Adding recording features to the cable or satellite box threatens both the stand-alone digital video recorder and visions from Jobs and Gates of entertainment hubs built around the home computer
Arguably the most touted announcement at the 2002 International Consumer Electronics Show (CES), held the second week of January in Las Vegas and attended by some 110 000 people, was the Moxi Media Center. Developed by Steve Perlman, who founded WebTV Networks Inc. and then sold it in 1997 to Microsoft Corp. for US $425 million, the Moxi Media Center is in essence a highly elaborated set-top box. Running on Linux, it can distribute television programming around a networked household and record programs on an 80-Gb hard drive. Moreover, it supports interactive television, instant messaging, and electronic mail, serves as an MP3 player and jukebox, and "rips"--copies as digital files--CDs directly.
With such credentials, the Moxi Media Center is a clear threat to efforts by electronics manufacturers to win acceptance of stand-alone hard-drive or "personal" video recorders (PVRs). It could also imperil visions propounded by both Apple Computer Inc. and Microsoft Corp. of making souped-up computers or servers the fulcrum of home entertainment and work .
Yet even before Moxi's Las Vegas debut, set-top boxes were gaining ground as a preferred medium for digital video recording. Late last fall, middleware design firm Liberate Technologies, San Carlos, Calif., and IC manufacturer Broadcom Corp., Irvine, Calif., announced their intention to equip TV set-tops with interactive and digital video recording capabilities by integrating the companies' respective software and hardware. Meanwhile, set-top technology got a boost from an international standard unveiled at the beginning of January for TV middleware--that is, the proprietary software between the box's operating system and its graphical user- interface.
As it has evolved in the United States during the past few years, digital video recording all but compels consumers to buy both a hard-drive recorder and a subscription to a service. The latter supplies the headend software needed for the recorder to find programs being broadcast and record them.
The best and more expensive PVRs can store as much as 320 hours of programming on a hard drive, but they do not play standard video disks and therefore do not double as DVD players. Users can in principle not subscribe to a service and just punch RECORD, as with a VCR, when they want to save a show. But that procedure makes programs hard to retrieve and misses out on most of the special features that make digital video recording so attractive to begin with.
Typically the subscription services supplement the recording capability with a panoply of interactive features, usually for a monthly fee--unless that fee is part of the PVR's price, as with the SONICblue Replay TV 4000 line, introduced late last summer in four versions for $700 to $2000. Interactive features can include automatically finding and recording all programs of a certain kind, recording without ads, pausing and rewinding live TV, searching programs two weeks in advance, and providing video on demand from the Internet.
The set-top box technology from Liberate and Broadcom could help resolve a marketing conundrum--is digital recording a product or a service?--that some analysts feel has been confusing customers and slowing adoption of PVRs. (Admittedly, poor advertising and hostility from TV and movie studios also have been factors.) The combined solution is targeted at original-equipment manufacturers and cable or satellite network operators who want to add digital video recording and interactive TV capabilities to set-top boxes.
The Liberate-Broadcom offering
Liberate offers client software for set-top units that allows consumers to digitally record TV programs and set customized viewing preferences--say, for the programs that should be recorded each week. The software supports Java, Javascript, and HTML applications and enhanced content; it also lets box manufacturers and cable service providers deliver service offerings to the TV set. Also available are application development extensions with which developers may build in features like live TV motion control, program listings, and recording schedules.
On the hardware side, the BCM93740 Broadcom reference platform enables set-top boxes to deliver voice, video, and data throughout a home. Its dual-channel Moving Picture Experts Group (MPEG) encoder chip supports analog and digital channels, and allows cable and satellite TV subscribers to view one program while recording another. "We're providing an entire system on a very complex chip," explained Joseph C. Del Rio, a product line manager in Broadcom's San Jose, Calif., office. "We've developed software for programming the hardware, but middleware, such as Liberate's, is essential."
Hard-drive recording--hot or not?
PVRs were introduced in 1999 by companies like Sony, RCA, and Philips, and the major digital recording services--TiVo, ReplayTV, UltimateTV--often have taken responsibility for marketing. Sales have been sluggish, according to Aditya Kishore, an analyst with the Yankee Group, a Boston-based research firm. "Manufacturers have not done a good job of communicating their value," he told IEEE Spectrum. Yet TiVo Inc., San Jose, Calif., has signed up 300 000 subscribers for its digital recording services in the United States and the UK, and early reports of holiday 2001 sales indicate a sellout season.
Forrester Research, a market research firm in Cambridge, Mass., estimates that PVR sales could reach 53 million units by 2005, while the Yankee Group is less optimistic, forecasting an installed base of 18.6 million units in U.S. homes by 2006.
The combination of a PVR and supporting service gives viewers much more power to control and manipulate content than they could ever get from even the most advanced VCRs or DVD players. To record a program on Microsoft's UltimateTV, for example, viewers press the GUIDE button on the receiver's remote control, which displays the program guide on the TV screen. Once the title of a program has been located and is highlighted on the screen, the viewer presses the RECORD button once, or twice to record all subsequent episodes.
PVRs have, in short, many attractive features, but their future will depend heavily on the extent to which cable and satellite providers promote them or else incorporate their features in set-top boxes.
AT&T Broadband, Denver, is offering the Series2 recorder from TiVo with 40 hours of built-in recording space (40 GB) for $299 plus monthly service fees. A 60-hour version for $399 will soon be out.
The mounting cable challenge
In their pursuit of subscribers, a growing number of cable and satellite TV operators are planning to offer enhanced digital services like PVR and interactive TV capabilities. AOLTV and Microsoft TV are busily expanding their interactive and enhanced TV capabilities so viewers can shop and communicate while watching TV, access special content, and participate in TV programs, as opposed to passively watching them.
For example, the DirecTV receiver with UltimateTV service has a built-in 56K dial-up modem that lets viewers access the Internet from their TVs. The modem allows UltimateTV subscribers to receive the Microsoft network TV service as well as enhanced or interactive TV programming from The Weather Channel, CNBC, and MSNBC, among others. These special programs offer additional content such as local weather and business statistics, with access to still more information available via the Internet while watching the program.
Time Warner Cable, Stamford, Conn., has announced it will aggressively promote video-on-demand via set-top boxes in the coming year. Likewise AT&T Comcast Corp.--the company likely to result from Comcast's acquisition of AT&T Broadband--plans to develop and deploy new broadband applications that include interactive television. If approved by regulators, it will serve approximately 22 million subscribers in 41 states.
TiVo, already working with AT&T Broadband, also has agreements with Real Networks and Jellyvision to woo subscribers with things like digital photo albums, group video games, Internet radio, and broadband video on demand. The hope is for such services to be available by the holiday season at year end.
Thus, the technology agreement between Liberate and Broadcom plays into a broader trend in the cable industry to provide extra revenue-generating services. Yet, to date, few cable companies have offered their subscribers interactive and digital-recording capabilities. None of Liberate's satellite or cable customers has rolled out such services, and set-top boxes based on Broadcom's hardware platform alone have not yet been announced.
The Yankee Group's Kishore said that cable operators will ultimately drive the deployment of PVRs, but have been slower than satellite operators to deploy the service for two reasons. For one, cable network architectures are faced with server and bandwidth concerns that do not apply to satellite networks. Further, the base of satellite-based PVR customers has not taken off as fast as expected, so cable operators are weighing deployment costs against likely revenues.
"If [the market for] PVRs had exploded, the cable companies would already be offering the service," he said.
A Moxi-Echostar alliance?
Analysts at the CES Las Vegas meeting noted that Perlman's Moxi Digital Inc., Palo Alto, Calif., could gain in a big way from a relationship it has entered into with satellite operator EchoStar Communications Corp., Littelton, Colo., especially if the latter's acquisition of DirecTV from Hughes Electronics Corp., El Segundo, Calif., wins regulatory approval this year.
After the merger, EchoStar could well decide to replace the 10 million set-top boxes used by DirecTV's subscribers with more capable units providing interactive and recording features. If, as Moxi claims, its Media Center will enable cable and satellite providers to reduce the cost of making a digital set-top box equipped with a hard-drive recorder, from an average of $570 per TV for a single-TV household to $425, then the Media Center would look to be a strong candidate for EchoStar's next-generation box.
Yet Moxi Digital confronts competition from other start-ups offering entertainment-center technology, including Microsoft and Apple. Apple's Steve Jobs and his chief designer Jonathan Ive have concocted a new iMac, unveiled at MacWorld in San Francisco on 7 January. This product consists of a flat panel mounted on a lamp-like arm and a compact hemispheric base containing the computer. The hub-like base seems intended to be the home hub.
Meanwhile, in his keynote address at CES, also on 7 January, Microsoft's Bill Gates unveiled two flashy technologies, Mira and Freestyle, designed to support home entertainment networking and relying on the IEEE 802.11 standard. Mira is software for a flat-panel tablet that can be carried around the house and used to issue commands to PCs or an entertainment center and to access the Web. Freestyle is a hardware and software package that turns Windows XP-based PCs into remotely controlled home entertainment centers for handling TV signals.
It was not the first time that the world has witnessed Jobs and Gates stealing and elaborating on each other's ideas, seemingly in less than real time. What will the outcome be? This much seems clear: the stand-alone digital recorder is facing stiff and possibly insurmountable challenges, both from set-top boxes and computers.