Washington, DC, June 25, 2002 --  

The cultural shock wave that arrived with MTV over two decades ago was billed as just the beginning of the media revolution. As cable companies wired homes at breakneck speed, corporate executives and futurists predicted that the Holy Grail of television -- video-on-demand -- was just around the corner.

No longer would it be necessary to run to the video store to rent a copy of the latest movie. No longer would it be necessary to watch the television shows chosen by programming executives. No more TV schedules. No more channel surfing. You would have the ability to watch the show of your choice at the time of your choice. It was just around the corner. And that was 20 years ago.

What happened?

Despite unforeseen advances in information technology, video-on-demand remains stuck in its tracks. Only a few companies, like California-based Intertainer Inc, supply widely available on-demand services, and these companies have such limited content libraries that they make a mockery of the original idea.¹

Those in the entertainment industry with the power to make video-on-demand happen aren't doing it. American cable companies, bloated from nearly two decades of government-awarded monopoly contracts, have become the antithesis of innovation. The big American studios, entrenched in an opaque fifty-year-old system, show no interest in shaking up the profitable status quo.

This intransigence has left American viewers with few options. Miss the season finale of Friends because you ran out of video tape? Well, that's just too bad. There's no legal way for you to see it unless network programming executives decide to re-run it, say, six months down the road. And you'd better be home and on the right channel at the exact time when it happens.

Thankfully, the industry's infuriating status quo is being shaken with a force worthy of measurement on the Richter scale. The tremendous gap between technological advances and the antiquated television business model have created vast opportunities. Sonic Blue, an American consumer electronics company, has created a set-top box called ReplayTV 4000 that records television digitally, and allows the owner to share programs with others via its built-in Internet connection.

Studio executives are furious. A coalition of television companies including Paramount, Universal, Disney, MGM, ABC and NBC have sued SonicBlue for enabling what they call "piracy." They don't like people viewing programs in ways that they haven't approved, and they're doing everything they can to stop it. In May, a judge agreed to the studio's requests, ordering SonicBlue to spy on its customers using the same Internet connection that allows video sharing.² The information will be used to determine the merits of the case against SonicBlue.

It's not difficult to see why the executives are so upset. Having refused to support creation of video-on-demand services for decades, the studios now face financial ruin by technologies that allow consumers to do it themselves. If you combine enough SonicBlue units on the Internet and add a searchable directory, and you end up with a video-on-demand service that surpasses anything available on the market today. It's Napster comes to television.

Like Napster, SonicBlue is proving to be an easy target for lawsuits that may lead to its demise. Other similar technologies, however, will not be such easy targets. Modern PCs can now be fitted with $200 circuit boards that essentially do the same thing as SonicBlue. They can record digital video, play it back at will, and share it with others using the PC's built-in Internet connectivity. I've been using such a system for over a year -- widespread adoption may be just around the corner.

This holiday season, Microsoft plans to begin offering a SonicBlue-like package called Freestyle on high-end PCs.³ This would allow networking of program libraries in a much more flexible way than with set-top boxes like SonicBlue. And in this case, the studios would have nobody to sue. The ability to record and share television programs with a PC is made possible by multiple distinct technologies that are only put into use for video sharing by the actions of the end-user.

The studios are hoping that they will be able to fight this by forcing hardware manufacturers to include copy-protection technologies in their circuit boards. This is difficult enough for digital copies, but nearly impossible when programs are converted from analog to digital format. Exactly this kind of conversion takes place when a SonicBlue unit or a PC records broadcast video.

The networks and studios hope to stop analog-to-digital copying through the use of video watermark detection circuitry. This would employ a visual watermark that's unnoticed by the human eye, but can be detected by computer circuits. Theoretically, a prefect watermark technology could even stop pirates who go to movie theaters with portable camcorders. In reality, the technology would prove much less reliable. And for it to be employed at all, the studios must convince manufacturers to betray their own interests and install expensive product-limiting circuitry to go along with the studios' self-serving plan. This won't happen without a court order, and probably not at all.

The only thing that saves the studios and broadcast companies instant doom is the limited reach of high-speed Internet connections. Even with a DSL connection, it can take half a day to download a feature length movie with DVD quality. Broadband adoption in America has been at close to a standstill for the past few years, and companies are investing little in expanding its potential. It's the classic Catch-22. Nobody wants to invest more in the broadband technologies that enable video transmission because there isn't enough demand. Yet there isn't enough demand for broadband because there isn't enough video out there to transmit.

This temporary logjam buys television and movie companies time they desperately need to fortify their positions. Unfortunately, they appear to be using this time to pursue obstructionist tactics like lawsuits and copy-protection schemes. It's too bad they won't use it to adopt a revolutionary, user-friendly, industry-supported video-on-demand system. If they chose to do it, it could be just around the corner. Just like it has been for decades.