Industry Roundup

Video-on-demand: The Holy Grail of the cable industry, VOD is getting a boost from underutilized ("dark") fiber optic networks. Early attempts at VOD were glitchy at best, but computer technology is increasingly making the service a reality via large-capacity servers that can offer thousands of hours of programming to thousands of digital cable subscribers. Many of the fiber networks are owned by telecommunications companies that lease use to cable providers. Cox Communications Inc., Time Warner Inc., and Comcast Corporation have all bet heavily on the potential of fiber optics to deliver more to their subscribers. "80% to 90% of the fiber installed during the telecom boom is still sitting unused," reports Peter Grant in a recent analysis in The Wall Street Journal.

TV Web search: With VOD come video search engines, the couch-potato equivalent of Google, In mid-December San Francisco–based Blinkx launched its web video search engine, said to be the first to let users connect to actual video clips instead of file names or URLs. Entering search words links users to clips cued up to the point where the search word is first mentioned. Yahoo has also released a test version of its web video search engine. Microsoft and other companies have such services in development. Copyright law currently limits video clips to 30 seconds; Blinkx, whose system is based on analysis of audio tracks, is negotiating with content providers for expanded access.

Legal front: On December 14, the Motion Picture Association of America (HREF="http://www.mpaa.org">MPAA filed suit against more than 100 people claimed to maintain "BitTorrent" servers, which when connected to filesharing services such as Kazaa let uses swap "large files" over the Internet. "Large files" is a euphemism for movies. The US Supreme Court recently agreed to hear cases appealed by the entertainment industry against Grokster and StreamCast, two companies whose file-sharing software allows users to swap files with each other. The MPAA also plans to launch lawsuits against NeoModus, Inc.'s "Direct Connect" and MetaMachine, Inc.'s eDonkey, according to reports from Los Angeles.

Philips exits monitor biz: Philips Electronics NV said it will sell its monitor business and some of its television-manufacturing operations for $358 million in stock to TPV Technology Ltd., a Taiwanese maker of computer monitors. The deal follows by a couple of months an announcement from Philips that it would stop producing LCoS rear-projection TV sets. Industry rumors have it that the company would end support for high-resolution audio chipsets by 2007, part of a general move to concentrate its efforts on the more profitable areas of medical and scientific equipment, household appliances, and lighting systems.

Sony-Samsung: In a new twist on the growing trend for sweetheart deals among major manufacturers, Sony and Samsung have announced a plan to share their patents. On December 15, the two rivals announced a no-fee cross-licensing agreement covering approximately 90% of their combined 24,000 patents. Other companies, such as Toshiba, Matsushita, and LG Electronics, are embroiled in expensive patent disputes that prevent sales of their flat-panel displays in some countries. The Sony-Samsung deal may help the two gain market share in the flat-panel market by keeping key technologies between them, and may also take work away from intellectual property lawyers by minimizing patent infringement suits. The deal is good through 2008.

Guilty as charged: Charter Communications, Inc. former chief operating officer David Barford has pleaded guilty to one count of conspiracy, admitting that he participated in a scheme to inflate the number of Charter subscribers reported to financial analysts. The plea, entered in US District Court for the Eastern District of Missouri in St. Louis, could earn the 46-year-old executive five years in jail. Former senior v.p. David McCall pleaded guilty to the same charge earlier this year; two more Charter execs are still awaiting trial. Charter reportedly kept deadbeat accounts active in order to inflate its apparent subscription numbers, very much the way flailing magazines continue to send out unpaid subscriptions in order to improve their clout with potential advertisers.

Blockbuster eases late fees: Video rental chain Blockbuster has initiated a one-week grace period beyond stated due dates before assessing late fees. The move is part of an effort to win back declining market share in the age of Netflix and other online rental competitors. For movie fans, late fees are among the video rental industry's most despised practices, and long one of its most profitable revenue steams. By some accounts, late fees have contributed more than 50% to Blockbuster's bottom line. The new "extended viewing" policy, which includes a purchase option, goes into effect on January 1.

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