Primestar could be one of Zenith's HDTV/STB "best of breed" partners based on the News Corp/Zenith Latin America STB deal. Note a recent press release from LGE:
"Zenith supplies digital set-top box to LA Sky B
- Secured a contract to supply 500,000 units (amounting to 70 million
dollars) by the year 2000
- Partnership agreement with NDS (2)
- Expects to supply additional 300,000 units by the year 2000.
- Will constitute mid to long-term activities.
- The result of combining LG Electronics' global network with Zenith*s
technological expertise.
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Zenith Corp. made a contract with "LA Sky B(1)" to supply satellite
broadcasting receiver set-top boxes starting 1998. *LA Sky B* is a joint
venture project between Media Mogul Murdoch*s News Corporation and
Central and South American countries* broadcasting companies. The
venture was formed to provide satellite broadcasting services to that
region. This contract enables Zenith to supply satellite broadcasting
receiver set-top boxes to the burgeoning Central and South American
market in addition to existing suppliers such as Pace and Philips.
The contract calls for at least 500,000 units (150 million dollars) to
be supplied, and the total market size of the region amounts to 2.5 to 3
million units. The products will be supplied to Central and South
American countries, which include Mexico and Brazil. They will be
manufactured at Zenith*s Chihuahua factory that is located in Mexico.
The products will be allocated through local LG Electronics*
distribution channels.
"LA Sky B" project has been in operation in Mexico and Brazil since 1996
and will be in operation in other countries of the region by 1998.
Along with this contract, Zenith plans to take part in a venture that
provides package solution services to each country*s digital
broadcasting service. For this purpose, the company has made a
partnership with NDS, a subsidiary of Zenith and a leading manufacturer
of broadcasting equipment.
This new partnership with NDS will provide a package solution service to
each country*s digital broadcasting companies that are not included in
News Corp*s "Sky Network by Sphere." Zenith expects to supply an
additional 300,000 units (total market size 1 million units) by the year
2000. The set-top boxes Zenith provides are perfectly compatible with
NDS* software and Conditional Access System *(3), which is NDS* core
technology and suitable for most digital broadcasting.
Zenith has insured active mid to long-term network business by securing
this contract to supply products until the year 2000 through successive
orders.
This contract is a classical example of how Zenith and LG Electronics
combined their strength in a successful fashion. The combination of
Zenith*s technological prowess, symbolized by its HDTV standard that was
approved by the FCC and its globally recognized brand name, and LG
Electronics* global network and product design capability, has resulted
the successful acquiring of substantial business from the global market.
Zenith*s position as a leader in the Digital Technology field has been
enhanced by its collaboration with News Corp, which is a dominating
force in the international broadcasting sector. In August of 1996, the
company also received an order to supply cable broadcasting digital
set-top boxes to Americast, a consortium of US local companies and the
entertainment giant Disney.
LG Electronics, which manages Zenith, plans to promote and advance
Zenith as a premier multimedia company. The focus will be on
concentrating Zenith*s efforts towards the production of display units
(regarded as a promising enterprise) and network systems.
Legend:
(1) LA Sky B
"LA Sky B" is the Central and South American portion of a worldwide
satellite broadcasting venture propelled by R. Murdoch.
(2) NDS Corp.
NDS is a venture technology concern in charge of News Corp*s
broadcasting technology. The company is a worldwide leader in the
production of digital broadcasting equipment, supplying not only News
Corp's clients, but also competing with DirecTV's.
(3) Conditional Access System
The current broadcasting business model consists of providing free
services to viewers and making profit through funds from advertising.
However, the future of digital business will adopt a new model where
viewers will pay for each broadcast. The new business will model will
soon supply services only to paid customers who are allowed to Access
this service Conditionally.
Addendum:
The current state of News Corp's satellite broadcasting business
In England, the project will is in service under the name of "B Sky B",
and consists of 6 million subscribers. It currently utilizes analog
technology, but plans to eventually convert to digital technology.
In Japan, the name is "J Sky B" and it is a joint venture between Sony
and Softbank. It is currently in its developmental stage. In Indonesia,
it goes under the name of "Indovision," a joint venture between local
businesses. It also utilizes analog technology, but plans to convert to
digital in 1998. In India, a company is waiting for the approval of the
nation*s government and expects to be in operation during the second
quarter of 1998.
The state of worldwide satellite broadcasting's market
In the US, the three service companies - DirecTV, PrimeStar, and
EchoStar are competing fiercely and DirecTV is the largest one with 2.5
million subscribers. News Corp recently invested in PrimeStar, which has
1.8 million subscribers, and once this goes in effect, DirecTV and
PrimeStar will engage in direct competition.
In Europe, excluding England, "CNAL Plus" is mainly a service provider
and News Corp is seeking to enter this market as well.
In South America, News Corp.'s "LA Sky B" and DirecTV*s "GLA (Galaxy
Latin America)" are competing with each other. Up to now, each party has split the market in half. "
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Note: NDS is NOT a subsidiary of Zenith but is a "best of breed" partner. Nice comments though about the successful LGE/Zenith partnership. |
