CTA: Consumer Spending on Video Streaming Services Increasing 25% to $17.7 billion in 2019

The growing popularity of streaming services, artificial intelligence (AI)-enabled emerging devices and in-vehicle technology will help drive the U.S. consumer tech industry to a record-breaking $401 billion in retail revenue in 2019 — 2.2% growth year over year — according to new data from the Consumer Technology Association.

“Enthusiasm for AI-powered technologies is skyrocketing — more consumers are discovering for themselves how tech innovation can change their daily lives for the better,” Gary Shapiro, president and CEO of the organizer of the annual Consumer Electronics Show in Las Vegas. “And with 5G delivering the faster connectivity we’ll need for anytime/anywhere streaming, smarter home robotics and more advanced vehicles, consumer excitement will only grow.”

CTA’s biannual U.S. Consumer Technology Sales and Forecasts report reflects U.S. factory sales-to-dealers for 300+ consumer tech products and related software and services.

Emerging Technologies

Smart Home: Home safety and monitoring products are driving growth in the smart home category. CTA expects smart home sales – including Wi-Fi cameras, smart thermostats, smart smoke and carbon monoxide detectors, smart locks and doorbells, and smart switches, dimmers and outlets – to reach 28.6 million units (19% growth) and $4.5 billion (16% increase).

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Smart Speakers: After rapid adoption of AI-enabled, voice-controlled smart speakers including Amazon Echo and Google Home, and increased voice integration in other devices such as TVs, soundbars and smart home devices, smart speaker sales will level off in 2019. Smart speakers remain a category to watch, with an expected 35.2 million units sold (1% increase over last year) and $3 billion in revenue (1% decrease) in 2019.

Home Robots: Consumer enthusiasm for robots that perform chores such as vacuuming, lawn mowing and floor cleaning is driving another AI-enabled category seeing double digit year-over-year growth. CTA expects the category to sell 3.6 million units, a 12% annual increase, and earn $1.2 billion in revenue, a 19% jump.

Wireless Earbuds: Leading devices including Apple AirPods and Beats by Dre Powerbeats Pro are expected to sell nearly 16 million units in 2019 (up 45%) and approach $2 billion in revenue (a 46% increase). CTA projects double-digit growth for the category over the next few years, as consumers pick premium audio experiences featuring true wireless technology.

Smartwatches: As consumers gravitate toward premium smartwatches, revenue for the category is expected to increase 19% in 2019 to reach $5.4 billion. Smartwatches are expected to sell 20.1 million units, a 7% increase over last year – leading the wearables category.

“More than ever, consumers want premium technology experiences – especially within the smartphone, TV, laptop, smartwatch and wireless earbuds categories,” added Steve Koenig, VP of market research. “The lightning-fast pace of tech means we can upgrade our ‘everyday tech’ and get extraordinary experiences.”

Revenue Drivers

Smartphones: Now owned by 91% of U.S. households, smartphones have packed vital features into models at all price points. As a result, the replacement cycle is lengthening and smartphone units are expected to decline for the first time in 2019, reaching 165.5 million units (2% decrease) and earn $77.5 billion dollars in revenue (2% decrease) – the largest consumer tech category.

Looking ahead, 2019 marks the launch of the first 5G smartphones. This year, CTA expects the 5G-enabled devices to reach 2.1 million units sold and generate $1.9 billion in revenue.

Laptops: Driven by growing demand for cloud-based and convertible models, the U.S. laptop market will sell 51 million units, up 2% over 2018, and earn $32 billion in revenue (up 3%).

Televisions: After two years of record revenue and unit sales for the massive TV category, sales will start to taper off in 2019, as LCD shipments decline and upgrades from 4K Ultra High-Definition (4K UHD), 8K UHD and OLED sets grow. TVs remain the centerpiece technology in many American homes.

Overall, the total TV category will ship 38.8 million units in 2019 (1% increase) driving $21.4 billion in revenue (9% decrease) – following a better-than-expected year of sales in 2018. Upgrades will be driven by big screen models and sets featuring 4K UHD resolution and HDR technology. This year 4K UHD sets will account for 17 million units (7% increase) and almost $15 billion in revenue (9% decrease).

Looking ahead, inaugural shipments of 8K UHD TVs in 2019 will reach $734 million in revenue and 175,000 units. And the promising OLED market will surpass one million units this year (up 30% over 2018) with double-digit growth through CTA’s forecast horizon of 2023.

In-Vehicle Tech: Factory-installed, in-vehicle technology will see the largest revenue increase of any tech category in 2019 – increasing over $1 billion dollars year-over-year to reach $17.6 billion (8% increase over 2018). Advanced driver-assist safety features such as blind spot detection, adaptive cruise control, lane keeping assist and collision avoidance systems are driving sales of both factory-installed and aftermarket vehicle technology alike.

Software and Streaming Services — Music, Video and Gaming

Consumer spending on software and services (including music, video and gaming services) is projected to reach a new high of $75.6 billion in 2019 (a 14% growth over last year). Driving consumer demand are cloud-based subscription services supported across a range of devices.

Video: Live TV streaming and exclusive content through subscriptions will push consumer spending on video streaming services to $17.7 billion in 2019, up 25%.

Music: On-demand music services including Apple Music, Pandora and Spotify will cross $8 billion in revenue, up 33% as increased adoption of products such as wireless earbuds and smart speakers drive more music subscriptions.

Gaming: A revolutionary shift toward cloud-based streaming models, subscriptions and growing in-game purchases will push the gaming software and services category to $38.9 billion in revenue in 2019 – an 11% increase.

‘Star Trek: Discovery’ Exec Producer Talks About Going SVOD, the Launch of the Second Season and More ‘Trek’

LAS VEGAS — “Terrifying” — that’s how Alex Kurtzman, executive producer of “Star Trek: Discovery” described launching on the SVOD platform CBS All Access.

Kurtzman spoke Jan. 9 during the Variety Entertainment Summit at CES in Las Vegas.

“There’s always concern that the fans will revolt,” he said. And “Star Trek” fans are notoriously engaged.

“What was really clear was if we’re going to ask people to pay $10 a month we’re going to have to deliver an experience that they can’t get on traditional television,” Kurtzman said.

The first season famously sported some Klingon nudity and the first F-bomb in the series.

“It’s all tone,” he said, and being careful to not be “disrespectful of ‘Trek.’” The F-bomb, for instance, was delivered in reference to a scientific concern, he said.

“I think that the line now between movies and television is essentially over,” he said, noting “Discovery” is basically a long movie.

“The thing I love about TV is you can spend time getting into the details of the characters lives,” he said.

To that end, in the second season, the series will explore the relationship between Spock and his adoptive sister. It will be about “family [including the work family] working together to solve this mystery,” he said.

Taking into account some of the fan concerns about the dark theme of the first season, the second will include more humor, he said.

It also will address a burning question for some fans about the first season: Why do the Klingons have no hair?

Season two reveals that “in a time of war, Klingons shave all their body hair,” he said.

More “Trek” series are in the works, including an animated show from “Rick and Morty” exec producer Mike McMahan about the lower deck employees and a series with Patrick Stewart returning as Captain Jean-Luc Picard. It took some convincing, but Stewart eventually agreed to revisit the character.

“Sometimes you meet your heroes and they are as wonderful as you want them to be,” Kurtzman said of Stewart.

Viacom CEO Bob Bakish Focusing on Content in Fragmented Market

LAS VEGAS — For Viacom, content truly is king, according to CEO Bob Bakish, who is forging a “culture of content” at the company.

“I continue to believe there’s a lot of value in assets that we already own,” he said Jan. 9 during the Variety Entertainment Summit at the CES show in Las Vegas.

While the Walt Disney Co., with its Fox merger and pending SVOD service, and WarnerMedia, through the AT&T merger and its own pending streaming service, are leveraging consolidation for greater distribution clout in the fragmented market, big deals aren’t necessarily the best path, he said.

“Vertical integration is very much in vogue,” but historically it “doesn’t tend to work,” Bakish said.

“Bigger is not always better,” he said.

In fact, rather than bulking up to compete with online services, he pointed out Viacom produces shows for Netflix, Amazon and Facebook. For instance, the show “Jack Ryan” is on Amazon. The company launched Viacom Digital Studios to produce social media friendly content for outlets such as Facebook.

“Viacom doesn’t really require a transformational deal,” he said. Instead, the company is doing what he calls “accelerant deals,” such as recent pacts to acquire VidCon, which celebrates online video creators, and Awesomeness TV, which produced To All the Boys I’ve Loved Before released on Netflix.

The goal is “unlocking opportunity through truly multi-platform distribution,” whether it be AVOD, SVOD, legacy platforms or other models, he said.

“Relative to some of our peers, we’re further along in this transition,” he said.

One of the new technologies he is enthused about is the coming 5G mobile delivery standard.

“Mobile distribution is what will turn this [content monetization] decline on its head,” Bakish said.

5G and the move to 10G for traditional TV distribution will both expand the pipelines for content, he noted.

He’s also intrigued by self-driving cars, which will open up more free time for consumers to view entertainment.

Content owners cannot “crawl into the ivory tower” and hope the future will go away, he said.

“You can look at this transformation as glass have full or half empty. I’m half full,” he said.

Home Entertainment Community at CES 2019

Home entertainment executives again gathered for the annual DEG: The Digital Entertainment Group reception Jan. 8 in Las Vegas during CES 2019. The DEG honored Warner Bros. with the Excellence in 4K UHD Content Award for Stanley Kubrick’s 2001: A Space Odyssey 4K Ultra HD Blu-ray Disc, and Sony Electronics with the Excellence in 4K Product Award for its Sony Master Series A9F OLED TV. Dolby Labs was presented with the Emiel N. Petrone Innovation in Entertainment Technology Award for Dolby Vision, an imaging innovation developed in collaboration with a wide range of studios, creatives, and post-production partners.

Panelists Discuss SVOD Battle, Content Overload in the Entertainment Market on Eve of CES

Netflix has a fight on its hands as new subscription video-on-demand services from the big studios enter the marketplace this year.

That’s the opinion of Laura Martin, managing director and senior analyst, entertainment and Internet, Needham & Company, speaking on the panel “The Business of Video: Insider Insights for Going Global” in Las Vegas Jan. 7 on the eve of CES. While Netflix is getting into the studio game with content, it can’t match the marketing savvy of the big studios, she said.

“Netflix will spend $12 billion dollars on content, and they are shitty marketers [compared to the big studios],” Martin said.

Walt Disney Studios, with its impending launch of Disney+, and WarnerMedia, with its impending service, represent “two marketing juggernauts.”

“I think this is the big change that is happening to OTT,” she said. “I think the traditional content marketers [are positioned to win].”

She said the online entertainment space is getting saturated.

“There’s too much content being made,” she said. “Eventually those [capital investment] funds will not get a return on content.”

Ted Schilowitz, futurist in residence at Paramount Pictures, agreed that there is “content exhaustion.”

“There is so much content being made at various levels of quality,” he said, with companies such as HBO making a small amount of high value content and Netflix and Amazon making a large amount of content of varying value.

“It’s overwhelming,” he said.

Niche SVOD players will have to find their audience and a level of success they can live with, said Ooyala co-founder and CTO Belsasar Lepe, whose company helps services wring costs out of the process. They will have to figure out pricing and content models that work to discover “what does success look like?” he said.

The content mix is key for SVOD players, panelists said.

Schilowitz noted that the WWE SVOD service draws in subscribers with big events, but keeps them with the library content.

He questioned the hype surrounding bite-sized mobile programming backed by such ventures as NewTV from Jeffrey Katzenberg and Meg Whitman, calling the idea of short content demand somewhat of a “misconception.” Consumers are actually watching long form content in short bursts, he said.

“We talk about it as start, stop TV,” he said. Short form content limits character development and story arc, he said.

 

Digital Hollywood Panelists Discuss Challenges and Opportunities of Content Delivery on Eve of CES Show

LAS VEGAS — The challenges and opportunities of content programming in an increasingly online world were the subject of a Digital Hollywood panel Jan. 7 in Las Vegas on the eve of the CES show.

Three important challenges to an online content provider are facilitating “access, discovery and community,” said Soumya Sriraman, president of the subscription on demand service Britbox, which offers British programming. While access is getting easier for consumers, content discovery is a challenge and building an online community is even more of a challenge, she said, speaking on the panel “The Future of TV: From Primetime to Multi-Platforms.” One strategy Britbox has used to build its community is offering programming concurrent with its debut in the United Kingdom, she said.

PBS, too, is building its community of local station supporters through PBS Passport, said Ira Rubenstein, chief digital and marketing officer, PBS Digital. Those who donate at least $5 a month to their local station get online access to an expanded library of content not available on the PBS OTT platform. Meanwhile, another challenge for PBS is accommodating both an older audience that likes traditional linear TV and a younger audience that wants greater online access.

Finding an audience is aided by a platform, such as Twitter, which facilitates communities, noted Laura Froelich, senior director, partner management, global content partnerships at the social media company. Twitter helps its partners find and serve their audiences. The company is helping the PGA service its audience by uncovering the golf fans’ desire to see more than what is broadcast.

“Golf fans on Twitter were very, very vocal,” she said.

Different kinds of programming will begin to evolve, several panelists noted.

The PBS program “Frontline,” for instance, through its “Transparency Project” gives online viewers access to the entire interview of subjects in its documentaries.

Stefanie Schwartz, EVP, media networks digital partnerships and digital studios strategy and operations, Viacom, said her company is reimagining its program for mobile. For instance, for “The Daily Show,” the company created a segment called “Between the Scenes,” in which host Trevor Noah speaks to the audience in the commercial break only on social media.

Colby Smith, SVP, content and partnerships, ABC News, said through its 24/7 ABC News Live online platform, which launched in May, the network is deconstructing traditional TV elements to make them more dynamic. The breaking news and live events channel is found on various streaming services and social platforms. Referencing Netflix’s experimentation with a choose-your-own-adventure, multiple storyline strategy with “Black Mirror,” he envisioned online news content where the platform asks viewers where they want reporters to take a news story.

“That’s where it get’s really exciting,” he said.

“I think content is going to drastically change,” said PBS’s Rubenstein. “What is defined as content is going to drastically change.”

LG Rolls Out Roll Up TV

LG Electronics literally rolled out what SVP of marketing David Vanderwaal called the “ultimate future TV”; it’s a TV that rolls out of the sound bar box below.

To oohs and aahs from the crowd, the company unveiled its LG Signature OLED TV R, which “magically rolls up,” senior director of product marketing Tim Alessi added during a Jan. 7 press conference at the CES show in Las Vegas.

The TV “brings freedom of design to a space,” Vanderwaal noted.

The TV can roll up only partway in the box, which includes a Dolby Atmos soundbar, to become a control console to check the weather and perform other functions.

In what is called the “zero view,” the TV is hidden completely and can be used to play music.

The company also announced LG’s first 8K OLED TV, device compatibility with Amazon’s Alexa (in addition to Google’s Assistant announced last year) and the addition of Apple AirPlay to the 2019 TVs.

In partnership with Qualcomm, LG phones will include the Snapdragon 5G mobile platform.

“5G will be a reality in 2019,” said Jim Tran, SVP and GM of handset products for Qualcomm Technologies, adding “you will be able to download a 4K movie in seconds.”

Government Shutdown to Affect Some CES Programming

The federal government shutdown is expected to affect some programming at CES, according to the Consumer Technology Association (CTA).

The show is scheduled to take place Jan. 8-11 in Las Vegas.

“Because of the government shutdown, some of our scheduled government speakers at CES 2019 have alerted us that they must cancel their travel to the show,” said Gary Shapiro, president and CEO of the CTA. “As a result, some of our scheduled CES 2019 programming and speakers will change. We urge attendees who planned to hear U.S. federal government speakers to check the sessions on the website to ensure those individuals are still speaking. Our Speakers Directory can be found here. This page will be updated regularly.”

LG Announces Sound Bar Lineup for CES

LG Electronics announced a new 2019 sound bar lineup to be showcased at CES 2019.

The bar lineup is equipped with artificial intelligence and features two CES Innovation Award recipients (models SL9YG and SL10YG), according to an LG press release. LG’s premium SL9 took home the Best of Innovation title, the company announced.

LG models SL10YG, SL9YG and SL8YG were created in collaboration with Meridian Audio.

“The collaboration goes far beyond basic fine-tuning or the adoption of feature-sets, with both companies joining forces to engineer sound delivery for a truly unrivalled listening experience,” according to the release. “Drawing on 25 years of experience as the Master of Digital Signal Processing, Meridian’s Bass & Space technology improves the soundstage and envelops listeners in rich, uncompromising sound and strong bass. Together with its Image Elevation technology, designed to lift the soundstage in a more lifelike way to boost listeners’ sense of immersion, Meridian creates a true cinematic experience, delivering powerful surround sound like no other.”

Able to up-mix two-channel audio to multiple, distinct channels without generating any distortion, the Meridian Upmix technology increases sound immersion by improving the sound field while upgrading the clarity of vocals and lead instruments, according to LG.

LG’s sound bar models SL10, SL9 and SL8 support both Dolby Atmos and DTS:X. Users can add the Wireless Rear Speaker Kit (sold separately) to achieve a more cinema-like experience, according to LG.

The new sound bars also offer AI smart connectivity and voice recognition with the built-in Google Assistant. Users can control their LG sound bar and get information with a command such as, “Hey Google, increase the volume,” or, “Hey Google, what artist is playing?” Compatibility with Google Assistant-enabled smart products make it possible to control connected devices throughout the home via voice command. Users can say, “Hey Google, ask LG to turn on the air purifier,” to the sound bar to make adjustments.

The sound bars “have a sleek, understated design that perfectly matches the chic style of LG’s exceptional OLED TVs,” according to LG. At 57mm (2.25 in) deep, the LG SL9 can also be installed flush to the wall. An integrated gyroscope sensor gauges the position of the product (fixed to a wall or on a flat surface), adjusting sound directionality to guarantee the optimal listening experience, according to LG.

“LG’s 2019 sound bars deliver amazing performance tuned in close partnership with Meridian Audio with the convenience of smart AI connectivity,” said Kim Dae-chul, head of LG Home Entertainment Company’s audio and video business. “The high-quality sound and versatility of our newest lineup takes home entertainment to a whole new level and satisfies a growing demand for premium sound bar solutions that provide impressive listening experiences, greater convenience and stylish, modern aesthetics.”

AT&T’s John Donovan to Deliver Keynote on 5G Opportunities at CES

AT&T Communications CEO John Donovan will lead a keynote session titled “New Frontiers in Mobile” at CES 2019, the Consumer Technology Association announced.

Donovan will join MediaLink Chairman and CEO Michael Kassan to discuss opportunities for 5G, the next generation technology for mobile.

Owned and produced by CTA, CES 2019 takes place Jan. 8-11 in Las Vegas. The keynote will begin at 2 p.m. Jan. 9 at the Park Theater, MGM Park.

Presented by MediaLink, the keynote will explore how 5G will open up opportunities for robotic manufacturing, AR/VR and mixed reality, sporting experiences and public safety, among other industries. After Donovan’s talk, a panel of industry executives will discuss how global companies are developing marketing strategies to best engage consumers in this mobile, data-driven world. Confirmed keynote panelists include National Geographic CMO Jill Cress, Deloitte Digital CMO Alicia Hatch, Magic Leap CPO Omar Khan, Adobe CMO Ann Lewnes, The Stagwell Group president and managing partner Mark Penn, and Ascential Events president and Cannes Lions chairman Phil Thomas.

“AT&T is a leader in the next-generation of connected mobility that will impact every aspect of our lives, and 5G is the platform that will enable that transformation,” said Gary Shapiro, president and CEO, CTA, in a statement. “We are excited to have John Donovan and Michael Kassan lead this powerful CES keynote that will delve into the new world of 5G innovation and the next wave of connectivity.”

Donovan is responsible for the bulk of AT&T’s global telecommunications and U.S. video services businesses, including its Business, Mobility and Entertainment, and Technology & Operations groups, according to a CTA press release. Previously, Donovan served as chief strategy officer and group president, AT&T Technology and Operations, where he led strategic planning for the company overall.

Kassan founded MediaLink in 2003, a strategic advisory firm serving companies at the intersection of media, marketing, advertising, technology, entertainment and finance.