xOD Capsule - August 30, 2005

Mon, 08/29/2005 - 8:00pm

xOD Capsule Newsletter CED Broadband Direct Current Issue Subscriptions August 30, 2005

VOD needs some lovin'

Bryan Burns, the VP of strategic business planning & development at ESPN, blew through town last week to provide an interesting and informative update on high-definition television (HDTV). The sum takeaway: It's gonna be freakin' huge. Hence, the reason why ESPN has poured so much effort and money into ESPN HD, ESPN2 HD and its monster digital facility in Bristol.

One tidal trend Burns had to share was this: the ratio of HD-capable sets versus SD-only sets sold will even up sometime in 2006, then be overtaken by hi-def.

But what I also found interesting was a slide that showed how consumers "love" some devices and services over others. Survey results from Arbitron and Edison Media Research released earlier this year showed that 54 percent said they "love" using their digital video recorders—no surprise there. Right behind it was HDTV, at 44 percent. Other chart toppers were high-speed data (40 percent), satellite radio (40 percent) and the iPod (35 percent).

So where was VOD? Right there near the bottom of the heap at 10 percent. Only Internet radio and Internet video scored lower on the love scale.

Given that data, HD-VOD seems to be the obvious love connection that will help VOD get some much-needed affection. Cable operators are certainly dabbling in HD-VOD, but the big complaint is that there's not a lot of hi-def content available to put on the servers.

Rainbow Media just launched a stand-alone HD service under the Voom umbrella, but, cable bandwidth issues aside, is focusing on carriage for its entire package of linear channels, and doesn't appear to have any near-term intentions of making programs available on VOD. Calls to Rainbow on the subject were not returned.

But what ESPN, ESPN2 and ABC are planning to do with the 2005 World Cup (all 64 matches in HD) creates a tremendous opportunity. And love isn't the appropriate word for what those supporters think of "The Beautiful Game." Mania, coupled with obsession and a heavy-handed sprinkle of lust—that sounds more like it.

By the same token, it could be a huge opportunity lost because it's unlikely that those games will be offered on-demand, unless there's a big push for it and the rights get worked out with FIFA and other requisite parties. Cable operators should be fighting for this.

And it would be a shame if the games aren't available on-demand, considering the time zone difference with Germany. As a soccer fan, I would be happy to impose a personal media blackout as to avoid seeing the scores and then queuing up the games on VOD when I get the chance. People with HD-DVRs can record the games, of course, but these matches, shown in all their hi-def glory, will fill up hard drives faster than you can say, "Goooooaaaaaal!"

—Jeff Baumgartner

Real-time encryption could break the limits of VOD
Harmonic Inc. has added real-time content encryption capabilities to its VOD transport platform, a move that should make advanced on-demand applications like network-based personal video recording a much easier proposition for operators.

That platform, based on the company's Narrowcast Services Gateway (NSG), will offer the encryption via Privacy-Mode conditional access technology from Motorola Inc. The capability also enables the company's IP-based edge QAM devices to integrate with multiple conditional access systems and set-top boxes, Harmonic said.

Although today's pre-encryption systems provide plenty of security, they also limit the capabilities of VOD. Real-time encryption, a mainstay of international cable systems, will leverage new edge QAMs and take VOD to another level, according to Gil Katz, director of cable solutions for Harmonic's Convergence Systems Division.

"To deal with pre-encryption is an operational nightmare," he explains. A cable operator that pre-encrypts content for Motorola- and Scientific-Atlanta–based systems, for example, must store at least two copies of every piece of on-demand content. If the operator uses video servers from different vendors, each with its own technique for trick play files, the system becomes just that much more complex.

In addition to making VOD less complicated, real-time encryption will be required for the nPVR and applications like "startover," a technique that Time Warner Cable is testing that enables viewers to time-warp their way to the beginning of a show. Without that real-time encryption, a show can't be offered on-demand until it's over and then made available on the VOD system.

Another option that's that not really an option, lest the cable industry decide to offer VOD without any studio support, is to offer the shows in the clear.

Katz said Harmonic's real-time encryption system is undergoing trials and lab tests with "four big MSOs," with deployments starting this week. Katz expects at least 50 percent of markets that use NSGs to adopt real-time encryption in the next six months. The upgrade requires only a new software load to the NSG, he said, noting that real-time encryption is also cheaper than pre- encryption.

Today, Harmonic's Privacy-Mode component does not work on Scientific-Atlanta systems. Harmonic built an implementation, but has not obtained the appropriate license from S-A, Katz said.

"But [Motorola markets] are more significant for us," Katz said, explaining that Harmonic has 100,000 QAMs deployed in Motorola-based systems.

SeaChange plays software card
SeaChange International is putting its software strategy into high-gear.

In the wake of a spending slowdown that hit the company hard in Q2 (overall revenues dipped 39 percent to $26.2 million in preliminary results issued last week), SeaChange said it will push ahead with the decoupling of its backoffice VOD platform, attempt to strike up its international set-top middleware business, and emphasize new on-demand applications such as gaming.

SeaChange attributed its Q2 drop-off to a "temporary" slowdown of VOD system spending by U.S. cable operators and slower than anticipated VOD deployments by telco customers.

In a call with reporters and analysts last week, SeaChange President & CEO Bill Styslinger said previous revenue projections will be lower, "but we still believe that the second half of our fiscal year will be stronger than the first half. And we think that our business in the first half of fiscal '07 will be better still."

On the middleware front, SeaChange will use the code acquired from Liberate Technologies earlier this year, and combine it with its VODlink product and licensed IPTV technology from Minerva Networks. SeaChange will focus on building its middleware business outside the U.S., where there are many more opportunities and fewer standard interactive program guides and middleware combinations.

"We believe middleware is more than a $1 billion marketplace over the next five years," Styslinger said, noting that the business will enable SeaChange to get paid for every device that uses it.

He also downplayed the competitive forces faced by SeaChange, explaining that "timing issues" rather than VOD server rivals were related to any problems encountered in Q2. SeaChange, however, has lost some ground with Time Warner Cable to server maker Broadbus Technologies. On the call, SeaChange SVP of Corporate Development Yvette Kanouff said past contract issues between the company and Time Warner Cable have been resolved, "and our position with Time Warner is better than it has been in years."

Taking a page from companies such as C-COR Inc. and Tandberg Television, which acquired N2 Broadband earlier this year, SeaChange is also unbundling its VOD backoffice, dubbed Axiom, and began to generate some revenue from the tactic in Q1.

"It gives us an opportunity to have our software in sites without SeaChange servers, and an opportunity to have our software stand on its own," Kanouff said, in separate interview with CED. The move also aims to unlock the value of VOD software, an asset with a worth that was not as apparent during early VOD deployments, she added.

"We've been actively involved in open standards development," said Kanouff, who was elected Chair of the North America cable industry's standards body, the Society of Cable Television Engineers, at the 2004 Cable-Tec Expo in San Antonio.

SeaChange has yet to announce integrations with any third-party server vendors, but that hasn't been the priority set by SeaChange's customers, Kanouff said, adding that the company is busy hooking into billing and OSS systems and network infrastructures.

"But we are absolutely prepared to [integrate] with multiple server vendors," she explained.

But video server replacement or coexistence shouldn't be the primary focus of "open" VOD systems discussions, Kanouff said.

"It doesn't mean that those open interfaces are being built just for that," she said, noting that projects like Comcast's Next Generation On Demand (NGOD) are not about replacing vendors, but growing their networks for next-gen on-demand services and using their bandwidth more efficiently. "They have bigger goals to solve," Kanouff said.

TiVo makes more cable connections
After a long drought (who remembers that old trial with AT&T Broadband?), TiVo Inc. has been able to forge a few recent deals with cable operators.

Last week bore witness to two—a trial with Cablevision Systems Corp. and a deployment with Cequel Connections.

Cablevision will use TiVo as a competitive weapon and test market the company's standalone DVRs with wireless networking routers to existing DBS customers. Instead of a telephone return, the router will be used to obtain program guide information and other data. Cablevision also supplies DVR-capable set-tops from Scientific- Atlanta, but apparently will play up the brand power of TiVo to lure DBS subs.

"For many satellite customers in our service area, there is significant value in the TiVo product and brand," said Patricia Gottesman, Cablevision's executive vice president of product management and marketing.

Cequel, meanwhile, has agreed to market 80-hour TiVo Series2 DVRs to about 300,000 cable customers beginning next month. A Cequel spokesman said the agreement is not exclusive, which means Cequel can also deploy set-top/DVR combos from Motorola Inc.

Cequel is the second MSO to take TiVo up on a new cable distribution strategy that targets more than 1,000 members of the National Cable Television Cooperative. Benton Cablevision Inc. of Rice, Minn., was the first. TiVo also has a separate deal in place with Comcast Cable.

TiVo's foray into cable can't come a moment too soon, especially as word leaks out about DirecTV Inc.'s forthcoming NDS Group-powered receiver/DVRs. Reportedly, those devices will come with features such as a 90-minute buffer, electronic bookmarking, and TV-based caller ID. There's also talk of a "VOD" capability, meaning the box will probably record a PPV film linearly and cache it on the hard drive for anytime viewing. DirecTV, as you might recall, embarked on something similar under the subscription-VOD umbrella with Starz!, whereby the DVR would flag and record certain titles on the lineup automatically.

On the financial front, TiVo notched its first profit ($240,000) in Q2, but that corner turn will be short-lived. In Q3, the company expects to post a net loss of between $20 million and $25 million. Its reliance on DirecTV for new subs was again evident in the quarter—214,000 of the 254,000 added in the quarter came way of the DBS giant. The same can be said for 2.3 million of its 3.6 million subs.

itaas simulates VOD
itaas Inc. has launched a simulation platform to help operators and vendors week out problems and determine capacity loads well before deploying video-on-demand in the field.

itaas has not yet announced any customers for the VOD Session Simulator, which can simulate the live environment of "hundreds of thousands" of set-tops posing as DSM-CC (Digital Storage Media -Command and Control) clients to the Digital Control System/Session Manager which sets up and tears down interactive sessions.

Presently the system is outfitted for cable systems based on the Scientific- Atlanta digital platform, though one for Motorola Inc.-based systems is also in the works, a company spokesperson said. The system is designed to work with multiple video server and VOD system suppliers.

As a stand-alone product, VOD Session Simulator doesn't have much competition. Tandberg Television, however, provides VOD simulation testing as part of a larger set of services.

Akimbo plays ball
Akimbo Systems hopes its latest content deal will be a big hit with baseball lovers.

Stepping away from the "long tail" of niche content and closer to the mainstream, the company has signed a deal to offer condensed games and highlights from Major League Baseball.

The agreement, made with MLB Advanced Media (MLBAM), gives Akimbo the ability to provide the content in the "early morning" the day after the games. Akimbo will also archive games of note, including perfect games, playoff games and World Series games. "What makes this special is that sports fans will be able to get their daily baseball fix on-demand on their TVs, directly from MLB Advanced Media," said Akimbo CEO Joshua Goldman.

Akimbo got off the ground last year via a $199.99 broadband-enabled standalone player capable of storing up to 150 hours of standard-definition programming. The service runs about $9.99 per month. The company will soon launch a version of the service that works on Microsoft Media Center PCs. Akimbo's longer-term strategy is to forge content partnerships with cable operators and other service providers.

Digeo: The Sony annex?
Digeo Inc. has poached the executive ranks of Sony Electronics again, this time naming Greg Gudorf as president and chief operating officer.

Gudorf most recently served as VP of television marketing at Sony, and played a direct role in the launching of Sony Passage, a platform that enables cable operators to run a second conditional access system alongside the incumbent's. At Digeo, he will oversee the company's day-to-day operations, with an emphasis on product delivery, process improvement and integration with MSO headend systems. Digeo said its previous COO, Bert Kolde, will continue to lead the company's sales and marketing team.

Earlier this month, Digeo tapped Mike Fidler as CEO. Fidler was the SVP of Sony Electronics' home products division before joining Digeo, the company behind the Moxi Media Center and a range of interactive television and navigation software products for set-top boxes.

"As Digeo continues to grow as a business and expand its customer base, we need a dedicated focus on operations to make sure we don't miss a beat. I have worked with Greg for many years and have seen first-hand his ability to drive superb execution," Filder said, in a statement.

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.

September 2005   
Issue Contents >>

An earlier iTV Spotlight listed Softel-USA's headquarters as Santa Monica, Calif. The company has since moved its HQ to Stamford, Conn.

Editor's note:
xOD Capsule will not be published the week of Labor Day. The next edition of xOD Capsule will appear the week of Sept. 12.

Entone Technologies

San Mateo, Calif.


CEO: Steve McKay

Claim to fame:
Serving the cable, telco and satellite markets, Entone markets off-the-shelf servers under the "StreamLiner" brand, a video asset manager and encoding studio. Furthering its push into the IPTV world, its Hydra IP Gateway enables service operators to pump services to multiple televisions (up to three simultaneous streams) over existing coax without the needs for a separate set-top box for each TV.

Recent news of note:
Hired former Tandberg Television/N2 Broadband vet Jeff Pierce to head up cable sales in North America. The company has a number of trials underway with "top" U.S. cable operators, but has not provided further details. Internationally, it has cable deployments with operators such as Telewest and Telenet.

Bluestreak Networks Inc.

Dallas, Texas


CEO: John Reed

Company claim to fame:
The company's flagship product is MachBlue, a middleware platform made up of connectivity, integration and presentation layers that supports interactive applications ranging from navigators, games, voting/ polling, and news and information tickers. In the cable arena, it has announced deals with Time Warner Cable and Videotron.

Recent news of note:
Just launched MachBlue for Mobile, a software platform for service operators and manufacturers to bring rich media apps to mobile devices.

September 9-13, 2005

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
For registration or information
Sponsored by Arcwave, C-Cor, CommScope and Motorola

Interactive '05—istart Developer Conference
Atlanta, Ga.
Oct. 20-21, 2005
Registration information

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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