Original URL: http://www.theregister.co.uk/2006/01/13/newscorp_digital_home/

News Corp throws everything but kitchen sink at 'digital home'

Fox on the run

By Faultline

Posted in Financial News, 13th January 2006 14:40 GMT

News Corp’s Fox Entertainment has cut a deal with sister company DirecTV to put FX and Fox Broadcasting content over a broadband line to its new DirecTV Plus DVR, designed by NDS.

The system will become available in March and deliver primetime hits from up to two days before they show on TV, for a payment of $2.99 each. Later in the year, DirecTV subscribers will be able to buy any TV they missed from a primetime series, for just $0.99, up to six or seven days after their national broadcast.

It is understood that content from NBC and its cable networks - USA, Sci Fi and Bravo - will also be added to this VoD system.

These moves reflect the steps other content houses have made in deals with Apple, Google, AOL and Yahoo for making delay TV available. Viewers will have on-demand access to dramas, comedies and documentaries including FX's The Shield, Rescue Me, It's Always Sunny in Philadelphia, and 30 Days, and Fox Broadcasting's 24 and Prison Break. But DirecTV’s relationship with Microsoft leaves us with the feeling of a company backing the wrong horse, saying it would work towards allowing its content to move throughout the home under the control of Microsoft software onto PCs, home networks and portable players.

If this is the full extent of its portable strategy, it has already blown it (we don’t think it is). Windows Media PCs are now shipping in volume, but that’s because any PC you buy comes fully equipped with the Media Center software and not because there has been any conspicuous success out there in the marketplace. Customers are not asking for them and, most likely, not using them.

Under the agreement, the two will work together to enable the flow of digital content among Windows-based PCs, DirecTV’s set-top boxes, and Microsoft PlaysForSure-compatible devices, including the Xbox 360.

It gives the appearance that DirecTV has abandoned its own efforts (which it clearly hasn’t), which are led by UK-Israeli conditional access subsidiary NDS, whereby it would use its own software and smart-card chip technology to force CE makers to incorporate extensions of NDS' own conditional-access system into portable players. Now it appears that it is accepting that the PC is the target destination for taking content off the set-top and has embraced the software-only DRM of Microsoft. Highly contradictory.

The only upside to all of this is that the Xbox 360 was always supposed to be a lot more than a games machine, and is likely to become popular operating as a bridge to the PC world, at least until the Sony PS3 is launched, which can do all the same jobs and more.

This week, Microsoft marginalized itself further by stating at the Consumer Electronics Show that the Xbox 360 would include a HD DVD player later in the year. Of course, given that there will be almost no marketplace and no content for HD DVD compared to Blu-ray, this makes little sense and is unlikely to actually come to pass. It might be alright if this was a recorder, but it won’t be.

But Microsoft can only keep up its anti-Sony stance for a little bit longer if it continues to say it supports this. The Xbox 360 may ship a few million, but this is an optional extra, so the chances are that a low percentage of consumers will buy the add-on, giving the Xbox 360 HD DVD player just a few hundred-thousand shipments. That won’t move the market.

It’s unlikely that DirecTV will follow suit and act as a route to market for such a device - not when it has supported Blu-ray, as have most of its set-top manufacturers. News Corp relies on many set-top makers around the globe, including the big Eastern CE firms Samsung, Sony, Matsushita, plus Philips, and they all exclusively support Blu-ray.

Of course, the fact that DirecTV has cut a deal with Microsoft does not preclude it from following through with multiple deals. That way it can also put its protected content out to its own SVP Alliance partners and, more importantly, to the portable players of the moment - the Sony PSP and Apple’s iPod. But why not cut these deals first instead of going to Microsoft? Perhaps the answer is because Sony is a content competitor to New Corp’s Fox, and because that Apple’s CEO is also CEO of Pixar and he cut his first iPod content deals with a Fox competitor, Disney.

DirecTV also said at the show that it has joined the Digital Living Network Alliance (which supports existing standards for content interoperability, but has no recommendations for DRM) and will add both DLNA and UPnP (universal plug and play) into its next generation of set-tops. This move also contradicts its earlier statements about Microsoft. The DNLA insists that any standard that it picks can run on multiple platforms, so will not settle, for instance, on Windows Media Player as it still only runs on a PC.

DirecTV also plans to protect all this DLNA with its Secure Video Processor, which puts a smart card on an onboard chip - as soon as it has the silicon - any month now. This completely contradicts the Microsoft announcement, and leaves DirecTV with two parallel content protection strategies, one from NDS and one from Microsoft. If the DLNA comes out in favour of another DRM, it could end up with an overly complex three-pronged strategy.

The deal allows for transfer of DirecTV-held content to a PC or a PlaysForSure portable device. They will also design a system which will push music the other way from Windows PC to a DirecTV set-top box.

One other aim of the deal is that DirecTV customers will be able to use a Windows Media Center PC instead of a set-top, reducing DirecTV’s responsibilities to provide a subsidized set-top. This is unlikely in a standard TV home, but where a family wants a secondary subscription on the home PC, it might work well, especially where that PC is fitted with Intel’s ViiV technology for viewing and controlling the PC from across a room. In fact, part of this system will be provided by DirecTV and Intel, collaborating on a secure PC tuner to allow PCs to subscribe to DirecTV without a set-top.

DirecTV also said at CES it would introduce Viiv technology later in 2006, with an extensive joint-marketing campaign.

To prove the Microsoft relationship is more than skin deep, News Corp’s UK subsidiary, BSkyB - the leading satellite broadcaster with eight-million customers - has also signed up with Microsoft.

This deal is to bring broadband-served content directly into the existing Sky homes. Sky really launched this service last year and is just re-launching it. Essentially, if you are a Sky customer you can also download the same programmes to a Media Center PC to play on the PC or other device (like your TV or portable player).

This is just PR for the sake of it. A version already exists for non-Media Center PCs, so this is mostly whitewash. However, it does show that the two are working together across the world.

Bill Gates, in his keynote CES address, waxed lyrical about the Media Center, but that’s his job - to push the products that Microsoft are having trouble selling.

As if to underline NDS' annoyance at the apparently close links with Microsoft, it showed its own Xspace software at CES, describing it as an entertainment server that can stream HD content to three different rooms at once - in effect, it is a multi-room DVR.

NDS showed the prototype, called the Home AV Center II, in partnership with both Samsung and Broadcom with five tuners, a 300 GB hard drive, IP connectivity, two USB 2.0 ports, router capabilities and VoIP.

The new server can handle multi-room High Definition programming transfer video, music, games and photos between the DVR and portable devices, and can control a range of peripheral devices, such as printers and security cameras, and looks every bit a competitor to the Microsoft Media Center. Go figure.

Copyright © 2006, Faultline

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