13 Months and Counting: What's Changed?

Once again, the 17th has come and gone, and it's now less than 13 months until the current "hard" date (2/17/09) on which analog broadcasting is supposed to cease. This is the 22nd of 35 planned monthly recaps of developments affecting the various players (laid out in my first few posts) in this story, meaning that we have gone well over half the distance that remained when we started this blog in March of 2006. Despite the name of this blog I do cover some stories (like the growth of HD) that are not directly transition-related (but strike me as being of interest to transition-watchers). That said, here's some of what happened (or was commented on) between 12/18 and 1/17 (with one exceptions - see the MANUFACTURERS section below). If this seems even later than usual, blame my new Kindle - just can't stop downloading those free sample chapters. As is usual, major news sources for this update include Multichannel News, Engadget HD, TV Week, TWICE and TVPredictions.com.

THE PUBLIC - No surveys on the transition per se this time. But it is interesting that the Consumer Electronics Association is now telling us that over half of American households now have at least one digital TV set. Considering that Forrester Research estimates that as many as 20 percent of high-def sets bought during the 2006 holiday season were later returned (often because the new owners didn't understand how to get HD programming), it's surprising that it's gotten that far. Perhaps consumer awareness has improved a bit in the past year. As for those sets that haven't been returned and are hooked up to a program source, DirecTV recently conducted a viewing-habits survey of their HD customers. Not much in the way of dramatic differences from the general population, but it's nice to know that HD Theatre is doing well.

GOVERNMENT - A crucial part of the government's plan to manage the transition is now underway, and demand is brisk. To meet the demand, the National Telecommunications and Information Administration (NTIA) is busy approving converter boxes. One box of particular interest will be offered by Echostar (guess I was wrong last time about not seeing that name again) at $39.95, the value of one converter box coupon, meaning that every household that is aware of the program can get two free boxes (as long as Echostar can keep up with the demand). However, a cautionary note comes from top retailers, who are worried about whether they can supply the estimated 15 million homes who are going to need these products between now and February '09.

One way of dealing with the uncertainties involved with turning off all the analog signals at once would be to test the process in some areas first - that way we'd get a better picture of what might be likely to happen nationwide on The Day. This is why FCC Commissioner Michael Copps is now advocating just that, though he has so far not gotten the support of FCC Chairman Kevin Martin. I'm not surprised by that lack of support - bad results from the test could strengthen the case of those wanting to push back the date, which is clearly not something Martin is willing to consider, as you can see from his comments at the recent International Consumer Electronics Show (CES). Equally unenthusiastic about any delay are the companies (like Google) that have ponied up serious money for the spectrum auction that commenced on 1/24 (more about that next time).

Following up on earlier stories, House Energy and Commerce Committee Chairman John Dingell has scheduled another transition-related hearing, this time for 2/13. He was busy in other areas as well - raising objections to Comcast's plans to require many Michigan subscribers to use a set-top box to view local PEG (public/educational/government) channels, and pressing on with his investigation of Chairman Martin's management of the FCC. The ownership cap that prevents any cable company (e.g. Comcast) from serving more than 30% of paying customers nationwide seems likely to face a court challenge from the cable industry, which is also challenging a recent lawsuit designed to force program providers to offer a la carte selection of channels.

BROADCASTING - Not much of note this time around. There was the usual handful of new local HD newscasts, bringing the total close to 70 (I'm still waiting for a second station to do this in Boston). Broadcast football got a boost when the NFL Network allowed a CBS/NBC simulcast of its feed of the much-anticipated Patriots season final. The only other new HD of note came after the 17th - more on the WWE's transition next time. Lastly, I'm still waiting for some sign of The NewsHour with Jim Lehrer on my local PBS HD station - if I can find some time in the next month or two, I'll update my December survey of PBS HD station schedules to see whether this situation (of 50 stations surveyed, 34 ran the "PBS HD" feed, but of those only five included the NewsHour HD in their schedules) has improved significantly.

PROGRAM PROVIDERS - The biggest story of the past few months (other providers' attempts to catch up with DirecTV's expanded HD offerings) continued to generate news. DirecTV itself made a couple of additions, adding Tennis Channel nationally as well as agreeing to add local PBS HD feeds sometime this year. In response, Comcast added new channels (including CNN, SciFi, USA and some of the Discovery Networks lineup) to the DC metro area, Charleston, SC and other areas in the Southeast (adds vary by area). Other providers were busy as well - examples include Time Warner (adding a wide variety of channels to various parts of NY as well as Raleigh, NC, Augusta, ME and San Diego, CA), Cox, (adding CNN, TBS, Discovery Channel and TLC in Kansas), Charter (adding Weather Channel, Discovery Channel, TLC and FSN in Yakima, WA) Wide Open West (National Geographic and three Discovery Networks channels in the Metro Detroit area) and Cablevision (adding ESPN2). But while adding channels where it could (we're still waiting for SciFi and some of those Discovery channels here in Boston), Comcast also is attempting to reframe the whole debate by focusing on "choices" (which includes their expanding HD VOD menu as well as linear channels) as opposed to linear channels alone. They have ambitious plans in this regard, expanding to 1000 choices this year, and planning to offer more than half of a projected 6000 total VOD movies in HD by 2009.

One of the other ways to catch up is to expand capacity, and this effort continued as well. Dish plans to launch new satellites to bring them up to 100 national channels plus HD locals in 100 markets. Others are looking to the more-efficient MPEG-4 video format, and this is being pushed forward by the Society of Cable Telecommunications Engineers (SCTE), who approved a related technical standard. Support also came from Motorola, who announced a new line of set top boxes that support both the new format and the existing MPEG-2, and who predicted widespread cable deployment of these boxes by the end of 2009. A method we've discussed before is the accelerated movement of analog channels to digital-only tiers, but you've got to be careful in implementing that - when Comcast in Detroit tried to do that with the PEG (public/educational/government) channels, a federal judge sided with local officials and issued a temporary restraining order forbidding the move. IPTV (the IP standing for Internet Protocol, which theoretically should make it possible to access channels more like we access websites today, which means potentially unlimited channel selection) is also in the mix, and this effort to implement global standards should help speed its implementation.

There were other technological developments affecting multiple providers. CableLabs has renamed its OpenCable platform as "tru2way", and says that it will be supported by most cable companies (Comcast will be using it to help develop interactive serivices without the use of set-top boxes). To help explain this technology, here's this clip of a Panasonic marketing person shot at CES (includes a demo). Freed from its marriage to Dish Networks, Echostar Holdings will be marketing its Sling Media products (best known for the Slingbox, which lets you watch your recorded TV shows on any Internet-connected device) to cable operators and telcos.

Another ongoing story we cover in this section is legal matters concerning the various providers, and this month saw both a settlement of differences (Comcast and DirecTV settled the suit over Comcast's picture-quality survey) and a new suit (the Wealth TV network suing Time Warner over a perceived bias towards carrying MOJO (co-owned by Time Warner and Comcast) over their network, which they feel MOJO copied when it transitioned from the old INHD network.

As always, we have news relating to specific providers. Comcast has launched the TiVo service (TiVo software running on Comcast's existing Motorola set-tops). I'd have it right now if not for all the bugs reported at this AVS thread. I'm really hoping this all gets sorted out soon, as I've waited a long time for this. Looking ahead, Comcast has plans to deploy its "Start Over" service, which lets you see go back to the beginning of in-progress program. My question - will I have to choose between this and TiVo? Comcast CEO Brian Roberts gave the keynote at CES, detailing both their HD "choices" strategy and their tru2way plans. Looking even further ahead, Comcast and Panasonic will be debuting a portable DVR next year (with built-in screen and DVD player) that you can unplug from your system and take your recorded shows (SD, alas) with you. Liberty Media's pending acquisition of DirecTV is being held up by the Department of Justice and the FCC over ownership issues. As always, the news at Verizon FiOS concerns expansion - as in these notes from New York, Virginia and Rhode Island (and, I'm sure, a bunch of other places as well). And a new, HD-only satellite provider made its debut at CES.

When talking about providers, we need to remember that one of the big ways TV is changing is in the many new ways we have to get our content. This time around we have news relating to Apple's new HD movie rental plans, NetFlix's in-development movie set-top box, TiVo's indie film program and new content from XBox Liveand Vudu.

HD NETWORKS - Other than the continuing addition of various existing channels to various lineups (as detailed above), there wasn't too much happening this time out - no blizzard of new channel launches or announcements - but here's what we have. Travel Channel HD launched on Cox and RCN. I agree with a point made in the linked article - this is definitely the kind of thing HD was made for. Tennis Channel HD also launched, on DirecTV. As for announcements, we can look forward to ESPNews on March 30, and The Oprah Winfrey Network sometime next year.

As I said, not a lot. With so many of the big brands already having gone HD in the wake of DirecTV's expansion, it might be an interesting exercise (maybe for next time) to survey the channels that haven't come over yet.

MANUFACTURERS - When it's time for something to happen, it can happen with head-spinning speed. At the end of December, many analysts were still talking about a stalemate in the NextGen DVD format war, which is perhaps why only 11% of HDTV owners were planning to buy a player in the next few months. Meanwhile, the speculation continued over Warner's stance (format-neutral at the time), and we waited with anticipation to hear what they would have to say at the HD DVD promotional press conference at CES. As it turned out, they didn't actually have anything at all to say there, having announced before the show that they would be ending support for HD DVD at the end of May, and as a result the entire press conference was cancelled, leaving poor Toshiba with only their "HD DVD Concierge" service to tout.

That cancellation was only the first bit of fallout. Fellow Time Warner companies New Line Cinema and HBO quickly followed Warner out the door, followed in turn by German producers Constantin Film AG and Senator Home Entertainment. Another major HD DVD supporter (they provide an HD DVD add-on drive for the XBox 360) began to waver, as Microsoft's Bill Gates made no mention of the format war in his CES keynote, and later stated that the company was ""actually neutral" in the struggle. On top of that, another Microsoft official signaled their willingness to support Blu-ray "if that's the way [the consumers] vote". Even the adult film world was affected, with Digital Playground (which had just gone neutral in December) going Blu-exclusive in January.

As you might, it didn't take retailers long to put their two cents in. Right now it appears that while the biggest retailers are unwilling to declare a winner (to the extent of stocking only Blu-ray), a number of others are definitely adjusting the balanceof their product mix. Of course, the main thing retailers have to think about is what's selling, and post-announcement sales figures strongly indicate that that the customers have been paying attention, with HD DVD disk sales plummeting to below 20% of the total. Figures released after the 17th show that things are even worse on the stand-alone player front (the one area where HD DVD had historically been ahead). How retailers will react to those figures should become clearer in the next few weeks.

Speaking of the future, where does all this leave us? There are three major players left in the HD DVD camp -Toshiba, Paramount and Universal. For the moment, Toshiba has taken the offensive, slashing prices and putting renewed emphasis on their players' upconverting abilities (though they also quote old sales figures that may no longer be that relevant). The main question at the moment is whether this strategy is designed to keep the format going or just to clear out their inventory of the A3/A30/A35 generation. I've not seen any reports so far relating to an upcoming A4/A40/A45, so keep an eye open for that. Concerning Paramount, there have been reports that their exclusivity contract has an out clause specifically tied to a defection by Warner (which has now happened, so they should be free to go if those reports are true). Last time, I pointed out (in reference to Warner denials) that there is a type of corporate denial that translates as "we're not ready to tell you that just yet", and this statement from Paramount has some of that feeling to it. So that brings us to Universal (the company whose extensive back-catalog releases are a big reason that the available title figures are still somewhat competitive), who have been subject to the same kind of speculation as Paramount, and its been pointed out that their exclusivity contract has expired. But they still seem to be on board, promoting the benefits of the format in conjunction with their release of American Gangster. And there's another factor not often mentioned - the head of the HD DVD Promotional Group is Ken Graffeo, an executive vice president at Universal! So don't be surprised if Universal stays in the game longer than sales figures might lead you to expect.

Still, many say now that the meaning of the phrase "format war" has now changed, and that the real war is now between Blu-ray and both regular DVDs and other forms of HD distribution such as pay-per-view and downloads. Pricing will be a part of that equation - without another HD format to compete against, will prices stay high enough to make Blu-ray a laserdisc-like niche market product geared to videophiles, or will they take prices low enough to become the true successor to DVD?

This is the place every month where I mention that actually are other hardware stories taking place, and that's doubly true this time, as CES occurred recently (from Jan 7-10). In fact, there's too much news, in view of the fact that this recap is seriously late (the SuperBowl is just a few hours away as I type this). The major news sources I list (now with links) in the first paragraph all covered the show, so check out their news archives from around that time for more hardware news than I would ever have time to tell you about. You might also want to check out the CES site itself, paying special attention to the "Post-Show Highlights" section on the main page.

And that will wrap it up - hope it was worth the longer wait. The next recap covers the period leading up to the one-year-away mark - things should really start to get interesting after that point.