Apple TV: A lost opportunity?

When you were a child, did you ever annoy your parents into buying you a toy for Christmas or Hanukkah, only to find that once you unwrapped it and took it out of its box, it wasn't exactly what you were expecting? I felt that way after Steve Jobs' introduction today of Apple TV Part Deux. For months, there were rumors flying around about what the new Apple TV would be able to do. Jobs himself specified the problems with the old Apple TV approach in an interview with Kara Swisher and Walt Mossberg at the D8 conference last June:

"The problem with innovation in the TV industry is the go to market strategy. The TV industry has a subsidized model that gives everyone a set top box for free. So no one wants to buy a box. Ask TiVo, ask Roku, ask us... ask Google in a few months. So all you can do is ADD a box to the TV. You just end up with a table full of remotes, a cluster of boxes... and that's what we have today. The only way that's going to change is if you tear up the set top box, give it a new UI, and get it in front of consumers in a way they're going to want it. The TV is going to lose in our eyes until there is a better go to market strategy... otherwise you're just making another TiVo."

The new Apple TV doesn't solve any of these problems. It's not a replacement for any existing set-top boxes, especially the ones from cable, satellite and IPTV operators, because the only content providers that have signed on are Disney/ABC and Fox. So, to use Apple TV, you're adding a set-top box and remote. Jobs said that the solution was to "...tear up the set-top box (and) give it a new UI...", but Apple TV is simply a smaller version of the original Apple TV, with a slightly improved UI. In short, it doesn't do what Jobs correctly said had to be done in order to change the game.

Further, Apple TV is closed. It apparently doesn't use iOS, it doesn't allow developers to create apps that extend its functionality, and it doesn't have a web interface or other means to access content on the open Internet. Many people, myself included, were hoping that the new Apple TV would be iOS-based and would run iOS apps. Apple may have decided that the living room TV would stretch the iOS user interface so much that it wouldn't make sense to try to run phone- and tablet-based applications. They may have also believed, as Jobs said today, that consumers don't want to deal with a computer when they want to watch television. However, they still could have opened up Apple TV to content from third-parties. With the exception of Netflix, YouTube and Flickr, Apple TV is a walled garden and other content providers need not apply.

The only real improvement that Apple TV brings to the table is price. The box and the content are less expensive than in the first version. However, much of that same content is available for free from other sources, and other solutions provide far more content overall.

At the end of the day, I don't know why Apple and Jobs bothered to release this iteration of Apple TV. It doesn't do what Jobs himself said that it had to do in order to be viable, it doesn't have a critical mass of content partners, and it provides only small incremental improvements over the product it replaced.

Apple's opened a hole wide enough for Google TV to drive a truck through...if Google has the talent to take advantage of it.

That sound you hear is TiVo circling the drain

Residents of Alviso, California have reported hearing a strange "swishing" sound for several weeks. That sound has now been identified as TiVo circling the drain. TiVo's fiscal second-quarter financial results were released yesterday, and the company is continuing its long downward spiral:

• The company lost 125,000 subscribers in the quarter, and its total subscriber base stands at 2.5 million vs. 3.1 million last year, down 22%.
• Subscriber churn in the quarter was 1.9%, up from 1.5% a year ago.
• Revenues fell 11% overall to $51.6 million, and the services and technology component of revenues fell 14.2% to $42.1 million.
• The company posted an overall loss of $15.3 million, compared to $2.7 million a year ago.
• TiVo has been claiming for several years that licensing deals with cable and satellite operators would make up the difference, but companies like Comcast have been extremely slow to roll out services based on TiVo's technology.

If TiVo's problems were simply due to the bad economy, you could argue that a turnaround is only a matter of time. However, TiVo's subscriber declines predate the recession, so a macroeconomic turnaround may well not help TiVo enough to make a difference. Companies that fade as long as TiVo has very rarely turn around on their own.

In my opinion, it's time for TiVo to actively begin looking for an acquirer. The company still has some valuable patented technology, but as time goes on, more companies are figuring out ways to get around those patents, so TiVo management needs to move while it still has something to sell. TiVo could be integrated into the businesses of set-top box powerhouses such as Motorola, Cisco and Pace. Its DVR and advertising monitoring technologies could be valuable to Google in the future development of Google TV.

TiVo is forecasting still more losses for the next quarter, and investors have to wonder when, if ever, they're going to see an upside. Given the company's track record, the only likely upside will be when the company is acquired.

The set-top box Tower of Babel

A company called Dyyno is offering to create your own channel for the Roku set-top box, or you can run your video content on their existing channel. If you want your own channel, they'll charge a one-time fee of $7,500, plus a monthly usage fee starting at $149 for 1,000 viewer hours. If you're willing to run your content through their channel, you'll pay only the monthly usage fee.

Roku has its own developer program, which costs nothing to join, and its own SDK. If you've worked with JavaScript, you can probably figure out how to create your own channel without paying $7,500 and being locked into a single online video service. However, once you've developed your Roku channel, it won't work on Boxee, Popbox, TiVo, Google TV, or any of the myriad Internet-connected Blu-Ray players and HDTV receivers. Each one of those platforms has its own SDKs, and each one requires a separate development effort.

That's why I developed the Capstan Content Syndication (CCS) format. CCS is a free, open source, XML-based format that does for live, scheduled and on-demand video content what RSS does for fixed content. It also provides the hooks necessary for authentication, monetization, search and recommendations. If the set-top box companies support CCS, content providers will be able to use the same feed and format for a variety of different devices and platforms. It will dramatically decrease the cost of making video content available, and will get many more channels onto many more devices.

I'll be presenting a session on CCS at the Open Video Conference, to be held at the Fashion Institute of Technology in New York City on October 1st and 2nd of this year. There's more information on CCS at the Klemfarb website, and you can download the spec and participate in the definition process at the project's Google Code site.

Pace passes Motorola on the set top, TiVo supplies Technicolor with PVR software

There were two big pieces of news in the set-top box business yesterday. First, CED reported that, based on preliminary numbers from IMS Research, Pace has overtaken Motorola to become the world's largest set-top box supplier overall (aggregating cable, satellite and IPTV shipments). If the final report confirms this finding, it's huge news. Motorola (and General Instrument, the company that Motorola initially purchased to get into the set-top box business) has been number one in STBs for as long as anyone can remember. According to IMS, the top five STB vendors are now Pace, Motorola, Technicolor (formerly Thomson,) Cisco and Humax.

In related news, TiVo will provide PVR software to Technicolor for its STBs. This announcement is potentially a huge win for TiVo, which has struggled in its efforts to get its PVR software deployed on set-top boxes other than its own. (There's a deal in place with Comcast, but the rollout has been incredibly slow.) Technicolor is the leader in supplying STBs to satellite operators worldwide.

Will the Dish/TiVo case kill Sling Media?

Last week, the U.S. Court of Appeals for the Federal Circuit upheld a previous ruling of contempt of court against Dish Networks in the patent infringement lawsuit brought against it by TiVo. According to this article from Multichannel News, Dish could not only be required to shut down as many as eight million of its DVRs within a month, it may also be prohibited from offering its own DVR in the future. That would mean that Dish would have to license technology from or farm out DVR manufacturing to TiVo or another company whose DVR technology doesn't infringe TiVo's patents.

In late 2007, Echostar, Dish Network's parent, split into two separate companies, with Dish Network providing satellite television services and Echostar maintaining the satellites and building the receivers, DVRs and other equipment. When the split took place, Sling Media was moved into Echostar.

Echostar has been trying to expand its set-top box and DVR customer base beyond Dish Network, but to date the company has had limited success. One of the reasons has undoubtedly been the Dish/TiVo litigation, since anyone using the infringing Echostar DVRs would be subject to the same threat of litigation as Dish. If you're in the set-top box business and you can't offer DVRs, you're stuck in the bargain-basement pricing arena that Chinese manufacturers are dominating.

Sling Media is stuck in the middle. Echostar is no longer focusing on direct-to-consumer sales and instead has retargeted the Sling products for the cable, satellite and IPTV service provider market. If service providers don't want Echostar's set-top boxes, they're unlikely to buy the Sling products either. Given the TV Anywhere initiative and similar services being offered outside North America, the need for Slingboxes and similar devices will inevitably diminish. Sling may be a good idea whose time has come and gone.

Flash: It ain't dead yet

Tonight, TiVo announced its new Series 4 DVRs, called Premiere and Premiere XL, which will ship next month. Engadget covered the announcement in New York, so I'll skip the product details. However, one of the most intriguing aspects of the announcement is that the Premiere's user interface is built on Flash, and its performance looked quite smooth. While Apple and Adobe are throwing spitballs at each other over Flash on the iPad, TiVo has just moved Flash front-and-center into the living room. It remains to be seen whether the Premiere will halt TiVo's slide in the DVR business, but at least it indicates that the company isn't giving up on the hardware business.

The keys to media aggregation success

Not too long ago, I wrote about a new wave of disintermediation, but I've realized that consumers don't inherently dislike middlemen; in fact, they appreciate them if they aggregate content. For an aggregator to be successful, however, it has to:

1. Have a comprehensive selection of content
2. Be easy to use
3. Its prices (if it sells goods and services) don't have to be the lowest, but they must be reasonable

The first key is to have a comprehensive selection of content. Record companies learned years ago that consumers won't shop in stores where they can only get one or two companies' music. They want a big selection. That was why Apple didn't launch its iTunes Store until it had signed distribution deals with all of the biggest record companies.

The second key is ease of use. There were plenty of online music sites before iTunes, but they were hard to use and imposed draconian DRM schemes on users. The motion picture companies had the same problems with their early attempts at making movies available over the Internet.

The final key is reasonable pricing. Early on, record companies tried to demand more money for digital downloads than they did for CDs, and they tried to force consumers to purchase entire albums rather than single tracks. Apple sold them on the idea of a fixed price per track and discounted prices for entire albums.  Now, Amazon is rewriting the pricing model for eBooks by selling almost all its titles for $9.99 or less.

Apple was the first company to get all three keys right, with the iTunes Store. Tight integration of iPods and iTunes helped the company get the ease-of-use part right. Amazon learned from Apple and implemented a similar model with the Kindle, which also gets all three keys right but is somewhat vulnerable due to the technical and ease-of-use limitations of the Kindle itself.

On the video/movies side, YouTube leads by far in the free content space. Hulu has gotten the ease-of-use key right and has the biggest selection of legitimate content from the US television networks, but many users are frustrated by convoluted policies that make episodes available for only a limited amount of time or restrict the number of episodes available. Netflix and Amazon are both working to make more movies and television shows available for immediate viewing, but they're not there yet, and both their ease-of-use and pricing models are "works in progress".

TiVo and Roku are both positioning themselves as "super-aggregators", in that they already offer access to both Netflix's and Amazon's libraries, plus content from an expanding number of producers and aggregators. TiVo got ease-of-use right a long time ago, but its Achilles' heel is its monthly service charge. Roku's user interface is less mature, but it doesn't charge a monthly fee to use its set-top boxes. However, its weakness is that its set-top boxes are only sold direct, not through outlets such as Best Buy and Wal-Mart. Without high-volume outlets, Roku will always be playing catch-up with its better-distributed competitors.

In music, Apple has locked up a dominant position, and Amazon is well on its way to doing the same thing in eBooks. In video, television and movies, however, the only truly dominant player, YouTube, is free. It's far from certain that YouTube can maintain its dominance once it starts to charge for access to some content, which is widely rumored to occur in 2010. For these media, the field is still wide open.

It's the predictions time of the year, and some are better than others

The holiday season is wonderful, but it's also the time where bloggers, editors, pundits, psychics and all of us slightly- to completely-uninformed people issue predictions about what is going to happen in 2010. I just read a few of the predictions for 2010 from Danny King of Video Business, and I had a few, uh, disagreements.

Image via Wikipedia

Image via CrunchBase

For example, King thinks that it's a foregone conclusion that Amazon will buy Roku. Not very likely, given that the Roku set-top box was designed by Netflix and was originally supposed to be a Netflix-branded product. I'm sure that Netflix still has first dibs on the product, and perhaps on Roku itself. He also predicts that Tivo will be sold to Best Buy. Huh? Tivo is turning into an audience- and advertising-research company; Tivo's DVR sales and market share continue to decline, and Best Buy buying the company wouldn't change that. I think that both companies will end 2010 as independent entities, but if I had to come up with likely purchasers, I'd vote for Cisco for Roku and Google for Tivo.

Image by Getty Images via Daylife

He also thinks that Redbox will do a deal with Starbucks, but only if they come up with kiosks that do digital downloads (to thumbdrives or SD cards, I presume.) Starbucks tried it with music and it didn't work, so why would they think that it would work any better with video? My personal opinion is that the digital download kiosk model being pursued by Blockbuster and MOD Systems will be dead on arrival. Why would I drive to Starbucks to load a video onto a thumbdrive when I can download it over the Internet to my PC or stream it to my Netflix- or Amazon-equipped set-top box or Blu-Ray player?

Another of his predictions is that NCR will drop out of the video kiosk market, just after the company acquired DVDPlay; his logic is that NCR is number one in ATMs and doesn't want to be number two in video kiosks. True, they don't want to be number two--that's why they purchased DVDPlay and partnered with Blockbuster. There is certainly room for more than one company in the video kiosk business, and I think that NCR will stay in.

I've learned not to make end-of-the-year predictions, because too much can happen too quickly to anticipate. I will state a hope for 2010, however, and that is that the economy recovers, so that the millions of people without jobs can find work, and the millions who are underemployed can find full-time work and better opportunities. I hope that you have a happy holiday season and a healthy, loving and comfortable 2010 for you and your family.

Put a Roku in your Cable Set-Top Box

For years, I've doubted the ability of third-party set-top boxes from companies like Apple and Roku to make much market impact. Consumers generally detest adding more boxes and more wiring to their televisions. That's why home theater-in-a-box systems have been so successful, and a big reason why TiVo, which still has the best PVR, has struggled to build a viable business selling hardware. Consumers know that they have to have a set-top box from the cable or satellite company, and they accept two other boxes: DVD players (slowly morphing into Blu-Ray players), and game consoles.

In turn, both Blu-Ray players and game consoles are morphing into Internet digital video players. Netflix's streaming movie service is integrated into many Blu-Ray players, and with Microsoft's XBOX360. Earlier this week, Netflix made official support for Sony's Playstation 3, and support for Nintendo's Wii is right around the corner. However, none of these devices have anywhere near the household penetration of the ubiquitous cable or satellite set-top box.

Cable and satellite set-top boxes have always been closed, monolithic devices--they act as the gateway to the service provider's content, and nothing gets on them or through them without the service provider getting a cut of the action. Even with initiatives like Tru2Way, there's been little progress on opening up service provider STBs. Perhaps now is the time for them to do so.

Network-enabled Blu-Ray Players and game consoles represent the first viable competitors to the service providers' programming hegemony in the living room. The cable and satellite operators can rail against the competition, try to keep their content suppliers from working with them, and try to limit the value of competitor's services with artificial release windows for movies, none of which are likely to work in the long run. Or, they could add network-enabled features to their own set-top boxes and make the competition irrelevant.

Consider a cable or satellite set-top box that allows subscribers to access the same content as Roku. That means Netflix, Amazon, Major League Baseball, and in the near future, YouTube, Hulu, Revision3, Mediafly and a host of other services. You may be thinking, "Netflix? Amazon? Are you out of your mind? Don't the cable and satellite operators have their own Video-on-Demand services that they've spent millions of dollars to build?" Yes they do. But, those VOD systems have limited capacity and are extremely expensive to expand.

According to Comcast, in the first quarter of 2009, over half of its new VOD movies were available the same day as the DVDs. To limit the impact of $1-a-night services like Redbox, the movie studios are pushing to require Netflix and the kiosk operators to get their titles a month or so after the DVDs are shipped to retailers. The way things are going, if you want to see the movie as soon as it's out on DVD, you can buy the DVD or Blu-Ray, or watch it on cable or satellite VOD and pay a premium. If you're willing to wait a month, you can watch it on Netflix.

But, under the model I'm proposing, even if it's from Netflix, you'll still watch it on your cable or satellite set-top box. The service provider will charge Netflix a small fee for access to your set-top box--perhaps pennies per title viewed or a dollar a month. The service provider will get to brand and sell advertising on the interactive program guide and menus that subscribers access in order to find titles. A similar approach would work for other content providers: The cable or satellite operator gets the right to surround the content with advertising, and possibly to even insert advertising directly into the content.

Is the service provider cannibalizing itself? Yes, but it's capturing a chunk of the revenue that it's now losing, and will lose in even greater amounts in the future, from over-the-top (OTT) services that completely bypass the cable or satellite operator's set-top box.

The OTT services also offer leverage that the cable and satellite operators can apply to providers of conventional cable networks. For example, many service providers have long wanted to move ESPN to a premium sports tier, but ESPN demands a fee for every subscriber, even if they have no interest in sports and never watch any ESPN channels. OTT services like Major League Baseball can be integrated into the service providers' offerings to make a premium sports tier more popular and provide negotiating leverage to move ESPN's services into the same tier.

It's time for the service providers to stop trying to prevent the growth of over-the-top services like Netflix, and to start working with them.

TiVo tanks, Apple breaks third-party apps

Earlier this week, TV By the Numbers reported that TiVo lost 163,000 subscribers in October, and the company has lost subscribers almost every month this year. In its most recent quarter, TiVo only sold an average of less than 500 DVRs a day. The company would have lost money in the quarter had it not received a one-time payment of $105 million from Echostar for patent violations. It's pretty clear that TiVo's situation is getting dire, and the company is not going to survive in the standalone PVR business for much longer.

At about the same time, Blockbuster got into the set-top box business, as I've written about earlier. Also, Apple released a new version of software for its AppleTV STB, which broke third-party software running on those devices, including Boxee, media center software for Linux and OSX that supports Hulu, CBS, Comedy Central, CNN and many other Internet media sites. Boxee was back up and running on the AppleTV a day later.

Is there really a market for third-party set-top boxes? By and large, the answer is "no," although the Roku Netflix player seems to be selling well. What I'd really like to see is a set-top box that's open and that supports multiple services. That rules out Apple and Vudu. You shouldn't have to pay a monthly subscriber fee to use the box, so that rules out TiVo, Microsoft's Xbox 360 and, at least for now, Roku. Blockbuster's new box is still a question mark--there's no monthly fee, and the box, built by 2Wire, runs Linux, but it's unclear if Blockbuster will allow Boxee and similar applications to run on it.

In my opinion, it would be a brilliant move if Blockbuster let Boxee, as well as others, run their software on its box without a long approval process or the fear that the third-party applications would be deliberately broken by Blockbuster. In one step, Blockbuster's offering would move from a me-too product to a market leader.

Experience has proven that consumers simply don't want multiple set-top boxes. Given the choice between a cable operator-provided PVR and a TiVo, they've chosen the cable operators' offerings in droves. This market is dead unless the players start seriously rethinking their strategies to adapt to consumer needs.

Dish Network's TiVo Killer? (Well, maybe a TiVo wounder...)

From Cnet's Crave comes news of Dish Network's new DTVPal DVR, a $250 (after $50 instant rebate) standalone HD PVR with 30 hours of HD or 150 hours of SD storage. The DTVPal works with over-the-air, cable or satellite sources, has a 7-day program guide, and perhaps most importantly, requires no monthly or lifetime subscription fee. The key is the user interface, but Dish has made great progress with its satellite-based PVRs over the years. (The DTVPal DVR also acts as a digital-to-analog converter, but it doesn't qualify for the $40 Federal coupon, which is why Dish is offering a $50 instant rebate.)

The question is whether or not consumers will be willing to pay for a HD PVR if they can get similar functionality from their cable or satellite providers. Probably not, since they'll still have to pay for a set-top box, but the real target for this device is consumers who want to record over-the-air video. For those users, TiVo is the primary option, and an alternative with no subsciption fees will be very tempting.

Netflix "Watch Anytime" to be available on TiVo

According to the New York Times, Netflix's "Watch Anywhere" service will be available on TiVo's HD-capable PVRs starting in December. To use the service, consumers will have to have a TiVo HD ($299.99) and subscribe both to TiVo's service ($12.99/month, less per month with an annual or lifetime plan) and one of Netflix's unlimited subscription plans, which start at $8.99/month. The cost of the two services together, almost $22/month, is as much or more than basic cable in many parts of the country, so this isn't the solution for cost-sensitive consumers. However, it helps TiVo to improve its value proposition against cable set-top boxes that include PVRs.

It's a shame that TiVo couldn't offer Netflix on its Series 2 SD PVRs as well; there are millions more Series 2 boxes in the fields than HD models. It's unlikely that this announcement will spur sales of many TiVo HDs, but it will certainly add utility for people who already have a TiVo HD or are considering purchasing one for other reasons.

TiVo and DirecTV: Back Together Again

When News Corporation took operational control of DirecTV a few years ago, it began an agonizing split between DirecTV and TiVo, its supplier of DVR technology. Prior to the split, DirecTV was by far TiVo's biggest market. After News Corp. took over, it demanded a much bigger split of subscription revenues, which TiVo wouldn't agree to. News Corp. called on NDS, a corporate subsidiary, to port DVR software that had already been developed for BSkyB and other services to the DirecTV platform, cutting out TiVo. Last March, DirecTV announced that subscribers wanting HD DVR service had to switch to NDS's set-top box, a decision that's been roundly criticized by many DirecTV users.

However, within days of DirecTV's announcement, John Malone's Liberty Media acquired News Corporation's controlling interest in DirecTV. Liberty Media almost immediately began talks with TiVo to reestablish the relationship between the two companies, and today, both companies announced that TiVo will develop a DirecTV-compatible HD DVR for delivery in the second half of 2009.

The loss of DirecTV as a major customer made TiVo a much stronger company: It completed a distribution deal with Comcast that's in the process of rollout, and it shifted a good deal of its revenues from selling boxes and subscriptions to selling viewing and marketing information to advertisers. Winning DirecTV back can only help the company's bottom line.

A Huge Win for Cablevision (and for consumers)

Earlier today, the U.S. Court of Appeals for the Second District reversed a previous ruling that Cablevision's network PVR service infringed the rights of content owners. In 2006, Cablevision announced its network PVR service, called RS-DVR, which was based on technology from Arroyo Video Solutions, a company that was subsequently acquired by Cisco. The big advantage of a centralized PVR system is that conventional set-top boxes can provide video recording capabilities; in-home PVRs, with their cost and complexity, aren't needed. Network PVRs are the standard in China, India and other countries where subscriber income precludes the cost of in-home PVRs.

Almost immediately after Cablevision's announcement, a flock of content companies, including CBS, Viacom, News Corp., Time Warner, Disney and NBC Universal, filed suit to stop deployment of RS-DVR. In the initial court case, the media companies prevailed and won an injunction that precluded Cablevision from offering RS-DVR. Today's decision by a three-judge panel overturned the lower court's ruling and lifted the injunction. These articles provide more details about the ruling itself.

This is not the last word in the case, of course. The media companies can request that the entire U.S. Court of Appeals for the Second District rehear the case. No matter how that turns out, the losing side can appeal the case to the U.S. Supreme Court, which can (but isn't obligated to) hear the appeal. However, we're a giant step closer to legal network PVR service in the United States, which will likely mean lower costs for consumers.

Are we not annoying? We are TiVo!

A couple of days ago, TiVo and Amazon.com announced that TiVo users will be able to purchase physical products from Amazon.com that they see on television. Let's say that Jay Leno is pushing a nose hair shaver on The Tonight Show; lucky TiVo users will be able to pause the show and buy the shaver, using only their remote control.

I don't know if one of those obnoxious icons, like the ones that TiVo uses to try to get users to record a particular show, will flash on the screen ("Click Here to Buy that Nose Hair Shaver"). Frankly, I'm already getting sick of TiVo interupting my late-night television viewing so that it can change the channel to record content that I have absolutely no interest in. They're selling my viewing information, my eyeballs, and now they're trying to sell me merchandise from Amazon.com.

It's getting to the point where the basic utility of the TiVo service, time-shifting, is becoming outweighed by the annoyance of putting up with a salesperson sitting in my living room, 24 hours a day. If the company offered some kind of trade-off--accept the plugs and ads, or sign up for Amazon Prime, and the basic TiVo service is free--I could justify what's going on, but they're doing nothing except making the service less, rather than more, valuable.

Therefore, I've decided to relegate my TiVo to the dustbin. I've enjoyed it, but I won't go back until they tip the value scale back in favor of subscribers rather than advertisers and merchants.

VOD Gets Traction

Comcast,VOD,Apple TV,Vudu,Amazon,Unbox,TiVo,DirecTV

According to this article in CED Magazine, Comcast's VOD service has had more than seven billion views totalling more than one billion hours since the service was launched in 2003. Monthly, there are more than 275 million views totalling more than 130 million hours, and approximately 40 million movies are being watched on-demand.

Comcast's VOD library consists of more than 10,000 titles available each month, approximately 90 percent of which are free to view. By the end of the year, the company expects to have 6,000 movies in its VOD library, half of which will be in HD. (Given the statistics, they most likely have less than 1,000 movies available today, of which only a relative handful are in VOD.)

It's easy to forget, but cable VOD is most certainly a direct competitor for Apple TV, Vudu, Amazon Unbox on TiVo, and similar services. (DirecTV is readying its own Internet-based VOD service for later this year.) I think that it's far more likely that consumers will use the VOD service that comes from their incumbent video service providers than buy and install a separate set-top box that offers much the same content.