From Michael Bay to Ultra HD, CE Story Lines Abounded in 2014

The incident involving Transformers director Bay, whose walkoff at Samsung’s CES news conference went viral on YouTube and social media outlets, drew more attention to Bay than it did to the curved Ultra HD TV that Samsung hired Bay to trumpet for its "immersive" viewing experience. However, Joe Stinziano, Samsung senior vice president-home entertainment, who was credited with the onstage save after Bay’s exit, later praised Bay in a statement.

Though some debate flourished in 2014 over whether consumers preferred flat 4K screens or the immersiveness of curved 4K display form factors, the bigger Ultra HD story was that 2014 marked the first full calendar year of Ultra HD TV shipments, and those shipments were expected to brush past the million-unit mark for the first time when CEA releases year-end results at CES. However, the year hardly saw a deluge of native-4K content availability to serve those million-plus sets. That scarcity of content helped mask signs that sales of Ultra HD TVs were a genuine CE industry success story in 2014 and strong indications that consumer adoption of Ultra HD technology -- even lacking that native content -- might well be proceeding faster than many observers had predicted at the beginning of 2014.

Snippets of Ultra HD's success could be found everywhere throughout the year. For example, a rather stellar Conn’s report on Ultra HD sales performance for the month of November was buried beneath the retailer's disclosures last month of poor credit risk oversight that caused Conn's shares to plummet 40 percent and see its chief financial officer depart the company with little warning. "The Black Friday weekend was outstanding," a senior Conn’s executive said on a mid-December earnings call. "Television sales trends reversed and TV comps were positive for the weekend with a strong Ultra HD performance." Ultra HD "is the big winner for us so far in the holiday period," he said, citing two models of curved Samsung Ultra HD sets that had "higher sales in one month than any other SKU in the company's history. We're excited to see a new television technology that is generating consumer enthusiasm. With prices below $2,000 and larger screen sizes, we could see a meaningful replacement cycle."

As for Ultra HD content initiatives throughout the year, Netflix's 4K foray with the second season of the House of Cards series is "a toe in the door" for a technology that could take "years" to fully establish itself, Todd Yellin, the company’s vice president-product innovation, told us in late February. In the transmission of live 4K sports, the few developments that took place were experimental in nature. Typifying those efforts was Sony’s partnership in July with Vue Entertainment to stream a World Cup quarterfinal match and the final live in 4K to a movie theater in the Westfield shopping center in London, the companies said Monday.

In other 4K content developments, after months or more of saying it was "gearing up" for 4K content delivery, DirecTV finally pulled the trigger mid-November when it said it will become the first multichannel video programming distributor to deliver 4K VOD to customer homes. Finally, LG as a sponsor announced late November that Cheek to Cheek: Live, a concert performance by Tony Bennett and Lady Gaga, recorded in Ultra HD last summer in New York, was destined for streaming in 4K on Amazon Instant Video.

Other 4K content initiatives were heavily talked about in 2014, but won’t be delivered on until 2015. At the Berlin IFA show in September, the Blu-ray Disc Association publicized for the first time that its current target is to have licensing documents ready for a next-gen native-4K format by spring or summer 2015, allowing the first products to reach the market by the 2015 Q4 holiday selling season. Finally, the Secure Content Storage Association broke a prolonged silence in December when it announced that Walmart has joined as its first U.S. retail member. SCSA is a two-year-old consortium that has been working to fashion what backers like Samsung have called "an open ecosystem" of native 4K content that one could buy at retail for download for storage or playback on any number of brands of Ultra HD TVs that support that ecosystem. It’s expected more SCSA details will be disclosed at CES.

Other stories captured the CE industry's collective attention during 2014. Here’s our summary recap of some of those 2014 story lines:

Aereo Goes Down to Supreme Court Defeat

Broadcasters hailed their late-June victory over Aereo, while Aereo’s defenders, including the company’s own CEO, Chet Kanojia, called it a "massive setback." In the end, Justice Stephen Breyer wrote the Supreme Court's majority opinion, ruling that despite Aereo's unique technology, the company's end product differed little from that of a cable company, and should be subject to laws intended to impose copyright restrictions on cable companies. Aereo didn’t respond to numerous interview requests about its plans, but in a statement said the company planned to continue fighting. However, in late November, Aereo filed for Chapter 11 protection in U.S. Bankruptcy Court in lower Manhattan, listing about $20 million in assets, including about $4.5 million in cash, and $4.2 million in liabilities, plus potential damage claims from broadcasters.

Connected Home Marches Toward Mainstream

Last January, Google announced it agreed to buy home automation innovator Nest Labs and that Nest CEO Tony Fadell, who was on the iPod development team at Apple, would continue to lead Nest after the purchase. Immediately, other home automation innovators like Control4 CEO Martin Plaehn greeted Google’s Nest acquisition as "a validator of the ideas we put forth in the early 2000s." Others also hailed the Google-Nest news as vindication that the larger connected home market was poised to go mainstream. In late August, Lowe’s said it will exhibit for the first time at January CES as part of the Tech West exhibit at the Sands Expo. Lowe’s will make its CES debut because the home control market is "going mainstream" and Lowe’s is part of that, the retailer said. Said one Lowe’s executive: Home control has been part of CES in the past, but at a level beyond the reach of most consumers. "Anybody can do home automation for $5,000 a pop, but Lowe’s is trying to bring it to the masses at $179," the approximate cost of a Lowe’s Iris starter kit, it said. Then in November, a Janney Capital Markets report concluded that Best Buy is poised for "strong market share" in the connected home space. Among retail chains with electronics products, Janney said Best Buy’s recent expansion into the connected home market in 400 stores initially focuses on home security. Wireless cameras dominate shelf space in stores, Janney said, with Next thermostats, smoke detectors and automated door locks "less visible." The connected home market will drive traffic in Best Buy stores in the near future "as it improves and becomes more consumer friendly," said Janney. Lowe’s and Home Depot have laid claim to the connected home customer, but Best Buy will take share through its service capabilities, Janney said.　

Two Iconic CE Retailers Meet Their Demise

CE industry retail veterans mourned the news late February that 60-year-old regional chain American TV & Appliance, of Madison, Wisconsin, would shutter its stores after a going-out-of-business sale. The 10-store retailer said it's "going out of business forever." CEO Doug Reuhl called the closing a "sad moment," attributing it to "an unforgiving economy." In April, more sadness greeted a notice on the J&R website that the lower Manhattan CE retailer had shuttered its doors after 43 years. "A lot has changed in these 43 years, including not only the way we listen to music and the technology products we sell, but the way people shop and socialize," J&R founders Joe and Rachelle Friedman told customers in an open letter. They said amid changes in technology, real estate trends and retailing, they need to "reinvent ourselves as we continue to look ahead." After liquidating inventory throughout most of the summer, J&R did J&R Express just before Thanksgiving. It’s a store within a store operating inside the Century 21 department store in the shadow of the former World Trade Center.

Apple Buys Beats for $3.2 Billion

The CE industry was abuzz mid-May with the first reports that Apple was planning to buy Beats for $3.2 billion. Apple ultimately closed on the deal in early August. According to NPD numbers, Beats already had 62 percent share of the premium $100-and-above headphone market in the U.S., which topped $1 billion for the 12 months ended March 31. Under Apple’s watch, Beats will be able to grow its brand beyond the 18-34-year-old demographic, analysts said. As Apple’s in-house audio brand, Beats will be able to tap into the enormous base of iOS and Mac users spanning various demographics, and Beats will benefit from Apple’s continued expansion into new categories and markets, they said. Said one analyst: Beats’ crossover into fashion electronics "says their brand or design imprint will be felt" in the wearables market.

Dolby Atmos Debuts for the Home

By mid-year, the race was on toward the next phase of surround sound at a time when sales of five- and seven-channel AV receivers have been trending downward. Denon, Marantz, Onkyo and Pioneer all announced Dolby Atmos-enabled AV receivers, which deliver up to 11 channels of audio, including channels for height to create what the companies call a multidimensional surround-sound experience. Dolby Labs estimated at a late-summer media event that 150 movies have been mixed in Atmos for the cinema, mostly of the "blockbuster" type. It then used the CEDIA Expo to announce that the Paramount release of Transformers: Age of Extinction would be the first Atmos-enabled soundtrack to come out on Blu-ray. Not to be outdone, DTS waited until two days before New Year’s to make its next-gen object-based codec official. DTS:X will be its next-generation object-based codec technology and is the successor to DTS-HD Master Audio, DTS said, releasing few technical details. DTS:X "delivers the ultimate in flexibility, immersion and interactivity to listeners of all forms of entertainment," the company said. The official launch of DTS:X is planned for March, DTS said. While it was short on specifics, the company did cite manufacturers that have agreed to launch products supporting DTS:X in 2015 -- which it called "nearly 90 percent of the home AV receiver and surround processor market" -- including Anthem, Denon, Integra, Krell, Marantz, McIntosh, Onkyo, Outlaw Audio, Pioneer, Steinway Lyngdorf, Theta Digital, Trinnov Audio and Yamaha.

Internet of Things Coming of Age

This CES will have more than 900 exhibitors participating with products, services and technologies for the Internet of Things, CEA said just before Christmas. "The Internet of Things is the hottest topic in tech right now," CEA said, citing the opportunity to connect "everyday items" including cars, home security systems and kitchen appliances to networked devices such as PCs and smartphones. Throughout 2014, many multi-company initiatives sprung up to assure multi-brand interoperability of IoT devices. One was the Open Interconnect Consortium, which was formed in July to promote interoperability among the billions of connected devices expected to come online by 2020, the consortium said. Founding members include Atmel, Broadcom, Dell, Intel, Samsung and Wind River. The consortium will target interoperability in PCs, smartphones, tablets, home appliances and "new wearable form factors" by establishing a specification, an open source implementation and a certification program for wirelessly connecting devices, it said. "The first open source code will target the specific requirements for smart home and office solutions, with more use case scenarios to follow."

Hi-Res Audio Begins Seeking Its Imprint

High-res audio will be defined as "lossless audio that is capable of reproducing the full range of sound from recordings that have been mastered from better than CD quality music sources," said CEA, the Digital Entertainment Group and Recording Academy in a joint announcement in June with Sony Music, Universal Music and Warner Music. The groups and labels also approved a series of four voluntary "descriptors" for the "Master Quality" recordings that are used to produce the hi-res files available to digital music retailers, they said. "The industry can take a unified approach in offering digital music services a variety of information concerning the growing number of hi-res music titles being distributed today," said DEG President Amy Jo Smith. At CES, the Bellini Room 2001, Level 2, in the Venetian Hotel will be home to a half-dozen panels on hi-res audio. A key attraction there will be rock icon Neil Young, who will hold a special press briefing on hi-res audio on Tuesday at 3:30 p.m. Young also will share his passion for hi-res music in a CES SuperSession on Wednesday at 10:15 a.m.

TVs Make Their Black Friday Mark

The big tech winners Black Friday weekend weren’t tablets or smartphones, but were TVs. So said CEA in early December when its consumer surveys found TVs were cited as a purchase by 37 percent of consumers canvassed by CEA who said they bought tech products Black Friday weekend. In 2013, the proportion of tech shoppers citing TV purchases was only 27 percent during Thanksgiving weekend, "so that was a pretty significant jump in the percentage of shoppers who report having bought a television," CEA said. "Phenomenal deals" in TVs helped feed the frenzy, as did signs that the industry might well be "moving into a sweet spot" for replacement sales of TVs, it said. Promotional activity for Ultra HD was another factor lifting TVs to the top of the tech product winners list, CEA said. "This was the first year we saw Black Friday pricing and promotions for 4K Ultra HD."