Cable operators looking for ways to lower the waves of digital churn may have a friend in an unlikely place: HDTV.
"Clearly, if a viewer makes an investment in HDTV, they're more than likely a high-end customer, and those customers are people that take quite a bit of premium content," says Dave Davies, Scientific-Atlanta director of strategic marketing, subscriber networks. "So operators want to put a solution in front of them that is compelling."
The first step toward that solution is the announcement last week by the National Cable&Telecommunications Association (NCTA) that the top five MSOs will carry HDTV channels in the major markets. The second is the continued improvement in digital set-top boxes that can bring HDTV services to consumers.
"We're hearing from folks like Time Warner Cable in Manhattan that there is a four-month wait list to get HDTV-capable set-top boxes," says Davies. "We've ramped up production in the factory so we can meet demand."
Scientific-Atlanta's 3100HD is actually the company's second-generation HD set-top box. More than 38,000 of the set-tops have already been delivered to six North American cable operators. Davies says the 3100HD is much smaller than its predecessor, the 2000, but runs all the interactive services that the 2000 and 3000 models run, including VOD and SVOD and the walled-garden e-mail, chat and shopping application.
"It's pretty compelling because operators can deliver HD service plus get revenues from the other services," he says.
Digital set-tops like the 3100HD could go a long way towards helping cable operators solve the digital-churn problem. Many HD owners have moved over to satellite so that they can receive HD programming.
"I think it's definitely going to decrease churn because now you have more content, and it's all about content," explains Dan Ward, director of marketing for Pioneer Electronics business systems division. "Off-air, the viewer will only get a limited amount of broadcast HD, so cable really has the opportunity to take advantage of bandwidth and program offerings to decrease churn."
It also will allow for a new revenue stream. Bernadette Vernon, director of strategic marketing for Motorola, says that, while the cost of deploying the HDTV boxes may be higher than anticipated, the impact on churn makes it a good investment.
"When you look at the economies of the boxes and the payback," she says, "there are a lot of features in these boxes that in effect reduce the cost of the box because operators can turn around and charge a fair amount for the features."
Motorola has three HD-capable set-tops. The HD5100 is an HD version of the DCT2000 available this summer; the HD5200 (a 5100 with PVR functionality) will be available in the fourth quarter. The BNC9000 (available next year) also will have HD capability on top of such other features as DVD player and PVR.
According to Vernon, Shaw Communications and Comcast will deploy the HD5100, and Insight and Cox are also showing strong interest.
Pioneer's first HD set-top is the Voyager 3511HD. Based on the Voyager 3000 architecture, it has 4 MB of Flash memory, 16 MB of SDRAM, and an additional 16MB for processing and decoding the HD signals.
The HD set-top that appears to be best-prepared for the future may be Pace Micro Technology's 550 HD. It's the first set-top box on the market to have digital connections, including DVI 1.0 and Firewire, which allow content owners to copy-protect the signal. The box will ship early next year, so it's likely also to include an interface to HDMI, the next generation of DVI. Secure delivery of copy-protected content will make the Hollywood-studio community happy. "You're not going to get Star Wars
in HD delivered unsecured," says Pace Micro Senior Product Manager Matt Grabhan.
The box also addresses the problem of different aspect ratios and formats from one channel to the next. "With DVI, there are active format descriptors that enable the box to tell the TV screen how it should be displaying the content so there aren't squashed or stretched people on the screen," says Grabhan. "We want to make the experience as consistent and seamless for average users as possible."
The Pace box is expected to be available around the beginning of next year, because the evolving DVI and HDMI standards need to be integrated into the box. Cost is expected to be around $100 more than standard-definition set-tops.
Bob Van Orden, Scientific-Atlanta vice president, product strategy, subscriber sector, says that, in six to nine months, his company will introduce a set-top box that will allow viewers and broadcasters to more easily handle different formats as well. "The newer generation of silicon will allow the viewer to manipulate that," he says. "And one interesting issue is how will it be done in a way that doesn't confuse the daylights out of the consumer."
Says Ward, "HD and PVRs are tools in the MSO toolbox to keep customers from going to satellite."