Sonic Solutions' Mark Ely: It's going to be an interesting year

with Mark Ely, Sonic Solutions' president for strategy

Mark Ely Sonic SolutionsSonic Solutions has had a busy year, launching a movie platform for Sears, gobbling up SoC deals (where they now have 95 percent penetration), expanding its CinemaNow platform to include HD and 3D capabilities and, late in December, being acquired by Rovi for $720 million.

FierceOnlineVideo Editor Jim O'Neill sat down with Mark Ely, Sonic Solutions' president for strategy at last week's Consumer Electronics Show to talk about some of the latest news around the company.

FierceOnlineVideo: What does the acquisition of Sonic by Rovi mean?

Mark Ely: It's big news, really good news. Most people don't know much about Rovi... if you think Roxio is obscure, Rovi is really obscure. But what Rovi really has is a tremendous position in the electronics space. They power the meta data for a huge amount of content. When consumers go to find or search for movies, TV, music, whatever it is, Rovi provides a hug amount of that data.

The interesting thing for us is that, combined with Rovi we both have very similar missions: It gives us a broader platform to really deliver a huge range of tools and solutions for our customers.

And, the news from our customers has been very positive. In many cases, our customers are already working with Rovi and with Sonic, so now there's an opportunity to actually have a broader product offering as one company.

FierceOnlineVideo: It's been a pretty wild ride in 2010. What's the outlook for the space in 2011? Is this the year it really takes off?

Ely: I'm always surprised at how fast it's moving. You look at (the space) and what happens is, the first year, maybe two years ago, we were surprised at how quickly the device manufacturers embraced over-the-top software stacks on their devices. This past year, we've been amazed at how rapidly it scaled into the market and how many devices are out there.

And now, you almost look at it and think, "Gee, you know, pretty soon consumers are going to be watching these devices as much as they watch broadcast television." We haven't gotten to this yet, but what we're starting to see is that a huge number of consumers are viewing over the top content when they have services available, whether it's from us, our partners Blockbuster, Best Buy, or people like Netflix. Now that you can get these services directly on your devices into home, and it's so easy to do, and it's such compelling content, of course consumers are going to start to really engage with it.

So, I think what we're going to see is a real acceleration this year.

FierceOnlineVideo: Is it all a function of the connected home, or about consumer uptake?

Ely: We're going to see, more and more, that any device that you buy in retail that's a Blu-ray player or a television set, chances are that it's going to have Internet service built into it. And then it's just about educating the consumer to let them know. I think that we in the technology business are totally aware of what's possible. The next big step, where it really explodes, is when everybody knows that it's there, which is why we've been very focused on working closely with retailers because on the retail side, that's where consumers really get educated about the services that are available.

FierceOnlineVideo: How do we get consumers onboard?

Ely: This year is the year of big in-store promotions, lots of consumer awareness building, it moves to the mainstream press, and it just becomes the natural way that consumers interact with their content. It's going to be amazing.

FierceOnlineVideo: What's been surprising to you about the business over the past year?

Ely: I think that the amazing thing for me, for all of us in this space, is seeing the speed at which it's happening. It's almost like you can look at it and predict, "Oh, yes, it'll all be this way in the future," and then you realize, whoa, it's happening right now.

I think that it comes down to as long as there's a wide array of content that consumers want to access, and they want to access it in their living room, they'll figure out a way to do it, and I think the interesting thing is that, really, in the case of online video to the PC, YouTube has really been the great educator to the mass market and as content becomes better and better and better, then people want to see that everywhere. Then you mix that with some great Hollywood produced, high-definition content and suddenly it becomes a real trend.

FierceOnlineVideo: What's it mean for Sonic? What are you looking forward to?

Ely: We're really positioning in the market as the tools provider, the infrastructure provider for a lot of this online content. So, if you're a Best Buy or a Blockbuster or a Sears or a device manufacturer, or Intel or whatever studio is out there that wants to get the content out, we're an obvious part of that because we connect that to a kind of really agnostic platform, we work with any of the technologies that are out there, we work with a lot of content providers, and so we can provide a real common platform for all of the different constituents in this market as people jump in and try to take advantage of over-the-top content.

Two years ago, it was like "OK, we can do this." Last year it was, "We're gonna get a retailer involved." And this year, it's "OK, everybody, it's here let us help you get there."

FierceOnlineVideo: So far, you've been part of several pretty low-key rollouts, they're big players, but their services are pretty low key. When do you get your Netflix? Is there another player out there who's going to take this and run?

Ely: I think there are. Netflix isn't going to have the space to themselves forever. The interesting thing about Netflix's model is they really have become the HBO of online video. It's good content, it's not the new content, but it's good content and there's a huge variety of it.

The statistics that people are talking about is just the hours of video that people watch. We do it at my house. It's really convenient and it's great. Good content that you can get instantly and it feels free.

There are a lot of people who have been battling it out on the VOD side but nobody's really taken on Netflix. There are, I think, others out there that will do that, it's just a matter of somebody coming out, saddling up and writing a big enough check to do it.

From a technology perspective, our entire structure can support it. The challenge of course is paying the studios the licensing rights and minimum guarantees to stream that content, and finding a way to do it so it does feel free.

FierceOnlineVideo: What's the edge Netflix has now?

Ely: What Netflix has going for it is momentum. It'll be interesting to see what happens when they start to renegotiate some of their deals, especially for the expensive stuff that they get from Starz and some of the other studios. As they go back to negotiate with the studios, I would be surprised if they didn't have to add a couple o f zeros to the checks they're signing.

FierceOnlineVideo: Much has been written about the space consolidating in the coming year. The Rovi/Sonic merger aside, do you see that happening? Or is the market strong enough to support more growth, more players?

Ely: We think there will be more players in the space. Increasingly, we're seeing more studios getting involved, more content creators looking for ways to get their content in front of more eyes. That will create, we think, more opportunities, and likely bring more players into the space.

FierceOnlineVideo: What challenges does the industry face in the coming year?

Ely: I think the next challenge is to get more content onto more devices. Then, we need to get the consumers to be aware of the content, and then, Phase 3 is to get people to keep coming back and watching content. Right now, it 's all about premium content delivered to all devices.

I think it's going to be an interesting year.