Actv has a previously announced deal with Pioneer to integrate Actv software.
Time Warner Taps Pioneer For Aggressive Box Rollout
By JEFF BAUMGARTNER August 7, 2000
Time Warner Cable maintained its penchant to buy set-tops from multiple sources last week, agreeing to order an additional 350,000 "Voyager 1000" digital set-top boxes from Pioneer New Media Technologies Inc.
If certain "options" are exercised, Time Warner's latest Pioneer order could reach as high as 500,000 Voyagers during 2000, the companies said.
The financial terms of the deal were not disclosed, although some published reports pegged the 350,000-unit order at roughly $70 million.
Under terms of the new contract, Time Warner also agreed to license Pioneer's cross-platform "Navigation Software Suite Passport" software on any other digital set-top boxes used in its systems. Pioneer executives said the company has already shipped more than 400,000 Passport-enabled Voyager boxes to Time Warner from an earlier deal.
With its latest purchase commitment, Time Warner now has deals in place with three set-top box suppliers -- Scientific-Atlanta Inc., Pioneer and Pace Micro Technology plc.
S-A -- Time Warner's system provider for the "Pegasus" digital platform -- remains the MSO's biggest set-top box supplier.
Although S-A officials said the company does not break down set-top-box orders by MSO, S-A did sign a deal with Time Warner in 1998 that called for 1.1 million units, with options that could raise that figure to 1.6 million.
To date, S-A has shipped 2.4 million "Explorer" boxes to Time Warner, Cox Communications Inc., Comcast Corp., Adelphia Communications Corp. and its other cable partners, vice president of marketing Perry Tanner said.
During a recent earnings call for the quarter ended in June, S-A said it shipped 835,000 Explorer boxes during the period, with 450,000 of them going to Time Warner.
"Right now, the supply chain is about two-thirds S-A and one-third Pioneer, but that will change a bit when Pace begins shipping boxes to Time Warner before the end of the year," Time Warner Cable vice president of advanced engineering Mike Hayashi said.
Earlier this year, Time Warner placed an order with Pace for 750,000 digital boxes, marking Pace's first major foray into the competitive U.S. market.
"We are a big believer in multiple set-top-box sources," Time Warner Cable chief technology officer Jim Chiddix said, adding that the MSO is talking with additional set-top vendors, as well.
Panasonic Consumer Electronics is one set-top supplier that could be in the running, an industry source said.
Having three digital-set-top-box sources should help Time Warner to continue rolling out digital services aggressively.
Time Warner -- which currently serves more than 12.7 million customers in 32 states -- said it had 889,000 digital-video customers June 30, a 107 percent rise versus year-end-1999 numbers.
"We expect to have 45 percent digital penetration among our basic subscribers by 2003," Hayashi said, adding that all but three of Time Warner's 40 divisions are using the Pegasus platform. "We are digitally loaded," he added.
The MSO's digital footprint currently covers more than 11 million homes, a Time Warner spokeswoman said.
Pioneer's Voyager box contains hybrid analog features, as well as more advanced digital capabilities such as video decompression, Internet-protocol addressing, 32-bit processing and 4 megabytes of flash memory.
Pioneer's Passport software -- which consumes about 1 MB of flash memory -- runs basic channel-surfing, impulse pay-per-view and parental-control functions, as well as more advanced two-way, interactive e-mail and Web-browsing applications.
By the end of 2000, Pioneer expects to introduce a version of Passport that supports video-on-demand, vice president of software engineering Haig Krakirian said.
So far, about 700,000 set-tops have been shipped with Pioneer's Passport software, director of marketing Dan Ward said, noting that 200,000 of those include S-A boxes. That figure will easily reach 1 million by the end of the year, he added.
The component shortage that has plagued set-top vendors worldwide this year is beginning to abate, Krakirian said.
"Like everybody else, we've been a bit tight, especially for the first half of this calendar year," he said. "But I think we've been able to pick up the ball at this point. We're hoping that the last five months of this year, we'll be able to fulfill our commitment to Time Warner and other MSOs."
Pioneer will focus next on carving out deals for its "Voyager 3000" box, which is based on Broadcom Corp.'s chip set. Pioneer's 1000 set-top is powered by a chip set licensed from S-A, Krakirian said.
"We were in development with the ‘Voyager 2000,' but we decided to shift gears and leapfrog technology over to the 3000," Ward added.
The 3000 model will not include a cable modem, but it will support point-of-deployment modules and options for an external hard drive and high-definition television ports, Krakirian said.
Although Pioneer could eventually seek retail channels for the 3000, the company has no such plans yet. "At this point, we don't see the [retail] market out there. We may pursue that next year," Krakirian added.
In the meantime, the company will continue to seek direct-source agreements with MSOs. Although "nothing is set in stone," Pioneer is trying to work out agreements with several MSOs, including Comcast and Cox, Ward said.
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