The battle between Germany’s media titans Bertelsmann AG and the Kirch Gruppe over the future standard for digital television has finally come to truce, marking the closing chapter in what one Frankfurt media analyst equaled to a cross between a mystery and a soap opera. But while the two sides have agreed on a common […]
The battle between Germany’s media titans Bertelsmann AG and the Kirch Gruppe over the future standard for digital television has finally come to truce, marking the closing chapter in what one Frankfurt media analyst equaled to a cross between a mystery and a soap opera. But while the two sides have agreed on a common interface for their competing digital decoders, the saga is far from over. Although the industry has averted a standards conflict, one reminiscent to the rivalry between VHS and Betamax, it still leaves Europe with two very different black boxes and two different directions in which to go. One is the media-box, a decoder to be jointly developed by Philips Electronics NV and a consortium lead by Bertelsmann together with partners including Deutsche Telekom AG, France’s Canal Plus and Germany’s two major public broadcast stations ARD and ZDF.
Its encryption code was developed by Seca SA, a French joint venture owned by Bertelsmann and Canal Plus. No-one has seen it yet and it is reported to lack multimedia features. It debut is scheduled for the CeBit home consumer electronics trade show next month in Hannover. Bertelsmann, which has stakes in broadcast television, electronic publishing, Internet tools, on-line services and music, seemed to have it all and Thomas Middelhof, Bertelsmann management board member in charge of multimedia, hinted that the media-box would eventually set the standard for European digital television. But it was not to be. The Kirch Gruppe, a company that had originally been a member in the Bertelsmann consortium and later grew impatient with the consortium’s slow pace, emerged with its own decoder. The so-called d-box, jointly developed by BetaTechnik GmbH, a Kirch Gruppe company, and Nokia Oy, is based on Nokia’s DVB 9500. Its conditional access system, which is stored on a PCMIA card, is the work of Irdeto. To date the d-box has two major advantages over the media-box: it is available beginning July 28 and it is the first device to combine television and computer applications. Analysts including Kathy Rankin, a senior consultant at Ovum Ltd of London, are convinced that this is the direction the industry is going. The winner on the marketplace will be the provider who has the simplest box and the easiest access… preferably through a remote control, Ms Rankin says. It also helps, she says to be first to market. Kirch appears to have managed both. Indeed, this is the driving philospohy behind the d-box, says Gabor Toth, a BetaTechnik manager and the brain behind the d-box. The difference between Kirch and Bertelsmann decoders, he adds is the difference between color and black & white (television). Toth, a visionary often likened to Bill Gates, believes business professionals and private households are two sides of the same coin. The line that divides them is fast fading, Gabor says.
The d-box can adapt to this development, he adds, and marks a revolution in the way we all communicate with each other now and in the future. The d-box has a long list of features which ensure its place in both home and office environments. The de coder can be used to operate a CD-ROM disk drive, Photo-CD, CD-video, video recorder, digital radio and game console. It has a printer interface and provides access to large networks like the Internet through an integrated telephone modem. The decoder also makes it possible to broadcast programs and services to pre-defined regions and user groups, a feature that intrigues many computer vendors. So far Siemens Nixdorf Informationssysteme AG has built a business application based exclusively on the d-box called Gigabyte-Business-Broadcast. It supports data transmission via satellite and makes use of the d-box’s unique ability to receive continuously variable bandwidths from 2MHz to 54MHz. The Kirch Gruppe says it will announce its first corporate users this fall. A main d-box attraction for consumers is TONI, Tele-Online Navigation Instrument, a menu-based interface similar to a remote control based on point and click features. TONI activates the d-box electronic program guide, an on -screen display that lists all television programming and enables the family to design its own programming by offering the choice between six camera positions. TONI also acts as a gateway to on-line services and the Internet. It enables users to download software on the air and update the decoder’s own operating system software when new services are introduced. This means We have invested to create a unique solution, Toth says, and we have succeeded. The Kirch Gruppe, says Simon Reader, a senior analyst at CIT Research Ltd in London, understands that market and is well positioned to benefit from its head-start to market. It wisely introduced superior hardware, Reader notes, at precisely the same time it decided to stockpile more software. Software in this case is programming rights – and at age 69, Kirch has been squirreling them away for four decades. His Fort Knox is estimated to total at least 15,000 movies and 50,000 hours of television programming ranging from Star Trek (from Enterprise to the present) to the complete Laurel & Hardy collection.
A recent count contained no fewer than 35 Emmys, 65 Golden Globes and 490 Oscars. Kirch will need the programming to satisfy the appetite of DF1, the digital television station it launches this Sunday. In addition to offering pay per view it will also feature a pot-pourri of German-language content including sports, classic movies, thrillers, opera and DMX, CD-quality radio. Kirch intends to invest $665m in DF1 by the year 2000. Kirch has also dominated the headlines with one billion-dollar deal after another to spice up its DF1 package. In addition to reuniting with Rupert Murdoch last week, Kirch has sewn up the rights to programming from almost all major US studios. It formed a five-year strategic alliance with Viacom Inc, a joint venture with Discovery, and agreed to broadcast the Microsoft-NBC station MSNBC. It also closed deals with Columbia Tristar and Steven Spielberg and is due to announce a similar alliance with MCA Inc soon. Bertelsmann, a 160-year old publishing house, will have to work double-time to catch up up with Kirch, Reader says. Particularly because the truce on standards means consumers will be looking at content and not technology. Even so, analysts stress, the d-box incorporates the features that will enable it to benefit from the convergence in the industry between the television, the computer and the telephone.
By Peggy Salz-Trautman