Digital Rights Management Conflicts Delay Lucrative 144 Million Device Market

Boston, MA - June 8, 2005 - According to the latest research from the Strategy Analytics Connected Home service, technology providers are now overcoming many of the hurdles in the race to develop tomorrow's connected home, where consumers will be able to easily transfer their digital music and video files between the home PC, the home theater and portable media devices. The report, ` Connected Home Rollouts Await Direction From Content Owners,' identifies one major remaining obstacle: major content owners such as Disney, Fox and Warner are still not convinced that digital rights management (DRM) solutions are meeting their needs. Connected home proponents such as Intel, Sony and Philips must give high priority to solving DRM interoperability challenges if they are to maximize the revenue potential from this 144 million connected device market opportunity.

`Consumers increasingly want to share media between different digital devices,' notes David Mercer, Principal Analyst at Strategy Analytics. `But incompatible DRM solutions mean that they cannot know whether a particular piece of music or video content will play on a particular device. While the efforts of organizations like the DLNA and Coral are commendable, the process of establishing widely accepted interoperable and open standards is likely to prove lengthy and arduous. Apple's iTunes/iPod model demonstrates that proprietary and incompatible solutions can be successful, in the short term at least.'

According to the report, wider adoption of media-sharing devices will be delayed as long as content owners disagree between themselves on how they wish to benefit from DRM technologies. Technology providers, in turn, cannot develop a horizontal market for connected devices until major content providers have agreed on a common framework of DRM interoperability.