xOD Capsule Newsletter - March 14, 2007

Wed, 03/14/2007 - 3:10am  |  CED Broadband Direct  |  Current Issue  |  Subscriptions
March 14 , 2007

Jeff Baumgartner Resurrection wreckage
Last week was an active one in the world of datacasting, as two companies that use the technology went in much different directions following earlier resurrection efforts.

While USDTV announced it was closing its doors, Disney finally gave up on MovieBeam and sold it to Movie Gallery.

USDTV, a low-cost, no-frills service targeted at a consumer group it called "cable-nevers," said it was shuttering after a major investor pulled out. That investor, USDTV said, withdrew due to a "financial setback in another business." USDTV did not mention the investor by name, but NexGen Telecom LLC picked up USDTV's assets in November 2006.

Although not cited as a reason for its demise, USDTV struggled to sign up subscribers during its three-year run. It delivered programming by piggybacking on the digital signals of local TV stations in markets such as Dallas/Fort Worth, Salt Lake City, Albuquerque and Las Vegas.

Moviebeam, meanwhile, also uses datacasting to pipe movies and other content to set-top boxes outfitted with hard drives coupled to special antennas. After mothballing the service in April 2006, Disney (along with new investors Intel Capital and Cisco Systems) relaunched MovieBeam in 29 big markets, even offering some titles in HDTV format.

Movie Gallery
Movie Gallery, which operates 4,600 video
rental stores in Canada and the U.S., hopes to expand its reach after acquiring MovieBeam.

Despite a beefier lineup, MovieBeam remained limited by its pricepoint for gear and service - the revamped offering retailed for $199.99 (after a $50 rebate), and a one-time activation fee of $29.99.

Movie Gallery is the latest to jump in and see if it can make MovieBeam fly. In addition to using MovieBeam's existing over-the-air datacasting platform, Movie Gallery said also plans to deliver content to the proprietary set-top via the Internet as well, taking advantage of the fact that the latest iteration of the MovieBeam device also has Ethernet and USB 2.0 ports on-board.

Movie Gallery, which operates 4,600 video rental stores in North America, said the acquisition of MovieBeam and "any ongoing development expenses" will be less than $10 million in 2007.

Jeff Baumgartner, xOD Capsule Editor, and CED Editor-in-Chief

Comcast closer to entering Mr. Rogers' neighborhood
TiVo Inc. is closing in on its first deployment with Comcast Corp., TiVo CEO Tom Rogers said last week during an earnings call with reporters and analysts.

Rogers, reiterating that TiVo and Comcast demoed the product at the Consumer Electronics Show in January, said "engineering trials" were also completed that month, and technical trials "started on time in February."

Comcast, he added, has identified an undisclosed launch market, "which is sizable," and that the MSO is on track to offer it there "in the relatively near future."

When analysts pressed him on the subject later, Rogers said the launch in that initial market should happen this spring. "Beyond that, we aren't able to announce what Comcast's roll plans are, but over the course of the year…much of Comcast's base will have TiVo available to it."

TiVo execs said the company's cable initiatives are on track.

Rogers was confident that the Comcast offer "will be superior" to the current DirecTV offering. He did point out, however, that TiVo's Amazon Unbox offering (see further below) will not be available through Comcast. He did not elaborate, but the reasoning is certainly so that TiVo-powered cable set-tops supplied by Comcast cannot go over the top of the operator's VOD offering and siphon those revenues from Comcast.

Rogers also addressed TiVo's relationship with Cox Communications, saying only that the MSO expects to begin offering a TiVo-powered product later this year.

Sub and financial highlights…
TiVo posted Q4 revenues of $77.6 million, up 29 percent, and narrower than expected quarterly loss of $18.7 million.

During the quarter, the company added 163,000 "TiVo-owned" subs, down 26 percent from a year ago. The base of TiVo-owned subs grew 16 percent, to 1.7 million, year-over-year. TiVo's overall subscription base stood at 4.44 million, up slightly from the previous quarter despite an an expected decline in subs that get the service through DirecTV - 2.72 million in Q4, versus 2.87 million a year earlier.

On HDTV trends…
Rogers said HDTV sets "are the most important new consumer electronics item," but acknowledged that TiVo, due to the price of its HD unit (the Series3, which TiVo lists on its Website for $799.99), was "not able to meaningfully participate in that [HD] trend."

Although DirecTV has opted to go with a DVR platform from corporate cousin NDS Group, the DBS giant has extended its agreement with TiVo so its existing TiVo subs can continue to get the DVR service.

Elsewhere in TiVoland…
TiVo confirmed it is now offering all TiVo subs with a broadband-connected unit access to Amazon Unbox, a feature that allows TiVo subs to rent and purchase movies and TV shows from a range of studios, including, Fox, Paramount, Universal, Warner Bros., Sony and Lions Gate.

TiVo also secured a co-marketing deal with EarthLink, which has agreed to distribute TiVo offers with its broadband Internet product.

Tandberg recommends Ericsson offer; ARRIS drops out
Decisions made last week by key players have all but sealed the final fate of coveted digital video specialist Tandberg Television.

Last Wednesday (Feb. 28), Tandberg confirmed it had recommended that its shareholders accept a $1.4 billion, unsolicited cash offer from Ericsson.

Ericsson outbid an original, $1.2 billion cash and stock deal tendered by ARRIS.

Tandberg TV
Tandberg has recommended Ericsson's
cash-fueled offer over an original tender by ARRIS.

After weighing a range of competitive bids and other "strategic alternatives," Tandberg said Ericsson's offer "delivered the highest value to Tandberg Television's shareholders at that time."

Ericsson has already acquired an 11.7 percent stake in Tandberg via certain institutional shareholders, along with pre-acceptances from an additional 15.7 percent. That situation, Tandberg pointed out, would prevent ARRIS from obtaining a required 90 percent "acceptance condition" unless Ericsson opted to sell its stake in Tandberg or support the ARRIS offer.

ARRIS confirmed on Thursday that it would not extend or increase its original offer for Tandberg. ARRIS noted that it has received a termination fee of $18 million, adding that it incurred about $9 million to $10 million of expenses for its original Tandberg transaction.

"Although the Tandberg Television acquisition was a desirable transaction, our offer was fully priced and we believe a transaction at [a] higher price would not be in the best interests of our shareholders," said ARRIS Chairman & CEO Bob Stanzione, in a statement.

He said ARRIS would maintain a "disciplined approach in its acquisition strategy," adding that the company will explore other potential acquisitions and partnerships.

Stanzione did not detail where ARRIS might look in order to fill its digital video technology gap, but industry analysts have spelled out a range of possible targets, including Terayon Communication Systems, Harmonic Inc., C-COR Inc. and Concurrent Computer Corp.. Analysts have also suggested that ARRIS itself could become a takeover target.

NBCU premiered
"Hollywoodland" via VOD and
in all its hi-def glory on March 8.
NBCU drives HD-VOD initiative
March is marking NBC Universal's first foray into HD-VOD. On March 8, the programmer premiered "Hollywoodland," and will debut a thriller titled "The Return" on March 29.

In "Hollywoodland," Ben Affleck stars as George Reeves, the actor who played the Man of Steel in TV's "Adventures of Superman," and was found dead in his home under mysterious circumstances.

Sarah Michelle Gellar stars in "The Return," which NBCU calls a "supernatural thriller."

NBCU is complementing both releases with free, complementary on-demand fare, including some behind-the-scenes features and an alternative ending to "The Return."

• On Demand Group, a subsidiary of SeaChange International, has teamed with Tele Munchen Gruppe to launch On Demand Deutschland, a J.V. aimed at German-speaking Europe. SeaChange said there are more than 45 million German-speaking TV homes in Germany, Austria and Switzerland.

• TiVo Inc. has renewed its multi-million dollar advanced DVR ad agreement with Interpublic Group of Companies Inc. The original deal was announced in May 2006.

• The Comcast Media Center announced a range of new hires and promotions.

For New Product Information, visit CED's Product Showcase Today!
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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.

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Company: itaas Inc.
Headquarters: Atlanta, Ga.
CEO: Vibha Rustagi

Claim to fame: Markets and develops a suite of VOD products for cable, satellite, IPTV and wireless platform. Specific products include the Event Collection System (for VOD system monitoring), VOD Session Simulator (for VOD system testing), and the Digital Storage Media Command and Control Specs Library (for managing interactive and continuous feed sessions).

Recent news of note: Landed a deal to handle VOD monitoring for Canada-based MSO Videotron. Other operators to deploy itaas' ECS platform for VOD include Time Warner Cable, Cox Communications, and Bright House Networks.



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