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Roadblocks to Digital Evolution

13 Jan, 2005 By: Erik G., Stephanie P.



Home media technology continues to advance, but there are several roadblocks to convergence, panelists said at this month's Consumer Electronics Show in Las Vegas.

Movie distribution over the Internet and broadband connections are here, but face several challenges, speakers said at a session titled “Movie Distribution and the Broadband Timeline.”

Curt Marvis, CEO and co-founder of video-on-demand Web service CinemaNow, remembered “the euphoria of 1999 when we all thought movies would be projected directly into people's eyeballs.”

Marvis said he's still “looking forward to creating a business that we've been waiting a long time for.”

Alan Citron, SVP of marketing at Movielink, the studio-owned VOD Web service, said, “We have to be careful about drinking our own Kool-Aid.”

The studios are in no hurry to offer a better window and more content for VOD, he said.

“There are a lot of ways that content holders make money from their content,” Citron said. “They will wait until they think a method of distribution is ready.”

“No one dares to tamper with distribution because [studios] need the flow of revenue to finance expensive movies,” added Josette Bonte, managing director, broadband services, for consulting firm RHK.

DVD sellthrough offers a strong and upfront revenue stream that the pay-per-view model of VOD does not, Bonte noted.

“As the digital market grows in dollars,” VOD can get better windows, said Virl Hill, director of business development for consumer services, RealNetworks.

Marvis cited an “irrational belief by content holders that they will cannibalize their existing business.” Digital distribution can be “additive,” he said.

With digital distribution, consumers can collect libraries “much larger than we see out of the DVD business,” he noted.

Another roadblock to Web VOD is that it is, for the most part, confined to the PC, though new devices are trying to bridge that gap, speakers noted.

“This becomes a real significant business when it's connected to the television,” Citron said.

For the services themselves, it comes down to greater consumer choice, they said.

“In a perfect world, we see rental, subscription and buying options all available on all content,” Marvis said.

He also noted that portable devices could become a strong delivery avenue for Web VOD, calling the response to a promotion for Microsoft's Portable Media Center “astonishing.”

Networked Home Entertainment
With the ongoing proliferation of networked home entertainment — including DVD, online, music, data, voice and games — myriad challenges confront technology and content providers, including mobility, ease-of-use and copyright protection, said a panel of industry experts at a session focusing on PVRs.

“Consumer's want more choice control,” said Dave Davis, VP with Scientific Atlantic, one of the largest PVR manufacturers. “How do you provide that control while producing a very user friendly [interface] and protecting copyright?”

Davis said the evolution of the home video server, specifically the market for a PVR with built-in DVD R/W, would in the short term supercede that of home networks.

Panelists said interoperability between entertainment devices, including user interface, usage models, DRM and copyrights, and codec need to be addressed on several levels.

“When you are targeting people's interest with a TV screen, they don't want more than five control buttons — up, down, left, right and center (action),” said Richard Titus, president of Schematic.

With rapid changes in entertainment delivery channels, panelists said many consumers believe DVD, VOD and PVR are the same thing.“We don't want consumers having to make a technology decision when buying media,” said Brian Lakamp, SVP, Sony Motion Pictures Entertainment.

“When you realize you can't get video on your iPod, it can get frustrating,” said J. Michael Collette, CEO of Ucentric, manufacturer of home media networking software.

He said concerns about content piracy shouldn't be an issue within an enclosed home network, and pale compared to the Internet.“[Media] needs to be transportable within a network,” Collette said.

Telco-Entertainment Partnership
It's not your father's phone company anymore.

As cable channels and satellite companies strive to become original content providers, telecommunication services, including Verizon, Bell South, SBC Qwest and Sprint are competing through increased broadband rollout and wireless applications, strong brands, and customer relationships, said panelists representing a spectrum of telco-related technology companies at CES.

“Broadband services help drive down customer churn by 50 percent,” said Jonathan Hurd, VP with Adventis. “Telcos can help households have a much better experience and service with their entertainment.”

Jeff Weber, VP entertainment services at SBC, agreed.

“We need to bundle services. SBC has an agreement with EchoStar. It is not an a-la-carte world.

“We are very encouraged. It is absolutely intuitive for customers to buy videos from their telephone companies.

“It is a closed environment. We want our content partners to be very comfortable that their content is secure.”

Weber said telcos must address content providers' concerns, including delivery choices and VOD capabilities.Mark Turner, sales, western region, with BT Broadcast Services, said telcos can help deliver content through a unified platform.

“Content owners can't repurpose their content to fit all the various media platforms,” Turner said. “We can do that for them.”

And they'd better do it quick.

Comcast Corp., the nation's largest cable service, reportedly said it would begin offering voice over Internet protocol (VOIP), or Internet-based telephone service to 15 million households this year, with plans to extend service to all 40 million of its subscribers by the middle of 2006.

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