DBSs AIM Services: The Next Cataclysm?
By Jimmy Schaeffler, The Carmel Group
Its little exaggeration to note that during the past five and a half years, the U. S. Direct Broadcast Satellite (DBS) industry has revolutionized the way all of usincluding the private broadband side of the industry watch TV, listen to music, and acquire data. Among DBSs developments are leadership roles in the national deployment of 1) digital TV, 2) interactive electronic programming guides (EPGs), 3) high definition TV (HDTV), 4) in-home service tie-ins (e.g., lights and security), 5) Dolby Digital type services, 6) home theatre tie-ins, 7) 200-300 + channel offerings, 8) 30-40 audio services, 9) 50-60 pay-per-view (PPV) channels, 10) sports league packages, 11) dozens of multiplexed channels, 12) multiple language audio streams, 13) private messaging services and 14) a hugely fertile convergence environment (marking the merger of the computer, telecom and media industries).
Yet when looking at future advanced interactive multimedia (AIM) services, DBS is far from finished when it comes to lighting the way for its brethren in the businesses of content and signal delivery. And the deployment of those AIM services promises to be the most important and profitable new development the DBSand convergence industrieshas ever imagined.
By year-end 2007, AIM-type services will be deployed into more than 60 million U.S. TV and computer households. The chart below highlights this growth, segmented by estimated DBS, cable and standalone unit growth. For every home in this space, the potential revenue per subscriber per month, from a plethora of different AIM services, will be many percentage points (and many, many dollars) higher than what it is today. Nonetheless, it is most interesting to note that once cable catches on to this AIM services wave, it will, within the short time frame covered by this graphic, deploy more units even than DBS. At a point nine years from today, cable will offer its AIM services to more than 30 million subscribers. DBS by then will reach about five to ten million fewer subs, and standalone set-top box units will penetrate about ten million households.
Already today the first wave of these services are being offered, a few in selected cable service areas via products like Road Runner and Excite @ Home. Content service providers entering this arena include Open-TV, Liberate, WinkTV, iCTV, ACTV and Intertainer, to name but a few. Yet the only national deployment of these services for now (and long into the future) will be by DBS service providers like EchoStar and DirecTV.
With its launch of the WebTV service last May, EchoStar was the first to offer robust AIM-type services. Set-top boxes like the DishPlayer offer consumers the full range of "regular" EchoStar audio and video services, as well as internet connections and a hard drive that stores, pauses, rewinds and otherwise offers the viewer tremendous control over his/her content services. Moreover, EchoStar has also just announced an investment in a third party provider of these same types of hard drive-delivered services, Replay Networks. Later this year, EchoStar will add more AIM-type services from Silicon Valley, CA-based OpenTV, which has already reached more than five million subscribers worldwide. As of this writing, EchoStar is yet to announce a two-way signal deployment plan similar to that of DirecTV and its Spaceway project.
On the GM Hughes side of the ledger, DirecTV and its sister services, DirecDuo and DirecPC, will bring forth AIM-type services early this year, with its introduction of new, WinkTV- and Tivo-enabled set-tops. Later this year, GM Hughes companies will begin rolling out the result of its $1.5 billion investment from AOL last year, in the form of the new AOL-TV service.
In sum, billions of dollars in revenues from subscribers, to say nothing of advertisers, are poised to move into this new AIM services space during the next decade. Plus, the seeds of several more Microsofts may well be germinating in some converted Silicon Valley warehouse in the form of a provider of these new AIM services. The time for transactions in this space is about as exciting as one can imagine, yet as soon as one gets complacent about the number and scope of new developments, yet another one is announced, dwarfing those that went before. Ultimately, perhaps the word "revolution" almost does damage to the new convergence environment, where the better message might be to suggest a "cataclysm" in the way we acquire, store, transfer, reuse and otherwise manipulate the information and entertainment of our lives.
About the Author
Jimmy Schaeffler is chairman and CEO of the Carmel Group, a leading media research company specializing in analysis of the media, computer and telecommunications industries.