itvt

In [itvt] Issues 7.06 and 7.11, representatives of Espial and Siemens discussed the merits of their companies’ respective approaches to IPTV and offered a number of criticisms of the approach taken by Microsoft TV. In this issue, Microsoft TV’s director of marketing and communications, Ed Graczyk, addresses those criticisms and discusses the merits of his company’s IPTV platform. If any of the three companies (or their partners or customers) feel compelled to respond further to any of the topics raised in the three interviews, we will be happy to publish those responses in a future issue.

[itvt]: Could you give us a rundown of Microsoft TV’s recently announced IPTV Edition customer deployments?

Graczyk: We’ve recently experienced a lot of momentum on the IPTV front. To start with, on October 17th, T-Com, which is the broadband piece of Germany’s Deutsche Telekom, announced the commercial launch of T-Home, their full triple-play service. It includes advanced TV services that are powered by the Microsoft TV IPTV Edition platform. This IPTV piece of their triple-play offering features over 100 free and pay-TV channels, including all the mainstream German programmers, such as ARD, ZDF, RTO, and Pro.Sieben.Sat1, as well as programmers like the History Channel, Planet TV and Gusto TV. It also includes all the Premiere German soccer channels: Deutsche Telekom has a special agreement for the Bundesliga–which is the German soccer league–on Premiere, so they’re featuring live matches from the first and the second German football divisions. The T-Com IPTV service also includes VOD, and in fact is the only VOD service in Germany today to feature blockbuster movies produced by major studios like Universal, Dreamworks, 20th Century Fox, MGM, Paramount, Warner and Sony. It also offers HDTV and DVR. It uses Cisco KiSS-series set-top boxes, branded as the T-Home X300T Media Receiver, and it’s launched to date in 10 major German cities: Berlin, Hamburg, Munich, Ludzik, Hannover, Dusseldorf, Cologne, Stuttgardt, Frankfurt and Nuremberg. I should also point out that Deutsche Telekom is the largest telco service provider in Europe. In fact, I believe they’re the largest of any of the telco or cable service providers in Europe. So they are our largest customer in Europe and our second-largest customer overall, after AT&T.

Then, on November 1st, Swisscom announced the commercial launch of Bluewin TV, which is delivering various innovative TV services using IPTV Edition. Bluewin TV is part of Swisscom’s new integrated service offerings and a move towards its "Triple Screen" vision, which will ultimately enable users to view programming on a television set, laptop/PC and mobile phone. The monthly fee for the basic offering, Bluewin TV Plus, is CHF 29. This includes a wide range of TV and radio programming and a selectable language package–so German, French or Italian. The Bluewin TV set-top box provides customers with over 100 hours of recording capacity, and the service lets users search for programs, as well as record or pause a program during transmission at the touch of a button. It also supports remote recording via mobile phone or the Internet.

More recently, on December 4th, BT announced the commercial launch of BT Vision, its new television and entertainment service. BT Vision uses IPTV Edition and an advanced Philips set-top box to deliver a next-generation digital television service to BT Total Broadband customers across the UK. BT Vision offers a huge variety of content. combined with innovative advanced television services. The content is designed to suit a range of tastes, and is sourced from some of the world’s biggest entertainment industry names, including Disney, Sony BMG, Universal, DreamWorks, National Geographic, Viacom and the BBC, as well as from independent programmers. The service also offers interactive services like games and access to the phonebook via the TV; and, starting this summer, it will offer "near-live" on-demand Premiership soccer coverage.

I should also add that we recently announced our 15th and 16th customers: WIND, a service provider in Italy, and SingTel, which is Southeast Asia’s largest telecommunications operator, and which happens to be Microsoft TV’s second IPTV Edition customer in Asia. Both the WIND and SingTel sales were made through our Alcatel reseller channel, by the way.

We’ve also brought on new talent to assist us and our customers as they deploy our IPTV platform to subscribers. In December, Andreas Mueller-Schubert joined our executive team as general manager of Microsoft TV Solutions. Andreas was most recently president of the Fixed Networks Solutions division at Siemens, responsible for developing solutions for key global initiatives including IPTV, VoIP, IP networking and others. He brings a wealth of very relevant skills to our management team, including IPTV and telecommunications industry expertise, a carrier-grade focus, a global perspective, and experience managing both start-up and mature businesses.

[itvt]: Could you update us on the current status of some of your other IPTV deployments?

Graczyk: Well, things are going well, and it’s really heating up. Aside from the ones I just mentioned, we have AT&T, of course, which has commercially deployed IPTV in 11 markets in California, Connecticut, Indiana and Texas.

Club Internet, which is a subsidiary of T-Com in France, launched a couple of months ago. They have a full-fledged IPTV service that’s available throughout France. They’re marketing it very aggressively: they have points-of-presence–experience centers, you might call them–in around 150 retailers across France. So in the big hyper-marchés and department stores–companies like Carrefour and Fnac and so on. So they’re going full-bore.

[itvt]: What about Telecom Italia?

Graczyk: Telecom Italia is currently in trial with us. I can’t say much beyond what they’ve talked about publicly and what we’ve reiterated for the past several months, which is that they’re on a path towards commercial launch. But stay tuned for more details on that.

[itvt]: Now, why have some of your customers been so much faster to market than others? The ones who’ve launched earlier–what have they done right?

Graczyk: It’s not that the ones that have launched have necessarily done something right–which would imply that the others have done something wrong. It really just boils down to the fact that each of these operators has very different markets and infrastructures, and different partners that they’re working with.

If you think of any of these IPTV deployments as a puzzle, the puzzle pieces differ from operator to operator. The common piece for our various customers, of course, is the Microsoft TV platform. But the other pieces of the puzzle–the set-top boxes, the content-provider relationships, the network build-outs, the regulatory environments they’re working in–are dramatically different from operator to operator.

The truth is that you can’t even look at Europe as one market with common requirements. In fact, if you look at what Deutsche Telekom’s doing versus what BT’s doing, even the TV services they’re delivering are substantially different. Deutsche Telekom is rolling out what you might call a "pure-bred" IPTV environment, where all of their programming and services are delivered over the IP network. Whereas BT is offering really more of a hybrid service that will combine over-the-air digital terrestrial programming with IP-delivered video-on-demand and with other interactive services.

[itvt]: But wasn’t Deutsche Telekom one of your later customer announcements? Either they were able to deploy unusually quickly, or you were working with them well in advance of your customer announcement…

Graczyk: Well, I think actually all our customers are moving quickly. And, as you say, people shouldn’t assume, just because one customer was announced earlier or later than another, that we started working with that customer at the time we made the announcement. There are different factors that affect when a customer decides to go public with their plan. So even though Deutsche Telekom was announced in March, we’d been working with them for a long time. They were part of our early-adopter program, just like Swisscom and AT&T and the others.

[itvt]: Microsoft TV also signed a deployment deal with Denmark’s TDC, right?

Graczyk: Yes, we have a commercial agreement with them. They haven’t announced publicly their plans for deployment, but that’s in the works. You’ll hear more about them when they feel the time is right. Unfortunately, I can’t give you more information than that.

[itvt]: To date, how many sales have you made as a result of your partnership with Alcatel?

Graczyk: Well, we have SingTel, WIND, TDC Denmark, Slovak Telekom, Telkom South Africa, and Spain’s YA.com. So, out of our 16 customers worldwide, six came to us through the Alcatel relationship.

[itvt]: Now, as you know, a patent dispute has arisen between Microsoft and Alcatel. How do you think that will impact Microsoft’s relationship with Alcatel going forward?

Graczyk: Microsoft TV is committed to continuing to work closely with Alcatel to enable our customers’ success in the IPTV marketplace. The global collaboration agreement between Alcatel and Microsoft, which is designed to rapidly accelerate the worldwide availability of IPTV, remains in place. However, I’m not at liberty to comment on the specifics of Alcatel’s recent filing.

[itvt]: Let’s talk more about your US deployments. While we’ve heard a lot about AT&T’s U-verse service, which seems to be moving forward with new deployments, content partnerships and so on, we haven’t really heard so much about what you’re doing with BellSouth.

Graczyk: Well, BellSouth is one of our trial customers, as opposed to a commercial-agreement customer. To answer your question, you’d have to talk to them. But, as you know, the conventional wisdom is that they’re merging with AT&T–and ultimately, they will in all likelihood become a commercial customer of ours, under our agreement with AT&T.

[itvt]: How different are AT&T’s and BellSouth’s infrastructures–in terms of deploying IPTV?

Graczyk: They have been on very similar paths, as far as fiber-to-the-premises or fiber-to-the-curb strategy are concerned–and, of course, as far as IPTV software is concerned, having both chosen Microsoft TV as their software platform for IPTV. But there are still obviously going to be differences between them as far as infrastructure is concerned.

[itvt]: Now, you announced your deal with BellSouth quite some time ago, but they’re still in trial mode. Why do you think that is?

Graczyk: Well, if you knew you were merging with another company, and you knew that that would have an impact across every aspect of your business, there would be some things you’d move forward with at a different pace, if you’re expecting that you’ll become part of this new entity down the road.

[itvt]: You have also secured a major deployment with Verizon. How’s that going?

Graczyk: Verizon recently reported that FiOS TV is now in 200 cities. They recently announced that they had gotten over 100,000 TV subscribers. As you know, that deployment isn’t based on our IPTV platform, but on a customized version of our Foundation Edition cable platform. So they’re currently rolling out QAM/RF TV. They’ve actually had quite good success with that–a really good user response. But clearly they’re following a much different technology strategy and networking strategy than the other telcos are, in that they’re deploying on fiber-to-the-premises and going the route of RF QAM broadcasts for video delivery.

[itvt]: They also recently launched their Home Media DVR, correct?

Graczyk: Yes. That was the most recent upgrade to the Foundation Edition software that we’ve delivered to them. It enabled them to offer whole-home DVR–which actually makes them among the first, if not the first TV service provider in the US to provide that on a wide scale.

[itvt]: And the plan is for them to eventually switch to IPTV, correct?

Graczyk: Well, the deal we have with Verizon is for this customized one-off version of Foundation Edition. Verizon’s talked publicly about their belief that they’ll move to an IPTV platform in the future, but our agreement with them is for Foundation Edition.

[itvt]: Speaking of Foundation Edition, how is that doing?

Graczyk: It’s doing well. It was fully deployed by Comcast in Seattle quite a while back, and we’ve also got a number of customers in Latin America running on the Foundation platform. I think the reason you hear so much more about IPTV, versus any of the cable platforms that are out there, is that there’s so much momentum across the world for telcos to get into IPTV.

[itvt]: What’s the footprint for Foundation Edition?

Graczyk: It’s over 2 million today, between the Comcast deployment in Seattle and our Latin American deployments.

[itvt]: And what’s the footprint for IPTV Edition?

Graczyk: It’s still small numbers, because these deployments have just started. Most of our IPTV customers are in the thousands, but moving toward the 10,000-units-deployed mark. But with any of these deployments, you’ll see the ramp-up hockey stick before too long.

[itvt]: Can you say whether or not you’re still marketing Foundation Edition to cable operators as aggressively as you might have been marketing it before?

Graczyk: Well, I think that, certainly, more of our focus has been on the IPTV front, in terms of our sales activities.

[itvt]: And on sales to telcos rather than to cable operators, right?

Graczyk: Well, on sales to telcos, simply because telcos are the early movers today. Though you might recall, that cable was actually the first market we introduced our IPTV product to. In fact, if you remember the 2003 NCTA National Show, Brian Roberts brought up IPTV there before we’d even announced our product.

In general, I think there’s lots of interest in IPTV from cable. There’s actually lots of interest from a bunch of other kinds of industries–from enterprises, to educational companies for distance learning, to hospitality. We get a lot of what I would call "off-strategy" expressions of interest in our IPTV technology from these companies. But we’re trying to stay focused on where we can have the biggest impact on the marketplace in the shortest period of time. So that’s companies like AT&T and Deutsche Telekom that are making these big commitments to roll out IPTV on a massive scale. But cable is definitely very interested in the idea of IPTV, and they see it as the direction that they’ll move in, as an industry, in the future. They’ve been talking for a long time about wanting to deliver all their services over a single, converged network–about having all their services be IP-based, as opposed to the combination of different technologies they use today. But the cable industry made the move to digital many years ago, and they chose the best technology available at the time. So that means they have a huge investment–in this country, a hundred-billion-dollar investment–in infrastructure and technology, much of which would have to be upgraded or swapped out to move to IPTV.

[itvt]: Is it fair to say that there’s still a lack of standards in the IPTV space?

Graczyk: I would say that IPTV is actually much more standardized, in its first generation, than cable–where, even today in a market like the US, you effectively have two different closed, proprietary environments for cable delivery. It’s either a Motorola-based environment or a Scientific-Atlanta-based environment. Whereas IPTV, from its name on up, is based on standards: standards pertaining to the Internet Protocol itself, standards around security and encryption, standards around video compression technology and codecs, standards around application development and integration. So it’s quite a standardized environment.

However, the IPTV market is still a nascent industry and–just like we are with many other new industries–Microsoft is working closely with standards body organizations worldwide to identify and understand the likely standards as the market evolves. As you probably know, Microsoft has already moved forward in the standards process of taking the Windows Media Video 9 codec and making it an internationally recognized video codec standard through the SMPTE organization in the US.

[itvt]: Now, Microsoft TV is, of course, famous for taking an end-to-end approach to IPTV…

Graczyk: Yes, we have an end-to-end platform approach, as opposed to the "roll your own" approach of picking middleware from one company, a VOD solution from another company, DRM from a third company, service and subscriber management from a fourth, and so on. As I’m sure you know, with IPTV today, there are two camps. We’ve taken the end-to-end approach, and then there’s the "roll your own" approach that companies like Orca, NDS, SeaChange and others are taking. We believe–and I think the market agrees with us–that the end-to-end approach is the smarter, more successful one. The fact that our platform is designed as a true end-to-end platform, and isn’t just something we cobbled together using a bunch of third-party technologies that we’ve acquired in an effort to create an approximation of an end-to-end platform, is something that I think is going to be a big strategic advantage when it comes to scaling these IPTV services to huge numbers of subscribers like the tier-one telcos are planning to.

[itvt]: Could you talk more about what you consider to be the advantages of a single-vendor "homogeneous" end-to-end solution like Microsoft TV’s IPTV Edition solution, as opposed to multi-vendor, end-to-end IPTV solutions such as the one offered by Siemens?

Graczyk: There are vendors who claim a so-called "best-of-breed" approach of choosing technology A from vendor A, technology B from vendor B and so forth is superior to an end-to-end solution like ours. That implies that the components of an end-to-end solution can’t also be best-of-breed to begin with, which is, of course, not true. But individual components aren’t the key thing here, and vendors that think so are naïve. What matters in the end is the quality of the subscriber experience, not the technologies that make up the experience. You can buy the best lumber, the best nails, and the best shingles and still build a crappy house with a leaky roof.

A key competitive advantage of Microsoft TV IPTV Edition is that it is an end-to-end IPTV delivery software platform designed from the ground up as a complete, integrated, and carrier-grade solution. We believe that this approach allows us to create a superior user experience and enables an accelerated pace of development. We believe achieving a better TV experience will give operators great leverage in convincing consumers to switch their existing pay TV service with an IPTV service. Our customers are competing with well-entrenched pay TV providers that already offer a great service, and just offering a me-too experience is not enough. It’s exactly this end-to-end integration and superior consumer experience that sets IPTV Edition above the rest, and it’s why the world’s leading telecom providers have chosen it as their IPTV software platform.

I think the market has spoken on which approach they believe in.

[itvt]: We have definitely heard from your competitors that IPTV Edition is difficult to integrate with third-party solutions. Could you address that charge in more detail?

Graczyk: We have healthy respect for our competitors. That said, we think our customer list truly speaks for itself, as we’ve make tremendous progress this past year or so with Microsoft TV IPTV Edition.

IPTV Edition is built on open standards and is designed to enable service providers to build and deliver next-generation TV services using solutions from a wide variety of vendors of their choosing–from chipsets and set-top boxes, to encoding systems, servers, OSS/BSS systems, content providers, application developers and more. IPTV Edition is in fact more open than many competitive digital TV solutions in the market today.

One of the advantages of Microsoft TV is that it enables service providers to develop their own applications on top the platform–and that is exactly what Verizon, for example, is doing. It’s always been part of the strategy. We’re proud of our progress with Verizon, which has the broadest deployment of pay-TV services of any US RBOC today. The service is being well received by consumers and is now available in approximately 200 cities since launching in the second half of 2005.

[itvt]: As you know, in recent interviews we’ve conducted with Espial and Siemens representatives, they’ve alleged that IPTV Edition has potential scalability problems. Could you address those allegations?

Graczyk: We focus our energy on addressing the needs of our customers rather than the uninformed allegations of competitors. Our customer list and their scale clearly demonstrate their confidence in our solution over others. Microsoft is rigorously load-testing our platform to ensure its stability and scalability in order to meet the high SLA–Service Level Agreement–targets set by operators. On the server side, availability is achieved via server redundancy and standard clustering techniques. Obviously the fact that the solution is based on well-proven and widely used infrastructure technologies, including Windows servers, SQL Server and .net makes this job much easier. We also have hundreds of set-top boxes constantly running the new software "builds" we develop in our labs, so we can monitor on a daily basis the stability of these set-tops and perform code optimization where needed.

The most convincing evidence of Microsoft IPTV Edition’s scalability is actually in the field, where the platform has been commercially deployed by five major telecommunications operators around the world–AT&T in the US, BT in the UK, T-Online France, Deutsche Telekom in Germany and Swisscom in Switzerland.

[itvt]: Another complaint about your solution that we frequently hear from your competitors is that it makes too much use of unicast and not enough use of multicast.

Graczyk: We use a combination of multicast and unicast in order to improve the user experience. For VOD–as in most VOD solutions–unicast is used, as the experience and timing is fully controlled by the subscribers. For live TV we combine multicast and unicast methods in order to achieve fast zapping and efficient use of bandwidth. For example, we use resilient UDP to ensure that lost IP packets during multicast can be retransmitted in unicast back to the client so that the video experience remains flawless. A multicast-only approach simply cannot achieve the same results.

[itvt]: Are there any other criticisms of Microsoft TV from our recent interviews with Siemens and Espial representatives that you would like to address?

Graczyk: We welcome healthy competition, but we focus our efforts on working with customers and partners rather than justifying our strategy and decisions for competitors. We’re flattered that competitors seem to spend more time in their interviews talking about our solution than their own.

We have different philosophies and visions of the market and spirited debate is good. In the end, customers make their technology choices after extensive testing, often pitting competitive solutions against each other in those tests. In the end, they choose the best solution for their needs.

I do need to correct a couple of statements Siemens made about our platform that are factually untrue. First, they speculated that the cost of the fast channel zapping feature in IPTV Edition is a dollar or two per subscriber per month. While I won’t get into details, as it varies depending on the specifics of each service provider’s network and service, I will say their guestimate is inaccurate and the incremental cost of adding channel zapping is significantly lower. I’ll also point out that channel zapping is an option that service providers can choose not to implement. We have yet to see a customer choose not to include channel zapping in their service offering.

Second, they incorrectly said that we do not support MPEG-4. Our IPTV Edition platform, DRM and the set-tops that run IPTV Edition all support VC-1, MPEG-4 and even MPEG-2. We have customers today who are deploying IPTV Edition with MPEG-4.

[itvt]: Now Microsoft TV last fall coordinated an announcement with several set-top box makers that are offering system-on-a-chip-based IP set-top boxes. Could you talk a little about the significance of that announcement?

Graczyk: Yes. In October, at the Broadband World Forum in Paris, we announced with a number of partners the availability of what are, essentially, second-generation IPTV set-top boxes. As you mentioned, these are based on SoC technology–from chipmakers like Sigma Designs and ST Microelectronics. What the SoC does is chip-based video decoding in three codecs: MPEG-2, MPEG-4, and VC-1. Now in the first-generation IP set-tops that you see used in the early AT&T deployments, for example, the video was just decoded in the set-top box, not on the chipset itself. One of the huge benefits of the SoC architecture is that it enables multistream, multi-codec decoding in hardware. So you can have a very low-cost set-top box that enables two, three or four–in fact, I’ve seen up to 16–simultaneous streams of video to be decoded at once. So, if you look at AT&T’s more recent deployments, where you’ve got DVR with the ability to watch one show and record three others at the same time, that’s enabled by SoC technology. In a cable or satellite environment, you’d have to have four different tuners in that set-top box to enable that kind of functionality.

[itvt]: I take it that all your IPTV customers are using these SoC boxes…

Graczyk: Yes, all of our customers are rolling out these boxes. The boxes are now commercially available from Cisco, Motorola, Phillips and Tatung, and our customers are using them across-the-board, in order to go into their scaled-deployment mode. I’m not aware of any customer that’s not planning to use the SoC set-tops, simply because they provide more capability at lower cost.

The whole industry’s been waiting for SoC, so that they can roll out these services at scale, and enable things like cost-effective HDTV delivery. We, of course, have been doing HDTV on our software platform for a long time: I’m sure you can think back to demos you saw three years ago of Microsoft TV delivering HD content. The difference was that the set-top boxes on which those demos ran were much more expensive, because the decoding was done in software, as opposed to on the chipset. You had to have a heftier box with a faster processor and more memory. But now, when you use these SoC chipsets in the set-tops, you can offload all of that decoding onto the chipset. So you’ve got, effectively, a multistream HD DVR set-top box in the $150 to $200 price range, and with a much smaller form factor. Cable or satellite set-top boxes with the same functionality are much more expensive.

[itvt]: Could you give us an overview of the current state of your IPTV platform’s feature set and of any new features you’re planning on adding?

Graczyk: Well, I think our platform enables a much better TV experience for consumers than what those consumers have in their homes today. It offers a full set of features, all-digital audio and video, support for both standard- and high-def programming, and support for virtually unlimited content. Because it’s not a broadcast architecture, you don’t have the bandwidth limitations you do in digital cable or satellite, where, if your pipe’s full and you want to offer another HD channel, you’ve got to take away something else to make room for that. You don’t have those kinds of limitations with IPTV, because it’s not broadcast. So as long as you have the bandwidth into the home to support the number of video streams needed for that home, it really doesn’t matter whether you offer 10 HD programs at any one time, or 10,000.

Not only do we have a full suite of services–VOD, DVR, standard-def, high-def, etc.–but we also wrap them in a much more elegant package: we offer a superior user experience with things like fast channel-zapping and virtual picture-in-picture capability. By that, I mean we enable picture-in-picture–or what we call multiview applications–without requiring additional hardware in the box. And again, this is in contrast to the traditional digital broadcast environment, where to show picture-in-picture, you need two tuners in the set-top box. Likewise, in the traditional cable or satellite digital broadcast environment, in order to record one program while watching another, you need two tuners in the set-top. With IPTV, picture-in-picture capability is all done through software: so, whether it’s just one picture on-screen or two, four, six…all the way up to 16, that’s just a function that’s enabled by the software–and, of course, by the network bandwidth into the home.

As for future versions of IPTV Edition: they will support next generation connected entertainment, information and communications services.

[itvt]: What kinds of tools are you offering for the development of applications on your IPTV platform?

Graczyk: The Microsoft IPTV Edition platform is an extensible application environment which currently supports a browser that allows service providers to build applications themselves or with third parties. These applications could include multiview portals for content providers, a programming genre, or local communities; casual games; customer bill review; or current information services for weather, breaking news and sports scores. Our customers are already using it. One thing they’re using it for is applications where, if you want to upgrade from, say, a silver to a gold programming package, you don’t have to call an 800 number and navigate a voice-response system–instead, you can upgrade with a couple of clicks of the remote.

You could use this environment for any of a number of Web-based services that can be delivered down to the set-top box. In the future, we’ll have a full Content Development Kit–or CDK–as well as an application engine running in the set-top box. That engine will allow you to run applications locally on your set-tops.

[itvt]: Can you talk more about this CDK?

Graczyk: At this point, we cannot disclose any further information publicly, but we will make details available when the CDK becomes available.

[itvt]: When do you expect it to be commercially available?

Graczyk: 2007.

[itvt]: Which quarter?

Graczyk: I won’t get more specific than that, at this point. But it’s on the product roadmap for this year.

[itvt]: Are any of your IPTV customers working with broadcasters to create interactive programming?

Graczyk: Yes. In fact, there are a number of interesting projects going on–not many of them public yet–where customers–and, in some cases, we along with the customer and the content-provider–are developing interactive services that really exploit the capabilities of the IPTV platform.

We showed an example of one a while back with Major League Baseball. It was essentially a Major League Baseball video portal: you’d tune to the MLB channel and you could have the single, full-screen user experience that people have had for years and years, or you could have a more interactive, multi-picture-on-picture kind of experience, where you could watch multiple games on the screen at one time, and use your remote to flip between the different games: so between the primary game you were watching, which would be in a bigger video window, and three to four other games you’re keeping an eye on, which would appear in smaller, multiview windows. In other words, you could select one of the smaller windows and make it bigger, if you wanted to watch the game it was showing.

We’re also working with our customers on branded VOD storefronts. Those are something you can easily do with the platform today. Starz is one of the companies that we’ve been working with on these storefronts, and we’ve actually shown them publicly. So, if you’re an end-user who has this storefront on your system, you can of course browse VOD the way people browse it today, where you navigate through categories organized by genre, programmer, etc.; or you can also go into a Starz-branded environment, featuring the Starz color scheme and logos. And, as you drill into that Starz-branded VOD storefront, and go from, say, movies to series, or from comedy to drama or whatever, the whole experience can change–so the color schemes, the branding, the poster art and things like that. It’s a much richer way of navigating VOD.

In general, I think today one of the big challenges you have if you’re a VOD customer is that VOD is just very difficult to navigate. The user interfaces are, by and large, very limited and most of them, frankly, are horrendous. So, in order to find the programs you want to watch out of the 2,000 to 8,000 hours of VOD programming you have available to you, you have to navigate through a complex and dull hierarchy of menus. Basically, you have to hunt and peck. Now, with our IPTV environment, you might need to hunt and peck as well, but the experience is a much richer one. Another benefit of our IPTV environment, by the way, is that it allows you to do integrated search: if you search for, say, an actor, a movie, or a TV show, the search results will include all of the programming available through your system–so linear broadcast programming coming up for the next couple weeks, programming in the VOD storefront, and programming that’s already recorded on your DVR but that you’d forgotten you’d recorded. If you want to watch, say, "Dirty Harry," you don’t care as a consumer where it’s coming from–whether it’s on ABC tonight at 11:00PM or in Cinemax’s VOD storefront. You just want to find that movie. So we feel that this integrated search capability is a small feature that has a huge impact on the user experience.

[itvt]: Which of your customers are building these VOD storefronts?

Graczyk: Every single customer of ours is rolling out VOD, and they all have these VOD storefronts enabled. And remember that, even if you’re not doing content-provider-branded storefronts, our platform still offers a rich VOD interface that allows you to do things like poster art and different color schemes that appear as the customer navigates through your VOD offerings.

[itvt]: What other kinds of interactive applications can we expect to see operators running on your platform going forward?

Graczyk: Well, one of the beauties of IPTV, of course, is that it’s delivered over an always-on, two-way broadband network. As a result, lots of interactive TV applications are possible on the platform and can be implemented with a lot more ease than on other platforms. So IPTV is going to easily support things like interactive advertising, enhanced TV applications, such as voting for your favorite contestant on American Idol," and always-on interactive TV applications.

So we’ll see a range of things–from VOD and the basic low-hanging- fruit kinds of ITV applications to, over time, much richer applications such as integrated messaging. Here’s an example: you’re sitting at home watching TV and the phone rings. You get a caller-ID notification that pops up on your screen. You decide you’re not going to answer the phone, and you let it go to voicemail. Then you get a voicemail notification on your screen: you can pause the TV show and actually listen to that voicemail right through your TV system, as opposed to having to pick up your phone and call into your voicemail system, or click "play" on your answering machine.

[itvt]: I take it that Microsoft TV isn’t planning to offer its own content- aggregation service–as some other IPTV companies have been doing…

Graczyk: No. Our customers form their own relationships with programmers and content aggregators. In general, it seems that the tier-one telcos are building relationships directly with broadcasters and programmers for their core linear programming; for their VOD programming, it seems to vary from operator to operator: in some cases they’re working with aggregators and in others they’re working directly with the content providers. However, even though we’re not directly involved in the content-acquisition process, we do often work very closely with content providers at the request of our service provider customers, in order to help them adapt their content to take advantage of some of the unique things that IPTV enables, such as these multiscreen applications I was talking about earlier, and other interactive services.

[itvt]: How do you think the entry of Cisco into the IPTV market will impact that market?

Graczyk: Actually, Cisco, through its acquisitions of Scientific-Atlanta and KiSS Technology, is part of the Microsoft TV IPTV Edition ecosystem, delivering advanced set-top boxes and the latest video encoding solutions to make IPTV a reality. Microsoft TV and Cisco share the vision that Internet Protocol can improve entertainment and communications services while providing service providers with new revenue opportunities.

[itvt]: One of the benefits of your IPTV platform, which at least some of your competitors seem to acknowledge, is that it is well set up for integration with the PC and the Xbox. Could you talk a little about these multiplatform capabilities and where you intend to take them in the future?

Graczyk: Microsoft’s vision is to allow consumers to experience entertainment on any device, anytime, anywhere. Microsoft’s IPTV solution is a key component of this strategy as the platform enables unique connected entertainment experiences that unlock the potential of TV.

In fact, this week at CES we unveiled a first-of-its-kind solution, IPTV on Xbox 360, that brings together two of Microsoft’s leading entertainment assets: the IPTV Edition software platform and the Xbox 360 game console and online service. This is an unparalleled digital entertainment offering for the living room and speaks to how IPTV Edition enables new services and connected experiences.

IPTV running on Xbox 360 is a powerful differentiator for our customers in all markets. It offers service providers some key and unique competitive advantages. It’s truly a 1+1=3 kind of value proposition, as it supports full Xbox and IPTV functionality plus enables new services that are only possible on the platform, such as integrated voice chatting with your Xbox friends while watching TV. Imagine watching a football game in HD on TV while voice-chatting with your friends during the game with your Xbox headset. Then when the game is over, you’re watching the game highlights and you get an invitation from one of your buddies to go online to continue the experience and play one of the Xbox Live football games.

IPTV on Xbox 360 also provides service providers with access to a very valuable consumer segment–gamers; and it enables them to leverage the strong Xbox brand to build new sources of revenue, reduce subscriber churn and acquire new customers. We expect to see our first service provider customers bring it to market by Holiday this year.

URL: Microsoft TV

Originally Published: January 12, 2006  in [itvt] Issue 7.13

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