IBC tempered by recession

One year ago, the International Broadcasting Convention in Amsterdam felt the ripple effect of the events of 9/11, with more than 5,000 attendees and exhibitor personnel unable to attend the show. Some exhibits consisted of nothing but orphaned and unpacked crates full of booth gear and equipment.

This year's show marked a return to normalcy—or at least as normal as a convention can be in the midst of a global recession. The sense among exhibitors was that attendance was off slightly (official numbers clocked in at an optimistic 40,400) and buying was off substantially for most manufacturers.

On the surface, most exhibitors were pleased with the show, but there were fairly consistent grumblings from U.S.-based exhibitors wondering whether the cost of participating in IBC is worth it. Costs associated with unions and portage make IBC an expensive proposition—for some, even more expensive than NAB. The biggest notable absence was Avid, which said it would undertake a road show instead.

As usual for a trade show in a tough economy, IBC tended to attract fewer tire-kickers, but that didn't mean checkbooks were at the ready.

"People are faced with hard decisions to either buy new equipment or lay off staff," says Ciprico Senior Product Manager Gerry Johnson. "They really want to get in a situation where equipment lowers management costs but doesn't result in letting people go."

Grass Valley Group President and CEO Tim Thorsteinson notes that the economy has become more uncertain in the past 90 days, which is reflected in conservative capital spending. "Stations are conserving cash, and, where possible, they're pushing capital spending into the 2003 budget," he says. "But, as we get more clarity on the overall economy, stations will loosen up their purse strings. They have to because they have an aging capital base and there's a cost in labor and maintenance."

IBC marked the official trade-show debut of the Thomson Multimedia booth incorporating the Grass Valley brand. Grass Valley Group previously found difficulty getting traction in the European market, so being part of Paris-based Thomson's booth no doubt gives the Grass Valley brand easier footing than at previous IBCs.

Thorsteinson and the rest of the company are comfortable with the new situation for Grass Valley. For one thing, it makes marketing to the European market much easier. And, says Thorsteinson, "I no longer have to wake up on Monday wondering if we'll make payroll on Thursday."

Some manufacturers see opportunity in the current times: namely, those that have cash on hand and can afford to move ahead with research and development (Grass Valley is still in that camp). With many R&D cycles slowed, companies that remain aggressive believe that, when the downturn becomes an upturn, they will be well-positioned for fast growth.

Continued development is important for other reasons as well. Pinnacle Systems President and CEO J. Kim Fennell sees a shift to IT-based products, which means new issues facing manufacturers. Chief among such issues is the ability to provide IT-style support services, such as constant field support.

Any changes to a facility today, he adds, are driven by one need: business benefits. "We see a lot of growth as broadcasters retool, and there is a lot of organic growth in that area for us," Fennell says. "There aren't that many companies that will step up and provide end-to-end systems."

Says Ciprico's Johnson, "Sales may be flat, but we want to be one of the winners when we come out the other side and revenue ramps up."

Some manufacturers spoke of R&D rollbacks or, at least, moving away from certain product areas. The most notable of those companies, Panasonic, is retreating from development of nonlinear-editing systems and video servers. It will continue to make NewsByte systems and video servers for those that request them, but future developments, the company says, will come from third parties.

That may be a trend for nearly all manufacturers. Panasonic's efforts in nonlinear editing and video servers were born in the halcyon days of the very late '90s, when the drive to be truly "end-to-end" became a cliché goal. Fiscal responsibility has refocused those energies.

"We want to concentrate on the electrical/mechanical products like cameras and VTRs and work with partners in the IT industry to cover this middle area of production," explains Panasonic Broadcast Europe Managing Director Ted Taylor. "We didn't see it was worth putting a lot of investment into making more servers or nonlinear products when that sector is already very well provided for by IT-based software."

Panasonic has about 10 partners already, including Quantel, Apple and Avid. "We want to be able to play in the part of the market where we can make competing products," Taylor explains.

There were some hotbeds of activity. IP delivery equipment and deals were found in every hall, and, although Cisco Systems didn't have a booth, it did have a presence in booths throughout the RAI center.

Tandberg Television and Cisco have begun work on IP-based video-delivery systems in Italy and Norway. Tandberg's carrier-class iTTV broadband delivery platform will be used in conjunction with Cisco's Metro Ethernet broadband access network.

"We're trying to position ourselves as a system installer and one-stop shop for IP video for network operators that don't want to think too hard about it," says Tandberg Director of Strategic Development Tim Sheppard.

Tandberg has had a fairly strong year, having shipped more than 100 HD encoders in the U.S. It was one of the exceptions, however.

One area of production that did see some life is HD. Panasonic's Varicam garnered strong interest as European production houses look to bring film quality to video frame rates. "Interest in HD is still at the bottom of the curve," says Taylor, "but it is on the way up."

Among the interesting developments on exhibit was one in the Mitchell Camera Co. booth: a digital video magazine manufactured by Ikegami that can fit into an Arri 16mm camera (work on a 35mm version is under way). It doesn't contain tape or a hard disk but instead sends SDI or RGB output to an external hard disk or VTR.

HD production in Europe is popular, but the same can't be said for HD transmission. Widescreen is expected to make inroads over the next few years, and DTV transmission is definitely on the uptick. But Taylor believes that HD transmission will eventually arrive.

"I don't think Europe is going to be able to ignore HD transmission forever," he says. "China has agreed to go to HD. Can you believe a situation where you have most of the world broadcasting in HD and Europe says it will stay in SD? That's rubbish."

One market that has taken its lumps in Europe has been pay TV, and that was evident at the show.

"Europe has traditionally been the place that has led in interactive, and it has been the biggest market for us," says Liberate Technologies CEO Mitchell Kertzman. "Right now, the European pay-TV industry, particularly cable, is in serious financial difficulty. So things are slower here than they are in the U.S. right now."

Taylor concurs that pay TV in Europe is falling apart at the seams. "Vivendi Universal is selling off assets to deal with debts of 19 billion euros, and cable operator NTL has about 15 billion euros of debt. You can write a book on how badly wrong all the entrepreneurs got it."

The problem, as he sees it, is over-expansion when there was not enough money to pay for the content. "Programming quality crashed and was filled with garbage-type programs. The audiences were switching off in droves, and they weren't willing to pay for it. With advertising revenue down 27% in some markets, it all imploded."

Taylor sees consolidation and mergers taking place to get quality programming back on the air. He also wonders whether state broadcasters, largely unaffected by the economic climate, will dominate again.

They do seem to be the ones still spending. The biggest sale announced at the show: The BBC will install a 142-desk Qedit newsroom system, 20 edit systems and 13 sQ servers as part of its Jupiter news project.

There was also a major development in digital rights management (DRM). Macrovision, which has made its reputation on encoding consumer videotapes and DVDs, introduced MacroSafe.

"We talked with the studios about what they wanted and made sure that they won't have to change their workflow and infrastructures," says Macrovision Director, Digital Technologies, Kirby J. Kish. "If they do things right, it will be as easy as playing back a DVD."

Many of the DRM solutions in the marketplace involve either blocking the player from working or complex keys that send missing content to complete the program stream. Macrovision's DRM system doesn't block the entire MPEG stream; it blocks only the audio and video content. It uses XRML, a language created specifically for licenses, Kish says, adding that it facilitates writing rules defining how long or how many times content can be accessed.

Kish says discussions are under way with the major Hollywood studios, which are already familiar with Macrovision because of the home-video relationship.

The cost of the system depends on the business model of the service provider. The licensing model is similar to the analog licensing model: If it's for a VOD service, Macrovision would get a small percentage of the transaction; if it's subscription, Macrovision would get a small cut of the subscription fee.