'Beam' Me Up—in Analog

Broadcasters are distributing video-on-demand (VOD) movies, including high-definition titles, to a set-top device with reams of disk storage. Sounds like a perfect application for the digital television (DTV) spectrum, doesn't it?

Not necessarily. The “datacasting” application is actually being delivered over analog spectrum by MovieBeam, a VOD service tested by Disney in 2004 and relaunched last week as a separate company. MovieBeam features a $48.8 million war chest, heavyweight partners like Cisco and Intel, and an agreement by 39 PBS stations in 29 markets to use their analog broadcasts to deliver the service.

The MovieBeam set-top box, which is being sold under Cisco's Linksys brand for $199.99 (after a $50 rebate), doesn't have a DTV tuner. In fact, it doesn't have a functional analog tuner either. It comprises a small indoor antenna, 160-gigabyte (GB) hard drive, the necessary chip technology to receive the datacasts, and a host of inputs and outputs.

But the box won't work in its current configuration come February 2009, when analog broadcasts cease and DTV takes over. MovieBeam executives say there is an easy upgrade path to DTV, by connecting to a peripheral tuner, and they have an option to use PBS stations' DTV spectrum through their deal with National Datacast, the for-profit PBS subsidiary that aggregated the analog spectrum.

Executives at PBS stations that were involved in early tests insist MovieBeam works well on the analog spectrum. “I was pleasantly surprised by its success,” says Michael Boylan, president/CEO of WJCT Jacksonville, Fla.

Still, some are wondering why Movie­Beam isn't using the DTV spectrum now. “I think this is about five years too late,” says one engineer familiar with the technology. “The world has moved on.”

It has been suggested that MovieBeam's investors, which include venture-capital firms Mayfield Fund and Norwest Venture Partners, are betting that analog won't shut down on time. MovieBeam and National Datacast executives say that they're planning on the 2009 turnoff date but, right now, analog broadcasting is more reliable as a national platform than the DTV spectrum.

“This gives us a robustness we wouldn't have otherwise,” says MovieBeam President/CEO Tres Izzard. “For DTV reception, many homes require the installation of an outdoor antenna with line-of-sight to the tower. What we get is the ability for a small indoor antenna to provide a simple plug-and-play service.”

Kevin Fong, managing director of Mayfield Fund and a MovieBeam director, says MovieBeam was simply looking for the best coverage at the lowest price. “The analog signal footprint is very well understood,” he says.

Using the analog spectrum to deliver movies as digital files is much slower than with digital. National Datacast says the throughput of the MovieBeam service is around 1.2 megabits per second (Mbps); DTV stations could do it four to five times faster while still supporting high-def broadcasts. But MovieBeam backers say delivery speed doesn't matter, since the disk-based set-top doesn't need to receive the movies in real time and the service will send only 10 new movies a week, one or two in high-def.

The service is using Microsoft's Windows Media 9 (also know as VC-1) advanced compression scheme to encode the movies at considerably lower data rates than current MPEG-2 applications, allowing it to send a standard-definition movie as a 1.5-GB file and a high-def movie in 4 GB or 5 GB. That equates to encoding rates of around 1.7 Mbps for an SD movie and 5.7 Mbps for an HD movie and a transfer time of around two hours and eight hours, respectively.

“We have a hard-disk cache, and we are able to use the bandwidth 24 hours a day,” says Fong. “We trickle movies from the hard disk, and consumers don't see the downloading times.”

Costly service

WJCT's Boylan says MovieBeam's upfront cost “seems a little high”—particularly since the $4 rental for a movie is what Comcast charges for VOD titles. But he notes that his station gets paid either way; the annual revenues that PBS stations get from National Datacast for providing spectrum are based on their market size, not the adoption of the service.

Josh Bernoff, principal analyst with Forrester Research, says that offering HD movies on-demand is a selling point for MovieBeam. But he thinks the Movie­Beam box still doesn't have that much potential as a stand-alone product. “This thing belongs as a feature of a DVR or satellite box,” he says. “The idea of a separate set-top whose only purpose is movie rental—that is pretty challenging for a product like that to succeed.”

One broadcast source suggested that MovieBeam might use a different delivery method, such as the Internet or cable, to feed the box in the future. And incorporating MovieBeam's functionality into a broader consumer product may be the goal for Cisco, which recently entered the set-top market with its purchase of Scientific-Atlanta, and Intel, which is promoting the “Viiv” home-entertainment PC platform.

Intel spokesman Kent Cook considers MovieBeam “an interesting model for content delivery” and says Intel is “working very aggressively” at creating a Viiv-based product, such as a set-top, that would also receive the MovieBeam service. He adds, “Stay tuned.”