THE MORNING BUZZ: Getting Broadcast Without Paying the Pipers22 Jan, 2002 By: Holly J. Wagner
A couple of weeks ago I suffered a few slings and arrows from critics who said my last column on video-on-demand (VOD) competition was off base. Whether or not one believes VOD will be one of those options that may challenge packaged home entertainment is, of course, still a big question. But the few responses baffled me because I was agreeing with the critics.
My point was that video must coexist in homes with piped-in options, for the simple reason that nobody goes to the video store for news, any more than they go to an all-movie channel for news. (Like a sound mathematical equation, the proof is that it works in reverse. It worked in rentailers' favor in the weeks after Sept. 11, as newsweary consumers sought respite from video stores.)
Video stores can't give customers CNN, nor should they try to. But because of that, they will never entirely kick cable and satellite to the curb. Anybody who wants CNN, or for that matter any local broadcast programming, has little choice but to have cable or satellite. Video will never muscle out cable and satellite unless someone invents a video format that serves as a broadcast antenna when the movie isn't playing.
But now Pace Micro Technology is putting its money where my mouth was, or at least pretty close. The company is gearing up to offer its Pace Adapter, which lets any analog TV get digital TV reception, in the UK market by the end of March. The price tag is expected to be around 100 pounds sterling per unit.
Apparently Pace strategists agree with my humble assessment, because Pace's new set-top box is enabled for pay TV services but functions without them unless the user decides to subscribe. This would remove the all-or-nothing advantage cable and satellite systems have, in which subscribers must buy a minimum programming package to get local transmissions. This box will get up to 15 broadcast channels without that pesky subscription fee. The BBC and ITV have been in talks with pace, hoping such a box will accelerate the uptake of digital TV.
Some might argue the Pace Adapter will level the field by giving potential viewers an out from cable and satellite. It counters the very argument I made, that viewers must have one or the other to see broadcast television.
But while that's one possible outcome, I think it will run up against my friend and colleague T.K. Arnold's pet peeve: more boxes than set-top real estate. The Pace box and its ilk (Steve Perlman's Moxi, Microsoft's rumored Homestation) are a smart move for the pipers – those who pipe programming into homes – because they can get that figurative foot in the door. For some consumers, the deciding factor could be as simple as a choice of how many boxes will clutter up the household media center. (If you think this is not an issue, ask your friends and colleagues how many of them are rushing out to buy CD players. Why, when you can spend the same amount on a DVD player that also plays your CDs?)
More likely, this is the launching pad for a la carte pay-per-view services. What better platform than a box that gives users free broadcast transmissions and makes the next step -- "I'll just order one movie to see if I like it…" – so much easier. So much shorter. It's the gateway box.
The trick for the video industry is to convince the hardware makers to pair the adapter technology with some kind of video player. That, I should note, is the idea behind Moxi and Homestation. The all-in-one video player could lob the bouncing ball back to packaged video's side of the net by giving viewers what the pipers have failed to offer: free access to broadcast programming and a la carte video from one box.