Great find by crosspicker on yahoo. Lots of discussion points. CCUR's Del Kunnert quoted as the last paragraph.
eet.com
Pieces in place for video-on-demand
By Margaret Quan
EE Times
(12/07/00, 5:59 p.m. EST)
MANHASSET, N.Y. — After a decade in the making, video-on-demand is moving closer to prime time. Carriers are queuing up fresh trials, OEMs are touting what they say are cost-effective systems, and some analysts are projecting the start of a real market.
One new twist in the long efforts to deliver custom video to consumers is the rise of so-called digital video recorders, which some say represent a fresh route to VoD-like services. OEMs disagree whether it will be those hard-disk based home players or more traditional, back-end video servers that will power tomorrow's video services. But whatever the architecture, some sources said, the corner video store is about to get strong competition from a rising class of networked systems.
Video-on-demand is not new. The service was hailed as the Holy Grail of television in the early 1990s and envisioned as a service that would be operated over hybrid fiber/coax cable or digital subscriber line-powered phone networks, where the network would bear the brunt of storage and real-time video streaming. Hit video content would be delivered from a large number of servers at the cable operator headend or the phone company's central office and would be streamed in real-time to subscribers on demand.
But without broadband networks or digital set-top boxes, VoD proved too costly to operate on a grand scale. The services launched in the early 1990s saw only limited deployment in the United States and abroad.
Times have changed. Trends amenable to VoD include the arrival of broadband cable modems and DSL, the digital set-top boxes set to roll next year, and the improved price/performance of video server technology, sources said.
Analysts at Paul Kagan Associates Inc. (Carmel, Calif.) expect broad rollouts of VoD service in 2001 based on projections that broadband connections in the United States will come in at 6 million this year, and will grow to 26 million in 2003. With those connected households constituting the potential market base for video-on-demand, Kagan Associates predicts the market for VoD server equipment could reach $2.8 billion by 2004 in North America alone, out of a more than $10 billion total market for VoD-related hardware and services.
Those numbers have prompted several operators to initiate video-on-demand rollouts. Oceanic Cable of Hawaii, a division of Time Warner Inc.'s cable systems operation, undertook the first major commercial rollout of the technology in December 1999. Time Warner Cable also launched a service at its Tampa Bay, Fla., division that supports 70,000 subscribers.
Cox Communications is set to deploy systems in San Diego and Phoenix in 2001, and AT&T Broadband is conducting a trial in Atlanta and plans a commercial rollout there by 2001, with Los Angeles, San Francisco and Pittsburgh coming online next year. Comcast Corp. (Philadelphia) similarly plans VoD deployment in 2001.
Blockbuster's big secret
Blockbuster Inc. (Dallas), whose brick-and-mortar video-rental model may be threatened by broad adoption of VoD, has also gotten into the act. Together with Enron Broadband Services (Houston), Blockbuster will launch an entertainment-on-demand service in two U.S. cities by 2001. The service will use Ncube Corp.'s media streaming appliances and software. The company has not announced what kind of device will be used to receive the VoD service in the home.
Other trials will put digital video recorders (DVRs) and digital set-top boxes in the home as delivery vehicles for similar services. Cable operators are testing such two-box solutions to evaluate demand for such services.
Comcast Cable Communications Inc. (Philadelphia), a unit of Comcast Corp., launched a service in Cherry Hill, N.J., using DVRs from TiVo Inc. AT&T Broadband deployed custom DVRs from Replay TV Inc. to select digital cable customers in Denver and Boston; Time Warner Cable is doing the same in select areas. And most major cable operators have expressed interest in single-box solutions, which they believe will not only spur interest in video-on-demand services but also catalyze interest in interactive TV.
Wee hour activities
DVRs, also referred to as personal video recorders, could prove a lower-cost method for launching what amounts to virtual video-on-demand, because carriers would not have to make large investments in server infrastructure or allocate large amounts of bandwidth to video streams. Instead of streaming video in real-time during prime time, when bandwidth is scarce and expensive, the DVRs from Replay TV and TiVo contain software that directs them to initiate low-bandwidth connections to servers during the wee hours in order to receive program information and instructions to tune to particular stations at particular times.
Consumers thus can automatically record and store several hours' worth of video and TV programs that they can play with VCR-like pause and rewind functions at will. Consumers who buy the boxes are entitled to use a portal-like service that lets them search for content. The latest version of the Replay DVR has a 60-Gbyte drive that stores 60 hours of MPEG-2 video.
"We believe local storage will be important in making video-on-demand cost-effective and think it will let VoD work differently than the way people predicted 10 years ago," said Steve Shannon, vice president of product management at Replay (Mountain View, Calif.).
Others apparently agree. For instance, TiVo's system is manufactured in different versions for cable and satellite television by Philips, RCA and Sony. Both Motorola's set-top group (formerly General Instrument) and its arch-competitor, Scientific-Atlanta, said they may soon make a version of the Replay system, and at least one other player is emerging in this market.
The current installed base of DVRs is small. Analysts estimate that only about 20,000 units were deployed in 1999, although they expect that number to reach half a million this year. DVRs are expected to be a booming consumer electronics category in four years, according to Forrester Research Inc. (Cambridge, Mass.), which predicts there will be more than 34 million users in the United States by 2004.
That does not include the tens of millions of advanced digital set-tops with hard drives, one of the fastest-growing consumer electronics categories. The market for those products is projected to total 70 million units by 2005.
Motorola Broadband Communications already has prototypes of a hard-drive-equipped, DVR-enabled set-top that it co-developed with Replay TV and will ship next year. The set-top will contain a 20- to 40-Gbyte hard drive. Charter Communications Inc. will be the first operator to deploy the boxes, and other cable operators are said to have expressed interest as well.
Motorola Broadband vice president Mark DiPietro said the boxes bring DVR to the set-top and will allow consumers to store 12 to 20 hours of programming. Operators will be able to offer not only time-shifted television but also such services as deferred pay-per-view , with stored, encrypted content from the cable plant captured for future use.
Easy add-on
While the cost of storage in the broadband network is coming down, "it's cheaper to add a hard drive into consumer devices [like set-top boxes]," Kenneth L. Klaer, vice president and general manager for subscriber networks at Scientific-Atlanta, said at a recent Kagan Associates conference on video-on-demand.
Scientific-Atlanta is testing the Replay TV box and plans to make a decision soon about developing its own hard-drive-equipped set-top, he said.
A close cousin of the Replay and TiVo DVRs is the Zapstation, from Zapmedia.com Inc. (Atlanta). The Celeron-driven media player comes equipped with a 30-Gbyte Quantum Corp. disk drive, Ethernet, modem, USB port, MP3 player, DVD, CD player and wireless keyboard. Used with a portal service, it will let consumers download audio and video content to a TV.
Initially, Zapstation won't have DVR functionality; users will download video content from a video aggregator, such as the AdamFilms.com and MovieClicks offerings. But Zapmedia.com president and chief executive Eric W. Hartz said the company is integrating the TV tuner and software required for a DVR version of the Zapstation, expected by second half 2001.
Not everyone agrees that DVRs will be a big enabler for VoD, and some further question whether video-on-demand will indeed take off this time.
At least one analyst believes the high costs associated with VoD over cable and uncertain consumer interest raise questions about VoD's future. "Uncertain consumer demand, "combined with the as-yet-limited availability of broadband to the consumer and [limited] penetration of digital set-top boxes, leaves a lot to be worked out about business models" for video-on-demand, said Sujata Ramnarayan, an analyst at Dataquest Inc. (San Jose, Calif.), a division of Gartner Group Inc.
Iffy infrastructure
Some content providers question whether cable systems have the infrastructure to handle VoD services. Jeffrey L. Bewkes, chairman and chief executive officer of HBO, noted at the Kagan VoD conference that his company has been preparing software for an on-demand offering but added that few cable or satellite television systems have the money to put into servers to hold programming.
At that same conference, Michael Thornton, senior vice president of programming acquisition at digital satellite TV service provider DirecTV Inc., told a panel that his company decided not to deploy VoD yet, because "there are no reasonable buy rates where VoD makes sense" for DirecTV.
The company believes movies won't be sufficient to get buy rates up. VoD's success, he said, will "require availability of more content — compelling content that consumers can't get anywhere else."
To pump up the amount of content that's available on VoD systems, some cable operators are working to create personal video channels, with content that includes time-shifted television, local sporting events and news stored at the cable operator headend. But personal channels as well as home DVRs face the thorny security issue of whether they can adequately protect video content from being copied and resold.
The movie industry has not yet released much content for digital streaming, over either cable or DSL networks, because of its concerns about content protection over broadband pipes. The studios want their content protected from end to end along the delivery chain. VoD operators have two options: Movies could be sent pre-encrypted to an operator for distribution, or the operator could encrypt in real-time as the content is sent from its server to a subscriber.
Daniel Sheeran, senior vice president of product management at video server maker Ncube (Foster City, Calif.), called encryption of content one of the "most important" long term challenges for the video-on-demand industry.
DVRs in the home could add a layer of security not provided over broadband networks. Consumers have the right to store video and time-shifted content for their personal use under the "fair use" statutes of copyright law.
Quantum (Milpitas, Calif.), which provides hard drives to Replay, TiVo, Zapmedia.com and DirecTV, is working with the Hollywood studios to enable robust content protection and digital rights management in disk drives, said Bentley Nelson, director of strategic and technical marketing.
Still others think DVRs could be non-starters in this market. Del Kunnert, vice president of marketing at Concurrent Computer Corp. (Atlanta), which makes back-end servers for VoD, called set-tops with DVR-functions "expensive options with limited storage." |
