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Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?

To: BillyG who wrote (45442)	9/27/1999 12:26:00 PM
From: DiViT	Read Replies (1) \| Respond to of 50808

More on Pace/NDS/PVR/DVR... 09/20/1999 Inside Digital TV (c) 1999 Phillips Business Information, Inc. The integration of PC hard drives into digital set-top boxes was one of the major themes of this year's IBC. Barry Flynn was there for the launch of the Pace/NDS product. The idea of integrating a storage device into a digital set-top box is not new. TPS was proposing something called HyperTV almost as soon as it launched, and both NDS and Canal+ were making noises about a similar concept two years ago. Indeed, NDS's CEO, Dr Abe Peled, declared in the joint Pace/NDS press conference held to publicise the first XTV prototype that "digital storage is in my opinion the sleeper technology of digital TV." What has finally turned the concept into reality is the fact that the cost/performance ratio of the humble hard drive appears to be following Moore's Law - that is, every 12 or 18 months, the cost per Gigabyte is halving. Dr Peled noted that the first PC introduced by IBM had 10MBytes of storage, while the typical home PC sold today has 4Gbytes (400 times as much). While initial products can only store 10 hours of primetime television, Peled suggested "in the next five years maybe they will store 100 hours." The new prototypes demonstrated at IBC are, in fact, much more than an intelligent replacement for the VCR - and are arguably as conceptually far removed from the likes of the TiVo and Replay devices as the first analogue set-top boxes are from today's digital receivers. This is not just because they store the video in MPEG-2 mode (as broadcast) rather then re-encoding from analogue - although that will make a significant difference in picture quality on replay. It is, in essence, because their developers have realised there has to be something in it for the broadcaster as well as the viewer. Neither TiVo nor Replay appear to have tumbled to this - which is why most of the US broadcast establishment have taken stakes in one or other of the two rivals. When this bid to control the technology failed, the broadcasters threatened to sue. Much has been made of the fact that the networks are worried that PVRs will allow viewers to zap through TV commercials once they have recorded the programmes they want to watch onto their hard drives - but that is possibly the least of their concerns. The really dangerous thing that PVRs allows the audience to do is to create its own personalised programme schedules, thereby rendering almost completely redundant two of the average general entertainment network's only remaining assets in a 500-channel universe - scheduling savvy and brand loyalty. Not surprising, then, that when one US TV executive was first shown such a device, he described it as the "Hannibal Lecter" of television. NDS has come up with arguably the most sophisticated response to this problem: an end-to-end system which allows the broadcaster to control not just how the content is used once downloaded onto the hard drive, but to derive extra revenues from it. This only becomes apparent when the XTV tagging software, a user-friendly front-end which allows the broadcaster to add markers to particular segments of the broadcast stream, is demonstrated. These markers are decoded by the box and define how the recorded content is to be used. For instance, a pay-per-view movie can have information attached to it about the length of time the movie can be stored, the number of times it can be viewed, and what level of payment is to be billed for what type of use. A commercial can have information about when it is to be shown, whether or not it can be 'zapped' and which set of boxes are allowed to retrieve it. Since such boxes store programmes according to the viewer's declared or implicit preferences, the amount of data available to support precision targeting is enormous. The system doesn't simply benefit the broadcaster (and the advertiser), however: besides the standard personalisation and VCR- like pause and play functions, the 'metadata' attached to the video stream can segment programmes down to the level of granularity required. NDS demonstrated how it metadata could be used to slice a news programme up into individual stories, allowing the user to skip up and down the running-order to choose the desired item. Another demonstration involved the 'plays' in a football match being tagged for instant replay - a procedure which could even be carried out in real time on live broadcasts. A number of questions remain. Some are technical: Are today's hard drives robust enough for such a consumer electronics device? Others are practical: What will it add to the price of the box; and will the studios - who have demonstrated considerable paranoia about recordable DVD - really be happy about perfect digital copies of their movies being stored on them? On the first point, Pace CEO Malcolm Miller agreed there was a problem which "had to be overcome. The consumer won't settle for something less robust [than a VCR]." Peled agreed: "re-booting an STB is not a concept we believe in." As for price, Miller suggested that a ball-park figure of $100-$150 added to the base cost of the box was probably in the right ballpark. "I would like to see it as something the consumer pays for," he said, brushing aside suggestions that this would create two tiers of digital pay-TV customers in the UK market, one paying nothing for boxes and the other paying for the PVR function. Miller likened it to the mobile phone market, where consumers got the handsets for free or not depending on the level of service. As for the security issue, Dr Peled was confident that NDS's conditional access system provided enough security to protect the (encrypted) copies of the programmes stored on the hard drive: "we specialise in protecting content", he pointed out. Two things have now become clear: first, that this is a device ideally suited to the vertically-integrated pay-TV operator, which can confine the enhanced functionality to its own content on its own boxes, and not only charge customers extra for the added value but derive extra revenues from advertisers. Second, that whatever penetration TiVo and Replay succeed in achieving between now and when the first enhanced digital pay-TV boxes appear (at the end of next year?) will prove to be only a temporary blip. The established operators and consumer electronics manufacturers have learnt from their mistakes, and are joining forces to control this space themselves.