xOD Capsule - August 10, 2005

Tue, 08/09/2005 - 8:00pm

xOD Capsule Newsletter CED Broadband Direct Current Issue Subscriptions August 10, 2005


The fact that homes with Internet connections (high-speed or otherwise) watch less television is hardly earth-shattering news. Just about anyone reading this can recognize that much just based on their own experiences.

But just how much time the Internet saps away from the television has been the bigger question, and one that Forrester Research has tried to answer with its recent "State of Consumer Technology Adoption" report. According to a Forrester survey of more than 68,000 households, high-speed users in North America watch two fewer hours of TV each week than homes without Internet access. Among homes that connect through syrupy slow dial-up connections, the difference drops to 1.5 hours.

Further, Forrester broke down consumer attitudes toward technology as "optimists" and "pessimists." Optimists, the report explains, include people who are more apt to use and enjoy the options that technology affords them, including streaming media, playing video games and visiting blogs.

After this info hit the wires, Chicken Littles flooded the boards with the same tired "death of TV as we know it." Once again, everything had to be lumped into a big "winner" pile and a big "loser" pile. The reality, of course, is that there will be multiple winners, and maybe a loser here and there. I seriously doubt linear TV will be among the latter. It just won't enjoy as much of the pie as it used to. Despite the evolving ad models, TV as we know it will continue on. And those broadband users? It's likely that they are spending time away from the TV streaming other forms of video…and receiving those ad impressions that keep the video world spinning just the same.

And those two hours of TV viewing that have disappeared? Broadband users are still watching 12 hours of TV per week, so clearly their lives haven't changed that much. Last I checked, analog radio is still around despite television, despite satellite radio, and despite the Internet. It may be weaker than it once was, but no one expects to wake up one morning and discover that the radio waves we grew up with just vanished in the middle of the night like the Baltimore Colts. Same goes for TV.

But DVRs and video-on-demand, whether through a cable operator or the Internet, will certainly alter, but not completely change, the way we watch television, and this is hastening targeted and interactive advertising. There is a wave of change coming, but it's becoming more and more likely that the television world will be ready to face it when it arrives.

—Jeff Baumgartner

Enhanced basic: Comcast's Trojan horse for VOD?
Putting video-on-demand (VOD) in every customer household appears to be a big driver behind Comcast Cable's "enhanced basic" strategy.

For an additional fee, enhanced basic customers will receive a low-end digital box capable of supporting video-on-demand and an interactive program guide (IPG). Comcast has not yet disclosed pricing on enhanced basic or where or when it will become available first. But Comcast will have to offer enhanced basic deployments in markets where it is using digital simulcast, a technique that replicates analog channels in digital. In a research note, Richard Greenfield of Fulcrum Global Partners noted that enhanced basic subs will get one free box, and will be expected to pay $4 to $5 per month for each additional box.

Comcast will use this strategy to beef up digital penetration and to promote VOD, a key competitive weapon it is wielding against DBS that is not available to analog cable subs. With the "enhanced basic" set-top, which amounts to a digital box, customers can order "transactional" VOD titles as well as a bevy of "free" titles—about 500 of them, including hundreds of shows from Encore that are refreshed every month.

"With these movies, we're going to go to an entirely new level come this fall," Comcast President & COO Steve Burke told media and analysts last week during the MSO's quarterly earnings call.

Like a digital Trojan horse, the tactic is also designed to push the value of the full digital tier in the hopes that customers will upgrade their service. Once the box is in the home, Comcast can adjust it to support the traditional digital video service tier, which runs about $14.95 per month.

Enhanced basic will also place more digital boxes in what were analog-only homes, a move that will also fuel Comcast's plans for digital simulcast. Last week, Comcast said it expects to introduce digital simulcast in 75 percent of its markets by year-end.

Cavalier goes all-in with Kasenna
Kasenna Inc.'s strategy to offer soup-to-nuts video-on-demand technology and services is starting to pay off in some unique situations in the telco world, but one of its competitors believes that the tactic could backfire.

The latest telco to tap Kasenna's "end-to-end" VOD platform is Cavalier Telephone, a CLEC that serves about 180,000 residential customers in Richmond and Hampton Roads, Va.; Philadelphia, Pa.; Washington, D.C.; southern New Jersey; and parts of Maryland and Delaware.

Under the deal, Cavalier will deploy Kasenna's "PortalTV" VOD suite, comprised of the vendor's "LivingRoom" middleware and client software developers kit (SDK), MediaBase video servers, and vFusion network management software. When services begin to launch in November, Cavalier will also receive on-demand films and other fare from Kasenna's ViewNow subsidiary.

Although many large cable operators have opted to deploy and integrate myriad components from various VOD vendors, many telcos are looking for just the opposite—a fully integrated platform from one vendor, according to Kasenna Chairman & CEO Mark Gray.

"If you talk to the telcos that were early [VOD] adopters and ask them what they would do differently…they would all tell you that the biggest problem is buying servers from one company, content from another, DRM (digital rights management) from another, and then putting someone in to integrate them all," Gray explained.

But if one of the vendors puts forth a new software revision, "it breaks everything else. There's always finger pointing," Gray said. He added that two other telcos—Hutchinson Telecom of Hutchinson, Minn. and James Valley Telecom of Aberdeen, S.D.,—have also taken the all-in approach with Kasenna.

Despite Kasenna's win with Cavalier, Steve McKay, the CEO of Entone, another VOD vendor that targets the telcos, called Kasenna's move into middleware, content and encryption a "strategic gaffe."

"They've declared war on everyone in the industry, to Minerva, to Microsoft, to Entone, to SeaChange [International], to TVN [Entertainment], to Widevine [Technologies]. It's hard to name a company in the IPTV space that doesn't compete with Kasenna now."

Gray counters that Kasenna continues to partner with middleware competitors, including one with a yet-to-be named "major" telco, "because they like what [the middleware provider] has, and they like what we have." Gray labels this trend as "coop-etition."

But Kasenna views its integrated approach, especially with independent telcos, as a financial necessity. Historically, the offering of only the piece parts of a VOD system has caused the ILEC sector to become underserved, Gray said.

"If we were only doing middleware, we couldn't afford calling on them. If you're selling them [every component], it's a nice piece of business," he added.

But how nice? In the case of Hutchinson, selling only the servers would generate about $100,000 in revenues over five years. With the whole system, including products and services, Kasenna looks to generate more than $1 million over that same period.

Selling piece parts into the cable sector, which its tendency toward larger systems and higher stream counts, makes more sense for Kasenna, which has deployments with operators such as Adelphia Communications and Charter Communications, McKay agreed that the financials, especially those tied to integration, might not add up in small systems.

"But that's why you see some of the vendors getting together with pre-integrated solutions. Then the threshold goes away, because the integration is minimal," he said. One combo that is often repeated by telcos, he explained, is the matching of Entone's asset management, servers and CPE gear with Skystream Networks' IP headend, middleware from Myrio (now part of Siemens), and transport from Calix.

Entone barks up Telewest's VOD tree
Telewest is using servers and ingest gear from Entone Technologies to play-out The Barker Channel, a key component of the U.K.-based MSO's "Teleport" video-on-demand service.

Teleport, available today to 26,000 subs in Cotswolds, will be offered to more than 1 million digital TV customers by early 2006. Entone's StreamLiner gear will serve up interactive promotional trailers of VOD films and other on-demand offerings.

The Barker Channel seamlessly plays dozens of movie trailers interactively, Entone CEO Steve McKay explained. Once the customer engages a trailer from the play-out server, the system hands the customer over to video servers from SeaChange International, which initiates the actual VOD session for the movie or show selected.

The capability enables "impulsive viewing" for the on-demand environment, McKay said.

For Telewest, The Barker Channel "fulfills two main requirements—keeping our customers informed of what films are available, as well as acting as an advertising vehicle to encourage the impulse consumption of movies-on-demand," said Telewest Director of Product Management & Marketing Philip Snalune.

Concurrent Computer Corp. is also exploring the interactive barker concept. Its patent-pending Interactive Media Solution (IMS) technology pipes VOD barker channels via the streaming of in-band, scaled video to the set-top.

TiVo, Motorola help out the smaller guys
TiVo Inc. and Motorola Inc. have moved ahead with strategies designed to give small- and medium-sized operators more weapons to use against their DBS and telco foes.

In the case of TiVo, it will market its digital video recording (DVR) technology as a stand-alone service to that group after it obtained a hunting license with the National Cable Television Cooperative, an organization the represents more than 1,000 cable operators that serve about 14 million subs combined. The first to formally sign up for it is Benton Cablevision Inc. of Rice, Minn. It marks the latest cable foray by TiVo, which entered into an agreement with Comcast Corp. earlier this year.

Motorola Inc. and the Comcast Media Center (CMC), meanwhile, have developed a centralized platform for interactive services for small- and mid-sized operators. The new system, designed for HITS QuickTake users (the upgraded version is called HITS QuickTake+), will usher in interactive services such as digital video-on-demand, DVRs and interactive program guides (IPGs) without the expense of a Digital Access Controller (DAC). Motorola is marketing it as an upgrade to its existing National Authorization Service (NAS).

The resulting NASRAC platform will give operators access to the complete line of Motorola set-tops, including the digital-only DCT-700 and the high-end DCT6412 HD-DVR, according to Michael Hicks, senior product manager for access control systems at Motorola's Connected Home Solutions division. The platform will also support CableCARDs used in Digital Cable Ready (DCR) televisions.

A big driver is overall costs. According to Hicks, NASRAC provides a 40 percent cost reduction versus the NAS system.

Code downloads is one area that will be improved under the new system. Under the existing platform, bandwidth could be tapped out as interactive applications proliferate. The new system can download specific code for SeaChange's VOD system, for example, to just the targeted headend, rather than to all headends supported on the existing NAS system.

Although DVRs are now on the national control system, VOD was a bit more difficult due to constraints on the transponder, but the "Plus" upgrade will eliminate that problem, Hicks explained. He noted that the upgrade does not apply to HITS2Home, which uses a different architecture than QuickTake and operates on a separate controller for authorization. It will be suggested to HITS2Home affiliates that they migrate to the new QuickTake+ system if they want to take advantage of Motorola's complete line of set-tops.

Field trials are slated for this month, Hicks said, noting that a more economical means of obtaining and distributing high-definition television (HDTV) is a primary driver for operators that are interested in the new system. However, QuickTake+ will not enable HD until HITS puts those networks up on the transponders.

A Comcast Media Center official noted that HD will be offered as part of NASRAC, but could not offer a specific timeframe on when such content would become available.

Concurrent, GoldPocket match VOD and ETV
Concurrent Computer Corp. and GoldPocket Interactive have forged an integration deal that will marry the interactivity found in some linear programs with the time-shifting capabilities of video-on-demand (VOD).

Under the agreement, Concurrent will combine its MediaHawk On-Demand platform, including its Interactive Media Solution (IMS), with GoldPocket's iTV system. More specifically, Concurrent will carry GoldPocket's enhanced content, and handoffs will take place between the GoldPocket and Concurrent set-top clients and between each company's servers on the cable network.

One initial application for the combination will be interactive advertising, including "telescoping," which allows viewers to obtain more information about a product or service being advertised. In this example, GoldPocket's "hot-spotting" overlay application, once activated by the user, could handoff to the Concurrent VOD system to stream a longer form advertisement.

The technique could be used in an interactive ad or within a show that supports enhanced television (ETV), according to Martijn Lopes Cardozo, EVP of distribution partnerships for GoldPocket.

"Advertising will be a good hook for [the integration with GoldPocket]," said Mike Tudisco, VP of customer service & product management at Concurrent, noting that Concurrent and GoldPocket will explore several other capabilities.

Among them, GoldPocket-enabled ETV elements found on some linear broadcasts will become stored and available on Concurrent's servers.

"With this integration effort, on-demand customers will be opened to other content like gaming, polling…and trivia—things that we wouldn't offer on our own," Tudisco said. Yet another will be home shopping, added Jack Birnbaum, Concurrent's director of product management.

"We're probably just scratching the surface on applications we're thinking about now," Lopes Cardozo said.

By tapping IMS and leveraging more processing power at the headend, Concurrent also intends to extend the GoldPocket experience to more technically-limited set-tops, Tudisco explained.

Concurrent hopes to make it through the certification process with Goldpocket by the end of this year, with the intention of entering trials with cable operators in Q1 and Q2 2006.

Concurrent, which is deployed with operators such as Time Warner Cable, Brighthouse Networks and Comcast Cable, is the first VOD server and system vendor to announce an integration deal with GoldPocket. GoldPocket, meanwhile, has won ETV deals recently with networks such as CBS and HSN.

Market Video
Cavalier Telephone Delaware (parts) Kasenna Kasenna ViewNow vFusion (Kasenna)
Maryland (parts) Kasenna Kasenna ViewNow vFusion (Kasenna)
Philadelphia, Pa. Kasenna Kasenna ViewNow vFusion (Kasenna)
Richmond/Hampton Roads/Northern Virginia Kasenna Kasenna ViewNow vFusion (Kasenna)
Southern N.J. Kasenna Kasenna ViewNow vFusion (Kasenna)
Washington, D.C. Kasenna Kasenna ViewNow vFusion (Kasenna)
Comcast Spokane, Wash. SeaChange SeaChange InDemand, CMC,   TVN

We are making changes and additions (including several international deployments) to our Web- based "living" deployment chart. If you have a new deployment to report for the VOD Scorecard and the Web-based deployment chart, please contact CED editor Jeff Baumgartner.

August 2005   
Issue Contents >>

iN Demand

New York City


CEO: Rob Jacobson

Company claim to fame:
Initially a pay-per-view service, but has branched off to become a top VOD content aggregator and the company behind INHD and INHD2—two linear, 24/7 high-definition television networks.

Recent news of note:
In a coup for cable, MSO-backed iN Demand scored an exclusive deal last week to televise Howard Stern's SIRIUS satellite radio program, which debuts this fall. Some of iN Demand's top affiliates (Comcast, Time Warner Cable and Cox Communications) will offer the shock jock's show as a subscription VOD service.

GoldPocket Interactive

Los Angeles, Calif.


CEO: Scott Newnam

Company claim to fame:
Tools and technologies that enable programmers and other content providers to offer enhanced television (ETV) applications on Internet-connected PCs (for dual-screen apps) and a wide range of digital set-tops and receivers, including those supported by cable and DBS operators, for single-screen ETV.

Recent news of note:
Following up recent wins with CBS, Game Show Network and HSN, GoldPocket springboarded into the on-demand world via an integration deal (see story, this issue) with VOD server and systems company Concurrent Computer Corp.

CED Webcast:
"Digital Simulcast—stepping stone to cable’s all-digital future"
August 18 at 11 a.m. ET
Cost: free
Register online
Sponsored by: EGT Inc., RGB Networks, Motorola Inc., Scientific-Atlanta, Terayon Communication Systems

CTAM New York Blue Ribbon Breakfast:
Grand Hyatt Hotel at Grand Central Station--New York, NY
September 14, 8:00 a.m.
Tel: (212) 367-6921

Broadband Cities 2005:
Salt Lake City, Utah
September 19-21, 2005

DSL Forum Meeting Q3:
Philadelphia, Pa.
September 19-22, 2005

CTIA Wireless IT & Entertainment 2005:
San Francisco, Calif.
September 27-29, 2005

CED Webcast:
"Wielding the wireless weapon: How to take aim at traditionally out-of-reach businesses"
September 29, 2005
11 a.m. Eastern Time
Cost: Free
Sponsored by Arcwave, CommScope and Motorola

TelcoTV Conference & Expo 2005:
San Diego, Calif.
Nov. 8-10, 2005

Copyright © 2005 Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.


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