The business and culture of our digital lives,
from the L.A. Times

Category: Jon Healey

CES 2012: Dish offers week of prime-time shows on demand

Hopper will be Dish Network's new digital video recorder.

The capacity of today's hard drives is so enormous, the average consumer might have a tough time figuring out what to do with it. Dish Network has an idea: How about giving TV viewers the chance to watch every prime-time program on the four major networks that they missed in the last week?

The satellite operator, which is the third-largest pay-TV provider in the United States, announced at the Consumer Electronics Show in Las Vegas on Monday that its new Hopper digital video recorder will have an extra tuner dedicated to capturing all the prime-time programs broadcast by ABC, CBS, Fox and NBC. It also will have a 2-Terabyte hard drive, giving it enough room to hold on to all those recordings for eight days -- along with hundreds of hours of movies and shows chosen by each Hopper's owner.

It's a gimmick, sure, but a potentially useful one -- both for Dish and for its customers. Dish rival Time Warner Cable offers a "look back" service that enables subscribers to watch a broad range of prime-time programming from the previous three days, although the recordings are stored at the cable company's central office, not in subscribers' homes. Unlike a digital video recorder, however, the service doesn't let viewers fast-forward through commercials, which is one of the most appealing features of a DVR like the Hopper.

In addition, the Hopper helps close the gap between the time a show is broadcast and when it becomes available online through Hulu and other authorized sites. Networks routinely hold programs back until the day after they're broadcast; Fox delays them for eight days, although Dish subscribers can get those programs within a day. With a Hopper, there is no waiting.

The ultra-roomy hard drive also enables Dish to store a large supply of movies and shows for on-demand viewing, albeit not to the extent that cable operators can. On-demand service has long been cable's big advantage over satellite; cable is a two-way network that can send programming on request to individual homes, but satellite is a one-way system that broadcasts programming to entire regions.

Satellite operators have tried to overcome that technological disadvantage by teaming up with broadband providers to offer on-demand services through the Internet, and by caching programs on their subscribers' DVRs that can be unlocked for viewing on demand. The larger the capacity of the DVR, the larger the library of programs that can be cached.

The Hopper is designed to feed smaller set-top boxes, called Joeys, in other rooms of the home. According to Dish, a home equipped with a Hopper and three Joeys can watch four different recorded shows simultaneously.


CES 2012: What it's got, what it doesn't

CES 2012: Tobii technology enables your eyes to control computers

CES 2012: Rovi lets movie fans convert DVDs to digital files for a fee

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him at @jcahealey.

Image: A Hopper digital video recorder. Credit: Dish Network

CES 2012: Rovi lets movie fans convert DVDs to digital files for a fee

Rovi Digital Copy schematic
At the Consumer Electronics Show in Las Vegas Monday, Rovi Corp. announced what appears to be the first legal tool to convert consumers' DVD collections into digital files that can be played from on online library. It's not exactly iTunes Match for movies, but it's a step in the right direction, with caveats -- lots of them.

One of the main benefits of the digital revolution has been to release music, photos, books and video from their physical bindings, enabling consumers to access their media collections any time, anywhere, on a variety of devices. Those benefits haven't extended to DVDs, however; the discs' anti-piracy software deters people from making functional digital copies of the movies on the discs.

That's "deters," not "stops." It's technically possible to circumvent a DVD's safeguards and copy it, and the software exists to do so. But under federal law, it's illegal to make, sell or distribute such circumvention tools, even if the copy is being made for a legal use. And the Hollywood studios have mounted legal assaults against a series of companies (e.g., 321 Studios and RealNetworks) that have put DVD copying software on the market.

Unlike their ill-fated predecessors, Rovi isn't actually creating copies of DVD movies. Instead, it has created an app for Internet-connected Blu-ray disc players that can read the unique identifier on each DVD or Blu-ray disc, then offer the disc owner the chance to store a copy of that movie online. It won't be free, however; Richard Bullwinkle, Rovi’s chief evangelist, said the studios participating in the service plan to charge a small fee for the stored copy. The fee will be higher for high-definition copies than for standard-definition ones.

The fee is just the first of the caveats. The second is that Rovi's disc identification will work only on Blu-ray players capable of downloading and running a new Rovi application. Bullwinkle wouldn't name the manufacturers that will support Rovi's app, but the possibilities include disc players from Samsung and LG and Microsoft's XBox 360.

The third is that the stored movies will be protected by some form of digital rights management software that limits which devices can stream or download the files. Users won't be able to use the online locker of their choice; instead, they'll have to rely on a service blessed by the studios. Again, Rovi isn't identifying any specific partners yet, but a good bet would be Best Buy's CinemaNow and others that use Rovi's e-commerce technology.

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CES preview: Yet another rollout for mobile digital TV

RCA 2012 MDTV MIT700

Five years ago, Samsung unveiled a digital TV broadcasting technology that was optimized for mobile devices. It's still waiting to sell its first broadcast-enabled smartphones in the United States, just as the TV industry is still waiting for the notion of mobile DTV to take off. But there are signs that the wait may be coming to an end.

On Wednesday, a coalition of TV stations and networks announced a partnership with mobile phone company MetroPCS that will enable the latter's customers in Los Angeles and 13 other markets to tune in the stations' mobile DTV signals later this year. The first compatible device will be an Android smartphone made by Samsung, which will use a telescoping antenna for better reception. In the meantime, RCA plans to show off an Android-based flat-panel TV (shown above) that can tune in the coalition stations' service (called Dyle) at next week's International Consumer Electronics Show in Las Vegas.

The coalition's formal name is the Mobile Content Venture, and its membership includes Fox, NBC, Univision, Telemundo, ION Television and about a dozen large station ownership groups. Their members have been installing mobile DTV transmission equipment at 72 stations in 32 markets, which reach half of the U.S. population, according to Erik Moreno, a senior vice president at Fox Networks Group and the co-general manager of the coalition. "We needed to make that first move to convince someone like MetroPCS" to offer mobile DTV service to its customers, Moreno said.

That investment by the coalition's members helps overcome the chicken-and-egg problem faced by mobile DTV. But it remains an open question whether consumers will tune in. Qualcomm's high-profile effort to broadcast TV programming to specially equipped cellphones attracted few viewers, in part because it offered only a limited selection of programming. The company eventually abandoned the venture and sold the airwaves to AT&T.

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Marvell unveils the brains inside next generation of Google TV

Marvell, a Santa Clara, Calif.-based semiconductor designer, announced Thursday that the next generation of Google TV will be built around one of its chipsets

Marvell, a Santa Clara, Calif.-based semiconductor designer, announced Thursday that the next generation of Google TV will be built around one of its chipsets. The specifications of its reference design show, predictably, a considerable advance in power and chip integration over the first generation of Google TV: For example, Marvell's Armada processor is a dual-core chip, as opposed to the single-core Intel Atom processor found in Logitech's first-generation Google TV product. That's welcome, but the main problems with Google TV thus far have been business-model and software shortcomings. In other words, even if a Marvell-powered Google TV is more powerful and less expensive, it won't necessarily be more appealing.

According to Marvell co-founder Weili Dai, the semiconductor platform her company designed can handle high-definition 3-D movies and video games in addition to smart-TV applications. One complaint about the initial Google TV products, which debuted in October 2010, was that the roster of apps was thin. But Dai argued in an interview Wednesday that the open platform provided by Google TV will attract the same kind of attention from developers that the Android operating system has for smartphones.

"Many people are writing apps on that platform," Dai said. "Every day, every hour [they are] building that capability. ... What you saw for Android and smartphones in general is happening now with the smart TVs and the Google TVs of the world."

A bigger hurdle for Google has been the decision of many important suppliers of television programming online -- including Hulu, the four major broadcast networks and several popular cable channels -- to block Google TV from displaying the online versions of their shows. That reflects the networks' fear that Google TV could encourage people to swap their cable TV subscriptions for free TV online, undermining an important source of revenue for the industry.

The programming and software issues have been so significant that one of the two original Google TV vendors, Logitech, abandoned the product last month. That was a few months after the company revealed it had more returns on the unit than sales in the second quarter of 2011, prompting it to slash the list price from $250 to $99.

Dai said Marvell has cut the cost of the box's chips to the point where companies can "build very affordable devices." She also said she believes that consumers' experience with the connectivity, utility and flexibility of smartphones makes them hungry for a similar capability on the big screens in their home. But she conceded that it's up to Google and the TV industry to come up with a business model that persuades more content providers to embrace the Google TV platform.

"When Android was born, there was the learning curve. The Google TV side is the same thing," Dai said. Google has opened up the TV business model, but now "they need to work within the ecosystem," she added. "I'm hopeful they will resolve that."

Google TV products based on the new Marvell chips are expected later this year. Dai declined to identify any of the manufacturers, but at least some of them are likely to show off prototypes at the International Consumer Electronics Show in Las Vegas next week.


Apple to reinvent TV?

Google rolling out new version of Google TV

Samsung close to deal to making Google TVs

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him at @jcahealey.

Photo: Marvell's reference design for its Foresight Platform, which powers the next generation of Google TV. Credit: Marvell

Online music: Rhapsody reaches 1 million subscribers, finally

RhapsodyRhapsody, the longest-running subscription-music service, announced Thursday that it had finally crossed the 1 million subscriber threshold. Before you cue the cork-popping, bear in mind that Rhapsody launched almost exactly 10 years ago, so its growth isn't setting land-speed records. And three years ago, Rhapsody and rival Napster each reported having about 750,000 subscribers. The two companies are now combined, thanks to Rhapsody's purchase of the fast-declining Napster in October, but the total is far less than the sum of their erstwhile parts.

So the announcement doesn't exactly herald the dawn of a new era for subscription music services in general or Rhapsody in particular. The total number of people who pay for on-demand music services online is still dwarfed by the more than 21 million who subscribe to Sirius XM. And in a country of more than 110 million households, 1 million isn't mass market.

Nevertheless, Rhapsody President Jon Irwin insists that the new total is a real milestone. Although online music services have notched higher subscriber counts before, they were inflated by the inclusion of customers who'd signed up only for low-cost premium radio services. More important, Irwin noted that the way subscribers use Rhapsody has crossed a significant threshold as well. For the first time, most of that usage is not on a personal computer. Instead, more than half of the playback is on mobile phones, stereos, TV set-tops and other consumer electronics, with smartphones accounting for 40%.

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UltraViolet on eBay? No big deal

Green Lantern
The first two Blu-ray discs that support UltraViolet went on sale this month, enabling purchasers to stream or download copies of the films in addition to simply playing the disc. This week, however, reports emerged from GigaOm and the Wall Street Journal that some buyers were selling their UltraViolet rights on eBay for $1 or $2. Oh, the horror! Here's how the Journal's Michelle Kung put it:

It took three years for a consortium of more than 70 movie studios and technology companies to create UltraViolet, the new online storage service that was designed to make buying movies more appealing to tech-savvy consumers.

It’s taken those same consumers less than two weeks to figure out a low-cost work-around.

The situation isn't quite that dramatic. Consumers aren't hacking or circumventing the electronic locks that UV uses to deter unauthorized copying. They're just not using the system in the way it was designed to be used.

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Grooveshark: the other free music service

Grooveshark screen grab

This post has been corrected, as indicated below.

The "freemium" business model may be taking off among online music services, but the conventional wisdom is that Spotify and other proponents will never make money off of their free, advertiser-supported tiers. Instead, the key will be hooking people with the free offering, then persuading them to pay for an upgraded tier.

Spotify's newly released financial statements seem to back up that view. As the company grew in 2010, so did its losses.

Don't tell Paul Geller that free music on demand is a money-loser, however. Geller is vice president of business development at Grooveshark, an advertiser-supported site based in Gainesville, Fla., that streams an unlimited amount of music on demand to users at no charge. Grooveshark has been rocking the freemium model for longer than Spotify -- in addition to its free tier, it has a $6-a-month advertising-free plan and a $9-a-month service that works on modified smartphones (more on that later). But Geller is bullish about the site's potential to generate enough ad dollars to be profitable, even after paying royalties (more on that later too).

That's largely because of the data generated by Grooveshark users. By analyzing that data, Geller said, the company can target ads much better than other sites (as demonstrated by higher click-through rates), pair artists with brand advertisers in mutually advantageous ways, and help labels market artists far more effectively.

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Universal adds second screen of features to boost video sales

Fast Five director Justin Lin with star Vin Diesel
With cratering DVD sales dragging down home-video revenue, Hollywood is eager to find a way to persuade consumers to buy movies instead of renting them. Ultraviolet is part of that effort, on the theory that digital sales would take off if movie files were as portable as movie discs. A more interesting gambit that's slowly emerging is to make the experience of movie-watching different for those who buy discs than for those who rent them.

Universal Studios Home Entertainment took its first step in that direction this week when it released the Blu-ray version of its summer blockbuster "Fast Five." The discs offered to consumers -- not the ones sold to video rental services such as Netflix and Redbox -- unlock extra features in the cloud that can be delivered to a tablet or laptop in sync with the movie.

The point is to let lovers of the movie delve more deeply into it -- to give the director's point of view, to address viewers' curiosity as soon as it's piqued. It's an approach Disney is trying too, having offered "second screen" features on four releases so far.

"We know consumers are multi-tasking when they watch movies," said Hilary Hoffman, vice president of marketing for Universal's home entertainment division. The second screen features on "Fast Five" tap into that attention deficit disorder impulse, but direct it back to the movie.

Making it work requires an Internet-connected Blu-ray player and a laptop or tablet computer connected to the same home network, running the Pocket Blu app developed by Deluxe Digital Studios. As the disc plays the movie through the Blu-ray player, the app provides a series of links to bonus features that can be streamed from the Internet at specific junctures in the film.

On the "Fast Five" disc, those features include director Justin Lin explaining how the movie was made, breakdowns of special-effects sequences, and anecdotes from the cast and crew about the filmmaking. Compared to the standard extras on a DVD, the second screen features provide "a much more interactive experience," Hoffman said.

Interactivity is the common theme of second screen features, at least at this point. The feature is still evolving, Hoffman said, and the company is still deciding which releases to use it on. Next up: "Cowboys and Aliens," due out Dec. 6. That disc's features will be enhanced with a new capability: Users will be able to move second screen content from their tablets or laptops to their TV screen just by flicking (i.e., swiping a finger quickly across the touch-screen).

Hoffman said the company plans to have more second screen releases next year, but it hasn't decided how many yet. She declined to say how much the feature adds to the cost of a Blu-ray release.

Second screen won't appeal to people who like a good story uninterrupted. It makes much more sense to me for second and third viewings than the first time through. But it definitely changes the experience of watching a film. That strategy strikes me as the right one for promoting sales over rentals, although it remains to be seen whether Universal's second screen approach is an effective execution of that strategy.


Hollywood downloads a post-DVD future

For Hollywood, it was a tough 2010

Split-screen personalities

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him @jcahealey

Photo: "Fast Five" director Justin Lin with actor Vin Diesel. Credit: Universal Pictures.

Napster: A brand buried by free music?

Napster logo With Rhapsody buying Napster, the famous kitty-logoed brand may have used up its last life. Granted, the service bears no resemblance to the pioneering file-sharing network that pushed CD sales off a cliff a little more than a decade ago. In fact, it went legit long ago, only to struggle to gain a mainstream following in its new life as a subscription music service.

Here's the ironic thing. To the extent that "Napster" means anything to the average Internet user, it means "free." And thanks to Spotify and Facebook, free may be a necessary ingredient in any subscription service going forward. The current version of Napster, however, simply isn't competitive in that environment.

Napster has been languishing for some time, innovating more slowly than its rivals and shedding subscribers by the boatload. My colleague Ben Fritz cites an estimate by Gartner analyst Michael McGuire that the service has 200,000 to 300,000 subscribers, compared with 700,000 when Best Buy acquired it in 2008. Ouch.

The service was particularly lagging in social features. It didn't make even a token effort at Facebook integration, and was nowhere to be found last month when Facebook announced its "frictionless sharing" feature for media services.

Today, millions of Facebook users are seeing a steady stream of messages about their friends listening to this or that song on a music service that's not Napster. Most of the time the service is Spotify, which is so deeply integrated with Facebook, it requires people to have a Facebook account in order to sign up. Spotify also seems to be a fixture in the "Featured Music Service" section on Facebook users' new music profile pages.

Use of Spotify exploded in the wake of the Facebook announcement, as pointed out. Part of it is the network effect -- more people around the world use Spotify than any other subscription music service, and with Facebook automatically sharing their activity with all their friends, that's a heavy amount of promotion. But it also helps, no doubt, that when people click on the "play" button next to the songs their friends have listened to on Spotify, they're invited to download Spotify's software and play the tracks for free.

Now that's frictionless sharing.

It's too early to tell whether the rush to Spotify will continue. It's also too early to tell whether Spotify will be able to persuade Facebook users to convert from its free tier to a paid version in sufficient quantity to pay its bills. Every music executive I've talked to says that neither Spotify nor any other music service seems to know how to generate enough money from advertisers to make a free tier work. (Video is a different story; the issue there is generating enough money from advertisers to satisfy the studios, which worry about free online video cannibalizing pay TV services.) If they don't persuade a goodly percentage of their subscribers to shell out $5 or more a month, they can't survive.

A more fundamental challenge for Rhapsody and its rivals has been the lack of public awareness about subscription services in general. The exposure from Facebook is helping on that front, although again it seems to be benefiting Spotify more than anyone else. And as a result, all the online services are feeling the heat to beef up their free offering. Their goal, as one executive put it, is to draw in the people who appreciate "the full value proposition" of a subscription service -- in other words, music fans who want more than the ability to play a song from an online jukebox from time to time. Those are the consumers who could be persuaded to spend $10 a month for a service that puts millions of songs at their fingertips, wherever they happen to be.

Rhapsody Chief Executive Jon Irwin said his company is buying Napster to increase its subscriber base. Assuming Napster users don't quit en masse, the acquisition should put Rhapsody over the 1-million-subscriber mark -- not a bad achievement, but not the goal line either. Here's hoping that Rhapsody retains one of Napster's best innovations: letting subscribers listen to an unlimited number of songs online for free in exchange for them buying about $5 worth of MP3s per month. The free streams don't work on mobile devices -- every music-on-demand service charges for that privilege. Still, it's a nice way to bring in fans accustomed to the oh-so-20th-century practice of acquiring a personal music collection, rather than just renting access to a vast jukebox in the cloud.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him @jcahealey


Sezmi takes another step back from the pay-TV market

Sezmi, over-the-top, pay TV, cable competitor In case anyone thought competing with cable TV operators would be easier in the broadband era, Sezmi's experience should disabuse them of that notion.

Belmont, Calif.-based Sezmi told subscribers late Friday afternoon that, starting Monday, it would no longer be offering a pay-TV service directly to consumers.

"Sezmi has changed its business focus to providing our product and technology platform to service providers, internationally and in the U.S., who are interested in providing broadband video services to their customers," it said in an explanatory e-mail.

The company's service -- a combination of over-the-air broadcasts and on-demand video through the Internet -- had been available in 36 cities across the U.S., but the signs of trouble had been evident for some time.

Initially, it planned to offer a low-cost package that included local and cable networks delivered over the air, with the cable programming being broadcast on airwaves leased from local broadcasters. The networks' programs would be enhanced with personalized advertising and other content delivered through the Internet, along with on-demand shows and movies. To tune in the programming, the company developed a special indoor antenna and a high-capacity digital video recorder with TiVo-esque capabilities.

The full Sezmi service made its formal debut in Los Angeles in early 2010, priced at $20 a month. But it didn't have some of the most popular (and expensive) cable networks, such as ESPN and HBO. Those deals supposedly were still being worked out. And as Sezmi expanded across the country, it did so without any cable networks -- just local broadcasts and video on demand, which it offered for $5 a month.

Last December, the company notified subscribers in Los Angeles that it would no longer carry the two dozen cable networks that had been in its lineup, and it slashed its price to $5 a month. President Phil Wiser said the company was simply shifting technologies -- instead of delivering cable networks through leased airwaves, it planned to provide that programming on an on-demand basis through the Internet. The shift would help it extend its service across the country, Wiser said, by eliminating the need to lease airwaves in each city from local broadcasters.

Now, Sezmi is changing course again, pulling out of the consumer business in favor of supplying its technology and service to telecommunications companies that want to add pay TV to their product lineup. That's been Sezmi's approach outside the U.S., and it has announced deals with telecom providers in Mexico and Malaysia.

Numerous companies have tried to challenge cable operators over the years, but they've been deterred by the enormous up-front costs of building a network to deliver video. DirecTV and Dish Network succeeded by eliminating the need to run cables from home to home, beaming programming from a few (astronomically costly) satellites -- and persuading their customers to cover all or part of the cost of the equipment in their homes. AT&T and Verizon have also gained a foothold in pay TV, by taking advantage of the networks they had already built to deliver phone and Internet service.

What made Sezmi promising was that, like the satellite operators, it had found a way to eliminate the investment in wires. But it's hard to compete with cable if you can't offer a complete alternative, and Sezmi's channel lineup had a lot of missing pieces. Company executives argued that they weren't trying to appeal to people who were happily paying $80 to $120 a month for 500 channels of programming -- they were aiming mainly for the millions of people across the country who don't have pay TV, or those who'd prefer to watch shows on-demand instead of on a network's schedule. Sezmi will now be trying to win over those customers with the help of other companies' brands and marketing muscle.


Sezmi charts a new path to competing with cable

How Sezmi stacks up

Sezmi presents TV 2.0

-- Jon Healey

Photo credit: Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him @jcahealey


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