Cube mentioned....
CABLE SHOW LOADED WITH DATA, INTERACTIVE OFFERINGS
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12/12/97
Interactive Services Report
Copyright (c) 1997 Telecommunications Reports International, Inc.
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ANAHEIM - Two years ago, ISR's coverage of the Western Cable Show began with the description of a 20-year cable veteran who got through that year's event without being aware of cable modems.
It would have been nearly impossible to find anyone so isolated at this week's annual extravaganza in Anaheim.
Data services and digital boxes of all kinds were highlighted throughout the Anaheim Convention Center, starting with a bigger-than-ever CableNet pavilion that showcased the data products and their interoperability. Equally significant was the growing recognition of cable as a data/interactive delivery medium - not merely a video/entertainment packager. This attitude was underscored by the high-visibility arrival of technology firms that have been flirting with the industry for several years.
Among the trends surfacing at the show:
* More Internet service providers are seeking alliances with cable operators.
* Computer component and technology vendors are looking for pacts to assure their places in cable's future digital devices.
* The digital set-top box battle is heating up, with Microsoft Corp. and Network Computing Inc. squaring off to capture the hearts and minds of the cable industry - and in the process to stave off the juggernaut that WorldGate Communications Inc. is assembling.
* Video-on-demand is reviving, after a respectable cooling- off period following VOD's flop in its first attempt several years ago.
* Electronic program guides - considered by some a first step toward interactivity - are being revamped.
* @Home and Road Runner - the biggest cable modem ventures - are defining their roles as broadband content packagers, not just high-speed delivery providers.
* The gray area called PCTV (personal computers that are TV sets) is becoming even more murky: Witness Intel's plan to reintroduce its Intercast systems (for displaying enhanced TV shows on a PC), which is being relaunched for the digital set-top box arena.
The Dec. 10-12 Western Show also served up a larger-than- usual array of new program services and hotter-than-ever debates about how to deal with the growing satellite and telephone company video competition. It is the cable industry's first major gathering after a longer-than-ever gap since the National Show in the spring (ISR, March 21, p. 1; March 28, p. 2). A crowd of 26,000 people (up 10 percent from last year) is expected, despite El Nino's contribution to bad weather in Southern California this week.
The following summary (along with stories on products after the summary) was prepared on the eve of the show, based on interviews and material released in advance by eager vendors.
ISPs Stake Claims in Cable Turf
A slew of would-be Internet service providers (ISPs) emerged looking to establish relationships with small and mid-sized cable companies. The targets are systems that are not large enough for (or of interest to) data giants such as @Home or Road Runner.
Regional Network Communications Inc. (RNCI) put on a heavy push for its new "Ultimate Regional Web Site" service, which lets cable companies offer "an instant locally originated Web site." The company's first "RegionOnline" services will begin in early 1998 on six Armstrong Cable Services systems in Pennsylvania, Ohio, West Virginia and Kentucky. RNCI bundles local content, entertainment, event and restaurant guides, shopping, polls, forums and a local Web site directory.
Another newcomer, The ISP Channel developed by MediaCity, will install high-speed one-way or two-way data service, depending on the cable system's capabilities. ISP Channel offers a turnkey operation at the head-end (although the operator must pay for the cable modems) and sets up a 50-50 revenue split with the cable operator. The company has an arrangement with Excite to let each subscriber create a default page and is working with Taylor Communications Inc., which is handling cable affiliates and marketing; Taylor is led by cable veterans Ed Taylor and Selman Kremer, who made their fortunes helping Ted Turner create his satellite superstation in the 1970s, then worked on digital delivery and teletext in the 1980s.
Inergy Online Inc. unveiled "Communities Online," which lets cable operators offer Web content and services through TV sets or PCs. The system is based on Inergy's "zero-client" Internet technology, which the company said is optimized for TV delivery. Like other vendors, Inergy is pushing its Web creation and hosting capabilities, focusing on its ability to create "a dynamic home base where subscribers turn first for ... information about local sports teams, shopping, arts, school activities and community events."
Meanwhile, Internet Ventures Inc. (IVI), one of the first to chase the cable Internet market, has signed a pact with Cox Communications Humboldt Inc. to provide for IVI's PeRKinet turnkey service to Cox's 32,000-home system in Humboldt, Calif. The first test homes are being set up this month, with full rollout, including service in Eureka and Arcata, Calif., set to begin next month. IVI "already has a dial-up ISP presence" in the area that will be augmented by the Cox service, IVI President Don Janke said. Cox sees the PeRKinet plan as an alternative to its @Home offering, which is for now being limited to larger systems. IVI, which has been signing up California cable system affiliates since the spring, runs Northcoast Internet, an ISP with about 3,000 dial-up customers in the Humboldt area.
For its part, @Home unveiled a new design and enhanced interface to deliver richer content and take advantage of its speed, which is up to hundreds of times faster than traditional dial-up services. New features include giving subscribers up to three user accounts, each with its own e-mail address, and access to their @Home e-mail from anywhere on the Internet through NetMail. High-quality audio and video are available through the interface that permits multimedia content to be accessed. @Home said the redesign had ease of use for the everyday user as its impetus.
Meanwhile, WorldGate Communications thundered about its recent deal with 31 cable program networks, which will link their video and Web content using WorldGate's Channel HyperLinking technology. The integrated package - available through advanced analog and digital set-top boxes - has become the target of Microsoft and other Internet-enhanced TV providers (see section below).
Amid all this ISP action, noticeable by its absence in Anaheim is Community Networks Inc., which debuted a year ago and made a bigger splash at the March convention. Its financial backer, a government contractor, backed away recently and the management team is seeking funds for a buyout to continue service to the cable companies it had signed up before the financial plug was pulled.
RNCI, 610-865-6500, rnci.com; Taylor Communication, 918-481-5252; Inergy Online, 617-354-1880, inergy.com; Community Networks, 703-279-2314, http:// www.cninc.com; Internet Ventures, 310-378-5395, perki.net; Worldgate Communications, 800-796-9121, wgate.com.
Microsoft, NCI Face Off
Microsoft - relying heavily on its WebTV subsidiary - showcased its plan for digital TV and Internet-video integration. It also took the opportunity to demonstrate its HD0 (High Definition Zero) format, which can deliver 480 progressive-scan digital TV along with information access and enhanced content via an integrated Internet connection. Meanwhile, Network Computing Inc. (NCI) - the company created by Oracle Corp. and now encompassing Netscape Communications Corp. - unveiled its NCI DTV Navigator, a software platform for delivering Internet-based interactive and digital TV services.
Both assaults are aimed at establishing relationships with cable operators and technicians before the cable TV industry nails down standards for the next generation of digital set-top boxes, which will include video and data/Internet connections. Microsoft's agenda in particular seems, in part, intent on staving off cable alliances with ventures such as WorldGate, which is positioning itself as a low-cost alternative to the PC- based services.
The Microsoft/WebTV plan, which is part of the upcoming Windows 98 software release, envisions a $300 set-top box. It can present a data overlay on top of video images. The approach "moves all the [target] dates forward" for interactivity and high-definition, explained Microsoft Group Manager Mike Conte. He said that branding and distribution plans are still being formulated.
NCI's software platform offers an electronic program guide, personalized news ticker, TV chat, consumer polling and other interactive services. The system supports JPEG, GIF and PNG graphics, animation and sound. NCI's David Limp expects that two cable operators will begin tests of the system during 1998. At the cable show, NCI demonstrated DTV Navigator ported to the new "Explorer 2000" digital set-top box now being sold by cable equipment giant Scientific-Atlanta Inc.
"The architecture in a cable head-end is tree-based and looks like a corporate Intranet," Limp told ISR. He said that makes it easy for NCI to use Intranet technology (such as proxy servers from Netscape) to reduce complexity and speed up introduction of the services.
While strongly competing against each other, Microsoft and NCI also openly spoke of the limiting opportunities of WorldGate, Wink and other proprietary, TV-based approaches which, the PC companies said, ultimately will restrict cable's interactivity.
OnSet Plunges into VOD
Video-on-demand reared its head again, most notably through the dramatic debut of DIVA Systems Corp., which has high-profile technical and financial backers and enters the arena with a contract from the respected Lenfest Communications Inc. DIVA's "OnSet" VOD service began this month on Lenfest's Suburban Cable system near Philadelphia. Ten cable companies - including CableVision Systems, Adelphia Communications and Rifkin & Associates, have signed up to offer OnSet over some of their systems.
OnSet lets viewers browse for movies by title, genre or performer. Account management options, spending limits and parent control features are available in the system.
DIVA has been in development for more than two years and can operate on cable systems using hybrid fiber coax architecture. OnSet is built around a proprietary, scaleable video server from Sarnoff Corp. (formerly RCA Labs), optimized for streaming video and capable of delivering thousands of movies simultaneously.
OnSet starts with a library of more than 2,000 movies and special interest videos from more than 20 studies, including Disney, Warner Bros., Universal, Columbia/Tristar, HBO and PBS. Its first roster of titles includes recent releases such as "Liar, Liar," "Contact," "The Fifth Element" and "George of the Jungle."
DIVA Systems Corp., 650-859-6400.
Component-Makers Accelerate Efforts
As the battle for the set-top space escalates, microprocessor manufacturers and other infrastructure hopefuls are being drawn into the battle. The first wave of chip-makers started popping up at cable shows in the mid-1990s, and this year hordes of them seemed to be flocking around, eager to nail down deals to make sure their technology is included under the new Open Cable umbrella.
For example, C - Cube Microsystems Inc. has set up a new division called Consumer Network Products "to focus on digital set-top silicon," according to Mary Sharpless-Giani, a company manager. The strategy of this organization is to pursue set-top makers and also to line up content providers who can help pressure equipment makers to incorporate the C - Cube technology in their devices.
VLSI Logic Inc. is unveiling its "Vista 98" development platform, aimed at helping set-top box makers create products for the conversion from analog to digital TV.
Libit Signal Processing Ltd. is unveiling its integrated cable modem transceiver chip, which contains both a media access control and physical layer technology. The product initially is aimed at devices that use telephone return architecture.
Cisco, Allies Demo MCNS-Compliant Package
Cisco Systems Inc. made its cable industry exhibition debut (after years of private showings in hotel suites) with a demonstration of its new Cisco uBR 7246 Universal Broadband Router and associated Multimedia Cable Network System (MCNS) modem cards. Keeping to the schedule that it promised in September (ISR, Sept. 19, p. 3), Cisco and its new consumer- electronics and cable equipment allies showcased the industry's first MCNS-compliant integrated router and cable modem shelf package.
Bob Schack, Cisco's director-marketing, broadband networks, told ISR that the package makes it likely that cable modem makers will be able to sell their devices in the $299 range near-term and under $200 when the product is widespread. In addition to the previously announced alliances with Samsung, Hayes, Terayon and RCA, Cisco's allies also now include Sony, Com21 and NextLevel Systems - all of which will make and distribute cable modems that work with the new head-end equipment.
The new router is based on existing high-end Cisco equipment, but is customized for the cable environment. The Cisco uBR 7246 provides more than 600 megabits per second of bandwidth capacity. The price and distribution plans for the new router will be announced next month, but Schack stressed that it will be less expensive than the current cable modem structure, which includes routers and a series of modem termination equipment.
Cisco Systems Inc., 408 525-2957, cisco.com.
StarSight Unveils 'NOVA' Guide
In the two years since it unveiled its "cable strategy," electronic program guide supplier StarSight Telecast Inc. has signed up only a handful of clients - mostly telephone company video services such as the ones offered by GTE Corp., SNET Inc., BellSouth Corp. and MediaOne (U S West Inc.) (ISR, Nov. 28, p. 1). Now a subsidiary of Gemstar International Group Inc., the on- screen guide conglomerate, StarSight is introducing "NOVA," a package aimed at the "new generation of digital converters." NOVA can handle 250 channels and more, display graphics and variable sizes of fonts and its Grid Guide has been combined with an upgraded Main Menu to create instant access on a single frame to all of NOVA's guide capabilities.
StarSight is positioning NOVA as a way for cable operators to generate incremental revenues from an on-screen guide. The system offers customizable menus and positions pay-per-view options on the main menu portion of every Grid Guide. The three most popular theme categories - movies, sports and children's shows - also are available on the first screen.
The new version also offers movie and TV ratings for parental control, access to music channels directly from the on- screen display plus schedules of song titles, artists and production information, which can be displayed on-screen as music selections play.
StarSight Telecast, 510-657-9900, starsight. com.
ICTV/Cox Offer a Peek at Test Results
Cox Cable Communications Inc. will expand the "virtual PC" test it launched in Santa Barbara in the spring with ICTV. Details still are sketchy, but the extension is based on results from the first six months of the test, which generated average monthly revenues of $13 to $14; penetration reached 9 percent, which "substantially exceeded Cox's and our projections," according to ICTV President Wes Hoffman.
ICTV, a company born to create interactive cable television (hence its acronym) that reinvented itself last year as a cable/Internet company, is positioning its service as an alternative to cable modem projects, since services are offered through existing set-top equipment and viewed on the TV screen. The system tested on Cox's Santa Barbara system combines very high-speed Internet access (10 megabits per second and faster) with a large online library of CD-ROM titles. Each subscriber is equipped with a low-cost return path interface unit and an infrared keyboard.
ICTV plans to add a broader selection of CD-ROM content from Microsoft, Electronic Arts, Segasoft, Cloud 9 and other publishers during the next phase of the test. As a selling point to other prospective cable affiliates, ICV points out that "surprisingly, none of the subscribers dropped any of their pay services." About two-thirds of the Cox customers did not have a PC, which leads ICTV to conclude that its service could be "a useful marketing tool" to acquaint cable homes with interactivity before cable modem service becomes available. By ICTV's calculations, its test in Santa Barbara generated about $1.25/month/basic subscriber more than "many cable modem trials."
Hoffman stresses that the ICTV architecture "postpones the inevitable technology obsolescence of any set-top" by placing the technology in the cable head-end where it can be upgraded "without a costly exchange of boxes in the home."
ICTV, 408-364-9200, ictv.com.
Home Wagering in TV Games Network Lineup
ODS Entertainment Inc. finally is in the starting gate with its interactive horse racing network, which will feature in-home wagering. The video channel will be called Television Games Network (TVG) and is scheduled to debut in late 1998. On-Demand Systems (ODS) has been developing the technology for more than two years, and generated high usage rates during a test on the TKR Cable system in Louisville, Ky. More than 1,000 customers, using proprietary technology, averaged 200 bets per month, according to TVG President Mark Brenner.
Using a remote control, subscribers can navigate through a series of on-screen menus to view racing information and place wagers in real time on live races. Their bets will be tied directly into the tote systems at the racetracks. TVG expects to present four to six races per hour packaged into a live, hosted entertainment program. Eventually TVG hopes to expand to a 24- hours-per-day programming service, featuring interactive races, handicapping guides and tutorials plus interactive advertising.
TVG will feature exclusive live racing content from nine U.S. horse racetracks, including Arlington International Racecourse, Churchill Downs, Gulfstream Park, Hollywood Park, Laurel Downs, Lone Star Park, Pimlico, Santa Anita and Turfway Park. Outside investors have dedicated $33 million to the network so far, with plans for additional capitalization.
ODS Entertainment, 303-464-6004. |
