would agree this is a basic truth. But it is likely happening faster than most realize, and I believe the time of rich media is finally at hand. Next month, I’m going to write a comprehensive review of the rich media space and detail what everyone should be watching for.

In my role at Bluestreak, I have access to the aggregate stats from our ad-serving efforts. We’re a great benchmark of what’s going on in the industry (although our rich media background does give us a bit of an edge in this category).

When comparing January stats with June stats, you can clearly see a big shift in the proportion of rich media being served.

Bluestreak Ion Server Stats by Media Type
Ad Type	Ads Served (%)
January 2002
Images	96 percent
Rich media	4 percent
June 2002
Images	80 percent
Rich media	20 percent

This came amidst a 32 percent increase in the number of total impressions served between those two months. About 80 percent of the rich media served in June was Flash, and the rest was spread pretty evenly between third-party rich media technologies (including our own) and HTML ads.

The Changing Face of the Web

Although I’m uncertain exactly what shape this radical technology advance will take, I’m pretty sure something’s coming along that will change the face of the Web. There are a lot of indicators of this, from the amazing work being done in digital identity to the innovations of Flash MX. It’s likely this change will seem subtle when it first emerges, but its implications will be broad.

To give you an idea of the kind of clear change I can see from a tool such as Flash MX, just look at this innovative Web site: Chipotle.com. This is a definite indicator of what I believe Web sites are going to be like in the next few years. They will be much more interactive, dynamic, and interesting. And this site only uses Flash the way its been used for years (albeit much better than it typically is used). See my coverage of Flash from a recent column, if you want a fuller picture of the specific implications of Flash MX.

Digital identity is a broad topic and difficult to sum up in a few sentences. It promises to revolutionize the way Web sites are built, used, and controlled. But it will be a quiet revolution, not a loud one. See more about the digital ID revolution at Digital ID World.