Can 'place-shifting' drive the upstream and premium broadband services?
Thank baseball for the inspiration behind Sling Media and the concept of "place-shifting"—the distribution of video from the primary television to any broadband-connected device. For Blake Krikorian, the CEO of Sling Media, the idea was hatched after he and his brother—both big San Francisco Giants fans—wondered about the possibility of watching their favorite team in action, despite heavy travel schedules.
After making a big entrance in January at the Consumer Electronics Show, Sling Media is nearing the launch of the Slingbox, a $249 device that will enable consumers to virtually bring their living room televisions with them. CED Editor Jeff Baumgartner recently caught up with Krikorian to find out more about his plans for Sling Media's products and technology. An edited transcript follows.
CED: Why place-shifting, and why now?
In addition to the different displays, broadband infrastructure is now in place and wireless networking in the home has reached a critical mass. The time is now right to deliver a product at a consumer price point that can deliver that living room TV experience wherever you are on whatever device you have.
The desire or need hasn't really changed. It's actually always been there, but the technology has not been mature enough or ubiquitous enough to enable it. Now, we're there.
CED: How does this technology work?
Krikorian: The Slingbox Personal Broadcaster, which will be available in the first half of this year, is a $249 device. You put this device in your home and it enables you to enjoy that living room TV experience from wherever you happen to be. It turns your notebook PC, as an example, into a wireless LCD TV. You can be in another room in the house or in the back yard controlling and watching your living room TV programming. Or wherever you happen to be in the world with a broadband 'Net connection, you can also view and control that living room TV programming, whether you're at work or on the road.
You plug in your existing TV signal. We don't discriminate between what different TV signals that might be. It might be analog cable; it might be a digital cable set-top box; it could be a satellite receiver; or it could be any form of DVR, as well. You also put the Slingbox into your home network. Think of it as a box that takes TV in and spits IP video out.
CED: How do you deal with changing or non-guaranteed bit rates?
Krikorian: Streaming that video over IP is a very key technical challenge. This is where we had to innovate quite a bit...to deliver a satisfying user experience. First off, we had to make sure that this product could work in the existing infrastructure.
We essentially work down to the sub-100 kbps speeds. I would say that for real full-motion video, you realistically need 120 kbps, and at anything higher than that, the quality levels increase quite significantly. Talking about just that speed in terms of one number, is not how it works. There is no such thing as QoS in the existing infrastructure. It's best effort. When we look at what the user experience had to be with live television programming, people were not going to accept the rebuffering and freeze frames that are typically associated with streaming over IP. We had to ensure that we could deliver over all of these networks a smooth TV viewing experience. What we did is create some key technologies, which we've code-named "Lebowski."
CED: As in, "The Big Lebowski"?
Krikorian: Like "The Big Lebowski," one of my favorite movies. Like they say in the movie, "The dude abides"—our TV stream abides to whatever available bandwidth there is at any given time. The SlingBox itself will optimize that video stream for whatever given device and whatever given network it is streaming to. Not only that, but it will automatically adjust that video stream to work within the available bandwidth that is available at any given time. It will absolutely fluctuate. While you're watching the stream, the technology in the SlingBox and the technology on the client application are talking to each other in real time and dynamically adjusting the bit rate, the frame rate, the resolution and a variety of other parameters based on what type of content it is encoding.
CED: How much testing have you done to show that the ability to keep video and audio coming in different bit rate environments actually works?
Krikorian: We've been out developing and testing this for 18 months. We're now doing a field trial with a couple of hundred consumers. We're continuing to evolve a lot of those Lebowski algorithms.
For example, a 3G network, which we've been testing quite a bit recently, behaves much differently than a T-1 line coming into my office, so Lebowski has an algorithm that varies depending on what type of transport or what type of physical network it's coming over.
One of the interesting things that's happening now is high-speed data network upgrades, and people are getting higher and higher speeds. But what are the applications that will drive up the need and the desire for this higher speed service? The Slingbox is a perfect application. A case in point is myself. I was an eight-year DSL user in the Bay Area. I had the standard package of 384 kbps downstream and 128 kbps up. Even being a very advanced user, I had no need for 1 Mbps down or 3 Mbps down. As soon as we started developing the Slingbox, that was finally the application that made me say, "I need faster upload speeds." I actually changed...to Comcast high-speed data. The quality difference between the 128 and 256 was quite noticeable.
When consumers see it, [this] gets that craving for high-speed data really rolling. That's where some of the conversations we've been having with high-speed data providers have been incredibly positive, because this is an app that could potentially drive those new premium services.
CED: At the CES show, it was mentioned that Sling Media would be interested in cable partnerships. What's the status on those discussions?
Krikorian: Both on the cable and on the DSL side we've seen quite a bit of traction and interest. You should expect to see us starting to bundle our consumer offer with the ability to get higher speed service or convert them from one service provider to another that's providing a better quality experience for the Slingbox.
As one cable executive told me, "Basically what you're doing at Sling is you're adding another room to every home in America." I didn't really understand what he meant at first, but now I fully understand it. We basically have added another room—a virtual room—that's another socket for digital cable, as an example. For a cable MSO, this increases the number of outlets they can try to sell their digital cable or premium services [to].
CED: What's your business plan? Are you simply in the business of selling boxes, or is there more to it than that?
Krikorian: The old adage of "keep it simple, stupid" is exactly what we follow here. Sling Media is first and foremost a consumer products company. We view ourselves as a new kind of consumer electronics company that really understands the digital consumer. We're going to be selling this product at retail...in the big outlets and online. There's no monthly service fee. The consumer is already paying $80 a month to the cable provider; they're already paying $49 for their high-speed service; they're already paying for these PCs and PDAs that they have. What convergence should really mean is that all of that stuff I'm already paying for starts to work together, much better. We felt that we needed to be able to hit this price point and give people the programming and services that they already get, but give them the experience elsewhere—and try as hard as we possibly can to not charge them additional service fees because there's so much subscription fatigue out there. It's really holding back a lot of solutions and a lot of technology.
CED: So you're comfortable with a $249 price point? I would think some people would balk at that. Are you also going to subsidize it to get into the consumer electronics food chain?
Krikorian: First off, the $249 price is really a breakthrough price. As you try to get to a $199 or $99 price point, then it's a step function of the volumes you can hit. But just looking at that $249 price point, let's look at past history. In 1996 the Palm Pilot came out and they were, I think, at a $349 or $399 price point. They moved more than 1 million units in the first 12 months. Then look at the iPod. The lowest price point besides the new Shuffle product is $299, and there are anywhere between 10 and 20 million of those products out there. You can hit a pretty large market at that price point. Does subsidizing the product and adding some services...open up an even larger market? Absolutely. Could selling the product at $49 and charging a $10 a month service move more units and increase uptake? Perhaps. It's something that we could do, but based on our experience...it appears that our initial premise of charging a modest fee and not charging them an additional service charge is very refreshing to that consumer.
CED: One of the big questions surrounding Sling Media has to do with content rights. How confident are you that your company can do what it plans to do without finding yourself buried in litigation?
Krikorian: The first thing is that the response we've received from content copyright holders to the networks and so forth has been very positive. There's clearly an opportunity that the Slingbox provides in terms of really extending the reach, which is what that whole industry is all about. It always boils down to how they can monetize it, so there are questions that this raises for things to determine and explore for it to be an even larger positive for the industry. But there hasn't been that much negative reaction, but much more speculation about what this means.
We did a lot of homework up front to ensure that what we were doing was respecting the rights of copyright holders. We're not trying to create a product that, for example, could turn a consumer into a mass broadcaster.
CED: What are you doing in the box to avoid that?
Krikorian: The Slingbox itself will only stream to one outside device at any one point in time. If I have a PDA and laptop and I'm watching my TV on the laptop, if I try to connect with the PDA, it won't let me until I log off the laptop. It's more of the one-to-one relationship. People say we're doing a P-to-P. I say absolutely not. It's more of a me-to-me rather than P-to-P.
Also, we are not circumventing encryption schemes or anything of that nature. Once you do something like that, obviously that's not a legal thing to do. There's the Digital Millennium Copyright Act, which clearly states that you cannot circumvent encryption schemes, and we're not. We're actually taking that analog content that's in the free and clear and...redirecting it to your personal device.
CED: Do you have the capacity to expand the restrictions to more than one device?
Krikorian: It has more to do with having those discussions with the content owners and if there's a model that makes sense there. At our house, we have his and hers Slingboxes. Interestingly enough, my wife uses the SlingBox exclusively in the home. While the press has gotten very interested in the out-of-home applications, what we've found [from] talking to consumers is that there are just as many who are interested in streaming their TV in and around the house. I actually went out and got another digital set-top box because I wanted my own discreet session and wanted to get some of my premium stations, and that's a good thing for the cable operators and the broadcasters, as well. You could also plug a live cable into the product, too, because we have a built-in TV tuner in the Slingbox.