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Microsoft has ubiquitous software and two hardware choices: UltimateTV and the Xbox. But the regime has little content, and it falls short in distribution. It’s no secret, however, that Bill Gates has a keen interest in building a low-earth-orbit satellite network. And Murdoch has courted Gates as a potential bidding partner for DirecTV. If Murdoch and Gates worked together, both companies could complete the digital-entertainment chain. News Corporation and Microsoft both declined to discuss strategy for this story.

That brings us to Sony. It has plenty of content (Sony Pictures, Sony Music), and plenty of hardware and software. Sony’s platform strategy is clear: turn the PlayStation 2 and its successor, PlayStation 3, into the magic box. It’s got distribution too. In late May Ken Kutaragi, CEO of Sony Computer Entertainment, announced that Sony Entertainment had formed a strategic alliance with none other than AOL Time Warner. Sony gets distribution and AOL Time Warner gets a box. Sony also announced that networking giant Cisco Systems would develop software to give PlayStations broadband Internet access. Other plans include technology to let Sony video camera users upload their movie creations through the company’s Vaio laptop computer or PlayStation 3 onto its So-Net Internet portal, where any subscriber could retrieve and watch them. “You could even broadcast your own show live,” says Masaaki Oka, a producer in Sony’s creative-development department, “or create your own online video game.”

Sony bills such moves as creating a new world of broadband entertainment “through the fusion of games, music, movies, and broadcasting.” But critics question whether any one company could corner the digital-entertainment industry. “It’s logical for [Sony] to try,” says Claudy, the National Association of Broadcasters’ technology guru. “But they have different core competencies and may not be good at providing the missing links.”

The most likely outcome, he and other experts say, is a few giant companies that compete by offering custom TV services. Which package consumers choose will depend largely on price. “The cable and satellite companies are not sure how much consumers might pay,” Claudy agrees. “Eventually, the enigmatic desires of consumers will become clear. That will drive up volume, which will drive down cost.”

“The Last 12 feet”

Once companies integrate digital content and distribution with a platform, we might finally have custom access to all TV shows, movies, music and online gaming for a low price. But it may not stop there. Since a magic box will accept broadband, it could become the lauded gateway to the home for everything digital, including Internet and telephone. And because it will have an operating system that can control peripherals, it could function as the home’s central controller, directing the security system, appliances, heating, desktop computers and all sorts of wireless devices.

One of the first real-world trials of such a system began in August, in Ajax and Pickering, Ontario, just east of Toronto. Rogers Cable, the local cable provider, installed small silver-and-black boxes in 50 subscribers’ homes. A Linux-based networking platform made by Ucentric Systems of Maynard, MA, connects each home’s computers and appliances to each other and the Internet. The system can provide television, Internet and telephone services on all TVs, plus voice mail and e-mail on all telephones and computers. The Ucentric unit does not yet have digital-video-recorder capabilities or its own electronic programming guide, however, and it can’t receive digital TV signals-so custom TV remains out.

It’s not the magic box, but it’s an indication that the technology is within reach. That’s why, says Bean, “the battle in broadband distribution is no longer the last mile’ to the home, it’s the last 12 feet’ inside that home”-delivering not just bandwidth capacity but a custom broadband experience people can enjoy from a comfortable seat in any room.

The day that arrives, you’ll go to the electronics store and buy a “home gateway” box the size of today’s VCR for maybe $300. You’ll hook it to a broadband cable, then connect it to your wired or wireless home network. You’ll call the cable provider and sign up for its custom-TV digital recording service for maybe $50 a month. You’ll hang a flat plasma display (prices will have dropped since Mitch’s day) on the living-room wall and connect it to a wall socket that also taps into the home grid. You’ll put modest displays in other rooms, too. As you leave the bedroom you’ll say “off” to its screen, and as you enter the kitchen you’ll say, “Screen, show me my stock numbers.” During a commercial you’ll use a little wireless remote to instruct the hidden gateway box to find, download and play an original Star Trek episode. When the episode ends you’ll grab the game controller off the coffee table, become Captain Kirk on the plasma screen and engage in a live, online dogfight in the Neutral Zone with an opponent from Tokyo.

And you’ll wonder: will anyone buy that old “TV” stashed with the other junk for your tag sale Saturday? Hmm. Maybe some collector of obsolete technology.

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