The technologies of television and the internet are converging. This trend has been obvious for ten years. The rapid adoption of HDTV is currently driving the growth. Most customers of a fine video system want to take advantage of the associated benefits, including high definition audio, and merging their computer systems with the theater.
The primary forces impacting this trend include internet capacity constraints caused by video download demand, property rights of the movie producers (and the technical solutions), and an analysis of the who is likely to reap the financial windfall from it all.
Do We have the Internet Bandwidth to Support Downloaded Movies?
According to Google, the popularity of video downloads, especially High-Def downloads, could overwhelm internet bandwidth capacity. Services such as YouTube (owned by Google) are problematic, and new developments could create even more problems.
Joshua Danovitz, general manager and vice-president international for TiVo, said the issue of download limits differs in each country. In the United States and Asia, where bandwidth capacity is still available, users have few constraints (though not truly unlimited), while other countries, including Canada, ISPs are restricting users to some degree. The problem will only get worse with the increased popularity of video downloads. Currently, more than half of internet bandwidth utilization in the United States is peer to peer, and most of that is video download.
Time Warner said that it was going to start testing a new rate plan in Beaumont (Texas) that would limit the amount of bandwidth each customer can use each month before additional charges applied. New plans would offer between 5 gigabytes and 40 gigabytes of download a month. The top plan would cost roughly the same as the company’s highest-speed service ($50 and $60 a month).
Time Warner wants to test bandwidth limits to crack down on a minority of customers who are heavy downloaders. Only five percent of Time Warner’s customers use over half of its total bandwidth.
Bell Canada has imposed bandwidth limits on its customers. Bell Canada charges as much as $7.50 for each gigabyte when customers exceed the 30-gigabyte limit on a plan that costs about $30 a month. Since the average high-definition movie is 4 gigabytes to 5 gigabytes, that would mean a charge of at least $30 a download for customers on a plan like that who were over their limit.
On more expensive plans, the over-limit charges at Bell Canada are as low as $1 a gigabyte. That would represent a $4 to $5 charge for an HD movie for people over their monthly limits. Standard-definition movies are typically 1 gigabyte to 2 gigabytes.
A lot of the movies are not downloaded from authorized vendors.
Property Control (reference: Downloaded Music)
One fifth of U.S. citizens have pirated a major film and two thirds of this group have downloaded a film at least monthly. 80% of overall movie downloaders use unauthorized services to get their movies for free, as opposed to using a legal solution. The RIAA and MPAA have already resorted to legal action against thousands of U.S. citizens.
If we assume a parallel path with the audio recording industry, then the business implications are huge. MP3 players have now been around for about 10 years. Audio CD sales are down about 15% last year, 20% in 2006. The best estimate is that only about 42% of music acquisitions being paid. NPD (a retail tracking group) estimates that one million consumers “dropped out of the CD buyer market” in 2007, a trend led by teenagers, 48% of whom did not purchase a single CD in 2007.
Thomson is exploring methods for preventing bootlegging by the covert camcorder user. The company’s technique involves inserting “artifacts” (extra frames, flashes of light, pixelated grid patterns, etc.) into the movie before it’s shipped to theaters. The idea is to mark a camcorder recording without degrading the images moviegoers see.
The artifacts exploit the differences in the way a human brain and a camcorder receive images. In the technique that’s furthest along, extra frames with the words like “Pirated Copy, You Are Scum” are inserted into the frame. These warning words appear at a frequency too fast for the human brain to process, but they will appear in a camcorder recording.
From a technical standpoint, it is probably impossible to completely prevent users from making copies of the media they purchase, as long as a “writer” is available that can write to blank media. The basic technical fact is that all types of media require a player. The player has to be able to read the media in order to display it to a human, then a player could be built that first reads the media, and then writes out an exact copy of what was read.
In practice, almost-perfect copies can typically be made by tapping into the analog output of a player (e.g. the speaker output or headphone jacks) and, once redigitized into an unprotected form, duplicated.
Since these basic technical facts exist, it follows that a determined individual will definitely succeed in copying any media, given enough time and resources. Media publishers understand this; copy protection is not intended to stop professional operations involved in the unauthorized mass duplication of media, but rather to stop “casual copying”.
Copying of media which is downloaded (rather than being mass-duplicated as with physical media) can be inexpensively customized for each download, and thus restricted more effectively. They can be encrypted in a fashion which is unique for each user’s computer, and the decryption system can be made tamper-resistant.
Publishers of music and movies have turned to encryption to make copying more difficult. CSS is a form of copy protection that uses 40-bit encryption. Copies will not be playable since they will be missing the key, which is not writable on DVD-R or DVD-RW discs. The work is encrypted using a key only included in the firmware of authorized players, which allow only legitimate uses of the work (usually restricted forms of playback, but no conversion or modification).
The Digital Millennium Copyright Act would make it illegal to distribute unauthorized players was supposed to eliminate the possibility of building a DVD copier. However, encryption schemes designed for mass-market standardized media such as DVD suffer from the fundamental weakness that once implemented, they can never be changed without breaking the standard. Manufacturers have been prevented from enhancing their DRM technology until recently, with the release of next-generation media such as HD DVD and Blu-ray Disc. This period represents more than enough time for the encryption scheme to be defeated by determined attackers. For example, the CSS encryption system used on DVD Video was broken within three years of its market release in November 1996 (see DeCSS), but has not been changed since, because doing so would immediately render all DVD players sold prior to the change incapable of reading new DVDs. This would not only provoke a furious backlash amongst consumers. More recent DVDs have attempted to augment CSS with additional protection schemes. Most modern schemes like ARccOS Protection use tricks of the DVD format in an attempt to trip up pirating programs, though it is noted that any scheme must stay within the bounds of the DVD Video format, limiting the possible avenues of protection and making it easier for hackers to learn the details of the scheme and find ways around it.
HD DVD and Blu-ray Disc, attempt to address this issue. Both formats employ the Advanced Access Content System (AACS), which provides for several hundred different encryption keys, each of which can be invalidated should one of the keys be compromised. Revoked keys simply will not appear on recorded discs, rendering the compromised players useless for future titles unless they are updated to fix the issue. For this reason, all HD-DVD players and some Blu-ray players include an ethernet port, so that they can download updates. Blu-ray Disc goes one step further with a separate technique called BD+, a virtual machine that can execute code included on discs to verify, authorize, revoke, and update players as the need arises. Since the protection program is on the disc rather than the player, this allows for updating protection programs within BD’s working life by simply having updated programs included on newer discs.
The Rich Get Richer
Everyone from Apple and Microsoft, and smaller companies such as TiVo and Netflix, are marketing their version of the “digital living room”. Since the software is the most challenging (read value add) component of these systems, the author believes companies with a track record of success in the software arena are likely to end up on top.
These home theater systems are basically PCs designed to be connected to home theater systems. One benefit is the ability to access and use all your home media files in the living room, on the big screen. These systems have been popular for dire hard enthusiasts, but are only now becoming mainstream.
Microsoft
Windows Media Center (included on premium editions of Windows Vista, Vista Home Premium and Vista Ultimate) is critical in Microsoft’s vision of the digital lifestyle that the company aims to push as a standard of entertainment for consumers. This in the context of the intimate connection between the Windows client and Windows Media Center, but also because of Microsoft’s strategy focused on connected entertainment.
With the addition of a TV tuner card, Media Center can play back and record TV shows from a High-definition TV, Digital Cable (1080i Premium HDTV), standard antenna, cable, or satellite signal.
Like TiVo, Windows Media Center allows fast-forwarding through commercials of recorded programs. Some users deliberately wait 10-15 minutes to start watching a program in the live buffer so they can fast-forward through the commercials and catch up to “live TV” by the end of the program.
Commercials can be skipped automatically (not supported by Microsoft) by installing external plug-ins like DVRMSToolbox or Lifextender.
The problems that Microsoft Vista has experienced are well documented, but buggy software has never prevented Microsoft from dominating other software applications.
Our Recommendation: use XP MCE until Vista gets the bugs worked out.
Apple
Owners of the Apple TV set-top box are able to rent movies directly from their living rooms and begin watching them within minutes. “It will do for movies what iTunes has done for music,” said Michael Gartenberg (JupiterResearch).
Apple will offer about 1,000 movies, 100 of them in high-definition. The new service will also offer movies from all the major studios. That’s a big step, Apple has also tried to make Apple TV easier to use.
Apple faces more competition than it did when it launched the iPod. There is Sony, with its PlayStation 3 and Blu-ray disc players, and Comcast, which plans to offer 6,000 movies on demand each month, including more than 3,000 in high-definition.
Even the local Blockbuster has a larger selection of videos for rent than Apple, said John Barrett, director of research at Parks Associates, a market research firm focused on emerging technologies. And instead of worrying about a movie expiring within a day of starting to watch it, as with iTunes, Netflix customers can hang on to movies rented from its service for practically as long as they like, Barret added.
Should Apple’s product prove popular, cable providers are likely to start integrating similar features into their set-top boxes.
Summary
It is likely that at least 3 main players will emerge over the next 5 years. It’s a good bet that Microsoft and Apple will be competitive.
Since the product life of this type of system is 5-8 years, if you are in the market now, you can judge the winners on your next purchase. There will always be rationales for waiting. If you are building a World Class Home Theater, procrastination is not an option.