All things digital

The price of freedom: $ 1.3 billion

Comcast now has all the pieces to be totally client OEM hardware independent...

Comcast indeed started in April 2004 weaving the series of public announcements about their “deconstruction” of the end to end system lock-up from Motorola. Since then:

• They acquired the rights and TVGuide patent license from TVGuide, for $ 250 million
• Started the development of an internal Electronic Program Guide through closely held Guideworks – http://www.cedmagazine.com/cedailydirect/2004/1004/cedaily041027.htm and http://company.monster.com/guidew/
• They acquired an OnRamp Java based “thin” middleware platform, purchased from Liberate for $ 62 million
• They pushed on the development of its OCAP “thick” middleware platform, developed by its JV with TimeWarner Cable, OCAP, LLC
• And they are now sealing the future of the Conditional Access system, in this landmark agreement with Motorola - http://informitv.com/articles/2005/03/09/amdocslaunchesiptv/

The fate of OEM vendors in the US cable industry is sealed: commoditization, pressure on margins, sourcing from multiple vendors.

I believe that 3^rd party services like gaming, ITV and ETV will come to market as applications “monitored”, “approved” and “integrated” through and by the Guideworks EPG. Indeed, Comcast and the cable industry have not standardized important application APIs for VOD and EPG as part of the OCAP standard: those will remain embedded at the application level, which Comcast will control.

It will take years until such “open” systems come to market in volume and represent at least 40% of the installed base of the cable industry, but the roadmap is now laid, it is just about execution…

TimeWarner enters the OCAP licensing business

TimeWarner is now one more step closer to controlling its service destiny
http://www.cedmagazine.com/cedailydirect/2004/0504/cedaily040519.htm

This May 2004 is interesting to comment on.

• TimeWarner Cable is pursuing the same strategy than Comcast: positionning TVGuide-Gemstar as a data feed provider only; for economic and service direction reasons, the two cable behemoths have now separated the guide data business from the IPR and the implementation
• TimeWarner Cable, by making available its own OCAP middleware solution, implements the strategy “invented” by Canal+ Satellite, in France, about 15 years ago: it gives them a negotiation edge against the OEM providers, forcing them to (i) drop their price by $ 10 to $ 15 per STB for the licensing of the OCAP platform and (ii) commoditizing the hardware solution.
• The big loosers of this trend will be Scientific-Atlanta and Motorola which in the long run will start seeing a lot of price pressure on their STB business from new Asian entrants
• TimeWarner Cable stands a chance to maintain control over the “platform” by the IPG roadmap “chokepoint”, this also commoditizing the underlying platform layers; their control of the VOD APIs and the Master Application will be the next area to keep track on, as this will enable TimeWarner Cable to establish how services are presented to the consumer.