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  Article
  Technology Can't Croon

This article is provided by DVD Insider, a 15 plus year marketing and communications veteran in the computer and CE industry.

I Did It My Way by Old Blue Eyes, Frank Sinatra
Dark Side of the Moon by Pink Floyd
The Second Time Around by Barry Manilow

Frank Sinatra may have made doing it his way famous but then he had something really going for himself . . .  a single voice half of the population of the world would do anything for!

Unfortunately, the same can't be said for the next generation of DVD.  Toshiba and Sony have left the building and have determined they will do it…their way! Instead of singing we get the feeling we're watching the great James Dean classic, Rebel Without a Cause.  Remember?  "A rebellious young man with a troubled past comes to a new town, finding friends and enemies."

Sure the two have troubled pasts.  They both struggled with their successes and failures.  They have both lusted for patent supremacy and lost.  They both have friends and enemies.  Big questions are: How committed are the friends? How determined are the enemies? What about the gotchas they aren't considering?

All of Hollywood is committed…to making money.  Lots of it!  And the more the better. They are watching ticket sales slide. 

They see the newness wearing off DVD sales and people are being more selective in the discs they purchase for their libraries.  Dispelling the theory that moviegoers are opting to stay home and rent movies on DVD, the home video rental market was off over 2% for the first half of the year.

Is everyone buying pirated video?  Are they sending/downloading it off the Internet? Best way to answer those questions is with a comment from Blockbuster's CEO who noted that the continued poor theatrical performance is having a negative impact on the industry.

That's financial community-speak for “most of the movies aren't worth going to see, buying, renting or even stealing.”

A different disc format won't change that.  If the format disagreement continues it means it will be two years before either has any traction in the marketplace.  All of the studios that committed to delivering blue technology (BD or HD) titles this year have already said they will take their seat in the stands and watch the debate play out.

They will continue to knock out titles on present DVD discs as people buy more and more DVD players.  They will see what MPEG-4 and H.264 offers them in terms of added content protection on present media.  They will look for new channels.

Sure the studios have huge vaults they can mine for money - you know back when movies were really good.  But they won't release them on any format without solid DRM (digital rights management) technology.  It is available because they have developed it with the help of the software folks and it is flexible enough to work across any media - including IP.  It's so good it will take a 15-year-old at least a day to break!

A few are dusting off the golden oldies like Universal Studios with their remake of King Kong.  Universal isn't taking any chances on losing their control.   With military precision they are protecting their content from the moment it emerges from the vault and delivered to the consumer with all of the DRM protection intact.  If it works, other studies will follow suit and not worry about blue laser technology.

In fact, many of the friends - on both sides of the discussion -- are starting to look elsewhere for relief.

The options are out there and the studies are looking at them all.  The head of Warner Brothers recently noted that their industry is trying very hard to make sure that what happened to the music industry doesn't happen to their industry.
Trust us, they mean business…

That's why they are looking at every option, every opportunity.

The networks, content developers and consumers are becoming accustomed to video on demand across their cable and satellite connections.   Slightly more than 11.6 million U.S. households have DVRs (digital video recorders) today and by 2009 that number is expected be nearly 47.5 million.
Network Diagram
Much as we hate to admit it, much of that content will reside in the higher and higher capacity hard drives that are cheap today and just getting ready to die. The intelligent way to deliver the content - not that intelligence has anything to do with it - would be for the content owners to employ a realistic copy approach similar to what Sony's BMG is employing with their music CDs.

Their new technology allows customers to make three copies of the disc and while they admit their solution needs some enhancement it does create speed bumps in casual piracy.  Put a little meat on the bones and this could be a solution that delivers the content security they need to deliver content the most efficient way possible.  When this happens they will be able to reduce their reliance on their two expensive channels of distribution - theaters/retail stores.

The Dark Side of Discs
Perhaps in their lust for royalties, Toshiba, Sony and their partners, may not have noticed that people are becoming accustomed to downloading.  People of almost every age not only in the U.S. but around the world are increasingly comfortable in getting their music and game-play overthe Internet for downloading.

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Granted it isn't widespread but a growing number actually watch their movies and video programming over the Internet.  This wave of interest – my video, my way, my time - may have gone unnoticed by the blue-ray engineers but it hasn't gone unnoticed by Microsoft, Cisco and Intel.  All three are investing heavily into Wi-Fi and WiMax communications solutions.  The phone services around the globe have TV and video services on their planning boards.  Korea has been delivering IPTV for sometime and it is very successful.  The BBC just announced they would offer their program over the Internet for downloading.

chart2

Comcast, Times Warner and other cable monopolies see these services as their prime competition over the next five years.  Granted broadband video service won't be available everywhere until perhaps 2010 but remember we said it is only a small wave on the horizon…that's the way Tsunamis start.

chart3

Intel, Cisco and Microsoft are watching the horizon…not the shoreline
Second Time Around

Paul Otellini doesn't look like he is a Barry Manilow kind of guy but he obviously hopes that love is lovelier the second time around.Viiv is Intel's renewed run at hiding their computer chips inside a device that people will want in their living room.  The plan is elaborate and Otellini is serious about making it happen.  He rolled out the concept, plan and pieces at his first Intel Developers Forum (IDF) as CEO of the company.
chart4

Intel is going full bore because they see the writing on the screen.  They talk with homebuilders who are installing tech-based systems and they talk with home theater and CE/PC dealers.   Not that they don't believe the market research that says people want to control their content on their terms but they do something really wild…they talk to consumers across the country.

image1

That's why Otellini has given his global team clear marching orders…make it happen in the home and do it the way folks want it.  So at IDF they rolled out a wide array of Viiv options including one that looked like a regular set-top box as well as one that might have - just might have - taken it's lead from Steve Job's Mac Mini.
image2
image3

Working closely with its partners, Intel will be offering consumers a variety of entertainment solutions that are ready to plug into your HDTV.  Some with 1TB hard drive capacity.  That's 128 hours of HighDef content which should satisfy the biggest couch potatoes.  Sony showed their system last year and Hitachi unveiled theirs recently.  You can bet Seagate, Maxtor, WD and Hitachi are following Intel into every OEM with huge bit buckets that will store a lifetime of photos, months of music and seasons of your favorite soaps. If the DRM-secured content is sent over one of the broadband pipes to the home it will probably be MPEG-4 or H.264 encoded.  Assuming the content owners "allow" consumers to make one copy (or two if they are overly generous) with really cheap next generation red-laser MPEG-4 burners and today's low-cost DVDR media, will people really be interested in the blue spat? People receive and enjoy their content - audio and video - on their terms.  The only question now is what type of set do you watch it on?Digital TV or HDTV?  That's an orchestra without a lead singer!!!

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