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Entertainment On Demand - 2001, Looking Forward

Many exciting events are occurring that will change the way entertainment is experienced by the consumer. Let's look at the dots and see if we can link them together to draw a picture of "Entertainment On Demand - 2001,  Looking Forward."

Enron's  "Video on Demand" Broadband Services   announced an alliance with Viacom's Blockbuster on Dec. 18, 2000.   I'm a little late noticing it, but, here wakes a quiet giant, Enron. The pieces in the equation aren't quite certain.  Will Enron/Blockbuster offer ReplayTV/Tivo like functions on a box they provide?  Be sure of one thing, it will have the ability to distribute Blockbuster releases into homes directly.  Look for Enron to join forces with other big players.   SBC and Covad will contractually own a lot of DSL subscribers who like AOL patrons, pay a monthly fee.   Cisco/Efficient Networks/Seachange/nCube/NorthPoint?  Someone will step forward and be the missing link in Enron's ability to deliver the Blockbuster brand.  Right now the mechanics aren't clear. But soon they will be, no doubt.   Don't forget about the other video renters.   Patrons of Video Update or Hollywood Video may be offered a deal through a pioneer like Charter Communications. Tough to say.  But, I'm sure of at least one thing;  "Enron" will be a name revered like "Intel" by 2005.   Right now, they are as famous as "Global Crossing."  Their success will help fill part of the promise of entertainment on demand.

Wireless Broadband:
Starband and the Hughes DirectPC companies now offer 2-way satellite broadband. Alcatel and Nokia are joining the fray and will make wireless broadband a big topic for set-top and PC users this year.  Between DSL, cable, satellite and MMDS , there is no reason not to have a broadband Internet experience, if you want it and can afford it.

New Set-top Boxes To Be Available for Retail Purchase.  The FCC and FTC have mandated that "navigation devices" be available at the retail level and that channel selection functions and scrambling functions be separately controlled. Motorola and Scientific Atlanta are the two major players who have been dragging their feet on these requirements.  Government regulations took affect in the last half of 2000, which will force set-top makers to provide units meeting the new requirements.  Sony, Thomson, Philips, Samsung, Toshiba and Pioneer along with other smaller players  are also affected by the new rules. While TV-tuner cards like the RADEON ALL-IN-WONDER by ATI, are available for the PC, currently, these cards aren't able to handle the signal de-scrambling; they can only handle unscrambled channels.  In new rules by the FCC and FTC, the set-top box makers are required to separate the tuning functions from the encryption, so that any vendor can participate using a  PCMCIA drive.   The local cable company (or satellite TV company) supplies the PCMCIA card that will work with any manufacturer's PCMCIA-enabled device.  Consumers will be able to own their own navigation device, and not have to lease their set-top, only being required to buy/lease the PCMCIA card that handles the vendor specific encryption. This is a requirement that will reduce market share by the biggest players, hence their desire to delay for as long as possible.

Component Television and the Entertainment Server.  Cable companies are very good at squeezing the last dime of use out of old equipment. Don't expect that to change.   They are also reluctant to supply anything except thin-client (read inexpensive) devices to consumers.   Digital set-tops cost them over $300 each and they lease them to customers, amortizing the cost over long periods.  All the more reason to expect consumers to buy their own equipment.  With the changes required for the separation of proprietary scrambling methods from tuning functions and the cable operator's frugal ways, consumers who are using the cable system for Internet access are going to look for an "entertainment server" solution that provides: 1.) cable television access - including scrambled stations, 2.) Internet access, using a DOCSIS-compliant modem, 3.) shared access using a router/server/firewall/network that allows every navigation device (PC's, Internet-enabled TVs, set-tops, PDA's, etc.) in the house to share the same high-speed connection and to have access to the TV channels, 4.) a PCMCIA  drive to handle the de-encryption of scrambled content,  5.) a hard drive for recording shows (like Tivo and ReplayTV) and for storing cookies and other downloads, 6.) component and S-video outputs for high definition TV, 7.) Firewire/1394 for video conferencing or still picture transfer, 8.) IP telephony (for free high-speed phone calls), 9.) at least 64 megabytes of RAM to support Java, Flash, Pulse, Windows Media Player and Real Networks Player, 10.) a printer port, 11.) a high-speed CPU, 12.) a USB port and 13.) a wireless keyboard and remote.

Intel and AMD must  find new uses for CPUs; the home entertainment server is a natural.  

Apple will realize that their iMac, with its quiet convection cooling system, if equipped with a DOCSIS-modem tuner-card, and a PCMCIA drive, would be a good interactive television - as an all-in-one device.  Look for them to offer a bigger screen.  Yes, that's right, I predict that Apple will find its way into living rooms - in the enhanced television market! 

Playstation 2 Goes Broadband.  Sony's Playstation 2 game module has an adapter available for broadband connectivity.  Multi-user games (kids and adult) played on a high-speed network, may be the killer application that gets every family connected.   Something for everyone, without having to buy a computer.  An extension of the TV, as opposed to an extension of the calculator.   Ubiquity of Internet connectivity will come as critical mass of acceptance has been surpassed.   Mutli-user-e-games join e-mail and video-phone-calls as the short list of  "must haves for the TV room."

Enhanced Television More Probable.   With the ATVEF standards body making headway, look for more enhanced television content in the USA.   To allow the merger, the FCC had AOL and Time Warner agree to not block interactive television content coming over their pipes.  With the ATVEF triggers hidden in the broadcast content, consumers are  able to hyperlink to related Web sites, if they choose.   Proprietary Rube Goldberg systems like WorldGate's are already obsolete as everyone (in the USA) jumps on the ATVEF standard.   Participation shows like "Jeopardy" or "Wheel of Fortune" will be coded with the ATVEF triggers and will be playable on all cable systems.  Look for a huge boom in ATVEF encoding companies like MixedSignals, Liberate, OpenTV and  RespondTV.  Some new show in the style of "Survivor" or "Temptation Island" will help make enhanced television a huge hit, by allowing viewers to participate in the outcome of the show.  When companies like Thomson, Philips or Zenith sell ATVEF-compliant Internet-ready TVs, then the major television networks will encode virtually all shows.  Right now it's like 1962, at the beginning of color TV, when show-after-show went from black-and-white to color.  Over the next few years, every program will have enhanced content available, if not for show participation, then to sell that blouse that a star is wearing.  Tivo and ReplayTV record the shows, ATVEF signals and all. It doesn't matter when the show is watched. Even if people skip commercials, they will still have an opportunity to "go interactive" when the triggers prompt them during the program.  Advertisers will  find this attractive - fast-forward-proof ads!

OpenTV/Spyglass creates a set-top ATVEF-compliant browser.   If Microsoft and AOL upgrade their browsers to handle ATVEF triggers, like the new OpenTV's Spyglass Device Mosaic 4.1, browsers used on the PC as well as on set-tops will both be able share a similar enhanced streaming content experience.

RealNetworks and Microsoft Media Players should become ATVEF-compliant, allowing the popular streaming file types to include embedded enhanced triggers.

Microsoft and AOL Time Warner Introduce New Set-tops.  Microsoft and AOL are aggressively positioning themselves to have the highest market share of the new alternative set-tops.  Infomercials will abound this year for these two, UltimateTV and AOLTV, both of which are ATVEF-compliant.

Direct Exhibition of Motion Pictures. While news networks have been quietly providing more and more news-related streaming clips over the Web throughout 2000 (the election debacle and streaming media players allowed people to get the latest news - on their computers, without TV tuner cards), motion picture companies, until recently, have been very slow to capitalize on this new medium.  The year 2000 found breaking new ground by streaming "The Quantum Project" to web viewers.  Lion's Gate announced an agreement with to stream some of its film releases over the web.  During the third week of January, 2001, (a division of Disney) announced that they will exhibit "Guinevere" (a recent feature release) as a movie on demand, directly over the Web.  What does this mean?  It's quite revolutionary.  A company like Disney can bypass large MSO cable operators (who usually handle pay-per-view) and bypass the censors at Blockbuster (currently controlled by Viacom and a conservative Christian group) and bypass art house cinema owners, by streaming/exhibiting the content directly to the consumers entertainment navigation device.  Cable companies present a very limited set of pay-per-view movies, and they aren't on demand. You have to wait until they are screened at specific times.  Slow to evolve their equipment to video-on-demand servers, these companies are going to have their lunch taken away from them by companies that can distribute/exhibit directly to consumers, ironically using the same high-speed connection supplied by the cable operator.   The Surfview Guide (TM) already has a huge and growing number of channels of Internet entertainment on demand.    Anyone with a server can now host their own streaming content and handle the e-commerce for it, (see  "The Cablemodem Webserver Solution" ),  without being the size of Disney/Miramax.  For the consumer,  it doesn't matter if the cable operator only offers 80 channels.  With integrated high-speed Web access available now, a show can be streamed from an unlimited number of Web sources.  During 2000, advancements of Microsoft and RealNetworks media players made the "little screen" get bigger and with less artifacts.  If a higher quality of picture is desired, downloading the  content to a harddrive and then watching it will handle the QoS (quality of service) objection. 


We've looked at the dots.  Connected, they spell a huge opportunity for entertainment on demand consumers, producers, equipment makers and broadband providers. 2001 will be a pivotal year.   Cable companies will have to lead, follow or get out of the way. Worse case is, they will have a lot of people using their pipes for Internet access. With so many choices coming from so many directions, these established entertainment pipelines will have to evolve faster than they've ever imagined, as their customers return their old set-top boxes and choose instead, to buy their own robust home entertainment servers.  Legacy "current practice" cable operators will get a wake-up call during 2001.'s  direct exhibiting over the Web is the loudest shot so far.  I doubt they will hear it - until it's too late.   Nonetheless, we are in an exciting time.  As producers or consumers, we can participate, regardless of our size and the depth of our pockets.

The best is yet to come, one way or another.


James E. Tessier editor

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Copyright 2001  James E. Tessier. All Rights Reserved