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Technology Stocks : Concurrent Computer (CCUR)

CCUR 1,940

-22.4%

Jul 30 2:38 PM EST

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To: Rock who wrote (17772)	5/8/2002 5:44:53 PM
From: Granby	Read Replies (2) of 21142

The only difference between standard digital VOD and an HDTV VOD system would be the bit rate. There is probably also the nuance of wanting to use variable bit rate encoding (VBR) instead of constant bit rate encoding - which is what most content is today. VBR enables better compression - the encoder can use its bit budget where it needs it most. The big question is what bitrate will HDTV be delivered. Originally HDTV was designed to work at 19 mbit/sec - which would mean that only two subscribers could be simultaneously streamed in a single 6 MHz cable channel using QAM 256. Current VOD systems can stream to about 10 simultaneous subs via a 6 MHz channel (3 mb/s x 10 = 30 mb/s in a QAM channel). My guess is that decent quality HDTV can now be delivered at 10 mb/s which would enable about 4 subs per 6 MHz channel. When HDTV implementations using MPEG4 technology come around the numbers will improve - but probably not less then 4-6 mb/s. I haven't seen any recent studies but thats a guess. There is some interesting work being done in digital cinema which will produce high quality HD at lower bitrates but it will still limit the number of subs per channel. The cable operator will ultimately have to give up more channels to implement a VOD HDTV service - but in most MSO's 10-20 channels should be sufficient. If I am right about the step down to 10 mb/s from 19 mb/s then 20 channels would allow 80 subscribers to watch a movie simultaneously. With a typical neighborhood of 250 homes and a 10% take rate that is plenty of coverage. I thought for a long time that every home would "eventually" have a dedicated stream which would mean the cableco has to give up many more QAM channels. Technically there is no reason why 100% of programs could not be delivered in the VOD way. Each house has its own 100% streamed digital channel - in fact each house has one cable channel - through which all programming is delivered. That would allow all kinds of powerful interacfive video apps. Obviously, that hasn't happened and will not happen for the foreseeable future because there is no business model for transitioning to that approach. Being an R&D guy I never thought about the business side (that's an inside joke to myself...) Anyway - since 99% of the programming we watch - even primetime networks - originates from some kind of play to air server there is no reason why the program should not be delivered via the VOD channel. I believed for a long time that this approach would win out but it will be many years before it does. On another VOD front - as DIVA appears poised to be sold - reportedly to Gemstar - at (I assume) a firesale price I must reflect on the day in 1998 when an all wise M&A guru explained to me why it was such a good idea for the VOD server company I co-founded ( but had no control over) to be acquired by DIVA. "You see, Granby, it is so much better to be a complete service provider with all this recurring revenue from subscribers rentals then a server hardware vendor..." He said "hardware" with a kind of inflection to emphasize how little he thought of it... He then drew this glorious chart on the blackboard showing the value of DIVA on this exponential slope and our server company on this pathetic lower tapered line. Of course he forgot that you can only be a "complete" service provider if the companies with the server floor space and last mile connections want you to be. I also use to think that if DIVA was'nt successful it probably meant that no one could be - at least as a focused VOD only company. Clearly, that was also wrong and there are going to be successful VOD hardware AND SOFTWARE companies along the lines of CCUR. Oh well, back to work on all optical switches...

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