Digital Toys

Michael Hedges September 21, 2009 (follow on Twitter)

Media, mostly, relies on a wide assortment of electronic devices to deliver the streams, snaps, blurbs and other goodies. The technology geniuses keep inventing new ways of getting that stuff through wires or ether searching for that killer application. At the other end of the chain, real people either pay to enter the kingdom of new media or, well, they stay home.

Earlier this month the IfA consumer electronics show in Berlin saw an increase in both attendance and orders over 2008. The American Consumer Electronics Show last January was considered a bust as buyers and sellers stayed away. With the end of year shopping season less than 100 days away, sentiment at the IfA about economics, trends and preferences is closely watched.

As every gathering of ten or more media people is usually overloaded with forecasts of the next big thing, this years IfA appeared more realistic – or downbeat - depending on your perspective. Economic recovery – in terms of consumers returning to the shops ready to buy with cash – was top of mind. And the minds at IfA appear to be as one.

"In my personal opinion,” opined Sony Europe’s Fujio Nishida to Reuters, “we have not seen the bottom yet in the western part of Europe." Others suggested Western Europe might start spending sometime next year. Eastern Europe could be years away from what any reasonable observer could call a recovery in the consumer electronics market.

Market researcher GfK even brought back a marketing concept from the last serious recession – cocooning.  Most manufacturers and retailers at the IfA seemed behind the idea that people will be spending, sooner or later, and it will be on the home front. “This phenomenon can also be observed in the consumer electronics sector at present,” said GfK. Thus, we have the singing coffee makers.

Anything possible with game consoles will be done. And there will be 3D TV, as if livings rooms aren’t virtually crowded already. Funny glasses and all, 3D – a 1950’s retread – is perfect for a recession. Of course they will be expensive. Play Station 3 will be 3D. Cancel that holiday!

Since people will be spending more time at home obviously with more gizmos cranking through electrons, there was noticeable attention to power consumption and how to manage it. There was a solar powered mobile phone. There were laptops with up to 12 hours of battery power.

But there was little buzz on mobile phones, laptops or tablets – those inexpensive devices for downloading newspapers and books. Everybody already has a mobile phone or two and last seasons laptop is still running. As for tablets, best to wait until certain copyright problems are worked out.

With home-bound consumers expected to buy or at least look at new toys to accessorize the house, digital radio receiving devices may find a place on the list. With several digital radio standards available in Europe manufacturers have pressed chip-makers for more processing capacity. UK digital maker Pure introduced a receiver that can pick up digital radio signals no matter what standard is used, a nice idea for holiday takers traveling across Europe if people take holidays next year. Another model is both iPod and iPhone enabled.

Consumer electronics manufacturers have become quite adept at rapid changes in the market. Bigger names – like Sony – still need a couple of years to develop new products. Development time, though, has tightened. A Nokia mobile phone (device, thingy) has a shelf life of only a few months. Apple fans get the DTs when new toys don’t arrive each year.

But devices alone don’t drive the market, although in the easy credit days being clever and cute drove a significant part of sales. Until economic recession entered everyone’s personal space technology watchers believed consumers had all become early adopters. Certainly digital TV uptake continues to drive much of the big screen market; zillions of channels to watch, less expensive than other entertainment.

Digital radio uptake – or lack thereof – confounds broadcasters as well as receiver makers. Being somewhat on the low end of intrinsic consumer demand, buying a new radio receiver when the old one (or six) work perfectly well and with nothing (much) new on offer continues to hold back consumers. UK media analyst Grant Goddard, examining data on UK receiver sales and audience figures for digital radio channels observes the inextricable link between consumer demand and content.

“Much of the implementation of DAB (digital radio) to date in the UK has focused on ‘supply-side’ issues, without seeming to determine whether there is sufficient demand from consumers for new content, and without determining whether that new content would prove sufficiently attractive to lure consumers into shops to purchase DAB radios,” he wrote. (See full report here) Ironically, it appears that if our existing system of analogue radio broadcasting had been less well developed in terms of both the range of available content and its near universal delivery, DAB might have been better able to address any pent-up demand from consumers. As it is, the majority of consumers seem very content with their existing radio options.”

So, the toys will be in the stores. Consumers will look. How will they decide?

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