Server-based video’s solution

Jun 18, 2001  •  Post A Comment

Cable industry video server suppliers Concurrent Computer and nCube are in talks with personal video software licensor Metabyte about a partnership, hoping the pact will quell the resistance they face from the television programming and advertising industries.
nCube and Concurrent are developing a personal-video-recording technology that stores multiple shows simultaneously at a centralized cable system server rather than on the hard drive embedded in a viewer’s television set-top box (EM, June 4). Creators of the novel video service are hoping to persuade advertisers that the unique PVR solution will allow them to reach their desired 18 to 49 male demographic more effectively than through conventional television.
If the PVR developers can prove their technology is a boon to advertisers, they will win a significant battle in the war they are expected to fight against television networks-which fear the video service could lure the captive audience broadcasters currently enjoy away from inexpensive but predictable reality programs that have become the major networks’ stock in trade.
One cable television programming executive, who preferred not to be named, said the industry would fight nCube and Concurrent tooth and nail before surrendering their multiple branded networks to the upstart video providers.
Metabyte, whose software monitors cable customers’ viewing habits, generates recommended shows for a given viewer based on his or her past viewing behavior. The company’s personalized media service also inserts advertisements tailored to the individual viewer’s tastes into those suggested shows before sending the programs to the viewer.
While Metabyte is often praised by industry insiders for its technology, the company will face long odds in competing against TiVo’s widely recognized brand name if it fails to secure an infusion of financing in the capital markets. Since being founded in 1999, the company has raised $7 million in venture capital-with the lion’s share of that coming from lead investors Thomson Multimedia and Seagate.
As targeted advertising mechanisms such as Metabyte are incorporated into PVR services, PVR will become an important vehicle for providing the television industry with additional advertising revenues, Forrester Research Analyst Josh Bernoff said in an interview with Electronic Media.
“Broadcasters think their job is to fill air,” Mr. Bernoff quipped. “But their job isn’t really to fill air. What consumers want to watch is content-not filled air. They don’t care about networks.”
Consumers’ attraction to recording television shows that can be played back later makes PVR a desirable forum for advertisers, Mr. Bernoff pointed out. “These [recommendation engines such as TiVo and Metabyte] could be the brands that are the most important in television,” he said.
But Mr. Bernoff cautioned that the expected popularity of next-generation PVR services would force cable operators to accommodate the additional traffic by restructuring their network architecture. While video-on-demand systems are typically designed to allow one out of every 13 viewers in a given cable system to watch a VOD program at one time, multiple system operators would have to brace their infrastructure for heavier usage than they currently have capacity for, Mr. Bernoff noted.
Aside from Metabyte’s PVR service, which embeds tailored advertisements within suggested programs, Concurrent and nCube are considering partnering with another company in the PVR advertising space-ACTV-to subdue Madison Avenue’s qualms about its service. ACTV has built a technology designed to prevent audiences from skipping commercials with a personal video recorder.
“[ACTV’s PVR-proof advertising tool] is a technology we could deploy if [cable operators] want us to,” said Concurrent Vice President of Marketing Del Kunert.” We can disable the fast-forward and the replay during advertising,” he pointed out. “We can go to the cable operator and say, `We can increase your advertising reach.”’
Despite the carefully crafted sales pitch that nCube and Concurrent are making to the cable industry, one analyst thinks the common industry perception of the companies as video-on-demand technology vendors rather than as personal-video-recording purveyors isn’t helping their cause.
“VOD is not on the hot priority list with most of the cable operators,” said Sean Badding, Carmel Group senior analyst and vice president of business development , citing the multimillion-dollar cost of acquiring feature films from studios as one of the medium’s drawbacks. “I see VOD becoming a hot application within the next two or three years, but not today. … If [MSOs] are scaling back their [Motorola DCT] 5000 boxes, it doesn’t mean that they are going to move forward with their servers.”