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Los Gatos, Calif.-based ICTV announced last month that it was merging with Switched Media, a San Francisco-based company co-founded by ICTV’s former SVP of marketing, Ed Forman. The merged entity will retain the ICTV name, and the merger will see all of Switched Media’s co-founders joining the new ICTV: Forman will serve as EVP and COO; Michael Taylor (who was previously VP of business development at both BigBand Networks and nCUBE) will serve as SVP of business development and distribution; and Jeremy Edmonds will serve as system architect.

Switched Media has developed a proprietary software technology, called InStream, which it touts as allowing the processing and manipulation of compressed digital video streams, and thus as avoiding costly decode and re-encode cycles. The technology will be combined with ICTV’s HeadendWare platform (note: the latter is designed to overcome the limitations of entry-level set-top boxes and other low-resource devices, such as mobile phones; it pushes complex, IP-based interactive TV applications to those devices from the headend, and allows the apps to utilize a variety of Internet technologies, including HTML, JavaScript, Java, Windows Media Player, Flash, RealPlayer and Quicktime) to form what the companies describe as a solution that will allow "network operators, programmers and advertisers to create a personalized interactive subscriber viewing experience within any video stream–including live television and Web video–on any cable or IPTV set-top box, or mobile device."

ICTV demo’d a prototype product–a subscriber-customizable video mosaic–based on the HeadendWare-InStream technology combo at the recent CableLabs Winter Conference in Colorado Springs. In addition to providing live video from, and navigation through, multiple channels simultaneously, the prototype allows personal mosaics to be assembled by subscriber, operator or programmer choice, or via response to subscriber viewing habits. The solution is touted as working on any digital set-top box.

[itvt]’s Tracy Swedlow recently spoke to Ed Forman and to ICTV president and CEO, Jeff Miller, about the reasons behind the merger, about possible applications for the HeadendWare-InStream technology combo, about the new strategic direction for ICTV that the merger exemplifies, and more.

Ed Forman, Co-Founder of Switched Media and Newly Appointed COO of ICTV

[itvt]: Ed, how do you feel about becoming part of ICTV again?

Forman: When I stepped away from ICTV a few years ago and was able to take an arm’s-length look at the company, one of the things I realized was that it was trying to do something on television that was not very television-like. What’s really different now–both as a result of what Switched Media brought to the table, and as a result of a strategic change that’s taken place within ICTV itself–is that we’re moving away from the business of licensing HeadendWare and moving towards a content delivery network model; the company is now able to support a very rich audiovisual experience that’s very compatible with what you expect from television. Rather than having a situation where the world of television and the world of interactivity were two different things, we’re now focusing on bringing interactivity to television. There was a world of interactivity, or there was a world of television. Now we’re able to bring interactivity to television. And I think that it makes a huge difference.

[itvt]: Could you explain what it is that made Switched Media’s technology attractive to ICTV?

Forman: Switched Media focused on the manipulation of live streams, which is kind of a black art. What typically goes on in video manipulation is that video is manipulated in what’s called the "analog domain" or the "pixel domain"–meaning in a decoded or decompressed form. We came up with very, very cost-effective and scalable ways to manipulate video in the compressed domain. It’s almost like taking a PowerPoint file and changing the title on a slide while the PowerPoint file is zipped.

The reason why this ends up being very valuable to ICTV is…well, let me give you an example: imagine you’re watching, say, a news channel. On the screen, you see a message that appears overlayed on the programming that says, "To go to ‘Your News Now,’ press the ‘A’ key on your remote." When you press the "A" key, suddenly the live stream becomes just a window in your interactive session. And, in that interactive session, you can go get more information, or you can choose a different news story that replaces the live stream, or whatever.

So one of the things ICTV did with the Switched Media merger is to bring together the world of live television and the world of interactivity–or enable interactivity within this world of live television. What we developed at Switched Media will now come to market a lot quicker, as part of ICTV.

[itvt]: But interactivity and live television have been brought together before. As you know, a lot of apps are overlays over live video streams and allow viewers to view live TV in quarter-screen mode while using them…

Forman: There is no question that some interactivity already is underway. But in most cases, those applications are set-top box specific and are limited to the processing power and characteristics of those individual set-top boxes. The advantage that we can offer as part of ICTV is that we can deliver that experience on every digital set-top box. Sure, there are lots of cases where you can line everything up: you can get the right middleware on the right box and the right system, and make something happen. But that’s not particularly interesting to programmers and advertisers, since they need the promise of ubiquity–the ability to deliver the same interactive program or ad to audiences in the millions. That’s really what’s been missing in the interactive TV space. The problem with all of these interactive television efforts is they leave for the programmers and the advertisers a very, very fragmented world–a world in which they have to move from technologies that they’re comfortable with into obscure and fragmented television technologies, and make something happen. It becomes nothing more than experimental for them, and, even if the experiment is successful, there’s not enough of a base to justify a continuing effort. Often, they just get tired, and they stop trying, because the economic proposition hasn’t been strong enough.

What’s actually driving the economic proposition right now is that alternative delivery platforms for video are starting to emerge. That means that network operators are feeling more pressure to consider alternatives. I think that Disney’s recent decision to make their premium shows available on the iPod has served as somewhat of a tipping point for the realization on the part of the network operators that the kind of video content that could only find its way to people’s homes via broadcast, satellite and cable platforms now has other ways of getting there. And, obviously, broadband video–which is known in the trade as "the cable bypass"–is also growing very rapidly.

So all of this has really heightened interest among the distributor community in doing something different–in adding new capabilities. At the same time, Microsoft has been out there promoting Media Center Edition. They’ve really gone out and worked with programmers, and given them the opportunity to develop for a 10-foot viewing experience and for remote-control navigation. But then the programmers start to realize that, while Media Center Edition may, at some point, offer them large audiences, today there just aren’t very many Media Center Edition PC’s out there. So they start looking for ways to take this 10-foot content that they’ve developed to large audiences–and they’ll find an opportunity to do so through our technologies.

[itvt]: Where do you envision the ICTV-Switched Media technology combo going in the context of how you view the immediate future of interactive TV?

Forman: I think the next generation of interactive TV is, in some ways, going to resemble the broadband video platforms that we’re finding on the Internet. So, in that sense, I would call it "cable bypass-bypass." I think that what we’re going to find is that there’s going to be a move away from the current phenomenon of taking television content to the broadband environment, and a return back to television. I think that a lot of the Internet programmers are going to start finding opportunity in television. We’re going to be able to provide them with kind of a bridge between what they know, which is programming for the Internet, and what they seek, which is the large-scale deployment platform you get through TV. While what you’re fundamentally doing when you’re working with the ICTV platform is working with Web-powered content, we’re nevertheless firm believers that we need to offer a user experience that’s designed for television.

[itvt]: What will your own role be, now that you are part of ICTV once again?

Forman: I now have a much more significant operating role. I’m responsible for all of our business development and for building up our distribution channel–meaning our relationships with operators–as well as for marketing, and for all of our operations and customer support. So for everything that touches our partners. It’s really a very different role.

ICTV President and CEO, Jeff Miller

[itvt]: Could you explain what Switched Media’s technology does—what makes it unique, and what made it so attractive to ICTV?

Miller: The key thing about the Switched Media technology is that it enables processing and manipulation of compressed digital video streams without the complexity and expense of decoding to baseband video, manipulating the stream, and then re-encoding to digital–so it is highly cost-effective. We recognized that by combining it with HeadendWare’s ability to deliver Web-based video to the television and its interactive capabilities, we could create a unique video environment in which viewers have the same choice and control that they have come to expect from the Internet.

[itvt]: How did the merger with Switched Media come about?

Miller: As you probably know, Ed Forman has been a friend of ICTV’s for a long time. He was here as SVP of marketing, and then left a couple of years ago and founded Switched Media. Now, ICTV has been pursuing a strategy for the distribution of broadband video over cable and IPTV, but the main missing piece of that strategy has been the ability to include live-stream television and encapsulate it in our interactive streams. The capability to do this, which Switched Media had developed, was right on our roadmap. So it just made sense to combine the two companies and run forward.

[itvt]: Why are you merging, rather than just partnering?

Miller: We thought that their technology is very compatible with our technology, and that it would be much easier to just combine the two into a single product, and combine the management teams–since we’re basically on the same path–rather than attempting to organize it as a partnership. Our respective products have come together very quickly and easily. We showed our first product resulting from our merger, a customizable video mosaic for video-rich navigation, at the CableLabs Winter Conference a few weeks ago.

[itvt]: Could you describe that product in a little more detail?

Miller: You can imagine what kinds of products might result when you have the ability to combine multiple, scaled live streams into a single interactive stream. That’s what the mosaic we demo’d at CableLabs looks like: multiple live streams of video showing up into a single interactive stream. For example, you might imagine a scaled live news stream appearing in an interactive news stream.

As you know, ICTV’s technology can play streams off of the Web, using Windows Media Player, RealPlayer, QuickTime, or whatever. But the ability to actually pull off a live stream out of a cable network, scale it and insert it into one of these interactive streams is a new capability that Switched Media brings–along with the other capabilities, as well. The ability to create animation or overlays, and overlay them on top of live streams is another way to look at it. In the past, these overlays often had to happen in the set-top box. But a lot of set-top boxes aren’t capable of doing that. So we’ve used the technologies we’ve acquired from Switched Media to develop the capability, within the ICTV technology platform, to overlay logos, animation and even other video tiles on top of live television, without any set-top box client at all.

[itvt]: Could you give us an example of the practical applications of this technology?

Miller: It allows cable to do some of the things that IPTV is promising–the ability to allow subscribers to have more choice and control over their televisions, and the ability of programmers, network operators and advertisers to deliver targeted, interactive and auditable content. But it’s also of interest to companies in the IPTV space. What it really does is give network operators the ability to do localized television, without modifying the national feed. For example, one potential application is a ticker replacement: the replacing of the live ticker on a CNBC- or CNN-type stream with a localized version of the same ticker. That can happen, even though CNN or CNBC is broadcasting a nationwide program stream: our technology has the ability to overlay locally a localized ticker, with information on local news, weather, sports, traffic, companies, etc.

So this is where the synergy between ICTV and Switched Media lies: ICTV has developed technologies for delivering Web-based content to television. Now, if you add the ability to take some of that Web-based content and to overlay it on live video streams, then you really have a powerful, network-based solution for localizing television programming and advertising. Again, some of these applications are available today but their functionality generally is limited by the type and processing power of the set-top box.

[itvt]: So, to summarize, the ICTV-Switched Media technology combo enables multimedia and interactivity within a live video stream.

Miller: Exactly. And it is all fully compatible with current cable and IPTV deployments.

[itvt]: Is the ICTV-Switched Media technology combo ready to deploy? Could you launch it, for example, on the system you’ve deployed with Time Warner Cable?

Miller: We showed an alpha version at CableLabs, a prototype. However, within a very short time, these technologies will be available in our full production product.

[itvt]: What do you mean by "in a very short time"?

Miller: I would say it’ll be a couple of quarters. We’re looking at a production release in our next release, which is in the early-Q3/late-Q2 timeframe. We’ll be showing further capabilities at the NCTA National Show next month.

[itvt]: What kind of work has to be done in order to make the solution OCAP-compliant–or is OCAP-compliancy not an issue here?

Miller: Actually, the Switched Media portion doesn’t require a set-top client at all. There’s no overlap with OCAP. The ICTV technology, which enables the full interactivity, does require the set-top box to return keystrokes back to our headend-based solution. However, we already have an OCAP-compliant client–which means that we can drop into any OCAP set-top box, as soon as they’re ready.

[itvt]: So, in other words, no additional work has to be done for OCAP-compliancy…

Miller: Exactly. No additional integration is required.

[itvt]: Can you give us some more examples of the kinds of things this technology combo will enable?

Miller: We think that the main applications for the technology will center on the localization of national programming or national advertising, by adding local overlays. We also believe that it will be used to enable personalized video mosaics, where you have multiple live-TV streams embedded in a single frame. We think that that will be a strong selling point for the technology. Another possibility would be allowing viewers to monitor a television program while they played an interactive TV game in another window. So these are the kinds of things that are enabled by what we’re bringing to the table. We’ve put our creative hats on, and come up with a few ideas. But when this toolset becomes available to the really creative people out there, I’m sure they’re going to come up with lots of other very interesting things to do with it.

[itvt]: Can you say if Time Warner Cable is planning to deploy this technology?

[itvt]: Could you talk a little about ICTV’s plans for Switched Media, and its integration into the company? What’s the product roadmap, going forward?

Miller: We won’t be carrying forward the Switched Media product line as a standalone product line. It is being integrated into the ICTV product line. We’ll continue to develop what Switched Media was working on, but it will be enhanced by what we’re already doing at ICTV. So, where Switched Media had the capability of doing local overlays on top of video streams, when we put this together with ICTV’s technologies, the solution will become full interactive overlays on live video streams. That solution will be part of the ICTV roadmap. We definitely see value in this technology, going forward, and we’ll continue to develop it. But it is so synergistic with what we’re already doing at ICTV, that it just integrates very nicely into our existing product line. As far as products that the technology enables are concerned: personalized video mosaics, among other things, may become part of the ICTV roadmap.

I believe that, by the NCTA National Show, we’ll be backing up what we’ve been talking about with some more significant announcements.

[itvt]: Do you foresee yourselves using Switched Media’s technology as part of a multiplatform strategy?

Miller: Yes, it will absolutely be a part of our strategy. Since our technology–and that includes the Switched Media technology–is network-based and independent of the viewing device at the end, it means that the same source material can be used to service televisions with set-top boxes, mobile phones or PDA’s, and broadband devices. We have a broad applicability to offer the same source content across multiple platforms. As you know, we recently announced with our partner, YooMedia, that we’ll be doing our first mobile phone-based deal, offering their "Dateline" service on 3G wireless networks in the UK. That was our first cross-platform deal, but I expect there’ll be many of them, going forward. All of this technology works across all those platforms. It’s just a matter of adapting it to a different style sheet and outputting it in a different codec.

[itvt]: Are you able to track usage of the live streams and interactive applications that your technology is supporting?

Miller: We do a level of reporting in the product, but by leveraging companies and products that already solve problems on the Web–like DoubleClick applications for advertising, for example. We should be able to interoperate right off the shelf with that sort of technology. We are an enabling infrastructure: we enable the cable operators to do business with the Web companies, and make more compelling television and advertising as a result. We actively encourage them to go do that.

[itvt]: And your platform is able to track interactivity across multiple platforms, correct?

Miller: Yes, absolutely. If there’s a particular advertising campaign or piece of content that’s distributed across multiple networks, our tracking can tell which mobile phones have accessed, which cable-TV boxes have accessed, which IPTV set-top boxes have accessed, and so on. We keep all those logs, and they belong to the operator-partners that we deal with. If we use Switched Media technology to do an overlay on a program stream, a log will be formed whenever someone performs some action on that overlay. For example, if a call-to-action shows up in the middle of an ad, through an overlay, and somebody clicks on that call-to-action, we have the log for that click.

[itvt]: Presumably creatives can use familiar tools to create interactive overlays…

Miller: Yes. That’s the real beauty of the platform. The person or the agency that creates the content can use familiar tools–like Windows Media Player and Flash–to create the overlay. But, when we take it, we actually convert it into a format that can be overlaid on top of an MPEG stream, and we insert it within an MPEG stream, without changing the characteristics of that MPEG stream. So, in actuality, when the overlay shows up on the screen, we’re not using Windows Media Player or Flash to do it. Yet, the tools that are used to create the content are standard Web tools, which everyone understands and knows.

[itvt]: So you’re doing multiple layering of video on top of video.

Miller: You’ve got it. That’s exactly what we’re doing. And we’re not using proprietary tools to do it. We’re using Web-based tools to do it.

[itvt]: How easy would it be to copy what you’re doing? What’s the unique, special sauce that allows Switched Media to offer this technology and nobody else?

Miller: Well, the Switched Media technology is the efficient manipulation of compressed video streams. And adding this capability into compressed streams, without decompressing and re-encoding–that’s one of the secret sauces that is brought to the table, here.

If we really want to make this scalable, so that it can be personalized for everyone–for every video stream out there–this can’t require rack-upon-rack of equipment to do it. Our solution is very efficient, and is able to do this insertion into compressed video streams, without having to have racks of decoders and encoders to do it. It’s all software-based, which allows it to run on standard hardware platforms. And therefore, it’s very easy to keep it scaling, as faster and faster processors keep coming out.

[itvt]: Not too long ago, ICTV decided to take a new strategic direction. Could you talk a little bit about that new direction and the reasons behind it?

Miller: We’re still in the process of announcing our plans, but I think you will see a movement away from the business of selling technology and toward the business of helping programmers, network operators and sponsors deliver programming and advertisements that are targeted, auditable and interactive. The increase in on-demand viewing from new sources like PVR’s and the Web is threatening established business models. Our goal in combining our two companies is to help our customers create solutions that increase the value of the television experience.

URL: http://www.ictv.com

and the

http://blog.itvt.com/my_weblog/2006/01/_announcing_the.html

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