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w/e October 28, 2007 SCRI International, Inc © 1984 - 2007


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New HD Video Standards Make Video Infrastructure Obsolete

As the latest HD video standard, H.264, emerges on the market, replacing the current MPEG 2 standard, billions of dollars in video infrastructure will be rendered obsolete. The adoption of the new standard is critical to the fulfillment of a federal mandate requiring that all video broadcasts be delivered in digital format by 2009. This FCC mandate, along with unprecedented user demand for HD video, are the driving factors in the most significant video infrastructure replacement cycle in over 10 years. More than 90% of the existing video infrastructure is still based on the MPEG 2 standard which will not support the quantity or quality of video demanded by the market and the new regulations.

But according to Rod Tiede, CEO of Broadcast International, a leading video technology innovator, buyers must be mindful to make replacement purchases with upgradeability foremost in mind in order to avoid costly infrastructure obsolescence, especially since the new standards are likely to change frequently for the foreseeable future.

The ability to adapt to change is a particularly important buying criterion with video compression technology – one of the most critical and rapidly changing components of the video infrastructure, according to Tiede. “Perhaps the most important factor in the purchase of a video compression solution is whether or not the product is ‘future proof,’” said Tiede. “H.264 is not a single standard, but a rolling standard with important iterations every year or so. As the standard evolves and new codecs come out, video content producers and delivery providers could be faced with enormous replacement costs in as little as a year if they don’t choose wisely.”

The video compression market is one of the few technology areas in which the hardware and software in most products has remained tightly coupled in embedded systems. “That’s just a bad model,” said Tiede, “and one that has been rejected in nearly every other segment of the technology industry. You don’t have to throw your computers out every time Microsoft launches a new version of software, but that’s exactly what video compression vendors have asked their customers to do.”

Broadcast International’s CodecSys video compression software is based on an entirely different model –an open software architecture that can accommodate new standards, such as H.264, as well as new specialized codecs as they come onto the market. With CodecSys, codecs can be upgraded and added through simple, cost-effective software downloads; other solutions require costly, full replacement.

BI has a joint development effort with IBM to integrate its CodecSys software with IBM’s BladeCenter QS20 “Cell Blade” multi-core processor. The new hardware platform is also highly scalable, allowing customers to easily add additional processing power by simply adding extra processors or “blades.” At IBC in Amsterdam in September of this year, Broadcast International and IBM demonstrated the jointly developed product publicly for the first time.

Not only is CodecSys the only “future-proof” video compression solution, it also offers unrivaled levels of video compression, reducing bandwidth needs by more than 80%, from the current MPEG 2 standard of 19.8 Mbps to 3 Mbps for HD-quality video over satellite, cable, IP and wireless networks. CodecSys achieves its breakthrough level of performance through a patented multi-codec approach, using artificial intelligence to analyze a video stream and select the codec best-suited to a particular video frame or sequence from an entire library of codecs. By selecting the best codec for the job, CodecSys is able to offer performance several times higher than competitive products, which rely on a single codec for every type of video stream.

According to Tiede, explosive user demand for video -- and particularly for HD quality -- in markets such as cable, IPTV, Internet video and wireless is precipitating a bandwidth crisis. According to comScore, for example, there were more than half as many video views as searches conducted last year on the Internet, and video is much more bandwidth-intensive. The bandwidth crisis is particularly troublesome in the U.S., which has dropped from fourth to 15th place on the broadband ranking kept by the Organization for Economic Cooperation and Development.

“Video compression technology like ours will go a long way toward alleviating the bandwidth crisis,” said Tiede. “But just as important as compression efficiency in a buying decision is the ability to adapt to change. Infrastructure providers need to make sure that they aren’t simply choosing an expedient solution for the near term, but one that is scalable and upgradeable as standards change and video volumes continue to skyrocket.”

Blu-ray Outselling HD DVD In Format War

Blu-ray high-def DVDs outsold rival HD DVD by almost 2-1 in the first nine months of the year, according to Home Media Research. The research arm of Home Media Magazine said 2.6 million Blu-ray discs were sold compared to 1.4 million HD DVDs.

Blu-ray, which is led by Sony, is thought to be enjoying a lead largely because of sales of the Play Station 3, which has a Blu-ray player inside.

But Reuters reports that some analysts believe last week's HD DVD release of the box office hit Transformers could transform the high-def disc format war. Paramount announced yesterday that 190,000 HD DVDs of the film were sold in the first week.

Additionally, Paramount, which announced last August that it would back HD DVD exclusively, is expected to issue more HD DVD titles in the coming months. (Two major studios back HD DVD exclusively while four support Blu-ray exclusively.) "This (Paramount) definitely smoothes out the edge that Blu-ray had in exclusive titles, and it very much strengthens HD DVD's hand in the fourth quarter," Tom Adams, president of Adams Media Research, told Reuters.

However, Adams said he still forecasts that Blu-ray sales will surpass HD DVD for the entire year.

Adams predicts that consumers will spend $186 million on Blu-ray titles in 2007 compared to $91 million for HD DVD, Reuters writes.

Future of DTV in Europe depends on ITU decisions

According to the European Broadcasting Union (EBU), the future of digital TV could be adversely affected by decisions taken at the ITU World Radiocommunication Conference (WRC-07) opening this week in Geneva.

One of the items on the Conference's agenda concerns the identification of frequency bands for international mobile telecommunications (IMT) services. The bands under consideration include UHF Bands IV & V in ITU Region 1, i.e. Europe, Africa and parts of the Middle East, which are currently used for TV broadcasting. "In many European countries, digital terrestrial TV in these bands has already become a major success based on the availability of free-to-air TV services" says Lieven Vermaele, EBU Technical Director. "However, this success story could be jeopardised by the introduction of mobile phone services in broadcasting frequency bands."

Interference problems can easily arise when a number of services are deployed in the same frequency bands. A recent study of the European Conference of Postal and Telecommunications Administrations (CEPT), which represents 48 EU countries, highlighted the problem of potential interference between mobile phones and TV services. CEPT suggests that further technical studies are necessary in this area and therefore allocations to the mobile service in relevant parts of the band 470 - 862 MHz should be considered only at the next WRC in 2011.

In view of the many uncertainties about interference issues, the EBU strongly endorses CEPT's position. "We urge ITU to wait and study the options before making any decision on band sharing," says Lieven Vermaele, "in 2011 the picture will be much clearer."

IPTV Experts Share Insights on Trends

A group of Motorola Inc. business leaders, technologists and marketing experts recently convened an internal "trendstorm," where they discussed the latest and upcoming innovations in Internet Protocol TV (IPTV) for 2008 -- and beyond.

The market for IPTV is increasing at a rapid pace. "At year-end 2006, there were 4.6 million residential IPTV subscribers," said Parks Associate industry analyst Kurt Scherf. "This number will grow to nearly 60 million by year-end 2011. We forecast annual shipments of IPTV set-top boxes to be seven million in 2007 and exceed 20 million by year-end 2011. To capitalize on this market growth, telcos should focus on embracing user-generated and social media to differentiate their services," Scherf said.

"In 2007, we really started to see the promise of IPTV fulfilled. For example, it took a few years for Motorola to reach the 1 millionth IPTV set top box shipment; we then doubled the number of shipments in five short months," said Doug Means, Motorola corporate vice president and general manager, Home and Networks Mobility. "Building on the momentum of IPTV adoption, we see a number of applications coming into the picture as 'the next big thing.'"

Key trends and innovations discussed included:

  • Content portability -- the proliferation of mobile devices where video is available virtually anytime, anywhere carries over to the home environment. Whole-home DVR -- pausing in one room and picking up the program in another room -- is promising to be a potentially popular application for IPTV.
  • Increased content availability -- via a switched digital video environment and bandwidth optimizing features such as MPEG-4 compression technology, IPTV promises expanded content choices for consumers. For example, niche market content like university- or league-specific, hobby or ethnic programming that may not have been included in traditional broadcast environments, will start to find homes -- and viewers -- in an all-switched digital video environment that allows an array of channels and choices from providers.
  • Personalization and localization -- in an all IP-environment, each customer-premise equipment (CPE) device, like set tops, has an IP address. Accordingly, information specified and defined by the user can be provided as a customized content overlay. For example, IPTV consumers can receive personalized stock, weather, sports and other information directly on their TV.
  • Targeted advertising -- TV advertising is changing from broadcast to "uni"cast. Advanced advertising technology will allow consumers to receive localized information. For example, consumers could receive local dealer information when watching a car ad (using graphic overlay technology), obtain more information (launching a video on demand) or even click to request a test drive of the car from the local dealership.

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    AT&T Could Buy DIRECTV or EchoStar

    AT&T may be close to making an offer for either DIRECTV or its satellite rival EchoStar. according to a report in the Wall Street Journal.

    The newspaper, which earlier this month cast doubt on reports that AT&T might buy EchoStar, now says the communications giant could make an offer for either satellite service by year's end.

    WSJ writes that AT&T is anxious to complete a deal while the current administration is in power.

    After President Bush leaves office in January 2009, a new team of regulators would take over at the Justice Department and the new president would fill any vacancies at the Federal Communications Commission.

    The AT&T-EchoStar deal would make sense for both companies with AT&T struggling with its TV service called U-verse and EchoStar facing competition from companies with deeper pockets such as DIRECTV.

    With AT&T as an owner, EchoStar could invest more heavily in projects such as new satellites for High-Definition TV channels.

    For Liberty Media, which is expected to take control of DIRECTV before year's end in a stock swap with News Corp., an AT&T deal could represent a fast profit on its transaction.

    WSJ reports that AT&T Chief Financial Officer Rick Lindner refused comment on the buyout speculation in a conference call Tuesday with Wall Street analysts.

    The newspaper adds that EchoStar would be an easier deal for AT&T because it has a smaller market value than DIRECTV and its ownership structure is less complicated.

    NBC opts out of YouTube for Hulu

    NBC Universal has removed all its video clips from YouTube and closed a promotional channel on the site in advance of the launch next week of its own rival service, Hulu. NBC said it was intended to provide a boost to Hulu, which is a joint venture with News Corp’s Fox division, and did not represent a new, tougher line that the company was taking against Google.

    "Down the road, we will be open to promoting our content as we see fit," the company said, adding that NBC was "not closing the door on anything". Meanwhile, a YouTube spokesperson said NBC had informed them of their plans on Friday, and added: "Our relationship with NBC was a YouTube success story, so we hope NBC decides to post more original content and stay engaged with our users."

    The massive popularity on YouTube of Lazy Sunday, an NBC Saturday Night Live clip, was a watershed in revealing the new medium’s ability to circulate video to millions of viewers on the internet.Since then, NBC and other networks have posted promotional clips for programmes on the site.

    NBC and News Corp have promoted Hulu as a way to supply their professionally made video to online audiences in an environment that respects copyrights.

    Viacom Will Not Drop Google Lawsuit

    Viacom has stated that it will not drop its $1 billion lawsuit against YouTube parent Google. Philippe Dauman, Viacom's chief executive, said that Google had not done enough to prevent content from being illegally uploaded to YouTube.

    Viacom, owners of MTV and Nickelodeon, claims that Google allowed more than 160,000 clips of its programming to be uploaded to YouTube, the video-sharing website it owns. Google denies that is infringing Viacom's copyright, and claims that it removes unauthorised videos from YouTube when asked to by content owners.

    Dauman said he had "an open mind" with regards to reaching an agreement with Google, which he described as a "responsible company", but that a settlement "wasn't quite there yet".

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    Harmonic Reports Q3 Earnings Growth

    Harmonic Inc. announced its preliminary results for the quarter and nine months ended September 28, 2007. For the third quarter of 2007, the Company reported net sales of $82.3 million, up 31% from $62.9 million in the third quarter of 2006. For the first nine months of 2007, net sales were $223.8 million, up 30% from $172.3 million in the same period of 2006. Results for the third quarter of 2007 included significant revenue from a growing number of satellite customers deploying an increasingly broad range of new products and solutions. The Company also saw sequential revenue growth in both domestic and international markets, with international sales representing 46% of revenue in the third quarter.

    “We are very pleased with our strong sales and earnings growth, as well as our improved gross margins and operating efficiencies, for the third quarter and for the year-to-date,” said Patrick Harshman, President and Chief Executive Officer. “We believe that we have increased our market share among domestic and international satellite operators, which has been driven by our powerful MPEG-4 AVC high-definition and standard-definition video encoders, as well as our new video processing, video-on-demand and network management solutions.”

    “Our cable customers continue to deploy our industry-leading encoding, video-on-demand edge and optical access products, and we see growing interest in our innovative new solutions for switched digital video, time-shifted television, video-on-demand content preparation and streaming, video-rich navigation, and higher-speed Internet data delivery. In the emerging IPTV market, our IP-based video solutions have been winning new business with telco companies worldwide and, increasingly, drive network expansions for existing global telco customers.”

    “We remain very encouraged by our strengthening position in key service provider markets. We expect to continue to extend the breadth and depth of our products, and we believe that our global customer base will continue to further leverage the power of our new solutions to expand their video service offerings in exciting new directions.”

    The Company anticipates that the combined net sales for the fourth quarter of 2007 and the first quarter of 2008 will be in a range of $155 to $165 million and gross margins will be 41% to 43% on a GAAP basis. Non-GAAP gross margins for the same period, excluding stock-based compensation expense and the amortization of intangibles, are anticipated to be in a range of 45% to 47%.

    Google Q3 Net Income Surges

    Google said net income in the third quarter surged 46 per cent compared with the period a year earlier. Sales rose 57 per cent, topping Wall Street’s bullish forecasts.

    The results show that Google is growing roughly twice as fast as the overall online advertising market, which itself is booming, and that it is expanding far more quickly than any large Internet company. Google’s rival Yahoo said its revenues had grown just 12 per cent.

    Google said its net income grew to $1.07 billion (E0.75bn) , up from $733 million a year earlier. Net revenue rose to $4.23 billion. Excluding commissions paid to advertising partners, a widely followed measure of the company’s performance, revenue was $3.01 billion, about $70 million higher than analysts expected. Profit, excluding items like stock-based compensation, was $1.24 billion

    Gilat assesses bids

    Gilat the Israeli satellite network group, is evaluating interest from several strategic and private equity buyers in buying the company. The company, which is listed on Nasdaq in the US and in Israel, could fetch more than $500m in a sale. Bids are due at the end of this week.

    Participating in the auction are several buy-out firms, including Gores Group of California and Apollo Management, which has made numerous satellite investments in recent years and could fold Gilat into Hughes, one of its portfolio companies. Also in the running for Gilat is ViaSat, a California-based rival satellite networking group

    Image Entertainment Stockholders Vote to Adopt Merger Agreement

    Image Entertainment, Inc., a leading independent licensee, producer and distributor of home entertainment programming in North America, announced that at its special meeting of stockholders held in Los Angeles, California, Image Entertainment’s stockholders voted to adopt the amended and restated merger agreement providing for the acquisition of Image by BTP Acquisition Company, LLC. The merger is expected to close by November 6, 2007, subject to the satisfaction or waiver of closing conditions.

    Under the terms of the amended and restated merger agreement, each Image stockholder will be entitled to receive $4.68 per share in cash, without interest, for 94% of the shares of Image common stock owned by such stockholder at the effective time of the merger and will retain the remaining shares of Image common stock as shares of common stock of Image as the company surviving the merger.

    In addition to approving the amended and restated merger agreement, the stockholders of Image Entertainment also approved a proposal approving the issuance by Image Entertainment of common stock and/or convertible preferred stock to BTP Acquisition Company (and the issuance of common stock upon conversion of any convertible preferred stock issued).

    “We believe today’s stockholder approval clearly demonstrates the recognition of the benefits of this merger,” said Martin W. Greenwald, Chief Executive Officer, President and Chairman of the Board of Directors of Image Entertainment.

    Optibase to Report Q3 Results

    Optibase, Ltd., a leader in digital video solutions, announced that it will report third quarter 2007 earnings results on Monday, October 29, 2007 during pre-market hours.

    The Company will hold a conference call at 9:00 a.m. EDT on Monday, October 29, 2007 for interested investors, analysts and portfolio managers. The conference call will be broadcast live as a listen-only webcast. To listen live, please go to approximately twenty minutes before the conference call is scheduled to begin. You will need to register as well as download and install any necessary audio software. The webcast will be archived for 90 days.

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    Fujitsu Demos MPEG-4 AVC HD Encoder for SNG

    Fujitsu Computer Products of America, Inc., announced it will exhibit and present at the upcoming SMPTE Technology Conference & Expo, Oct. 24-27 in Brooklyn, NY. Fujitsu's best-of-class High Definition (HD) video encoder/decoder, the IP-9500, offers broadcast quality video transmission at low bit-rates and low latency, enabling HD news content to be transmitted in the same satellite bandwidth as Standard Definition (SD). Fujitsu executives will present on the innovative MPEG-4 AVC compression algorithms developed by Fujitsu Laboratories in the session titled "Topics in Hybrid AV/IT Systems" Thursday, Oct. 25 at 2pm ET. ewll The IP-9500 delivers HD quality at very low latencies, encoding and decoding video content in less than 300 milliseconds. It supports both 1080i and 720p formats with video data rates from 4-20 Mbps in both standard and low latency. The Fujitsu encoder is an exceptional solution for broadcasting companies that desire to transmit remote HD content through existing satellite configurations, while minimizing costs by utilizing a single satellite channel. In addition to the SMPTE presentation, Fujitsu will release "Exceeding Expectations: High QoS and High Picture Quality Enable the HD Revolution," that details the breakthrough technology allowing the IP-9500 to produce high picture quality at very low latencies that are not achieved by utilizing existing MPEG-4 AVC technology.

    Harris Provides US Air Force with Video Broadcast Systems for Breaking News

    Harris Corporation has been awarded a contract to provide the United States Air Force with broadcast distribution systems that will provide breaking news to 10 military bases in Europe and Asia. Harris was chosen by Snader and Associates to provide breakaway news systems to the Air Force News Agency Services (AFNEWS).

    Once deployed, the Harris breakaway news systems -- featuring Harris(R) NEXIO(TM) servers as well as routing systems, software and processing gear -- will allow the U.S. Air Force to provide breaking news to bases in the Azores, Turkey, Italy, Germany and Japan. The Air Force News Agency, headquartered in San Antonio, Texas, communicates news, information and entertainment through print and electronic media to Air Force and Army military and civilian members assigned to locations worldwide. The agency provides news and information via print, broadcast and Internet products.

    "Our complete, shared storage news distribution system provides the scalability to meet the U.S. Air Force's changing broadcast needs," said Tim Thorsteinson, president of the Harris Broadcast Communications. "The truly integrated workflow offered by our breakaway news system enabled us to win this significant contract."

    Limelight Networks Unveils HD Content Delivery for the Internet

    Limelight Networks, a leading content delivery network (CDN) for digital media, introduced LimelightHD, a service for the delivery of high-definition (HD) media and digital content over the Internet. LimelightHD allows media and entertainment companies, global consumer brands, game publishers, and social media sites to deliver HD-quality movies, TV shows, video clips and games directly to their users' Internet-connected televisions, game consoles, and PCs. Leading Internet TV service Brightcove, and key media entities, including Fox Interactive Media, MSN Video and, India's leading broadband video portal, are among those who announced they will offer HD content via the LimelightHD service. Media technology leaders supporting the LimelightHD initiative include Adobe Systems, Incorporated, Microsoft Corporation, Move Networks and Veoh Networks. LimelightHD will be available immediately on over 700 broadband access networks worldwide.

    LimelightHD is designed to meet the rising demand for high-definition content delivered via the Internet, to television set-top boxes, media players, game consoles, and PCs. Consumers are broadly embracing HD-quality programming, with Forrester Research predicting that the majority of U.S. households will have an HD television by 2010.(1) A recent report by eMarketer noted that by 2011, there will be 200 million Internet users in the United States and 183 million online video viewers.(2) As broadcast HD becomes commonplace, consumer demand for Internet HD will grow rapidly, prompting leading media and online companies to expand their Internet programming strategies and begin introducing online HD offerings this year.

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    Scopus Appoints Orit Leitman to Board of Directors

    Scopus Video Networks Ltd., a provider of digital video networking solutions, announced that on Oct. 16, 2007, the shareholders of Scopus appointed Orit Leitman as a member of its board of directors.

    Leitman has recently served as vice president of finance at Paradigm Geophysical Ltd. Prior to joining Paradigm Geophysical in 1999, Orit spent seven years as corporate treasurer of Scitex Corporation Ltd. Since 2006, Leitman has served as a director and member of the investment committee of Modelim Kranot Neemanut Ltd., and from 2000 to 2003 was an external director of Nur Macroprinters Ltd. She holds both a bachelor's degree in economics and a master's in business administration from the Tel Aviv University.

    "I am delighted to welcome Orit to our board of directors," commented David Mahlab, chairman of Scopus' board of directors. "Her wealth of business and technology experience will be valuable to our board and I am very much looking forward to her participation and active contribution to the company's success."

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  • NEW: 2007-2009 HDTV / Digital Trends Report This extensive 75 page report includes an Executive Summary, followed by an analysis, charts and tables of how the broadcast / professional video marketplace equipment endusers respond to the key HDTV / Digital Video Trends -- click to view table of contents

  • IPTV / Mobile TV Report: now available, 14 page Executive Summary and Analysis, with over 120 pages of articles and reports from online sources as well as SCRI Insider Reports. Cost is $995, or $695 for current SCRI Insider Report subscribers and clients. for more info.

  • Broadcast/Pro Video Product Reports. Tracking purchase history (2006), purchase plans (2007 & 2008), brand shares, etc. for each of twenty five specific product types, from Camcorders to VTRs.

  • Broadcast/Pro Video Macro Industry Overview Report. Over 50 pages of analysis and information on the state-of-the-industry compiled from secondary online research sources including industry news sites, manufacturers sites, as well as SCRI's own weekly online News Briefs and Insider Reports.

  • Broadcast/Pro Video Micro Quantitative Product Data Report. 23-page report containing quantitative data tables, for all six verical end-user markets, and all of the 25 Product categories, as well as in total, with summary tables from 2002- 2008.


    Mobile TV Generates Momentum

    The number of Mobile TV users has reached 20 million globally, and will balloon to over two billion in 2013, according to a new report from Research & Markets.

    The report titled, “Mobile TV: Executing the Vision” says the vast majority of users currently access free-to-air mobile TV, but pay-TV will catch on as high-quality made-for-TV programming becomes widely available on subscription-based channels.

    "Mobile TV is a killer app," said Naqi Jaffery, President and Chief Analyst, Telecom Trends International. "Just as mobile voice is becoming the primary means of voice communication, mobile TV will eventually become the primary means of accessing television," Mr. Jaffery said.

    "The momentum generated by mobile TV has surprised many industry observers," Mr. Jaffery said. "Despite the multiplicity of standards and lack of uniform frequency allocation, mobile TV is making a tremendous impact on the marketplace," he said.

    According to the report, the market is seeing the evolution of multi-network architecture with the same device supporting more than one standard. However, the report says, DVB-H has emerged as the de facto mobile TV standard globally.

    The market is seeing the convergence of out-of-band broadcast and in-band multicast technologies into one seamless network architecture, the report says. Besides providing high-quality television reception, it says, such architecture enables interactivity that will give a significant boost to mobile commerce.

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