Journey to the Center of It All

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Moxi Digital Inc. is running out of money. TiVo Inc. has become a sub-brand beneath the DirecTV label. Digeo Broadband Inc. promises and promises that it will show its true colors at the National Show in May.

Microsoft Corp.'s UltimateTV didn't make it. ZapMedia Inc. is reverting to its MP3 audio capabilities and abandoning its video agenda — for now.

And, a delectable tale — unconfirmable, but so juicy that you lust to embrace it — suggests that Motorola Inc.'s offer to sell its DCT-2600 (with built-in digital video recorder) for the same price as the lowest-form-of life DCT-2000 are being rebuffed. Cable operators' predictable response: "Then lower the price of the 2000!"

Whether we're talking about DVR set-top storage devices (also known as personal video recorders, but better called "digital media recorders") or the broader category of home media centers, this category is getting the cold shoulder throughout the value chain.

It's still early in the process, but impatient inventors and devotees despise the gestation period of three, four or maybe five years. A shakeout is certainly inevitable, especially as the early-production models add and drop a series of features, attributes and capabilities suited to the mass market.

On the consumer end, the reluctance to buy into the hype over digital media centers (or whatever they're called) is understandable. It looks complicated, and it's not easy to install yet. Price is certainly a factor — especially in this economy.

Perhaps most significantly, consumers don't yet know that they can't live without the services these devices provide.

The compatibility feud between broadband providers (mainly cable operators) and consumer-electronics makers adds another barrier to the distribution process (as waxed upon in this space after the Consumer Electronics Show in January).

Yet the concept of a home digital-media storage device tantalizes the public. Awareness levels are well above 60 percent, thanks, in part, to TiVo's ad campaigns and rampant word-of-mouth, especially among TV talk-show guests. (When did "TiVo'd" become a verb?). Despite that appeal, well under 1 million U.S. homes have installed any such device.

After TiVo devices, EchoStar's DishPlayer 500 and 501 are the most widely used DVRs — another reminder on how satellite providers have plunged into the business.

Not since the assault of the videodisc more than 20 years ago has a consumer-electronics product enjoyed such widespread awareness — but such lackluster sales.

Of course, the videodisc was outmaneuvered by the videocassette recorder, largely thanks to this sales pitch: Only an idiot would buy a device that could merely play back prerecorded videos.

That's why the VCR was a better product, we were told. You could actually time-shift a TV show, if you could make your timer stop flashing "12:00."

That brings us back to the PVR, a true machine for time-shifting — including time you never knew was there.

The digital media center is an ideal complement to video-on-demand, especially for specialized or short-form content.

Let's leave the incendiary debate about the storage and distribution of copyrighted material via set-top aside for one moment, and look at the expanded opportunities for digital programming. And remember, that includes music, games, software and other content, not just traditional, linear TV shows.

Channels' Cash

Networks like Home & Garden Television (and its Do It Yourself spin-off), Lifetime Television and Discovery Channel — with their huge stashes of special-interest shows and segments — have a potential wellspring of cash waiting to be tapped when the media center is deployed.

Not surprisingly, at this stage the battle to create a digital media environment is still being waged on the technical and platform fronts.

When Digeo president Jim Billmaier unveiled his Cable Media Center alliance with Motorola last month, he gloated that the product — to be introduced on Charter Communications Inc. systems later this year — was "designed and contemplated from the outset … to take advantage of what cable brings: its two-wayness."

And he was happy to take a few swipes at products like Moxi. Billmaier pointed out that the much-touted product, which debuted with an alliance with direct-broadcast satellite provider EchoStar Communications Corp., is "not suited to the cable industry," partly because it does not include adequate conditional-access features.

Of course, Moxi has its own set of problems these days. It has eaten through most of its $67 million of initial funding and has only a few months to live without another financial infusion, according to a Business Week
investigative report. Support from AOL Time Warner Inc., Cisco Systems Inc. and Vulcan Ventures Inc. has not guaranteed Moxi a place on any cable platform.

The deeper issue continues to be whether Moxi, Digeo, TiVo, SONICblue Inc. (owner of the feisty and always controversial ReplayTV brand), Microsoft — or any of the digital storage companies waiting in the wings — can come up with a palatable product and package that appeals to a new breed of digital viewers.

Personal media —that is, the ability to customize the program package to a customer's individual taste — violates every mass-media rule conceived during the past century. That's what makes the "home server" (a user-surly term, if ever there was one) so vital, and so challenging.

It's truly the center for the last 30 meters of the broadband voyage.

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