xOD Capsule Newsletter - October 10, 2006

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October 10 , 2006

Jeff Baumgartner Is the 'DVD party' over?
Following slowing over the past year, 2007 could be the first to witness U.S. consumer spending on DVDs decline, according to Richard Greenfield of Pali Research.

This drag on "catalog sales," due in part to the infiltration of pirated content into the consumer marketplace, is on the verge despite DVD home penetration of north of 80 percent in the U.S.

The good news for consumers: wholesale pricing is going to drop, but "the question is simply how much and how fast," Greenfield wrote, in a research note.

This trend, of course, will put pressure on studios, which have been riding the DVD gravy train for years, fueled along by wide margins.

Greenfield also warns that the new Blu-ray and HD-DVD formats are not going to serve as a much of a catalyst in 2007, and, therefore, will not materially impact studio revenues and profits next year.

He added that concern is also growing that the media message to consumers is that they won't experience much of a benefit with next-gen DVDs unless they have an HD screen of 50 inches or greater. Moreover, "upconversion standard def DVD players with HDMI outputs are increasing in number at more attractive prices."

So, what about digital distribution and download to burn models, which reduce distribution costs and removes physical inventories from the equation?

"That sounds great at first, but if the product has to be sold at a discount…because it is inferior to physical DVDs (in picture quality and usage restrictions/ DRM), how does it help the studio business?" Greenfield asked.

One thing not discussed in the note is how all of this will affect cable-fed video-on-demand (VOD) services. If DVD growth reverses next year, how do you think it will impact that market? Will it cause studios to loosen up release windows?

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

Set-top search engine,
ETV among the items on Verizon's video docket

LAS VEGAS— Verizon has jotted down a lengthy video to-do list as the telco looks to enhance its FiOS product lineup in 2007.

Complementing its existing slate of MoCA-powered multi-room DVRs and "TV Widgets" applications (real-time local weather and traffic updates), Verizon has a 2007 video roadmap that will sprinkle in a "FiOS TV portal," enhanced television applications, local VOD content, on-demand advertising, and personalized play list capabilities.

Robert Ingalls
Robert Ingalls

On the latter, the telco will employ a new set-top-based search, according to Robert Ingalls, Verizon's chief marketing officer, who spoke last week at the fifth annual FTTH Conference & Expo.

On the VOD front, Verizon also expects to offer extras that are typically found on retail DVDs. SeaChange International, Verizon's primary VOD partner, has a "DVD on Demand" application, which is also available to the vendor's cable MSO customers. While conceding Comcast Corp. as the VOD leader in terms of titles offered, Ingalls also paid the largest U.S. MSO somewhat of a backhanded compliment.

"It's not the number of titles; it's the quality of the content," he said, noting that Verizon today offers about 2,800 titles on-demand. Comcast of late has claimed to have a VOD library of more than 7,500 programs.

In a separate discussion with reporters and analysts, Ingalls addressed TV "place-shifting," a concept made popular by the Sling Media Slingbox. While it's clearly possible on a technical level, Verizon does not plan to offer such a service without proper DRM safeguards and agreements from its programming partners, Ingalls said.

In terms of high-speed data, Ingalls reiterated that Verizon's current BPON-based platform is capable of delivering high-speed Internet services on the order of 100 Mbps downstream, though the company presently markets a tier that only reaches as high as 50 Mbps. In FiOS pockets, cable operators such as Cablevision Systems Corp. have countered with 50 Mbps Internet services of their own. Competitive pressures in some of these markets could push cable operators to enlist DOCSIS channel bonding techniques to increase speeds even higher.

"We know we have to deliver a superior product," Ingalls said, adding later that Verizon, in what looks like a page from cable's PacketCable Multimedia (PCMM) playbook, is looking to offer bandwidth-on-demand services as well, to customers who want a speed boost for activities such as movie downloads.

At the end of the second quarter of 2006, Verizon's fiber-fed FiOS network passed 4.4 million homes and businesses. The company already supplies FiOS-based Internet services to 725,000 customers. Verizon hopes to have 175,000 video subs by year-end.

Court: EchoStar can sell DVRs for now;
TiVo, IBM swap patents

EchoStar Communications can keep making and distributing its current line of receivers with on-board DVRs, an appeals court ruled last week.

dual-tuner DISH Player-DVR 625
EchoStar dodged a bullet in the courts, which have
granted the DBS company the okay to continue
making and distributing models such as
the dual-tuner DISH Player-DVR 625.

In August, a jury ruled that EchoStar's DVRs infringe on a TiVo Inc. patent. The verdict called for EchoStar to halt sales and manufacturing of DVRs, and to disable already-deployed DVRs within 30 days.

However, the more recent appeals decision does not end the patent infringement case TiVo filed against Echostar, as an appeals court must still decide the merits of the case.

TiVo said in a statement: "We are confident that the jury's decision in TiVo's favor will be upheld once the Federal Circuit has the opportunity to review the entire record in this case. It is important to note that most injunctions in patent cases are stayed pending appeal, and the appeal itself will be decided on a totally different standard of review."

Separately, TiVo paid an undisclosed amount of cash to get a royalty-free patent cross-license with IBM. The agreement extends to all products other than digital media recorders and digital media recorder software, TiVo said.

"The license granted by IBM to us," said TiVo in a reporting statement, "extends to all products other than general purpose data processing products and data storage devices that are primarily sold separately from other hardware."

Digeo nets DVR interface patents
Digeo Inc. said it scored three new patents for its TV and digital video recorder guide and user interface, key elements of the company's Moxi Media Center set-top platform.

Digeo's 'dual-axis'
An example of Digeo's 'dual-axis'
navigational approach.

Digeo said the patents, which cover guide and navigation elements such as customizable categories/filters and the guide's "dual-axis" interface, are in use via media centers deployed by eight U.S. cable operators, including BendBroadband, Charter Communications, Comcast Cable, NewWave Communications and Sunflower Broadband, among others. Overall, that equates to about 400,000 Moxi-powered systems in more than 100 markets, Digeo said.

The dual-axis navigation presents categories such as HDTV, sports, news, photos and games in the horizontal band. Once a category is selected, the interface displays program options in the vertical band. Digeo's interface and filter applications won Emmy awards in 2004 and 2005.

Correction: Make that 'millions,' not 'billions'
The lead-in column for last week's xOD Capsule mistakenly referenced a revenue forecast from In-Stat related to user-generated content. Correctly, In-Stat predicted that user-generated revenues will exceed $850 million (not $850 billion) by 2010. A corrected version has been posted.

Akimbo takes orders on new RCA player
Akimbo said it is taking orders for the new co-branded RCA Akimbo Player, which isn't expected to ship until an unspecified date in mid-October.

The RCA Akimbo Player allows subscribers to download videos from the Internet through a broadband Internet connection to watch later on TV. Akimbo has cut a deal so that its subscribers will also be able to download flicks and other videos from Movielink.

RCA Akimbo Player
The forthcoming RCA Akimbo Player will
offer fare from Movielink as well as
Akimbo's vast video library.

The RCA Akimbo Player, which can store over 100 hours of programming, is selling for $179.99 with a free two-month trial offer for the Akimbo Service. When the player becomes available at retail, its price will jump to $199.99.

The Akimbo Service provides access to a wide variety of programs— subscribers can access over 13,000 titles from Akimbo, including favorites from well-known names like BBC, Food Network, Hallmark Channel, HGTV, Major League Baseball Advanced Media, National Geographic and many more, as well as hard-to-find specialty videos. Akimbo service is $9.99 per month.

Input/output options include component, S-Video and composite video connections, plus stereo and audio and both optical and coaxial digital audio connections. USB 2.0 ports have been added to the Player to support the 802.11g wireless adapter available on the Akimbo site and to offer future expansion possibilities.

Google tunes in YouTube
Well, that didn't take long. Just a few days removed from Mark Cuban's public remarks that any company interested in buying YouTube is a "moron," noting that the video-swapping site is poised to be "sued into oblivion," none other than Google stepped forward to pick up the fledgling, but popular, company for about $1.65 billion.

There's little wonder why Google decided to get its hands on YouTube. In addition to fueling its own budding video service, Google, according to Hitwise figures, is grabbing the company with the largest online video share (46 percent). In comparison, Google Video has just 10 percent of that market.

It appears also that financial guru Jim Cramer didn't exactly see eye-to-eye with Mark Cuban on the YouTube subject. Cramer, in a column published last week, liked the idea of a then-rumored marriage between YouTube and Google, but argued that Google should pay even more in order to keep others from swooping in and picking up this new Internet video phenom.

"In fact, I would like Google to pay $2 billion preemptively. I'd even be willing to see the company pay $3 billion!" he wrote, adding that the combo would be "lethal for the networks."

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
October 2006
Issue Contents »

Company: The Media Group
Headquarters: Glendale, Colo.
CEO: Gary Turner

Claim to fame: Media and marketing campaigns tied to interactive television programming. Clients include EchoStar, Mercedes, Reebok and SeaWorld, among others.

Recent news of note: Changed its name to The Media Group, from Turner Media Group. The company said the new name "connotes completeness in providing all aspects of branded entertainment programming and advertising, whether it comes in the form of direct response TV, interactive TV, or transactional TV." Our take: It eliminates any confusion with Turner Broadcasting Inc. or, for that matter, Ted Turner.

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

Interactive TV Show
Europe 2006

Oct. 30-31, 2006
Berlin, Germany
More info: 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

June 18-21, 2007
Chicago, Ill.
More information: Click Here

Wireless & Mobile
Expo & Conference

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

Copyright 2006 Advantage Business Media. All rights reserved



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