Intel Viiv On Hold OZ Content Issues

Written by David Richards     24/01/2006 | 22:51 | Category: INTEL VIIV

The Launch of Intel's Viiv technology has been put on hold in Australia as the company sorts out content partners.

Intel Viiv On Hold OZ Content Issues

According to Intel PR Manager, Dan Anderson, the launch will take place in March 2006 or even as late as April. At the recent CES Expo in Las Vegas, Intel unveiled the two newest planks of its strategy for consumer PCs along with partnerships with content providers such as The DirectTV Group, America Online and General Electric. The US NBC television network will also give Viiv users an opportunity to watch TV content they have missed on "free to air" TV on their new systems. None of those partners operate in Australia.

Dan Anderson said "We still have some work to do on the content side. We are currently talking to partners about content. As a result of this we have put the launch of Viiv on hold".
 
Intel President and Chief Executive Officer, Paul Otellini, used a keynote slot at CES to formally unveil notebooks based on the Centrino Duo, formerly known as Napa, and Viiv home entertainment PCs. When launched in Australia, PC makers will be able to take advantage of Intel marketing efforts behind the Viiv brand if they purchase a package of Intel silicon. This includes a dual-core processor, chipset, and networking chip, as well as software that allows users to share content around their home networks.

But what had been missing from the Viiv hype was the presence of major content providers. In Australia this is proving difficult for local technology companies such as Intel and Microsoft due to Australia being a small market and organisations such as free-to-air TV stations, and Foxtel refusing to grant access rights to content or services. What the local providers want is revenue from set-top box sales and the ability to continually interupt programs with advertising every few minutes. They also want to retain their monopoly over services and content. In Australia, consumers who buy a Microsoft Media Centre are denied access to an Electronic Program Guide Service and the ability to record Foxtel programs to a Media Centre hard drive.

 

There is no doubt that Australian consumers are being treated with contempt by the three major TV stations and Foxtel. In the US and Europe, consumers have not only access to a full EPG service but also content from local providers. US satellite television provider, DirectTV (which is similar to Foxtel) and NBC (which is similar to channels 9,10, and 7) are all working with Microsoft and Intel. In fact Intel and DirectTV plan to develop a set-top box based on Viiv technology that can receive content from DirectTV's satellites sometime in 2006, said Chase Carey, president and chief executive officer of DirectTV -- who joined Otellini on stage along with Jonathan Miller, chairman and chief executive officer of AOL. AOL's thousands of music videos, vintage television shows, and sports highlights will also be available to users who buy Viiv PCs, he said. NBC plans to make video clips of the upcoming Olympic Games in Turino, Italy, available to Viiv users through an NBC Website, said Jeff Zucker, chief executive officer of NBC's Universal Television Group, in a video shown during Otellini's speech.

These partners will make their content available through an interface available on the start-up screen of Viiv PC jointly developed by Intel and Microsoft, said Don McDonald, vice president and general manager of Intel's digital home group. Intel's vision of the digital home has taken several twists and turns since Otellini first unveiled the concept of the entertainment PC at the 2004 CES. But the concept is finally coming together with powerful new chips and alliances with global content companies, he said.

"A test of good technology is once you use it, you can't go back," Otellini said. Viiv PCs will start to appear on store shelves and on Websites in the USA over the next few days, while Australians have to wait.

With the launch of Intel's Viiv entertainment platform, Apple is facing a large and well organised competitor in the market for digital media and entertainment. In the coming months this is set to spark a battle over digital media standards, industry analysts predict. The launch of Viiv will finally "Get premium digital video content flowing", Nathan Brookwood, an analyst with Insight 64, said recently. Brookwood argued that the platform is at last meeting the demands of movie and television producing companies. Whereas they would hold their content " hostage" in the past, they are now willing to create ways for consumers to access it over the Internet, with the exception of Australia. Here, the only hope is that the original owners of the content do not sell the on rights to local TV stations but instead make it available over an IPTV service.

But the video download market is still highly confusing to consumers, as programmes are locked in by competing digital rights management technology standards. Archived episodes of Star Trek and Crime Scene Investigation require the Google video player and can be watched only on a computer screen. Again, this service is not available to Australians.

But consumers looking to download Desperate Housewives, for example, need to install Apple's iTunes player and can watch it only on a computer or video iPod. The service is also denied to Australians because of free-to-air TV rights.

Fans of older television shows, such as Babylon 5 or La Femme Nikita, are forced to purchase an Intel Viiv system. At the core of this battle are different digital rights management technologies. Viiv is build around Microsoft's Windows Media format, whereas Apple uses Fairplay. Google introduced yet another digital rights management technology at the Consumer Electronics Show in Las Vegas this year that will be used in its video download store. And RealNetworks' DRM cannot be ignored either. While most of the DRM technologies have been around for years, the battle between them can only further intensify, according to Michael McGuire, a research vice president with analyst firm Gartner. "This is the year that it gets painful for consumers and the industry," McGuire said at the CES show.

 

"It's going to get a lot worse before it gets better. A lot of people are holding their breath and are seeing what happens. They will close their eyes and let [the market] do its work." Intel launched Viiv aiming to create a standard way for consumers to acquire and distribute digital media across devices.

A Viiv device runs Microsoft's Windows XP Media Centre Edition and has to meet several hardware criteria, such as the inclusion of a surround-sound system and a high-end Intel processor. Systems will cost at least $900, Intel has said. Apple has built up a commanding lead in the music download market in recent years, but the company only opened its iTunes store for video purchases last October. Most of these video downloads are not available in Australia. Although the Viiv hardware cannot really be compared with Apple's line-up of media products centred around the iPod, both platforms compete head to head in the digital download market.

In the USA, Intel is actually ahead of Apple when it comes to the scope and diversity of its video portfolio. Viiv users have access to music videos, 14 000 television shows and 100 000 full-length movies. Apple's iTunes store offers a far more limited selection of music videos, television shows and short movies, and does not offer full feature movie downloads. "Viiv will have a volume advantage. It will be the platform for all key video content," said Brookwood. But Gartner's McGuire countered that Apple has a strong position with the iPod. "Right now iTunes and iPod have set the bar [in ease of use]," he said. " That experience is going to be what those alternatives have got to create."

The Viiv platform will also have to create a bundle with the appropriate hardware, software and user experience that will have to come from a large number of suppliers.

"You have to separate the fact that Microsoft and Intel represent a large, complex ecosystem and that Apple has its own ecosystem," McGuire said. "The days are gone where companies put products out under a name and let the people pick. They have to be packaged so that consumers immediately understand what to do and are not intimidated." Ultimately DRM standards will be forced to merge, or one will simply fade away, according to Brookwood. He predicted that it will take between 12 and 18 months for the battle to rage. Other than a long history of mudslinging, there is little that prevents Apple from adopting Windows Media DRM. But this is a move that the company will put off as long as it possibly can because it will then lose its tight grip on the music download market.

But nobody is willing to rule out the opposite from happening. If iTunes continues its march up the video download market, Intel could at some point feel compelled to abandon Windows Media in favour of Fairplay. But one thing is sure, argued Brookwood. "One party will have to throw in the towel," he said. "When a lack of content leaves a person on Apple out, that's going to impede market acceptance." The analyst's point is that the world simply isn't big enough for two competing DRM standards.

Apple is already showing signs that it is trying to evade a direct confrontation in the digital media market. At Macworld in San Francisco this week, the company did not unveil a special version of the Mac mini turned into a media adapter, as some observers had expected. Such a device would essentially mimic the Viiv PC by letting users record and play television shows to the hard drive. It would also allow consumers to play videos purchased in the iTunes store on a television.

Instead Apple chief executive Steve Jobs devoted most of his keynote at the tradeshow talking about the iLife software suite. The applications offer easy-to-use tools that allow consumers to create and manage digital media such as photos, music, podcasts. websites or blogs. By moving to the creative side of the digital media spectrum, Apple is leaving it up to Viiv to create a product that is focused on consumption, McGuire pointed out. "The iPod is about consumption and so is iTunes. But [Apple] also created an ecosystem that takes it beyond consumption by allowing consumers to create things like blogs and podcasts."


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