An industry executive speaks

In a series of Q&As, professionals in all facets of the packaged media industry share their views of things past, present and yet to come. It’s the turn of MIGUEL CLARKE, CEO of Silicon Philosophies, based in Augsburg, Germany.

Where do you see your company's comparative advantage or uniqueness in this crowded marketplace?

In contrast to other companies, Silicon Philosophies are developers, suppliers, integrators and users of hard and software products. This affords the competitive edge of being able to develop, program, assemble and deliver goods and services – based on our own experiences and production needs.

Amongst the range of services you offers, which one grew over the past two years and which one diminished?

Demand for our 2D and 3D encoders for Broadcast and Video Post-production and VOD have grown steadily. Traditional DVD production-related products have fallen significantly, due to web-based delivery of low resolution video products and services.

The non-home entertainment, corporate market is very substantial as far as DVD is concerned, rarely mentioned in statistics. Do you service this market segment as well?

Yes, most corporate clients still request their productions to be authored for playback on DVD. This is usually because they use laptops and want to ensure playback of content by their sales force or end-customers.

One hears alarmist opinions about the rapid demise of packaged media in the face of online delivery. What is your view as to how long discs will be around? And how to you plan this transition?

My predictions are the opposite! With all this hacking into the Playstation libraries, the film studios will soon recognise that 100% Copy Protection is a fallacy. Physical media and AACS are a “hindrance” to piracy, therefore high resolution movie and other content are less likely to be pirated when stored on disc than when they’re floating around in the “clouds”. Cloud-based distribution can be likened to flocks of sheep on fields surrounded by forests where wolves live – it’s simply a question of time. We strongly discourage content distribution via digital delivery, and will avoid it at all costs.

The unexpectedly rapid fall in price of Blu-ray discs, early in the commercialisation of the format, makes the economics of BD replication and authoring very challenging, especially in view of the heavy investment required. What needs to happen to make it a viable, long-term business for independents?

The greatest hindrance in profitability lies in the following: high AACS costs; unwillingness of customers to pay reasonable production and authoring prices; pressure from customers demanding more features for less money; some studios offer BD plus DVD pre-mastering (combined) for rock-bottom prices. The practice of price-dumping needs to stop. Studios are hurting themselves by undertaking productions at or below cost! Unless the industry settles on standardised prices to guarantee profitability – highly unlikely – the situation will remain dire.

Do you think Blu-ray discs will eventually replace DVDs completely or will they only partially replace them, becoming a niche, albeit big?

In view of the installed base of inexpensive BD players, PS3s, computers with burners, reliable 25/50GB media, plus the planned release of discs with much higher storage capacity, BD will eventually completely replace DVD.

Do you see the arrival of 3D as the shot of adrenaline the Blu-ray disc format badly needs to progress in the market, or do you think consumers will make a success of Blu-ray irrespective of whether 3D develops?

This is the case in Germany, Austria, France and Scandinavia, but not in the eastern European countries. Consumer acceptance of Blu-ray devices and technology is almost non-existent in Italy, for example. Content drives interest – not vice versa.

All TV stations in Germany are required by law to offer HD broadcast by 2012. This form of regulation will encourage consumers to purchase HD-capable devices in order to enjoy these broadcasts.

Prices of 2D televisions and players have fallen dramatically and new 3D devices offer so many improvements and features over their predecessors, that purchasing these are seen as cost-effective, sensible and practical investments.

Do you think 3D is here to stay or consumer interest in stereoscopy will be temporary?

3D is no longer just a novelty, but is steadily being adapted into production and post-production activities. As the availability of film, video, advertising, training and educational content increases, so will consumer interest. Content is king!

Do you think the consumer take-up of 3D depends on the arrival of glasses-free autostereoscopic systems. If yes, how many years do you believe consumers will have to wait for a high-quality glasses-free system to match the existing shutter glasses 3D solutions?

This is again a regional and cultural issue. In Germany, some retail stores gave away multi-colored passive glasses, which can be used with the new LG 3D televisions and also in the cinema. Teenagers and kids enjoy the variety of colors and consider wearing them as being “cool.”

This is the greatest motivating factor, since most parents buy products for the benefit and enjoyment of their kids. These same teenagers and young adults represent the future customer base for 3D and related electronic products.

Films on solid state/Flash memory, Holographic disc, 4,000-line Super HDTV are advanced technologies at varying state of development. Do you see any of them entering the consumer market and, if so, in what time frame?

This is still a long way off as 4K success depends very much on 3D’s acceptance and integration.

An increasing number of manufacturers are moving into solar panel/cell segment, which they reckon has more potential than packaged media. Is there enough synergy between the two industry sectors to warrant such a move? Are you considering expanding your activities in the solar business as well?

We have no plan at present to enter this market.

Diversification is claimed to be the best way of staying afloat in the face of market uncertainty. How do you see your company's range of services evolving over the next 2 to 5 years?

For quite some time we have followed and evangelised the strategy I call “Diversify or Die”. Additionally, we base much of our success on collaboration, whereby the synergy of our individual partners allows us to create package or modify our products and services as needed. We anticipate growth in our range of services and deployment of new products as we focus on evolving markets and broaden our customer base to households, schools and communities.

A last word?

If you follow what’s going on in the professional world of stereoscopic 3D you will discover just how much is being already done worldwide in 3D production.

Contact: www.cc-hde.com/
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