Arepa Inc. will work with @Home Network to deliver CD-ROM
content over broadband networks to personal computers -- a concept long considered to be
the missing link in delivering multimedia content to PCs.
Arepa, the Boston-based group of young software brains
funded by cable-modem pioneer Rouzbeh Yassini, emerged in March with a 24-year-old
software entrepreneur at the helm and big plans for big deals with all of the major
Already, Arepa attracted both interest and funding from U S
West Media Group, Fidelity Capital and Yassini's YAS Corp.
Last week, @Home finally publicized its yearlong
association with Arepa, agreeing to take warrants in the start-up and to conduct both
technical and marketing trials to prove the viability of the concept.
The carrot is a $6 billion market for CD-ROM titles
spanning educational, entertainment, utility, home-productivity and reference software.
Charles Muldow, vice president of media development for
@Home, said Arepa's pay-per-play content application "has great promise,"
especially considering that consumers now pay $30 to $50 for CD-ROM games or applications.
With Arepa's technology on @Home's broadband
pipes, "subscribers can have a true broadband experience with immediate access to
thousands of existing, media-rich applications without having to purchase any title in its
entirety or any additional hardware," Muldow said.
He added that the Arepa technique "could be the killer
application" for high-speed, broadband, always-on networks.
Ric Fulop, founder, president and CEO of Arepa, called
@Home's nod "a key milestone" toward a critical mass of multimedia
applications that differentiate broadband networks from slower, dial-up phone networks.
Right now, the first version of Arepa's software is
running in @Home's lab. Later this summer, @Home hopes to field-test the software in
one of the cable systems in its San Francisco Bay-area footprint. If all goes well, @Home
and Arepa are targeting early next year for commercial deployment.
"We'll also sample different price points, to
establish whether this is best-suited as a premium service, or if a pay-per-play or
ad-supported revenue model works better," Muldow said.
Fulop said the system doesn't require CD-ROM software
publishers to alter any of their products, nor does it require subscribers to @Home or
other high-speed services to download or install the CD-ROM content on their PCs.
The technology works by sitting on an Arepa server at each
point of the content-distribution chain -- at the software-origination point, such as
Microsoft Corp. or Broderbund Inc.; at the regional data center; and at the cable headend.
Arepa's software secures and encrypts a CD-ROM session
with a user, then serves it up dynamically so that users see a seamless flow of events
over their cable modem to their PC.
Fulop called the technique "the secret weapon of
Muldow said Arepa's software uses a new protocol that
is "several times faster" than existing Internet protocols and, as such,
extensive testing is necessary.
"That's why we're not saying, 'Hey!
We're launching this tomorrow,'" he said. "We'll throw darts at
it every way that we can to make sure that it works on the network."
@Home said one thing that it really likes about
Arepa's work is its attention to security issues, so that it can assure software
developers and big CD-ROM publishers that piracy is not a concern.
On the security front, Arepa's resident cryptography
expert developed what Fulop called a "disposable-key" algorithm, unlike
"public-key" encryption techniques that are currently used.
"This way, every time [someone who rents a CD-ROM
title] goes back, they get a new key, and if they break the key, they have to get another
one," he said.
Arepa's revenue model includes both licensing fees --
so far undisclosed -- and a possible turnkey option, Fulop said.
So far, @Home and Arepa approached the top 10 CD-ROM
publishers, Fulop said.
"In general, the reaction is really positive," he
said, noting that a few licensing arrangements are already in the bag "that will be
"The real issue for them is: How do they make
money?" Fulop said.
The answer, Arepa said: royalty checks based on aggregated
usage data. Fulop declined to discuss what kind of revenue split is under consideration.
In the initial trials, @Home will hold a relatively small
number of titles on its distributed services -- perhaps 50 to 100 titles, Muldow said,averaging about 300 megabytes apiece in disk space.
"In CD-ROM software, the 80-20 rule applies, in that
80 percent of the sales are generated by 20 percent of the offering," which will
require a close look at top-selling titles when the service rolls out next year, Fulop
@Home executives said the Arepa deal complements an
arrangement announced last month with SoftwareNow, where @Home's customers can
purchase software titles and download them to their PCs.
"Subscribers will have a choice: Quickly download and
own software applications through the SoftwareNow store, or use this [Arepa] platform for
instant access to titles that take up large amounts of disk space," Muldow said.
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