xOD Capsule Newsletter - September 12, 2006

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September 12 , 2006

Jeff Baumgartner Down on downloads
Thanks to high broadband service penetrations and ever increasing DSL and cable modem service speeds, the Internet has rapidly become a breeding ground for video download services - everything from personal videos to TV shows and movies. (see story below) is just the latest in a long string of Internet brands to join the over-the-top video gang. According to a recent report Apple isn't far behind, and may have announced its movie service for video iPods by the time you are reading this.

But just because everyone under the sun is doing this doesn't mean that everyone will be successful at it. In fact, several analysts and forecasts have emerged of late that are anything but bullish on the category.

  • Richard Greenfield of Pali Research lamented in note that the rules and pricing for's Unbox service (ie. $19.64 for the release of a new title such as "Family Stone" - a 41 percent premium to the cost of the same physical DVD offered on Amazon) "make us believe that studios do not want legal movie downloading to be terribly successful in the near-intermediate term." Plus, users can't burn the downloaded title onto a disk that plays on standard DVD players.
  • A recent poll from AP and AOL showed that just one in five people who have watched video via the Internet have viewed or downloaded a full-length movie or TV show.
  • Services from the likes of Movielink and Cinemanow have yet to reach critical mass, despite their time in the marketplace, according to Research and Markets. "As long as this continues, the film studios can bank on DVD sales to make up for declining theatrical revenues and profits," the firm said, but noted that Apple's entry "will be viewed by many as a turning point for online movie distribution."
  • Still, other research has found that only a thin slice of users will be willing to pay much for movie downloads via the iTunes platform. A survey from The Diffusion Group discovered that just 14 percent of broadband users would be interested in paying $15 for a movie from iTunes. Interest climbs to 23 percent at $10 per download.

While it's clear that the downloadable video market is growing saturated with providers, the demand for this remains highly suspect at this point in the game.

—Jeff Baumgartner, Editor in Chief, CED magazine and xOD Capsule

Concurrent says 'patent issue' not much of an issue
Suitors interested in buying the VOD business of Concurrent Computer Corp. apparently shouldn't fuss too much over some patent issues that were brought to light in a recent analyst research note.

In discussing a flurry of VOD activity that has brought Broadbus to Motorola and is about to bring Arroyo Video Systems to Cisco Systems, Brian Coyne of Friedman, Billings Ramsey & Co. Inc. wrote that a lingering VOD patent license "may be a stumbling block to an M&A premium" involving Concurrent.

"In particular, we think that there are risks to [Concurrent's] ability to transfer this license in the event of an asset sale and/or a change of control," the note explained. "The fact that [Concurrent] does not own the actual patent or technology itself has never been a secret, and while it might have possibly discouraged aggressive bids for the business or the company in the past, we have not considered it to be a non-starter for M&A discussions."

The license in question is tied to an nCUBE (now C-COR Inc.) VOD delivery patent (No. 5,805,804) that has been central to protracted legal feuds between nCUBE/C-COR and SeaChange International. Back in March 2002, Concurrent obtained a stake in Thirdspace Living Ltd. (now defunct) and secured a license for Thirdspace's existing portfolio, which also happened to be shared by nCUBE.

Concurrent, as late as June 2002, publicly acknowledged that this investment insulated the company from the legal battles between SeaChange and what was then nCUBE.

Even if Concurrent did sell, the license would still be good, the company insists.

"Our license does not have any limitation on change of control," explained Concurrent VP of Investor Relations and General Counsel Kirk Somers. He noted that all VOD gear and software shipped by Concurrent so far (and, theoretically, any sold after a change in company ownership) would be legally shielded.

Further, he added, other VOD vendors could find themselves exposed to potential legal liabilities.

What the note "failed to observe is that other than nCUBE (now part of C-COR Inc.), Concurrent is the only one with coverage under that '804 patent," Somers said.

Of course, the big question is the persistent rumor that Concurrent (all or just the VOD assets) is on the block, and that ARRIS is a leading candidate. But Concurrent is still mum on that account.

"I can't comment one way or the other," Somers said.

But he did comment on another point of Coyne's research note: that there's been a "mixed reception by cable operators" to Concurrent's new MediaHawk 4500 server.

Introduced in January at the SCTE Conference on Emerging Technologies, the MediaHawk 4500 is a 2-rack unit, RAM-based VOD system that aims to meet the streaming and storage demands of network-based DVR systems.

Somers said it would be difficult for operators to provide much in the way of a product review of the 4500 since it is still in the Concurrent labs. Expectations are that it will enter some customer labs by late September/early October, and that Concurrent will start to recognize revenue on the new product in fiscal Q2, which ends Dec. 31, 2006.

OCAP license costs $1.50 per device,
30 cents per sub per year

Via Licensing Corp., a division of Dolby Laboratories that serves as a patent clearinghouse for some popular technologies, has issued the global joint license for "essential" patents linked to the 1.0 version of the CableLabs OpenCable Application Platform (OCAP).

The basic license fees for OCAP, a middleware platform for OpenCable "hosts" such as digital TVs and set-tops, will cost as follows:

  • $1.50 per device for product licenses
  • $0.30 per sub per year for service providers. Service providers can also obtain a one-time, five-year license for $1.50.

Those fees will be divvied up among the owners of these essential patents. They include Comcast, LG Electronics, OpenTV, Panasonic, Royal Philips Electronics, Samsung Electronics and Time Warner Cable. Via Licensing did not say how these patent holders will divide the spoils.

As a clearinghouse, Via Licensing said its role offers CE companies and service providers a more efficient and convenient way to obtain the licenses necessary for OCAP. Via Licensing also plays a similar role for MHP, a middleware standard that makes up the bulk of OCAP.

Motorola closes Broadbus deal
Motorola Inc. has sealed its deal to acquire Broadbus Technologies.

The deal, which was marked by plenty of early speculation, was announced in late July. Motorola has revealed financial terms of the purchase, but the long reported number is roughly $186 million in cash.

Although Broadbus and its DRAM-based architecture will give Motorola's VOD plans a boost, Motorola's larger strategy, which calls for content to be delivered to a wide range of devices and via an array of wired and wireless networks.

Motorola said the Broadbus management team and employees will remain based in Boxborough, Mass., and be integrated with the Motorola Connected Home Solutions division. joins ranks of video download sources has jumped into the video download business with the launch of a service called Amazon Unbox. The company has lined up a library of films, TV shows, and other content from more than 30 studio and network partners from Hollywood and around the world.

Amazon Unbox is delivered using the VC-1 Advanced Profile codec, which Amazon warrants provides a DVD-quality picture. Downloads are progressive, so shows can be viewed with the download in progress. Amazon said the typical cable broadband customer can start watching any Unbox TV show or movie within five minutes of ordering.

At no additional charge, Unbox also automatically includes a second file optimized for playback on any Windows Media-compatible portable device. Users have the ability to purchase a download from one computer and download to another.

Content includes TV shows from CBS, A&E, Cartoon Network, Discovery Channel, FX and several channels from MTV Networks, including Comedy Central, Nickelodeon, MTV and VH1, and films from 20th Century Fox, Paramount Pictures, Sony Pictures, Universal Pictures, Warner Bros. Entertainment and Metro-Goldwyn-Mayer Studios.

Several television series, films, and networks will make their digital download debut with Amazon Unbox, including all 79 episodes of the original "Star Trek" series.

TV series episodes will be $1.99 each, and films will go for between $7.99 and $14.99. To give users a taste, Amazon is offering one free download of a TV show.

Comcast On Demand view tally exceeds 3 billion
Comcast Cable said its video-on-demand service has surpassed 3 billion program views since 2004, and has launched a new online program guide called TV Planner on its Web portal as an aid to subscribers.

Requests for on-demand programming are increasing. Comcast said it set a new monthly record for July with customers watching 180 million On Demand shows.

Music videos and programs have proven to be the most popular, with more than 540 million viewed, followed by children's shows (more than 330 million viewed), free movies (more than 180 million), and sports and fitness programs (more than 73 million). TV Planner enables viewers to search for content by title, category (e.g., movies, sports, kids, HD) and genre (comedy, documentary and drama).

Comcast said its library has grown to more than 7,500 programs per month. Approximately 95 percent of On Demand programs are available at no additional charge for Comcast Digital Cable customers based on their service levels.

Sunflower inserts MTV VOD ad campaign
Sunflower Broadband is continuing its trend-setting ways by supporting a new advertising campaign from MTV Networks that will dynamically insert national spots into on-demand programming.

'jackass number two'
Ads for 'jackass
number two' will be
dynamically inserted
into 'free' VOD titles from Comedy Central.

Sunflower, an operator based in Lawrence, Kan., is starting with a campaign, created and managed by an agency called Mediaedge:cia, that will promote the theatrical release of "jackass number two" from Paramount Pictures and MTV Films. Ads for the flick, which premieres Sept. 22, will be inserted into VOD titles from Comedy Central when the viewer makes the selection with the remote.

Ads that can be inserted on the fly will be key to paying the freight for VOD programming that is offered for free to digital cable customers.

On the technical end, the system is powered by SeaChange International's AdPulse ad insertion platform, which handles ads independently of the shows in which they will run. Also contributing is a "Media Console" from Atlas On Demand, a company that last year announced plans to apply its Internet advertising pedigree to the VOD arena.

Sunflower, which has about 30,000 subscribers, has already been offering dynamic ad insertion for local clients for several months, to an "overwhelming" response, according to General Manager Patrick Knorr.

By extending this to a national level, Sunflower aims to unlock more value from on-demand advertising and to advance the VOD business model.

Sprint adds PPV movie service for cell phones
Sprint adds a pay-per-view service that streams full-length movies to mobile phones. The new PPV service, aptly dubbed Sprint Movies, complements its existing subscription-based service powered by mSpot.

'The Hitchhiker's Guide to the Galaxy'
'The Hitchhiker's Guide to the Galaxy,'
is one of the first
movies coming to a
Sprint cell phone
near you.
For Sprint Movies, Sprint has rights to 45 films (and counting) from Buena Vista VOD, Lionsgate, Sony Pictures Home Entertainment and Universal Pictures, including "National Treasure," "Spider-Man 2" and "Scarface."

Both the mSpot service and Sprint Movies are enabled by mSpot a startup that aggregates entertainment from major media companies, and optimizes it for delivery over existing wireless networks.

Sprint began making mSpot streaming movies available on a subscription basis last December. mSpot also provides Sprint with a music service.

Sprint Movies has some DVD-like features. A movie can be seen in its entirety all at once, or it can be divided into chapters and watched over time. Customers can play, pause and skip forward or backward to different chapters. They can also resume a movie at the exact point where it was last shut down.

The mSpot monthly subscription fee is $6.95. Sprint said subscriber growth for that service has averaged more than 30 percent month over month. Sprint Movies cost between $3.99 and $5.99 each. Customers can view the movie an unlimited number of times within a set period, which varies between 24 hours and one week, depending on the title. One-day extensions can be purchased for 24-hour titles for $0.99.

Yahoo! and the NFL go global
The National Football League has secured an international distribution deal with Yahoo! that aims to give football fans outside North America access to live games that are generally out of their reach.

The service, called NFL Game Pass, will stream live Webcasts of football games to regions such as Europe, Asia, South America, Australia and Africa. It sells for $24.99 per week or $249.99 for the 17-week regular season. Each game will be archived for up to 24 hours after the final whistle.

The deal marks the first time the league has offered a full season of games via the Web.

But users will need a high-speed connection. The NFL and Yahoo! said games will be streamed at up to 700 kbps, and they recommend connections of 300 kbps or more.

Movielink expands indie library
Studio-backed, Internet VOD service Movielink has secured a deal to offer more than 100 titles from several indie film companies, including Magnolia Pictures, THINKFilm, Hart Sharp Video, Wolfe Video, Tempe Video, Wizard Entertainment, Associated Television International, Inecom Entertainment, and Media Blasters.

The agreement extends Movielink's library to north of 2,000 titles.

Movielink will use the latest content influx — which includes titles such as "Super Size Me!" and "Puppet Master" — to fuel a new category called "Indie Spotlight."

Zoffer to direct Verizon iTV efforts
Verizon Communications Inc. has appointed Rachelle Zoffer to the post of director of interactive TV.

In her new role, Zoffer, late of iTV specialist Softel-USA, will be responsible for obtaining interactive programming for the FiOS TV service.

In addition to Softel-USA, Zoffer has also managed iTV efforts at ShadowTV and Disney.

ViewNow enters the U-verse universe
ViewNow has become the latest company to score a video-on-demand (VOD) content deal for the AT&T U-verse service. Under the deal, the IP-based U-verse service will gain access to ViewNow's library of traditional on-demand movies, as well as subscription and "free" VOD fare. Financial terms were not disclosed.

Though U-verse is still in the early deployment stages, AT&T hopes to offer the service alongside its Project Lightspeed project, which aims to deploy fiber-to-the-node and fiber-to-the-premises networks that reach about 19 million homes by the end of 2008. ViewNow, a division of Kasenna Inc., has deals in place with studios such as Warner Bros, New Line Cinema, 20th Century Fox, Paramount, DreamWorks, and Buena Vista/Disney, among others.

Hardek joins Everstream
Industry vet Barry Hardek has been appointed vice president of marketing for Everstream, a company that provides reporting tools and data analysis for video-on-demand and other interactive services.

Everstream, which has north of 15 million "VOD-enabled" subs in the U.S., was purchased last year by Concurrent Computer Corp. for about $15 million. Everstream counts customers such as Comcast Corp., Time Warner Cable, Cox Communications, EchoStar Communications and J:COM of Japan.

Hardek joins Everstream from CableMatrix Technologies, a supplier of policy servers and application managers for the CableLabs PacketCable Multimedia architecture.

During his career, Hardek has held marketing and business executive slots with companies such as Chromatis Networks (now part of Lucent), Terayon Communication Systems, 3Com, Scientific Atlanta, and Zenith Electronics.

For New Product Information, visit CED’s Product Showcase Today!
Click Here.

We are making changes and additions (including 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.


CED September, 2006
September 2006
Issue Contents »

Company: Isilon Systems
Headquarters: Seattle, Wash.

Claim to fame: Clustered storage systems under the Isilon IQ brand. The Isilon IQ system targets digital content and data for sectors ranging from media and entertainment, digital imaging, oil and gas, and government.

Recent news of note: Signed an OEM (original equipment manufacturer) agreement with Harris Corp., under which Harris will offer the IQ storage system with its own NEXIO video server platform. The combo will serve to provide high-performance SD/HD production and delivery gear to the international television broadcast industry.

Video On The Net Conference
Sept. 12-14, 2006
Boston, Mass.
More information: Click Here

CTAM Blue Ribbon Breakfast
Sept. 13, 2006
Grand Hyatt
New York, N.Y.
More information: Click Here

FTTH Growth Forum and Networking Event
Irving, Texas
Sept. 13, 2006
More information: Click Here

IPComm 2006
Sept. 25-27, 2006
Nashville, Tenn.
More information: Click Here

2006 FTTH Conference & Expo
Oct. 2-5, 2006
The Venetian Resort
Las Vegas, Nev.
More information: Click Here

The Cable Center Key Issue Series: "Confronting Cable's Technological Frontier"
Oct. 10, 2006
The Cable Center
Denver, Colo.
More information: Jana Henthorn

9th Annual Cable Television Hall of Fame Celebration
Oct. 11, 2006
Denver, Colo.
The Cable Center
More information: Click Here

Viodi's Technology of Local Content Workshop
Oct. 11, 2006
Minneapolis, Minn.
More information: Click Here

SCTE Business Services Symposium
Oct. 17-18, 2006
Chicago, Ill.
More information: Click Here

CTHRA Fall Symposium
Oct. 18, 2006
Philadelphia, Pa.
Park Hyatt Hotel
More information: Click Here

TelcoTV 2006
Nov. 6-8, 2006
Dallas, Texas
More information: Click Here

Parks Associates
Berlin, Germany
Nov. 14-16, 2006
More information: Click Here

Fixed Mobile
Convergence Congress

Barcelona, Spain
Nov. 21-23, 2006
More information: Click Here

SCTE SoCal Vendor Days
Dec. 6-7, 2006
Doubletree Hotel
Ontario, Calif.
More information: Click Here

Understanding Mobile and Cellular Networks
Dallas, Texas
Jan. 23-24, 2007
More information: Click Here

China Broadband Triple Play/IPTV Forum 2007
April 18-19, 2007
Hong Kong
More information: Click Here

China DSL Forum 2007
April 18-19, 2007
Hong Kong
More information: Click Here

China VoIP
Conference & Expo 2007

May 23-24, 2007
Hong Kong
More information: Click Here

Wireless & Mobile
Expo & Conference

July 17-18, 2007
Toronto, Canada
More information: Click Here

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