Western Cable Show - November 2001

Western Cable Show - November 2001

The Western Show

November 27th - November 30th, 2001
Anaheim, CA

One silver lining of the economic turbulence of Year 2001 has been the required financial prudence of those entities hoping to participate in the successful development of the iTV industry. This sentiment was shared by a majority of panelists bearing witness in the various interactive sessions of this year's Western Cable show. Evidence of fiscal caution was found in the conspicuously sparse population of vendors on the floor of the Anaheim Convention Center. As well, a nearly fifty percent reduction in attendees added to the concerns of the hosting California Cable & Telecommunications Association.

Upside trends were quick to be identified in the kick-off session. Immediate talk-of-the-town subjects included the growing popularity of video on demand, and subscription video on demand. Suggestions were offered by panelists that dollars and numbers from personal video recorders are starting to show up. Others were excited about the increased interactivity in games, claiming that we are starting to see applications "that people really like". Rather than focused competition, the effectiveness of partnering is helping to bring interactive offerings to market. Local content continues to be heralded as one of the primary attractions to existing and potential digital cable subscribers. There is a place near the end of the rainbow where the leaders of the iTV world will find sustainable profitability and acceptable interoperability. The president of a leading MSO was encouraged to report that success toward that goal can now be measured as every month goes by, compared to annual evaluation. The CEO of an established content development and hosting company offered another perspective of pace, claiming that the industry is close to the half-way point with another ten years until iTV applications appear seamless to subscribers.

Downside comments began, of course, with the continued frustration of incompatibility between set-top boxes, middleware, and content. An MSO executive lamented that the industry was still working on making the platform 100% stable, but that goal is seemingly disrupted "every time a new kid comes in the sandbox". Throughout the conference participants from all sectors of the interactive television world echoed this attitude. With fewer new kids hopping into the sandbox, and capital markets thinning it may be attrition that helps bring unity to interactive platforms. In the kick-off session, three of the four panelists estimated there would only be two or three middleware platform survivors.

The buzz in the world of standards and specifications was the recent adoption of Multimedia Home Platform (MHP) as the basis for the OpenCable Application Platform. CableLabs has agreed to work in association with the European Digital Video Broadcasting consortium to help develop a unified software interface between iTV applications and set-top boxes, as well as coordinating future specifications that will impact interoperability. Working with leading middleware companies is a near-term plan for this newly created partnership.

A bi-product of the disappointment of platform incompatibility is continued interest in the two-screen experience. An executive from a game show programmer is realizing an interim value in "telewebbers". Recognizing it is likely a transitional model, yet the reduced anxiety of offering content with a fairly predictable return on investment is a comfortable oasis in the face of diminishing iTV funding sources. Dialogue from various sessions, as well as conversations held on the convention floor might lead one to believe that there is an increased curiosity in using a two-screen experience as a solution to a broad-based deployment of content.

As mentioned earlier, one of the most encouraging developments in the cable world over the course of the last year is the growing interest in VOD and SVOD. Executives of the multi system operators offering these services enthusiastically described successful limited deployments and trials. The ability for the user to have VCR functionality has strengthened this descendant of pay-per-view. Adding a subscription-based model of VOD has not only fueled the subscriber's acceptance, but also based on initial feedback, has changed the way a viewer experiences demanded video. In the trials, a subscriber's use of SVOD was more evenly dispersed than the use of traditional VOD offerings. While a VOD event can be paused for the convenience of a viewer, there is a limit to the duration of the pause. SVOD viewers were found, many times, to view portions of an event knowing that continuing the experience at a later time would not incur additional fees. SVODs benefit to the operator's head-end is a more even demand on their servers. What a subscriber is willing to pay for it is also encouraging. One MSO offered the same service in three different cities, but at varying subscription rates. It was reported that the overwhelming positive subscriber feedback was virtually the same in all three cities. Another MSO executive described a local VOD application in the successful use of available bandwidth to deliver movie trailers to those subscribers that might want help deciding at which cinema to spend their hard-earned dollars. It was also cheerfully reported that the local cinemas didn't mind paying a fee for this exposure. Clearly, there are many possible uses for VOD and as the applications grow in number, so will the MSO's hope that demand video will help to reduce the number of subscribers turning to DBS for popular services like high-definition and the NFL Sunday Ticket package.

The manufacturers of set-top boxes continue to adapt to the trends of the industry. Whether it is offering a PVR version of popular models, or considering trends in the IP world, or developing boxes that deliver some increased performance without the price tag of some thick client devices, box manufacturers are helping to negotiate a common ground for middleware suppliers with visions of rich content and the MSOs that must protect their deployment costs. An interesting dialogue took place in the kick-off session between an MSO president and an executive of a company that offers a leading middleware solution. The middleware opinion regarded the current 5 to 10 year lifespan of a deployed set-top box as a significant challenge to the success of rich content applications. He saw pressure on the MSOs to lower the life cycle down to an 18 to 24 month period to accommodate the rapid development in more complex interactive content demanded by the subscriber. The MSO president emphatically replied that no multi-system operator would have a set-top box life cycle that short, citing the cost of deployment. He added that STBs could be sold to subscribers, but felt that the price of the application friendly upper level boxes would discourage the majority from making that purchase.

The kick-off session wrapped with an outlook that was shared across the multi-day session schedule. Convenience attracts and retains customers, VOD and SVOD are the features that will help the cable industry fend off DBS competition, PVRs are here to stay, local and community content is one of the three features most in demand, and industry partnerships will help alleviate the roadblocks in broad-based deployment. Another agreed upon, and sobering statement was the prediction that there will be a lot more fall-out before survivors will be apparent.