Cablevision In $1 Billion Deal For Sony Set-Top Box
Cablevision Systems Corp, the sixth largest cable operator, will pay about $1 billion to buy 3 million new set-top boxes from Sony Corp., signaling the imminent arrival of interactive digital television to the company's New York-area subscribers. The companies herald their deal to ""develop and deploy a new-generation digital entertainment and broadband communications platform"" as bringing video-on-demand, permanent connections to Web-enhanced television, interactive game services, sophisticated programming guides and multiple choices in programming formats. Thursday's (September 16) deal marks Sony's entry into the U.S. set-top box business one day after Motorola Inc. bought market leader General Instrument Corp. for $11 billion. Cablevision President and CEO James Dolan said the pact represents ""the most important TV entertainment initiative in our company's history."" He said the technology developed by Sony will bring ""a whole new way of looking at your television set."" The deal marks the first time Sony will supply equipment used for delivering advanced digital services such as Internet access to cable operators. Sony has manufactured set-top boxes for satellite services such as DirecTV, but not cable lines. According to Jim Davis a Staff Writer at CNET News.com, Motorola and Sony, as well as a wealth of other companies, want to become major players in a market that is now simmering but is expected to soon reach a boil. Cable operators are expected to sell 1.7 million digital cable boxes this year, and by 2003 that number is expected to jump to more than 5 million, according to estimates from Cahners-InStat. With about 3.4 million customers, Cablevision is the nation's sixth-largest cable operator. Although services that run on the Sony boxes will be available in the New York area, the deal could be the wedge that Sony has been seeking to pry its way into the worldwide cable market. Connecting what are essentially stripped-down computers to TVs will result in additional revenue for cable companies offering enhanced services such as video on demand. In addition, the companies also could draw more revenue from interactive advertising and Internet access. For Sony, the arrangement is a chance to link a number of in-house hardware technologies that use content from its other businesses, such as Sony Music and its Columbia TriStar movie and TV unit. Cablevision will offer two Sony set-top boxes, including one that uses Sony's Aperios operating system, an IEEE 1394 high-speed port (also known as Firewire), and software for networking digital camcorders and other devices. Sony's i.Link IEEE-1394 digital Interface will allow consumers to connect the box with other consumer electronics; its Digital Transmission Content Protection (5C DTCP) technology; the Home Audio-Video interoperability-based home networking software; and the Aperios operating system. The technologies, along with other undisclosed software programs, will allow Cablevision to offer video-on-demand, interactive content guides, wired home networking, Web-enhanced television, e-mail and interactive games, said James L. Dolan, Cablevision's chief executive. An optional hard drive that would enable time-shifted programming and the storage and download of additional content and applications is another possible option for the set-top boxes, said Mack Araki, a Sony spokesman. Scientific-Atlanta, the second-largest set-top box manufacturer today, also ships its boxes with an IDE disk drive connector. Sony also will build its own conditional access card, which allows cable operators to protect its system from theft, however Araki would not discuss specifics about the cards. The use of the 5C DTCP will let Cablevision limit the quality and types of programming that can be recorded and stored, something content producers have been asking for since high definition television was announced. ""Conditional access and copy protection are two different things. The 5C product is a smart copy protection technology that addresses the needs of today's programming,"" said Envisioneering's Doherty. Source: Hollywood Reporter, CNET News.com and Inter@ctive Week