Ultra HD As a Product ‘Will Sell Itself,’ CEA’s Shapiro Says

With Ultra HD set prices expected to come down soon, Ultra HD “will be huge and big, and it’s not going to need lots of promotion” like 3D TV did, “because it almost will sell itself,” he said. “I am excited about Ultra HD. Content will come when the screens are there.” By comparison, of 3D TV, Shapiro said: “Let’s be honest. It was a little overhyped and it’s more of a challenge.” Shapiro thinks 3D TV “will be a case study at some point for mistakes our industries have collectively made,” he said of CE and Hollywood.

To this day, Shapiro thinks the DTV coupon program was “a total waste of a billion dollars,” he said. The program offered each U.S. home an $80 subsidy toward the purchase of two set-top converter boxes for when analog service went dark. Even if the coupon program prompted consumers to visit CE retail stores who otherwise wouldn’t have shopped a Best Buy, it wasn’t “a good use of government money” compared with building “infrastructure, education, things like that,” he said. “We didn’t need it. Losing your TV service for a few hours? You know you could turn on the radio, you could get a newspaper. The point is, it wasn’t going to kill anyone, it was just TV."

Of the U.S. economy, “if you think of what we're good at, we're good at innovation,” Shapiro said. The Amazons and eBays of the world “all started here, and it’s because of who we are as a nation,” he said. “We're the most diverse nation in the world, heterogeneous. We're not homogenous like the Japanese, where everyone just agrees with one another.” The U.S. uniquely also encourages failure, he said: “We're the only society to do that. Elsewhere, if you fail, you're out of business forever. Here failure is just the punch card to your next success and you learn from failure.”

On the need for spectrum, Shapiro said the average smartphone uses “20 times the data stream of a regular phone, and a tablet uses 120 times,” Shapiro said. “We're getting to a critical point where those things aren’t going to work. We have to get more spectrum.” Shapiro conceded that “for a lot of reasons, broadcasters don’t love me,” including for his allegation that broadcasters are “slow-walking” spectrum reform. Broadcasters “have gone from 100 percent market share when we were kids to right now where only 7-8 percent of homes rely exclusively on an over-the-air broadcast signal,” he said. “So we have these huge swaths of spectrum that are being used by relatively few people in the country, but broadcasters exist and they protect that.” NAB spokesman Dennis Wharton responded to Shapiro’s remarks with a tongue-in-cheek statement: “We do love Gary. How can one not love a Ninja Innovator?"

Of the “very complex” spectrum incentive auction due to take place soon, broadcasters “are coming up with a thousand reasons why it doesn’t make sense,” Shapiro said. For the auction to happen this year, “a lot has to play out, and it really needs aggressive government leadership,” he said.

Other disclosures: (1) “If you think about innovation” in the CE industry, “by definition, everything we do in consumer electronics is disrupting a business model of somebody else’s,” Shapiro said. “Whether it’s broadcasting, or cable or satellite or Hollywood or the music industry -- call me paranoid, but I'm always the bad guy to somebody because I represent that industry, and I'm fighting in Washington to make sure we can innovate."

(2) One of the reasons for the success of CES is that “we partner vociferously,” Shapiro said. “We would love to cut a deal with a motion picture company. If you wanted to promote a movie, CES would be a great way to do that. I'm shocked that no one has talked to us about that."

(3) Though he writes in Ninja Innovation that his “willingness to take a stand and speak out has landed me on various lists of influential policy people,” Shapiro has no plans or ambitions to run for public office, he told the conference. He confided that “a whole bunch of people” recently urged him to run for Virginia governor, “but I just can’t.” That came after Shapiro told a candidate “to his face” that the Virginia business community would not support his run for governor “because he’s anti-gay, anti-woman, anti-immigrant and very bad for business in Virginia,” Shapiro said. News reports identified the candidate as the state’s attorney general, Ken Cuccinelli. Though Shapiro admonished Cuccinelli behind closed doors, word of it leaked out “everywhere,” he said. As to why he won’t run, Shapiro said: “I have the best job in the world."

ESCA Digital 2013 Notebook

With 4K content creation looming as one of several expensive capital projects coming down the pike, it’s not easy to decide where to invest and where not to, two replicator executives told the conference. “I get a bit of a benefit by being part of Sony,” said Andy Shenkler, executive vice president-operations and business strategy, at replicator Sony DADC. For him, “4K is not really an option, I suppose,” but a requirement, because of Sony’s avowed plans to be a 4K industry leader, he said. “With regard to the capital investment, I think it’s really about the speed at which you scale as opposed to whether or not you're going to pursue something.” Shenkler obviously doesn’t believe “it’s realistic to think that there’s going to be about 1,000 4K movies by the end of this year, so it wouldn’t be very intelligent to scale up as if that’s going to occur,” he said. “But you start small and kind of watch where it goes, that’s pretty much how we did it with 3D as well.” Another replicator executive, John Crosier, Cinram senior vice president-digital architecture and delivery, agrees “it’s a scale question,” he said. “As the digital environment changes, you just have to be ready to be able to scale” to meet demand, Crosier said. “The bottom line is if the content owner is asking you to prep and get ready those assets, you have to believe that while the consumer electronics devices may lag, there will come a time when all that content you've started now will be available to the consumer, because the consumer’s not going to want to wait.” When it comes to 4K investment, Shenkler joked that Sony DADC’s “biggest capital cost right now is knocking down walls to fit the 84-inch televisions in QC bays.”