• Compression CODECs facilitate video streaming services.
• Internet video services bring streaming and downloadable content.
• Personal media players begin to playback video downloads.

In 2006 an emerging home entertainment revolution may be on the doorstep, offering personalized video entertainment direct to consumers’ homes via broadband Internet connections. Although the approaches are diverse, the world of Internet Protocol TV (IPTV) is splitting into two major business models: video services offering content for download or streaming over PCs and other connected devices, and telco services looking to replicate cable television video services using their digital subscriber line (DSL) networks.

In 2006, the burgeoning download side of IPTV revolution is in its very infancy, with companies experimenting with a variety of content and delivery methods to attract an audience. Although services offering movies for download over the Internet have been around for several years, take-rates have been small so far, primarily due to comparatively few title selections next to DVD rental stores, and late release windows on new releases that trail DVD rental by several weeks or months. Add to that sub-DVD quality resolution and consumers failing to understand that they can connect PCs to their TV sets with the right cables or plug-in cards.

Still, studios have been encouraged by experiments offering online distribution of television shows. For example, Apple’s iTunes service offered downloads of some popular TV shows in the fall of 2005, garnering sales of 15 million videos by the second quarter of 2006.

The arrival of dozens of new handheld media players with video capability, like Apple’s popular video iPod in 2005, is expected to further expand both legal and illicit video downloading for video playback on-the-go in 2006.

Meanwhile, the advent of video-over-Internet Protocol systems is being facilitated both by rapid adoption rates of high-speed Internet access services and new video compression CODECs that make possible the efficient streaming and downloading of data-intensive video within the relatively narrow constraints of Internet pipelines.

Just as it has done with the delivery of text-based content and MP3 music, the Internet is carrying a wide variety of video programming sources that can be accessed conveniently and personalized for the user.

The future continues to grow brighter for this delivery method. Vast libraries of titles can be offered on regionally located servers to one day enable a viewer to see virtually any video title at any time for a purchase fee or through a monthly subscription model.

According to an In-Stat market study, online paid content revenues are forecast to reach just less than $3 billion in 2006, growing to more than $8 billion by 2010.

Although Internet video services today offer mostly below-DVD-quality images and sound, new compression technologies are being used to make the first high-definition movies available.

New multi-channel Internet video services have sprung up offering virtual video-on-demand convenience via media center PCs or new broadband Internet connected TV set-top boxes.

Video-over-IP technology also is being adapted by many of the nation’s telephone companies to deliver video TV services, similar to cable and satellite TV services, over broadband DSL lines. The telcos are moving to offer bundled telephone, TV and broadband services that can compete with packages offered by cable competitors.

Already, many of these new telecom-based subscription video services are providing video programs ranging from standard cable networks, movies and sports to special interest content.

Although gaining in popularity, the number of Internet video service users remains small in comparison to users of cable-delivered video-on-demand (VOD) services, and packaged media. But as IPTV services proliferate, some analysts predict a new battlefront emerging in the multi-channel video marketplace.

Compression Standards on the Way
The key enabler of the delivery of video content over the Internet are new data compression technologies that will simplify the handling and transfer of video on the Internet while preserving as much as possible the quality of the original source material.

MPEG-4 Expands Video Choices
One of the most popular compression technologies that is enabling delivery of video over the Internet is MPEG-4. The MPEG-4 H.264L technology, which has emerged in part from Apple’s QuickTime technology, provides high-efficiency encoding and decoding (CODEC) algorithms that have been used widely for digital television and videoconferencing applications.

The system has been applied to HDTV as well as standard definition video content in a wide range of applications. In 2004, several manufacturers introduced DVD video players that are capable of decoding MPEG-4 encoded discs for playback. This enabled owners to download video files from the Internet easily and burn them to DVD discs using their PCs. The discs then could be played in the DVD players connected to TV sets.

Among other things, the MPEG-4 system adds new rich media formats, including enhanced graphics and multiple audio tracks, and provides extensions that will enable interactivity. For more information on MPEG-4, see the MPEG-4 Forum website.

DivX Digs In
Once considered the world’s most popular MPEG-4 compatible video compression technology, the DivX digital compression system continues to grow in use for IPTV downloads. The format has found a large community of users in international markets outside of the U.S., although it is popular globally with BitTorrent and peer-to-peer network users. 

The system was developed by DivXNetworks, and is sometimes called the “the MP3 of video”. It offers DVD-quality at ten times greater compression than MPEG-2 files. This allows placing full length films on CD discs or transferring them over broadband Internet connections. Many step-up DVD players slated for 2006 will be capable of decoding DivX encoded content.

Microsoft Promotes WMP
Most content, available through the major sports, movie and general interest video subscription services available today, is encoded using Windows Media Player technology and Microsoft’s Digital Rights Management (DRM) technologies. A number of content rights holders, thus far, have opted for Microsoft’s DRM technology to safeguard their intellectual property, giving the software giant a leg-up among Internet video service providers.

Users of WMP content usually must have a Windows-based personal computer, or another device equipped with a Microsoft-specific decoder capability.

The content that has been encoded using Microsoft Windows Media Technologies can be played back on selected portable handsets, on the X-Box video game console and by some Internet Protocol (IP) set-top boxes.

Portable Media Players Add Video
A major spark for the IPTV industry came in 2005 from the introduction of handheld media players that play videos as well as digital music and photo files. The introduction of Apple’s first video iPod touched off a rush of competitive product introductions, including those based on Microsoft’s answer to the category: Portable Media Centers. These devices use strong new digital rights management software that enables studios to offer secure video downloads for playback on a range of devices, with limited exposure to illicit mass duplication.

Typically, users can take digital entertainment files (videos, music and digital photos) from a central computer with them for playback on-the-go.

Internet TV Subscription Rates Grow
According to market research firm In-Stat, consumer online streaming video subscriptions are expected to reach 9.85 million in 2007.

Content Variety Drives Adoption
So-called premium “content” – special content offered for an added fee – will drive further expansion of consumer online subscription video streaming service in 2006, In-Stat predicts.

The four leading drivers of premium Video over IP content include sports-related programming, movie and TV streaming video services, general interest premium streaming video services, and video-over-IP video communications services.

Adult Content Seen as Market Driver
The current content leader for Internet video is adult movies. Adult video actually blazed the trail for Internet video delivery and remains the reference for gauging the success of more mainstream fare. Indeed, adult content was reportedly among the most popular video downloads in 2005 for new classes of mobile phones with video capability.

Among softer adult fare, a new site called MariposaHD began offering free high-definition 1080i video downloads of bikini-clad models on the beautiful beaches of Buenos Aries using BitTorrent peer-to-peer software. It was considered one of the first sites offering high-definition video downloads on the Internet. Users with broadband connections are free to download and watch these videos on PCs and even video iPods.

Akimbo Offers Specialized Video Menu
In 2004 Akimbo Systems launched a subscription based broadband video-on-demand service offering access to a wide range of video downloads from multiple program distributors. The service uses a $200 set-top box that provides access to a guide listing available video titles. Users select downloads from thousands of programs, many of which center on special-interest programming.

Akimbo is working with a wide range of IPTV distribution partners, from CinemaNow's library of more than 6,000 Hollywood films to producers specializing in content such as Africa Movies, Billiard Club Network and GolfSpan. The set-top box contains a hard drive capable of storing as much as 200 hours of content in Windows Media Player 9.0 format.

CinemaNow Goes Hi-Def
CinemaNow offers an Internet-based broadband video-on-demand movie download service featuring a library of more than 6,500 movie titles available for legal download. Content includes new and classic movies, television programs, music concerts and music videos from 20th Century Fox, ABC News, Disney, Lions Gate, MGM, Miramax, NBC Universal, Sony, Warner Bros. and more than 200 other licensors. Videos are available for downloading or streaming.

In 2005 the company added support for video-enabled portable media devices and is adding high-definition movies in 720p Windows Media Video HD format for playback on Windows XP-based PCs, including the Windows XP Media Center Edition 2005 PC.

The announcement marked one of the first mainstream services making high-definition movies available on-demand via the Internet. The first available HD titles included MacGillivray Freeman Films’ giant screen IMAX films.

All CinemaNow HD movies are encoded at as high as 10M bps and feature 5.1 surround sound. All Windows Media Video HD titles are available on a download-to-own basis so users may keep a permanent digital copy of the file for unlimited playback on their PCs.

ITVN Launches “Pulse” Service
Interactive Television Networks (ITVN) offers an IPTV video service that uses a $99.95 broadband set-top-box to deliver broadcast quality, streaming video to users’ TVs. ITVN offers a number of special-interest programming networks, including adult content. Current and future networks on the service will include movie channels, music channels, news channels and other interactive viewing options. The company recently added to its service a new network called “Pulse”, which is billed as one of the first IPTV music video networks. Pulse, which costs $4.95 per month, offers unlimited video-on-demand access to a commercial-free library of more than 30,000 music videos from most major recording labels, with new videos added weekly.Movielink Brings Content Direct to Consumers

In 2002, five movie studios, MGM, Paramount, Sony Pictures, Universal and Warner Bros., launched a direct-to-consumer video rental service using the Internet. The service, called Movielink, offers a limited selection of first-run and classic films from the founding studios, and later was expanded with fare from the BBC, Discovery Networks, National Geographic and Sundance Films. Users can download films to their PCs, Media Center PCs and laptops.

Titles can be rented at prices ranging from $2.99 to $4.99. Select titles also can be purchased for unlimited playback from the hard drive or a CD or DVD back-up disc. First-run films are released to the site after they have been released on home video, but before they appear on pay-per-view services. For rentals, users download a movie to their hard drives and have a 24-hour period to view them after pressing the play button.

STARZ! Ticket/Vongo Launched
In 2004, cable and satellite movie distributor Starz Encore Group (which was later renamed Starz Entertainment Group) launched a broadband video download service for PCs users called STARZ! Ticket.

The service offers near-DVD-quality video encoded using RealNetworks’ Helix video compression and digital rights management technology, requiring RealPlayer software to view downloaded files. Users subscribe to the service for $12.95 a month and are allowed an unlimited number of downloads. The company acquired Internet distribution licenses to more than 5,000 feature films, with about 150 titles available at any one time. Twenty-five to 35 percent of titles are changed out every week. Films include many titles released for cable TV viewing, with release windows for Starz! Ticket titles often preceding by days or weeks those for Starz' regular cable movie channels.

In order to take advantage of the service, viewers need a broadband connection speed of 600 Kbps or higher from a DSL, satellite or broadband cable service. An average movie file is compressed to fit into about a 500-MB file and requires about 2.5 hours to download at a 600-Kbps rate or 25 minutes at a 3-Mbps rate.

In 2006, Starz expanded its broadband download business by adding a new service called Vongo. The name – a derivation of “video on the go” – offers movie downloads to PCs, laptops and portable media center handheld video players. Unlike the STARZ! Ticket Helix-based service, Vongo was designed around Microsoft’s Portable Media Center (PMC) software platform. Companies, including LG and Toshiba launched PMC devices that will accept movies downloaded via a PC from the service. Microsoft and Starz developed a system of DRM and business rules that allow the transfer of movies and subscription downloads to PMC devices, the company said.

Vongo is offered to broadband PC owners as a $9.99 monthly subscription or as a $3.99 a la carte pay-per-view video download. Single downloads are available to view for a 24-hour period after a user hits the play button. A subscription to the service will support playback of downloaded content on as many as three devices. Vongo launched offering approximately 870 titles of newly released and classic movies, extreme sporting events and long-form concerts. Selections continually are rotated in and out at the end of each month.

Because of Starz' exclusive distribution agreements with most of the major studios, Vongo promises to have one of the most extensive catalogs of new releases and popular classics available for distribution over the Internet.

MovieBeam Starts Datacast Service
In early 2006, the Walt Disney Co.’s MovieBeam unit formally launched its video-on-demand service featuring more than 100 movies (ten in high-def) at any one time. The service uses datacasting technology to deliver movies to home-based set-top boxes over unused portions of PBS broadcasters’ analog television signals. The service began in the nation’s 29 largest markets and offered movies and other video content in both standard definition and 720p high-definition. The Walt Disney Co., which tested the service two years ago, spun the company off and received backing partners in Cisco Systems, Intel and others.

MovieBeam set-top boxes costing $199 are equipped with hard drives to store as many as 100 movies at a time, including ten HDTV titles. The selections are regularly refreshed with ten new movies every week. MovieBeam charges $3.99 for a 24-hour rental of each new release and $1.99 for classic titles. An additional fee is asked for HDTV titles. MovieBeam is working with most major studios. Select studios will release new titles to MovieBeam at the same time they introduce the films on DVD.

Although the service currently doesn’t use Internet distribution, company executives said they are exploring a possible expansion that will employ the Internet in the future.

Personal Media Players to Spark Video Downloading
Just as portable MP3 music players helped to ignite a range of online music download distribution vehicles, a crop of new personal media recorder/players that bring video recording and playback capabilities to mini hard disc drives (HDDs) is poised to spark on-demand video downloads.

In 2006, nearly a dozen manufacturers had plans to distribute hard drive players with large color video screens. These can be used to store and watch movies that typically are delivered in any of a number of MPEG 4 formats, and many use Microsoft’s Portable Media Player software platform. Action picked up on these devices in 2006 when many content producers signed off on new DRM systems that would limit viewing periods to movie files and prevent their unauthorized duplication or distribution.

Apple also opened the gates to video downloads for portables when it delivered its first video iPods in 2005. Just as it did with music, Apple supplies the blades for its multimedia razor by adding video downloads to its iTunes service.

CBS Offers Video Downloads of Popular Programs
Recognizing the growing popularity of video downloads for PCs and portable players, the CBS Television Network began offering episodes of select popular programs available to downloaders from its website. The practice launched with episodes of the “Survivor” reality television series. CBS also offers other top-rated shows, including “CSI: Crime Scene Investigation,” on the new Google video service for $1.99 and on Comcast's on-demand system for 99 cents. CBS makes new episodes available shortly after midnight following the airing of new episodes on TV. Customers can view an episode for a 24-hour period after paying.ABC, NBC Offer Programs for iPods

Both the ABC and NBC television networks began offering episodes of popular TV shows as downloads for new video iPods using Apple’s iTunes service. iTunes sells programs for $1.99 per episode.

AOL, Yahoo!, Google Offer Video
Internet portals AOL, Google and Yahoo! have gotten into the video download act offering episodes of popular TV shows, classic movies and special interest videos available from their sites.

AOL has long offered Webcasts of original concerts and now is developing program networks for entertainment news, old TV shows and sports. Yahoo! has hired the former head of programming at ABC, Lloyd Braun, to develop new video projects. Yahoo!, which offers streaming video content, joined with CBS to stream some reruns of the network's prime-time comedies, “Two and a Half Men” and “How I Met Your Mother”.

Google's new video service offers a variety of classic and popular TV programs, sports events, and music videos and lets users put its video clips on their own Web pages.