HDCP Code Cracked

FOX News has reported confirmation by Intel that the High Definition Copy Protection (HDCP) code has been cracked. This code is designed to protect digital content such as high-definition Blu-ray movies, so that digitally-identical copies cannot be made from a commercial disc. The HDMI digital connections include HDCP support, for example.

According to the reports, this development is not likely to result in an explosion of pirated BD movies hitting the market. In order to take advantage of this exploit, it apparently would have to be implemented in a chip, and then installed in a device such as a Blu-ray player or a disc-duplicating machine. At this point, that seems like an expensive proposition, and there may not be enough profit available to the pirates to make the effort worth it.

Still, this does demonstrate that “locks keep honest people out” and it’s just a matter of time before just about any copy-protection scheme will fall.

Green Grows the ivi?

Okay, what would you pay to get live streaming content from a collection of broadcast television stations? We’re talking about the same content that you could get for free over the air in a major metropolitan area, but that instead you can access over the Internet, no matter where you are. And even if you can’t get a good digital broadcast signal where you are.

What if I told you that the streaming system didn’t require buffering (though I’m not yet entirely clear on how that works without resulting in display problems), but instead just streams the content out directly to your computer?

Now, you may be asking yourself “isn’t this what cable is supposed to be all about?” You’re right that this is what cable was in the beginning, before it got bloated with all the different cable programming channels, from the free ones like Home Shopping Network and the CSPAN to the premium channels that have the shows that you really want to watch, like HBO and ESPN.

So what would you pay to access 25 different channels (currently from the New York City and Seattle markets)? How does $4.95 a month sound? (Of course, you’ll also have to pay for your broadband Internet connection, but you’ll have that anyway to get your email and surf the Web.) Yes, this is just a live streaming service — just like watching broadcast TV — but you can time-shift by adding the DVR feature for just another $.99 per month. (Apparently, the DVR cost is an introductory rate, and I don’t know what the “permanent” rate will be.)

Does this sound intriguing? It’s a new service called “ivi TV” and you can find it at www.ivi.tv. And you can even sign up for a free 30-day trial before you have to commit to paying for it.

I haven’t tried the service yet, but apparently it only offers standard definition resolution. The service apparently is prepared to offer high definition, but according to the company Web site, it does not appear that it offers that at this time.

So who would want this service? If you’re in a rural area and can get broadband but not over-the-air television broadcasts, this is a cheaper alternative to cable. Also people who really just want the basics and save money over a cable subscription might find this to be a worthwhile choice.

If you decide to use the 30-day free trial to see what ivi TV has to offer, write to me at alfred@hdtvprofessor.com and let me know what you find out,

Bye-bye HDMI and DVI?

DisplayLink is a clever company with some slick technology. They can connect a TV or computer monitor to a USB port, and deliver the image across the connection. Actually, they came up with the technology and the chips that do the magic, but then they let other companies build the computer monitors or adapter devices that can actually make the connection. You can find out more about these products at their Web site at www.displaylink.com.

But what caught my eye was their announcement yesterday of their new DL-3000 and DL-1000 single chip solutions for the new, high-speed USB 3.0 connections. Backwards compatible with USB 2.0, the device can make a high-speed bidirectional connection between a signal source and a display. It can connect using a digital HDMI connector or an analog VGA connector. Or it can connect over a gigabit Ethernet cable connection. With Ethernet, it can simultaneously send the high definition images as well as interactive data such as streaming content from the Internet or “zero client” sharing of a computer processor and its resources. And if the display’s power requirements are low enough, it can be powered by the USB connection. (There were two such prototype computer monitors on display at the Society for Information Display conference last May in Seattle.) This means that a single USB or Ethernet cable can carry all the data and power needed for a computer monitor or television.

The system can support two displays with a single chip, and can handle 3D images and HDCP for protected content. It can work with VGA, DVI, HDMI, and DisplayPort connections. It can even handle multi-channel audio streams along with everything else. You don’t need a graphics adapter when you use this interface, and the display can be supported with just a single, thin cable. This could lead to new designs for desktop computers, notebook docking stations, portable media devices, and much more.

According to the company’s press release, you can expect the first products with this new technology to appear in the first half of next year. Stay tuned….

Pay TV Market Shrinks in 10Q2

Few people love to pay their cable bill. Even fewer celebrate every time the monthly fee goes up again. Still, we’re used to seeing a game of musical chairs when it comes to TV subscription services. Someone gets fed up with their local cable, and decides to switch to satellite service. Others are tired of the shortcomings of satellite, and switch to local cable. Still others are enamoured with the bright, shiny options offered by the telcos in their market. But the numbers have stayed more or less the same. Until now.

According to the September issue of The Bridge, the total number of subscribers for the fourteen largest subscription TV services declined by about 151,000 in the second quarter of this year. The telco services added about 383,000 to their rolls, reaching about 5.7 million. Satellite services stood nearly still, gaining 81,000 to stay at 33 million. But the largest cable companies lost about 615,000 subscribers, dropping down to 54.8 million.

Now, for these cable companies to lose about 1% of their total subscribers is not going put them out of business by the end of the year, but this does represent a disturbing trend. And the same Bridge article also cites research by SNL Kagan across a broader range of subscription TV services; it shows that the net loss in the second quarter of this year was larger than the Bridge’s numbers, down about 216,000 subscribers.

One quarter’s results does not make a trend, but this is certainly worth watching. Is it caused by the lousy economy and high unemployment, causing people to cut back on expenses where they can? Are too many homeowners — the foundation of pay-TV services — losing their homes to foreclosure? Are more people being enticed to “cut the cord” by streaming Internet options such as Netflix and Hulu? Have people discovered that they can get plenty of programming for free in most metropolitan areas from over-the-air digital broadcasts?

It’s likely that the true cause is a combination of all of the above. The danger is that as U.S. TV-watching households start to discover alternatives to the expensive subscription services, some of these subscribers may be lost forever. Cable and the telcos still are in a position to profit off the broadband connections that make some of these alternatives viable, but this still could the warning signs of a fundamental shift in their business models.

So while it’s clear that the sky is not falling, pay TV services would do well to watch the horizon and see if these puffy white things grow into storm clouds.

Here Comes China!

I know, I know, you’ve heard that “sleeping giant” stuff too much lately. China’s economy is becoming inexorably tied to that of the U.S., but there may be some ways that you haven’t considered yet. For example, thanks to cheap manufacturing costs, many of our consumer electronics products are priced at just a fraction of what they were a few years ago, including HDTVs. Okay, maybe that’s not news either.

But I just received a presentation that was made by Lia Fang, President of Corning Display Technologies China, at the DisplaySearch China 2010 conference. It was full of fascinating information, but this was the slide that caused me to pause.

China is poised to become the dominant factor in the HDTV market.

China nearly matches the U.S. in terms of the availability of electricity, which as we saw in this country in the last century, can be a driving force for building a middle class. As they acquire labor-saving devices, people have more time to be more productive. This increases their earning power, and they can start acquiring more consumer goods.

But look at the signs of middle class in China now. They outnumber us in terms of Internet users by 68 million. They have 45% more televisions in use than in the U.S. but only about half as many LCD TVs. They already buy more TVs per year than we do in the U.S. What will happen as they start to replace those existing TVs with LCDs? And what happens when the remaining 0.9 billion people decide that they want and can afford a TV?

One thing that will happen is that we are likely to shift from a surplus to a shortage for LCD and plasma TVs. And when the market faces a shortage instead of a surplus, prices are likely to stop dropping. There is always the hope that increased production will lead to greater efficiencies which will help drive down costs, but this presumes that all the supply chains for materials and other resources are able to keep pace.

The U.S. has been in the enviable position of being in the driver’s seat, with our demand defining the features and functions of consumer electronics, especially HDTVs. The picture presented by Corning has me wondering how much longer that will remain true.

Universal 3D Glasses Are Here

I first mentioned XpanD’s plan to make “universal” 3D shutter glasses back in March. At the IFA conference in Germany last week, the company unveiled the new glasses. The X103 model sells for about $145 a pair.

New universal shutter glasses from XpanD will work with 3D HDTVs from major brands.

The company also revealed a list of compatible sets on their Web Site. This list includes models from Sony, Samsung, LG, and Panasonic, among others.

Yes, the price is still high, but we expect high prices for the early adopters. By the time that there’s enough content to make it worth buying a 3D capable HDTV (and the price premium for 3D support had dropped to near-zero), I expect the cost of these glasses to drop to about $50 a pair, which is less than lots of people pay for a pair of sunglasses, or even on taking the family to the local cinema to see a movie. So if you can wait two years, you’ll get a much better price.

Good News for HDTV Buyers

I know that the economy is tough and lots of people are out of work. Even more people are walking on eggshells, hoping that they get to keep their current job. This is the point in the economic cycles where cash is king and bargains are to be had. And that’s the case for HDTVs as well.

There’s a huge traffic jam in the inventory pipeline. The summer was even slower than projected, which is really slow. The Labor Day/back-to-school buying season looks disappointing, and I won’t be surprised to see retailers hanging snowflakes and deep price cuts in October. Once again, Black Friday and the holiday shopping season is shaping up to be a consumer electronics blood bath, with lots of red ink spilled all over the place.

DisplaySearch has a service that tracks the price of LCD panels. These are not complete HDTV sets, but just the display panel itself. A 42″ 1080p panel sold for about $333 in May, but that has dropped to $288 in the beginning of September. That’s $45 less, or a 13.5% price drop in less than four months. A 32″ WXGA (720p) panel went from $205 to $174 in the same period, down $31 or more than 15%.

In order to generate sales, HDTV manufacturers are going to have to cut prices, and they are going to look the panel makers to share some of the pain. The panel makers are already starting to lower their production, which is expensive. Their plants are designed to run flat out in order to maximize the return on the cost of building these expensive factories, yet some Taiwan plants are reported to be running at just 80% of capacity. And the retailers are going to be slow to order more product until they can sell off what they’ve got on hand already.

So all this bad news adds up to good news for you; you can expect to get some great bargains this fall on flat screen TVs, if you’ve got the money on hand. And you won’t have to wait until after the holidays; you’ll be able to find bargains now so that you don’t have to watch football on your old set this season.

OLED Screens from Carl Zeiss

You may recognize “Carl Zeiss” as the company that makes excellent optics for cameras and binoculars and telescopes, but the company also makes a head-mounted display system named “cinemizer“. At the recent IFA show, the company revealed an upgraded model that uses OLED panels in the goggles to deliver the images.

Now, the downside is that these goggles are limited to 640 by 480 resolution — that’s standard definition — so you’ll be losing a lot if you try to watch HD content on them. And they’re not inexpensive. And it’s not clear if they will be marketed in the U.S., or just in Europe for now.

But if you’re looking to get a big-screen experience from OLED technology this year, this may be your best bet. Samsung showed their new 7″ Samsung Galazy Tab tablet device at IFA, and revealed that it will only have an LCD screen. After all of Samsung’s brave talk about OLED displays, some may find this disappointing but there are plenty of us who view this news as no surprise. We’re still a long way out from large scale production of OLED displays larger than a cell phone screen.

Redbox Hits Milestone

On Sunday, Redbox announced that the company had rented its one billionth movie. For those who care, the movie that put them over the top was “Clash of the Titans”. Go figure.

The important point is that the first Redbox movie kiosk appeared just six years ago. Now there are more than 24,000 of these convenient, unstaffed, automated little buggers. And the company has announced plans to add service at thousands of CVS pharmacy stores (which seem to be sprouting up on just about every corner around here). Redbox has taken over the local rental market just as Netflix took over rentals by mail (and may soon rule the streaming-over-the-Internet rentals as well). How effective has Redbox been? The LA Times reports that Blockbuster will pull the trigger on a structured bankruptcy this month in an attempt to salvage what it can of its brick-and-mortar business while it plays catchup on both the kiosk and streaming markets at the same time. I have not been optimistic about Blockbuster’s chances for a while, and this latest news from Redbox makes it even more of a long shot.

iTV: iDon’t Get It

The Internet is buzzing with the news about Apple’s iTV. At the very least, this is a refreshing change from it buzzing with rumors about iTV. We all know that Steve Jobs is the master marketer of our time; he can turn a sow’s ear into a silk purse just by talking about it. The facts don’t always support the assertions, however. (See my analysis of the claim that the iPad is “the best… movie-watching experience ever.”)

So here comes the new iTV. It’s a little box — much like a Roku or other boxes — that connects your TV to the Internet through your local network and a broadband connection. And it lets you stream content from the Web. And you can now get that content from iTunes. We know iTunes; that’s the service that made it safe and simple enough that millions of people would actually pay for the music that they download. But one difference here is that you only rent the video content from iTunes. TV shows cost $.99 each, and movies cost $2.99 for older standard definition titles to $4.99 for new HD releases. Once you rent a show or movie, you have 30 days to start watching, but then you have to finish within the next 24 hours (48 hours for a TV show). Huh? Oh, and the TV shows are only from ABC (where Jobs sits on the Board of Directors) and Fox. This makes the selection available on Hulu seem like a feast.

But what about Hulu? Well, at least with iTV you don’t have to watch commercials, which is an advantage that it shares with the Netflix streaming service. Netflix doesn’t (yet) give you access to many recent releases, but the shows don’t expire once you start watching them. And all you need is an $8.95 monthly subscription. Rent two shows a night from iTunes for one work week and you will have spent more than you would for the Netflix subscription that would last the whole month.

But here’s the really crazy part; Apple is including Netflix streaming on the iTV. And YouTube access. I guess the idea is that people may watch a lot of the free and flat-rate stuff, but come to iTunes for the latest releases that they can’t get from the other services.

The $99 price for the iTV box makes sense, or at least a whole lot more sense than the price of the original Apple TV that it replaces. But I don’t see the appeal of the rental model for the content. I think that a lot of the viewing public will prefer the all-you-can-eat terms of Hulu (with the commercials) or Netflix (with the low monthly subscription) over the Apple offering. Aside from the loyal Apple fans, I’m not sure who is going to buy this. I can’t see it becoming the same sort of hit that the iPod or iPhone were when they were released.