Closing the cable television statutory licensing loophole

Over the last few months, FilmOn and ivi, two Internet-based services that retransmitted broadcast television stations from multiple cities, have been effectively shut down by preliminary injunctions issued by a U.S. Federal court. In both cases, the issue was that the U.S. Copyright Office has a regulation dating back more than 20 years (Section 111 of the Copyright Act) permitting cable systems to retransmit broadcast signals locally in return for the payment of statutory royalties to the Copyright Office. That regulation was effectively superseded by the Communications Act of 1996, which requires cable and satellite systems to obtain permission from and pay compensation directly to broadcast stations in order to retransmit their signals.

In ivi's case in particular, the company argued that it was a cable system for the purposes of Section 111 of the Copyright Act, but it wasn't a cable system under the definition of the Federal Communication Commission, and therefore wasn't subject to the Communications Act of 1996. In both ivi's and FilmOn's cases, the Federal court ruled that they weren't cable systems under any established definition, and therefore weren't entitled to take advantage of Section 111. They could negotiate directly with television stations for retransmission rights, as IPTV operators such as Verizon and AT&T do, but they had no right to retransmit their signals under a statutory license.

Both cases are still in litigation and have not been finally decided by the courts, but an action announced last week by the U.S. Copyright Office may may the entire argument moot. The right of satellite services such as Dish Network and DirecTV to retransmit signals from broadcast stations outside a subscriber's local area was renewed last year, in the Satellite Television Extension and Localism Act of 2010 (STELA). A section was included in STELA that requires the statutory licensing requirements in Section 111, as well as additional requirements in Sections 119 and 122 (covering satellite services), to be phased out, and it gives the Copyright Office responsibility for coming up with a phase-out plan. Here's what the section says:

Not later than 18 months after the enactment of this Act, and after consultation with the Federal Communication Commission, the Register of Copyrights shall submit to the appropriate Congressional committees a report containing the following:

1. proposed mechanisms, methods, and recommendations on how to implement a phase-out of the statutory licensing requirements set forth in sections 111, 119, and 122 of title 17, United States Code, by making such sections inapplicable to the secondary transmission of a performance or display of a work embodied in a primary transmission of a broadcast station that is authorized to license the same secondary transmission directly with respect to all of the performances and displays embodied in such primary transmission

2. any recommendations for alternative means to implement a timely and effective phase-out of the statutory licensing requirements set forth in sections 111, 119, and 122 of title 17, United States Code

3. any recommendations for legislative or administrative actions as may be appropriate to achieve such a phase-out

Last week, the Copyright Office announced a timetable for requesting comments and replies to comments to help it formulate a phase-out plan. By the time the FilmOn and ivi cases wind their ways through the Federal court system, it's likely that the phase-out plan will be adopted, and even possible that the phase-out date will be reached. Thus, even if they win in court, there won't be any statutory license, and they'll still have to negotiate station by station for retransmission rights and compensation.

NAB 2011 Part 3: Wireless ENG Backpacks, POV Camcorders, Thunderbolt and Final Cut Pro X

In this third and final installment of highlights from NAB 2011, I'll cover some of the interesting new trends and product categories, and finish with a quick look at Final Cut Pro X.

• ENG Trucks-in-a-Backpack: LiveU pioneered the category of putting encoders and broadband wireless transmitters into a backpack for field use, but there are now many competitors and a variety of approaches. The "traditional" backpack approach was demonstrated by LiveU, TVU and Streambox. These devices take the video output from a camcorder (analog, Firewire, HDMI or SD/HD-SDI), compresses it and sends it to a receiver over the public Internet using multiple USB broadband modems and WiFi adapters (anywhere from seven to fourteen, depending on the manufacturer). The receiver (located at the television station or head-end) takes the various bitstreams sent by the modems and WiFi interfaces, reassembles and decompresses them into a single video output for streaming or broadcast. Each manufacturer has their own approach:
  
  
  • LiveU uses a conventional PC running its proprietary software as the receiver, while both TVU and Streambox have their own dedicated receivers.
  • LiveU and Streambox use channel bonding between the multiple connections in order to get the needed bandwidth, while TVU uses channel aggregation with forward error correction, somewhat similar to the technology developed by Digital Fountain and now sold by Qualcomm, which it claims provides better quality at lower bitrates.
  • TVU and LiveU both use H.264 high profile compression, while Streambox uses its own proprietary codec.
  • Streambox's hardware receiver can support one transmitter at a time, while TVU's can support as many as ten transmitters simultaneously.
  • Streambox offers a "cloud" option for the receiver--customers can transmit video to Streambox's cloud and receive bonded, decompressed video without a local receiver.
  • All three systems are priced in the $30,000-$40,000 range (U.S.) for a single HD transmitter/receiver combination.

• Teradek demonstrated its Cube, a wireless HD H.264 encoder and transmitter about as big as a pack of cigarettes. Unlike the backpack models, the Cube can only transmit via a single WiFi or wired Ethernet interface, or a single USB port that currently works with Verizon's 4G LTE Modem. It's designed for video monitoring on-site and lower-bandwidth ENG applications, but its small size and weight may make it less visible, and certainly easier to move around, than the backpack systems.
  
  Teradek's various Cube models come with HDMI or HD-SDI inputs. They're paired with wireless decoders that are just as small as the receivers, and they can send directly to Livestream's streaming service for broadcast over the Internet. When using Livestream, no local receiver is necessary. Prices for the transmitters and receivers range from $1,490 to $2,190 depending on inputs and interfaces, and they're also available in matched sets for from $2,682 to $3,942.
  
• Comrex showed a working prototype of its Liveshot, a video compressor and transmitter designed to be mounted on ENG camcorders. The Liveshot Portable has two USB ports for broadband or WiFi modems, and HDMI, HD-SDI and analog video inputs. The Liveshot Studio is the receiver. Both devices support intercom/IFB headsets for two-way communication. Pricing hasn't been finalized, and Comrex doesn't expect to ship the Liveshot until late 2011.
  
• POV Camcorders: This was the year that low-cost POV camcorders were accepted by broadcasters and filmmakers. POV camcorders are being used to shoot athlete-perspective footage for skiing, surfing, skateboarding, car and motorcycle racing and skydiving. GoPro's booth was jammed when I was there; the company was selling its HD Hero models that are normally priced at $299.99 for $200, for delivery after the show. GoPro's 3D Hero system, which gangs two HD Heros together in a single waterproof housing and is priced at $99.99, was also a hot seller and one of the least expensive ways to capture 3D action footage. Contour was also exhibiting, showing its ContourGPS and ContourHD POV camcorders, as was V.I.O., with its POV.HD model.
  
• Thunderbolt peripherals: A few companies showed peripherals compatible with Intel's and Apple's Thunderbolt high-speed interface, now available on Apple's MacBook Pros. Matrox will be building Thunderbolt ports into its MXO2 line of video capture and conversion devices starting in July, and it's making available a box that connects Thunderbolt to its existing host interface for MXO2s purchased and shipped before July. The converter box will be priced at $299, with a discount if purchased with an MXO2 device.
  
  LaCie was showing prototypes of its Little Big Disk, the first model that will ship with Thunderbolt interfaces. The Little Big Disk holds 2 SSD or hard disks, and comes with a total capacity of 240GB or 500GB (SSD), or 1TB (7200 rpm hard disk). At NAB, LaCie had four 1TB Little Big Disks daisy-chained together on Thunderbolt as a RAID 0 array, and they claimed that they were getting better throughput than a comparable Fibre Channel array.
  
  Promise Technology's 4- and 6-bay Pegasus disk arrays were displayed in a number of booths, and it appears that Promise is the first company actually shipping Thunderbolt peripherals. As I reported yesterday, Blackmagic Design displayed its UltraStudio 3D video capture and display device with Thunderbolt, priced at $995, for July delivery.
  
• Final Cut Pro X: I didn't attend the FCPUG SuperMeet on Tuesday night, and there are plenty of other reviews of what Apple previewed at the event on the web, so I'm going to limit myself to a few points. First, the new FCP X demonstrates that Apple has been very serious about improving Final Cut Pro; there are many performance improvements (including 64-bit support and GPU acceleration) and new features. Apple also says that FCP X should work on any modern iMac, 17" MacBook Pros and Mac Pros running OS X 10.6 or greater; Thunderbolt isn't necessary (although it will make editing much faster.) In addition, the $299 price through the App Store was a shocker--right before NAB, Avid announced that FCP users could buy Media Composer for $999, which looked like a great price until the SuperMeet.
  
  At the same time, it's important to keep in mind that the version shown in Las Vegas was the same version shown to a small group of outsiders by Apple in February, and the final version isn't scheduled to ship until July, so a lot of work on the product remains to be done. In addition, Apple said nothing about Motion, Color, Soundtrack Pro or Logic, what (if anything) is being done to these programs, whether Apple will still offer a bundle, etc. There's a lot that we still don't know.

NAB 2011 Part 2: Blackmagic Design and the Video Value Proposition

In the interest of transparency, I want to start this post by saying that I've been a fan of Blackmagic Design for years, ever since the company launched its Decklink card in the U.S. market. Blackmagic Design reminds me a lot of what Hyundai has become in the automobile business--not only do you get an excellent product, but you get it at an excellent (and sometimes amazing) price. They carry on in the tradition of fellow Australian company Røde Microphones, which pioneered making high-quality microphones at very reasonable prices, and Atomos, which is selling amazing on-camera video recorders at a fraction of the price of most competitors.

At IBC 2009, Blackmagic announced that it had acquired DaVinci Systems, the maker of some of the most powerful and widely-used professional color correction and restoration systems for film and television. DaVinci Resolve was priced for high-end post-production facilities; an entry-level system was over $100,000 (U.S.) and could easily scale to several hundred thousand dollars as more processing nodes were added. Many industry observers wondered about how DaVinci's high-priced products would fit with Blackmagic's product line, most of which was priced at $1,000 or below. It didn't take long to find out the answer.

At NAB 2010, Blackmagic announced a $995 software-only version of DaVinci Resolve that's compatible with Apple's OSX and runs on most MacBook Pros, iMacs and Mac Pros. The software-only version is only a single processing node and doesn't include a control surface, but it's functionally identical to the product that had sold for $100,000 less than a year earlier. If you want a multi-node system, you can go with a $19,995 Linux version of the software and use it with a variety of third-party control surfaces, but if you want DaVinci's own control surface (which comes with a license for the Mac version), that's priced at $29,995. So, you could now pay less than $50,000 to get exactly the same functionality that you originally paid more than $100,000 for. And, since the Linux license supports multiple CPUs and GPUs, less than $50,000 also gets you the same functionality as those Resolve systems that cost hundreds of thousands of dollars.

Last August, Blackmagic acquired Echolab, the manufacturer of a highly-regarded line of production switchers that had fallen on hard times and declared bankruptcy. Blackmagic continued production of Echolab's two most recent designs, the ATEM 1 M/E with 10 inputs for $19,995, and the ATEM 2 M/E with 18 inputs for $51,995. At the time, I wondered if Blackmagic was going to apply the same cost-reducing philosophy to the ATEM switchers that it did to DaVinci Resolve. Again, I didn't have long to wait.

At this week's NAB, Blackmagic announced the next generation of ATEM:

• ATEM Television Studio, a six-input HDMI/HD-SDI 1 M/E switcher with two built-in media player framestores, two downstream keyers, software control panel, built-in H.264 real-time encoder,  built-in 10-channel multiviewer with HDMI and HD-SDI outputs, separate program HDMI and HD-SDI outputs, and an Ethernet interface, for...$995. That's not a misprint. $995.
  
  Roll a few of these concepts around in your head: A "personal switcher" that's small enough to hold in your hand but has four HDMI and four HD-SDI inputs, any six of which can be active at one time. A built-in hardware H.264 encoder. A built-in multiviewer that can use any off-the-shelf HDMI display. No need whatsoever for any PC slots. A software control panel that runs on Mac or PC. The ability to connect to hardware control surfaces and the Internet via Ethernet. $995. This is an order of magnitude better price/performance than anything comparable that I saw on the show floor.
  
• ATEM 1 M/E: Based on the specifications of the original ATEM 1 M/E, with 4 HDMI and 4 HD-SDI inputs, all of which are active, a separate analog input, frame resynchronizers on every input, HDMI, HD-SDI and analog program outputs, down-converted SDI output, a multiviewer, USB 3.0 and Ethernet interfaces, RS-422 control, and a PC and Mac-compatible software control panel. Plus, it includes stinger and DVE transitions, 6 keyers, built-in media players, etc. Blackmagic completely redesigned the electronics and firmware so that the switcher is small enough that you can hold it in your hand. And the price? $2,495. If you want the ATEM 1 M/E's original control surface, that sells for $4,995. The total is $7,490.
  
  The only feature that Blackmagic deleted from the new version of the ATEM 1 M/E is the second multiviewer, which most customers found redundant, and they added additional features, such as USB 3.0. Then, they cut the price by $12,505. If you can live with a software control panel, they cut the price by $17,500.
  
• ATEM 2 M/E: Take the ATEM 1 M/E and expand it to 16 simultaneous inputs, add a super source multi layering compositing engine, an additional multiviewer and an expanded software control panel. The resulting switcher is 3 RU high instead of 2 RU high for the ATEM 1 M/E, but you can still hold it in your hand. And, it's priced at $4,995. If you want the original ATEM 2 M/E control surface, it's priced at $14,995. The combination is $19,990, for an equivalent to the same switcher that sold for $51,995 at NAB last year.

These are, in many ways, revolutionary products, and the ATEM Television Studio will likely have the most impact of any of them. Consumers who had never even considered the possibility of doing live multicamera production and streaming it on the Internet will have an affordable way to do so. It has the potential of opening up entirely new applications, as do the other two models. All three models are going to put dramatic price pressure on Blackmagic's competitors, who are going to have to either drop their prices to remain competitive or add features to justify the big difference between their prices and Blackmagic's. Finally, we may see third-party control surfaces support the ATEM switchers at prices even lower than Blackmagic's, just as lower-cost color correction control surfaces are now available from a variety of vendors.

There's one final piece necessary if you want to do multicamera live production, especially in large churches, arenas and stadiums, and that's a way to extend the connections between the cameras and the switcher. To handle that, Blackmagic announced the ATEM Camera Converter, which accepts either HDMI or HD-SDI as input along with two microphone inputs. It's also got inputs for a talkback microphone and an output for talkback headphones. It then converts the signals to ride bidirectionally on an optical fiber pair, up to 147,000 ft. (27.8 miles or 44.8 kilometers). At the switcher end, another ATEM Camera Converter provides HDMI and HD-SDI outputs from the optical fiber signal, as well as talkback audio input and output for the director.

And the cost? $595. A pair is needed for each camera, for a total of $1,190. Consider that before now, you would have had to use professional cameras with multicore and optical fiber interfaces that cost tens of thousands of dollars. The ATEM Camera Converter enables you to use any good consumer or prosumer camcorder with an HDMI interface. The combination of the ATEM switchers and Camera Converters will make professional live field production affordable for schools, churches, community cable stations, small-market TV stations and Internet video producers of all kinds.

Just to touch on a few of Blackmagic's other NAB 2011 announcements:

• UltraStudio SDI, a cost-reduced version of the UltraStudio Pro with HD-SDI in, a HDMI 1.4 display output for monitoring, and a USB 3.0 interface, for $395.
• UltraStudio 3D, Blackmagic Design's first device with a Thunderbolt interface, with dual HD-SDI inputs, HDMI input, analog inputs on a breakout cable and HDMI monitor output for 2D ot 3D video capture and display, for $995.
• HyperDeck Studio, a dual-drive uncompressed HD recorder that uses the same 2.5" SSD drives as the new HyperDeck Shuttle I wrote about yesterday. It has HDMI and HD-SDI inputs and outputs, VTR-style deck controls, a jog shuttle dial, a small LCD monitor for time code, audio and video monitoring, and an Ethernet interface. SSD drives can be swapped while the device is running for effectively infinite recording time. The price is $995.
• H.264 Pro Recorder, a real-time H.264 encoder with component, HDMI and HD-SDI inputs, USB output and RS-422 control, for $495.
• And, as for DaVinci Resolve, Blackmagic introduced a new feature-reduced version called DaVinci Resolve 8 Lite, intended for users from whom even $995 is too much money right now. The price? Free.

My point in going into this detail isn't to provide an ad for Blackmagic (although I'm sure that the blog post reads like one), but to make it clear that video technologies that cost tens of thousands of dollars just a year ago, and hundreds of thousands of dollars a few years ago, are now available at a price so low that hobbyists can afford them. Just as making computer power available to consumers at a reasonable price sparked a revolution in the early 1980s, so making video and audio power available at a low price will spark an explosion in how media is produced and who produces it.

In the final part of this series, I'm going to take a look at some of NAB 2011's other interesting new products and trends, including the first Thunderbolt-compatible peripherals, POV cameras, the rise of ENG trucks in a backpack (or a cigarette case), and a brief comment on Apple's forthcoming Final Cut Pro X.

NAB 2011 Part 1: Cameras, Recorders and Lighting

The overarching theme of NAB 2011, at least for me, was "Price is no longer an obstacle". Other people might focus on 3D, which was everywhere in its headache-inducing splendor, but for me, the story was that you can do more for less money than ever before. In the next few posts, I'll deal with some of the most interesting trends and products I saw at the show.

DSLRs, Interchangeable-Lens Camcorders and Accessories

The DSLR trend was very much alive and well at NAB, but individual vendors dealt with it in different ways. For the first time, Canon gave over large portions of its booth to its DSLRs, even though it didn't make any new announcements. You could shoot video of models using 7Ds, 5D Mark IIs and 1D Mark IVs on tripods with cinema heads, alongside Canon's camcorders.

On the other hand, you'd be hard-pressed to know that Sony or Panasonic even makes DSLRs (or EVILs, or whatever acronym you want to use) from what they showed in their booths. However, Sony extensively featured its new F3 and FS100 camcorders that use the E-mount lenses designed for its NEX family of still cameras, as did Panasonic with its AF100 camcorders that use its Micro Four-Thirds sensor and lenses. Sony is clearly trying to make up for lost time against Panasonic; FS100s could be found in booths all over the show floor, even though it isn't officially shipping.

I sat in on a presentation by Gale Tattersall, the Director of Photography for Fox's "House", on Monday as he showed some of the footage shot using Canon 5D Mark IIs for last season's final episode. He stressed that price had absolutely no consideration in his or the producers' decision to go with the Canon DSLRs--it was the quality of the images and the flexibility that the cameras' small size gave for getting shots in extremely cramped locations. Tattersall was back in the booth on Tuesday shooting video with a Canon DSLR and handheld rig.

Every major lens manufacturer was showing prime lenses (and in some cases, zoom lenses as well) for DSLRs: Zeiss, ARRI, Thales Angenieux, Schneider, Cooke and Leica were all well-represented. The words "bargain" and "lens" usually don't go together, although Zeiss was recommending that DSLR users who find its CP.2 line of video prime lenses too expensive should consider using its still prime lenses for video work.

Anyone interested in DSLR rigs could find them in abundance on the show floor. Zacuto, Redrock Micro, Ikan, Cinevate, Genus, D|Focus, Jag35 and Shape were exhibiting, and most of their booths were jammed when I visited. Competition for rigs, follow focuses and viewfinders is intense, driving prices down and product variety up.

In fact, that last sentence could be a summary of the entire market for DSLRs and related products. You can start with a body, such as a Canon T3i or Panasonic GH2 for under $1,000 (U.S.) and add components as you need them. Lenses can be rented as needed and purchased over time. In fact, you're probably better off not buying the top-of-the-line in any component (with the exception of lenses), because prices are falling and capabilities are being added so fast that what's "top-of-the-line" today will be significantly less expensive a year from now.

On-Camera Recorders

Companies such as Vitec's Focus Enhancements and AJA Video have made on-camera recorders for a number of years that are designed to supplement or replace tape and flash memory, enabling longer record times and more reliability. Record times are a particular problem with some DSLRs that permit as little as seven to 14 minutes of recording at a time onto flash memory cards.

At NAB, we saw the next wave: Low-cost, high-resolution recorders that do double (or triple) duty: They also serve as viewfinders and, in some cases, compressors for immediate ingest into editing systems. Here are a few examples:

• Atomos' Ninja can convert 8- or 10-bit HDMI video and audio, compress it on the fly using Apple's ProRes codec, and store it on any 2.5" SATA hard drive or SSD. It's also got 480 x 270 display that can be used for monitoring or playback. U.S. list price is $995.
• Atomos' Samurai has the same basic design and capabilities, but it has a HD-SDI interface instead of HDMI, an 800 x 480 display, and improved audio monitoring capabilities. U.S. list price is $1,495.
• Fast Forward Video's SideKick comes with both HDMI and HD-SDI interfaces, can capture uncompressed 8- or 10-bit 4:2:2 video at up to 220Mbps, can compress on the fly to Apple's ProRes codec, and has a 480 x 272 display. It uses the same 2.5" SATA SSDs as Atomos (it doesn't support hard drives), but unlike Atomos, FFV ships the SideKick with a 128GB SSD, so it's immediately usable right out of the box. U.S. list price is $2,495.00.
• Convergent Design's Gemini 4:4:4 has both HDMI and HD-SDI interfaces, and records 8- or 10-bit 4:2:2 or 4:4:4 video at up to 280Mbps onto one or two (hence the name Gemini) 1.8" SATA SSDs. Video and audio can be recorded on both drives simultaneously (for safety) or can span the two drives for longer recording times. The Gemini also has some sophisticated processing capabilities, including over- and under-cranking and the ability to apply 1D user-definable LUTs. It has a 800 x 480 display. U.S. list price is $5,995.00.

One final option: If you don't want a built-in display or compression, Blackmagic Design introduced the HyperDeck Shuttle, which has both HDMI and HD-SDI interfaces and stores uncompressed 8- or 10-bit 4:2:2 video onto a 2.5" SATA SSD. The SSDs slide into and out of the HyperDeck easily, so they can be swapped in the field. Recorded SSDs can be plugged into any external eSATA or USB dock, leaving the Shuttle mounted on the camera. Best of all, the price of the HyperDeck Shuttle is only $345. (Blackmagic Design introduced so many new products that I'll be covering their announcements in a separate post.)

Lighting

If there was any question that LED lighting has gone mainstream, this year's NAB settled it. Every lighting manufacturer I saw on the floor had LED models. Vitec's Litepanels remains the model for most of the industry, although no one has yet cloned their Sola LED Fresnels. "Clone" is a good word for a lot of the LED lights, especially knock-offs of more-expensive designs built by Chinese manufacturers. There were a number of clones on the floor that are variations of the tunable color temperature designs pioneered by Zylight and Litepanels.

Whether it's fixed color or bi-color, with or without dimming, competition is driving LED prices down into the range of fluorescent lights, and fluorescent prices have dropped into the incandescent range. The color quality of fluorescent bulbs continues to improve--especially compact fluorescents that can replace incandescent bulbs in existing fixtures with much less heat and power consumption. In fact, fluorescents are the best price/performance compromise for a lot of applications--similar power consumption and heat output as LEDs and a much lower price.

In Part 2, I'll review some new products from Blackmagic Design that will redefine customer expectations about what video technology can do, and more importantly, how it should be priced.

Kno-t Again: Intel invests $20 million and takes over Kno's tablet designs

According to The Wall Street Journal's All Things D, Intel Capital and Advance Publications (parent company of Condé Nast) led a new investment round of $30 million in Kno, the Silicon Valley-based startup that planned to ship tablets for the educational market starting late last year. $20 million of the total is coming from Intel. Kno claims that none of the tablets were actually ever shipped to customers, but several hundred were manufactured for Kno by Foxconn. As part of the deal, Intel will acquire ownership of the designs for Kno's tablets and will license them to other manufacturers, so Kno is officially out of the hardware business.

Kno will continue to develop its tablet software and pursue eTextbook licensing deals, but will target existing tablet platforms such as Apple's iPad. It's a smart move by Kno, and probably the only viable option that it had. I wouldn't be surprised if some of the $30 million goes to buy out one or more of Kno's earlier investors who had come on board because they believed in the potential of their tablet.

I still have a hard time believing in Kno's long-term prospects: It can no longer take advantage of the unique capabilities that it had designed into its tablets (for example, the 15" dual touch/stylus displays) to differentiate its offerings, and it has to compete with a variety of eTextbook distributors and publishers, including Chegg, the company co-founded by Kno co-founder Osman Rashid.

The "Family Pass": A way for theaters to combat Premium VOD

A few days ago, I wrote about the firestorm in the U.S. film industry over plans by Fox, Warner Bros., Universal and Sony to make some of their movies available to DirecTV, Comcast and VUDU for a Premium VOD service 60 days after they open in theaters. The premium in-home movies would cost $30 each and would be available for viewing for 48 hours from the time of purchase.

One of the arguments for Premium VOD is that movie tickets for a family cost a lot of money--tickets for a family with two parents and two kids could easily cost more than $30, plus food and drink. However, theaters could lessen the impact with a "Family Pass" that allows two adults and up to four children to see a single film, even at regular showings, for less than $30. That would allow the theaters to compete on price with the Premium VOD service. The theaters would still be able to make their normal concession stand food and drink sales, and they could argue "Why wait 60 days to save a few dollars when you can watch a movie when it's fresh?".

 Theater owners want to keep Premium VOD from gaining traction, and a "Family Pass" might be the way to do so.

Final Cut Pro Users Group SuperMeet kicks its sponsors to the curb

Each year at the NAB Conference, the Final Cut Pro User Group holds a SuperMeet of FCP user groups around the world. It's an unofficial event, in that it's not officially part of the NAB schedule, but it's become known as the signature event for Final Cut users each year. Apple has participated in the event from time to time, but has never been the primary sponsor, and isn't listed as a sponsor for this year's event.

Yesterday, a flurry of rumors broke out about last-minute changes at this year's SuperMeet. Official sponsors of the SuperMeet, including AJA, Autodesk, Avid, Blackmagic Design and Canon, received notices from the event organizers that their presentations were being canceled. Presenters such as director Kevin Smith and DSLR cinematographer Philip Bloom were "uninvited". The SuperMeet webpage deleted a list of all the presenters and presentations, and substituted the following: "The Final Cut Pro User Group Network is excited to have a very special guest presentation at the 10th Annual Las Vegas FCPUG SuperMeet. Come to see a surprise sneak peek at something very special - you really do not want to miss this one!". That's it.

Word began to leak out that Apple plans to use the event to announce its new version of Final Cut Studio, and had demanded that the organizers drop all the other presenters and sponsors from the event. Neither Apple nor the event organizers are saying anything about the changes in the schedule, but it's fairly clear that the SuperMeet will serve as Apple's launch event.

You may ask why Apple didn't just schedule its own event, which it could have completely controlled. The problem is that Apple isn't an exhibitor at NAB, and many conferences (most likely including NAB) have contracts with the hotels that house attendees that prohibit them from making space available for events run by non-exhibitors. Since just about every hotel of any size is offering space through NAB's housing office, that would make them unable to host an Apple event. On the other hand, the SuperMeet organizers are also exhibitors, so they can do whatever they want with their event.

My problem with the whole thing is how the SuperMeet's sponsors are being treated. These are companies that have spent a good deal of money, both this year and in previous years, sponsoring SuperMeet events around the world. They were flying in presenters and paying their fees and expenses, and they were looking forward to having access to the SuperMeet's audience. Now, only a week before NAB, they've all been "kicked to the curb" by the SuperMeet's organizers.

If I were a sponsor, I would think twice (or more than twice) about sponsoring future SuperMeet events. The SuperMeet's organizers have said that sponsors' money, support and loyalty aren't worth as much as the opportunity to host the launch of a new Apple product. That, to me, is a bad bargain for everyone involved.

Dish Network buys Blockbuster for $320 Million

Reuters is reporting that Dish Network, the U.S. satellite video service provider, was the winning bidder for Blockbuster in U.S. Bankruptcy Court. Dish Network acquired Blockbuster for $320 million, of which $228 million in cash will be used to pay off the company's creditors (including movie studios) and bondholders. Blockbuster's total outstanding debt at the time of its bankruptcy was over $1 billion.

Dish Network gets a number of valuable assets as part of acquiring Blockbuster:

• Blockbuster has more than 1,700 stores, many of which Dish will likely close. The remainder, however, will likely start selling Dish's satellite service, streaming video service and hardware to consumers. Dish won't have to compete for shelf space with any other vendors. (Update, April 21, 2011: In a Bankruptcy Court filing earlier this week, Dish Network stated that it plans to keep only 572 of Blockbuster's stores open, although that number is subject to change.)
• Dish will become NCR's partner for its Blockbuster-brand video kiosks. To date, NCR/Blockbuster has done a poor job of competing with Redbox for locations, but Dish may give them access to new retail relationships.
• Blockbuster's set-top box and streaming video programs have largely failed to make any impact on Netflix, but Echostar, Dish's sister company, builds set-top boxes and owns Sling Media, the developer of the Slingbox. Echostar could build support for Blockbuster's streaming video service into its set-top boxes, and build new designs that could compete with Apple TV, Google TV, Roku, Boxee and others.
• Blockbuster has distribution deals with many of the major movie studios that gives it access to their DVDs and Blu-Ray titles 28 days before Redbox and Netflix. Dish could leverage those deals in a variety of ways, in a variety of channels.
• The Blockbuster trademark itself is still very valuable, even though it's been damaged by the company's ongoing bankruptcy. Dish has the option of using the Blockbuster trademark, its own trademarks, or a combination of the two, depending on the situation.

In short, for not a lot of money, Dish Network dramatically expanded its potential market opportunity and channels of distribution.

Theater owners' true concern about Premium VOD

Fox, Warner Bros., Universal and Sony found themselves at the center of a firestorm last week when word got out that they had agreed to make some motion pictures available to DirectTV, Comcast and VUDU (an over-the-top Internet video service owned by Walmart) for premium VOD play 60 days after they premiere in theaters. Subscribers to those services would pay $30 per movie and would have 48 hours to watch them from when they purchase.

The National Association of Theater Owners protested the studios' decisions, saying that making movies available at home so soon after they open in theaters will "...fundamentally alter the economic relationship between exhibitors, filmmakers and producers, and the studios." On Sunday, the Chairman of Fox Filmed Entertainment replied, saying that only a small number of titles, primarily those that "don't realize their full potential in theaters", will be made available for early VOD.

Here's the underlying issue that theater owners are really concerned about: Their share of ticket sales from films increases the longer that a movie stays in theaters. The first week that a movie opens in a theater, the studio gets 80% to 90% of the boxoffice. In six weeks or so, the theater and studio are splitting the boxoffice receipts 50/50. If a movie stays in a theater for several months, the theater can take 80% of the boxoffice for itself.

Neither movie studios nor theater owners are concerned about true "bombs" going to premium VOD. What theater owners are truly concerned about is that movie studios will make titles that could last for months in theaters available through premium VOD, thus decreasing theater owners' opportunity for profit. If premium VOD becomes very popular, theater owners are concerned that they'll lose their exclusives on all profitable films after 60 days.

My personal opinion is that the premium VOD option may be a mirage. The premium VOD offering appeals to people who really don't want to go to a theater but are willing to pay a fairly huge premium in order to see a movie at home, perhaps two months before they can buy it on DVD or Blu-Ray for the same or less money, and 90 days before they can get it for $1.00 at Redbox or from Netflix. So, the theater owners and studios may end up fighting over nothing, but don't be surprised to hear and see a lot about this over the next few months.