CES Trend #9: Will CE vendors start steering clear of DRM?

The lustre comes off the promise of DRM

About one-third of the 6 million songs currently available from Apple's iTunes now come free of DRM, too. The DRM-free offerings are sold through Apple's iTunes Plus.

At the end of December, Apple competitor Amazon.com added to its line-up of DRM-less downloadable songs through a deal struck with Warner Music Group, bringing the total number of tunes available through Amazon's MP3 store to 3 million.

Microsoft has jumped on the bandwagon, too. Its Zune service now offers DRM-free songs as well.

But outside of music downloads, high-def TV is another area where market penetration hasn't yet come anywhere near to reaching its potential, and the prognosis for the immediate future doesn't seem as rosey as for audio.

Despite all the vendor hype about ever larger display screens, and other shiny new HDTV features and accoutrements, a recent study by the venerable Nielsen Group found that only 11.3% of US TV households are currently "HD-capable" -- meaning that they're outfitted with an HD TV, an HD tuner, and at least one "HD network or station."

Meanwhile, though, vendors from both the Blu-ray and HD DVD sides of the fence are blithely ignoring that sad number, focusing instead on promoting statistics around their own respective shares of the overall digital movie pie.

In some senses, the picture seems brighter for streaming high-def video content than for HD disks. Although this particular report left high-def out of the equation, recent research by the Leichtman Research Group (LRG) found that digital video recorders -- the gadgets used for recording streaming video content -- are now present in one of five US households, as opposed to one in 13 households only two years ago.

Although a number of vendors will be on hand at CES with powerline home networking equipment, tough technology challenges loom ahead for streaming high-def video in the home, largely around distribution of high bandwidth video over low bandwidth pipes.

Moreover, remember Marks' observation about content that you can "hold in your hands?" Well, that preference seems to apply not just to the digital music, but to video, too, including the high-def variety.

For high-def video to really start reaching greater numbers of people, high-def vendors need to give up their current grip on DRM and other manifestations of Blu-ray and HD DVD proprietary formats, and start selling discs that will work interchangeably on any vendor's HD equipment. But what will happen if these two warring camps continue to stay locked in their current stalemate?

Ultimately, the doors look likely to swing open to a new high-definition TV standard, now under development in China, envisioned as supporting high-def video products that will interoperate with HD DVD.

Although the Chinese government is expected to extract small royalties for these CH-DVD products, pricing should be relatively low, on the whole. After all, regardless of the brand name on the box, the vast majority of the world's DVD components are already manufactured in China, anyway.

There are indications we'll see signs of this new CH-DVD standard at CES 2008. But there's always next year, and the year after that. And don't be surprised if, at some point down the road, the shelves and floors of your local Wal-Mart store are lined with high def CH-DVD discs -- along with CH-DVD recorders, tuners, and lower-priced HDTV bundles to go along with them.