Friday, June 17, 2005
Living Rooms Wars - Intel + Hollywood vs The World
An interesting job posting from Intel focusing on building alliances with Hollywood and record labels makes me wonder if Intel is about to Sony itself.
Now, that may be reading a lot (too much) into such a small thing, and I know Intel's Content + Services group has been around for a while, so let me make my argument.
By Sony itself, I mean that Sony's malaise can be traced back almsot canonically to it's content acquisitions, which were in almost direct opposition to it's core competences. This is where the strategic tensions that led to all kinds of misguided tactics like ATRAC and MD - and almost 15 years of missed strategic opportunities - came from.
Think about the counterfactual for a second: a Sony which didn't make suge huge errors in almost every other market but games (where, thanks to Ken Kutaragi, it continues to play an almost perfect game). Such a Sony would be an immensely succesful and powerful firm.
Powerful enough, in fact, to exert more power over content providers, than, paradoxically, it's been able to by acquiring them. Funny, huh.
Intel, I think, is about to find itself in almost exactly the same position, given it's newfound emphasis on the role of content providers in the value chain by investing heavily in DRM.
Either that, or consumers will miraculously not arbitrage rigid property rights away, and Intel's lockdown DRM will own living rooms across the world.
I'm putting my money on the former scenario - not the latter - largely because I think first that consumers aren't idiots, and second, because I think that China and India know a big opportunity when they see one. In fact, I'll probably be teaching fresh MBAs cases about how Intel screwed the pooch by ignoring it's core competences and essentially trying to arbitrage it's own ecosystem for another.
Of course, Intel and Hollywood have one big force working for them: the natural tendency for quality to erode when margins get atomized out of a value activity. Here's a very nice example: an unintended consequence of totally decentralized distribution a la BitTorrent is also more efficient distribution of spyware and adware.
india and china won't get the chance if Intel/Microsoft and Hollywood impliment technical standards which outlaw the use of such things as region-free coding.
brian, if China and/or India don't like "Intel/Microsoft and Hollywood" implementations, they'll just make their own. Their markets even individually have the potential to be magnitudes larger than what the US has to offer. Plus, China is already toying with their own video and audio codecs.