Why MPEG-4 Conversion Is Costly

In last week’s mail was a query from an acquaintance at a non-premium cable network, seeking an update on digital video compression.

“It’s amazing how fast technology is moving,” she wrote. “We did a brief survey last year with techs, who said that MPEG-4 was so far in the future for them. Now … it appears the timing may have changed.”

Her first question: Do most of the 60-plus million set-tops in circulation in U.S. cable and satellite homes include chips that can decompress in MPEG-2 (today’s version) and MPEG-4 (the new stuff)?

Answer: No. Most of those in circulation don’t know MPEG-4 from buttermilk. Last year, operators were anticipating shipments by year-end. This year, the melody sounds familiar: Watch for shipments of boxes with MPEG-2/4 chips in the latter half of the year.

(Reminds me of the old one about the cable engineer who asks his supplier when he can have the box he wants. Supplier: “In six months.” Engineer: “Six months from when?” Supplier: “From every time you ask.”)

This is why the encoder and transcoder business is en fuego right now: Everybody needs them. Programmers need them to apply the new kind of squeeze-down.

Operators need them wherever those compressed signals are received. The incoming streams need to be uncompressed, and then re-encoded to an MPEG-2 version. Otherwise, those 60-plus million active boxes in the U.S. won’t know what they’re looking at. (That decode/re-encode sequence is the transcoder, in hardware-speak.)

Second question: How much? Hallway talk still puts a $2,500 price tag on a three-stream transcoder, with lots of “it depends.”

Also: If you buy programming, know going in that the HD master tapes you’ll re-encode into MPEG-4 are more expensive — by a factor of 4 to 1, some say.

This is why the conversion to MPEG-4 is economically tricky for non-premium cable networks. What’s bigger: The pile of money you’ll save on the satellite transmissions, or the pile of money you’ll spend to go to MPEG-4?

With Starz putting up its MPEG-4 flag last week, all of the premium cable networks are on board. Some other networks (ESPN, Hallmark Channel) made the move. Most have not. Yet.

Third question: Who pays for the receivers and transcoders at all those headends? On the surface, operators are expected to buy their own. That usually comes with some grumbling about why they have to pay for something someone else changed.

For smaller, newer networks, though, still seeking carriage, it’s possible that headend transcoder costs wriggle into the negotiations. Forewarned is forearmed.

Stumped by gibberish? Visit Leslie Ellis at www.translation-please.com.