NAB 2005 Show Report

Buzz About Mergers, HD, H.264, and the Next Big Storage Bucket

NAB (National Association of Broadcasting) is all about TV, movies and radio technology, applications and profits. But it was profits that hogged the spotlight right from the start this year.

Merger Spotlight

Adobe started the show off with a bang by announcing the purchase of Macromedia for $3.4 billion. Now that was a stealth deal that caught everyone with their socks down. Both are very well run, highly healthy companies. There was no rush to the altar so why do it?

The price seems to be "a little stiff" but heck if you don't have to sell; you raise the price bar. For the 800-lb gorilla in its market space, it was a smart move by Adobe because they saw Microsoft drooling over the Web and wireless space. Macromedia is strong in this arena and the combination gives them a giant leap forward so maybe - just maybe - it was cheap at that price!

Avid's acquisition of Pinnacle had a lot of people asking questions but no one was talking because of SEC regulations. All their people would say is "hey this is going to be great for you the customer so don't worry we'll be here for you."

The same was true for InterVideo's slow takeover of Ulead. Lots of questions…no answers.

The joining of Adobe/Macromedia makes sense and we don't see people missing a beat in their applications. It probably even helped some people sign on with Adobe and Macromedia rather than Microsoft because those folks really know video and audio as well as how to get content produced and delivered. MS is a work in progress…at best!

But it has to have caused people looking at Pinnacle and Ulead solutions to think twice and perhaps even shelve (or switch) orders. It's tough for people in any organization that has been purchased to look you in the eye and say with a straight face that the products you are considering will be there after the ink dries and so will they.

Yeah... right!

If you want to see what consumers will be using and hearing/viewing in two years you visit Las Vegas for the April NAB. It was only about three years ago that 80% of the floor was all about big iron sales (stuff to networks, production companies and the bigger stations around the globe. Companies that appeared to be more comfortable at the Consumer Electronics Show (CES) held Twenty percent of the space.

Today the big iron boys look out of place and the products for corporate production, small stations, event videographers, independent production operations and "first in my neighborhood" folks dominated the show. It is really tough for them to relate to people who have budgets of $10 - $25K instead of a half-mil.

Fat budgets have disappeared but the 2-hour gala press conferences haven't!

Sony and Panasonic made their price/performance breakthru camera announcements with High Def units at a "spectacularly low priced" cameras that broke the $6,000 price barrier (whooppee!!). Both proudly declared that their approach would be the standard for the industry in the coming years. Both will probably be about $2,500 next year and in two years high-end consumers will be buying them for a "mere" $1,500.

But the quality of the imagery made the guys and gals drool.

Adobe, Avid, Sony, Apple, Sonic and hundreds of smaller add-in/add-on/plug-in suppliers wowed the crowds with their new High Def software products. It is flat amazing what $1 - $2,000 worth of software can do in the right hands. It's no wonder that Sundance has grown so much in the past couple of years with really great movies produced by independents who scrape together the bucks and talent to make some outstanding entertainment.

That's why the audio and video market has grown beyond networks and Hollywood. The hot segments today seem to be religion, healthcare, education/training, businesses of all sizes and community cable companies. Why not? For $10 - $15 grand and a lot of dedicated work they are in business.

Hollywood could be well on its way to being nothing more than distributors and huge content libraries.

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We're familiar with all of the MPEG standards for content but the buzz surrounding H.264 sent us to the Web to get some background. If it lives up to its promise it could be the solution to a lot of content delivery and storage problems.

MPEG-2 (or DVD if you will) was build for standard and High Def video/TV. It's great for today's DVD movies and in-the-air/cable content delivery. But it sucks when you try to send video anywhere/anytime to mobile units or to put really high, high resolution on a disc. MPEG-2 streams standard TV at under 1Mbps (great for DSL shipment) and 15-20 Mbps for High Def.

MPEG-4 Part 2 was going to solve those issues but the standard was a "natural extension," not a look at the whole future. So the standards people - really smart engineers from a variety of firms - wiped the board clean and started from the beginning.

It will probably take a year to be fully implemented but H.264 really solves the bulky content problem. It can "shrink" MPEG-2's 15-20 Mbps requirement down to 8 Mbps.

Suddenly we'll be able to push more TV programs into channel bandwidth. We'll be able to send really great video over smaller bandwidth networks (like packet-switched IP nets). Satellite service providers will be able to fit four HD channels on one of their present standard channels. Heck movie P2P "services" might be practical if you ignore the fact that the MPAA will sue them the minute the open their doors and Congress will support the scripts (laws) they write.

But we will be able to store our content on a variety of storage formats. It's so good you'll be able to put a complete High Def movie on one of today's single-sided DVDR discs.

The Storage Bucket Saga

With H.264 we won't need blue-ray technology for a few years (all new burners, all new players, all new recorders, all new media) but instead a new codec (encoder/decoder) software/firmware upgrade.

Don't worry, the blue train(s) are coming and there is another approach emerging from the dark.

Frankly we rather liked the "old" CD standard (it is over 20 years old now). Two companies got together (Philips/Sony) and schemed on how to convince people to buy a new storage/playback technology that would reap them hundreds of millions in royalties. They developed one standard, sold the idea to you the consumer and then sold licenses to every hardware, software, media producer year…after year…after year…

No Fuss... No Muss... No Screaming... No Confusion

The next generation - DVD - stumbled at the starting block. Everybody and his brother liked the Philips/Sony formula and wanted a piece of the action (including the MPAA and RIAA). Since they couldn't reach a "best technology" compromise (translation less of "their" royalties) hardware producers had to choose sides, software people had to support everyone and media manufacturers like Verbatim had to just the right amount of each. Sony followed by LG solved the "which solution do I choose" by telling the consumer that they would throw all of the technologies into their burners, recorders, players. The consumer could decide which media to buy and use.

Plus must be better because it's plus but then -R is what we've used for years with CD so it's just like the comfortable media you're used to buying. Right? Does the consumer know the difference? NO! Does the consumer care? Heck no! All they want to know is which media is the best quality that will safely store audio, photo, video and data content on that will play…on anything!

Well the third generation of optical is suffering from the same "my blue-ray approach is better" but now more people want a piece of the royalties and more people want to keep you from copying "their" content. The BD products were the first to emerge and have sold pretty well in Japan. The HD DVD solution has been slow in emerging but it has some strong allies (lots of studios).

Neither approach will have much traction (sales) until 2008 but "everyone" says the multiple formats are "holding up" progress. To end the issue, the two main proponents - Toshiba and Sony - recently decided to sit down at the bargaining table to come up with one next-generation DVD standard and they decide like ladies and gentlemen who decides get what percentage of the royalties.

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Life (and the world) is more complicated than it was 20 years ago. There aren't just two companies involved anymore. Now there are armies of accountants and lawyers from every point of the globe elbowing up to the table for their piece of the action. Isn't that the way the camel was designed???

The new standard will be released shortly but it will be at least six months to work out the details and another six months before we see product - hardware, software, media. IDC's projection that it would be 2010 before Blue-Ray technology hardware has even a few percent of the total DVD sales is starting to look very real!

If H.264 takes off as there is every indication it will and we start to use more of the $40 DVD burners, sub-$150 DVD recorders and sub 50 cent DVDR media that blue sales penetration rate could stretch out to 2015.

All of that is good news for most people but you do have to feel sorry for those Japanese consumers who purchased their expensive BD recorders and cartridge BD media. Like Laserdisc they'll have another collector's item.

Even as they talked in the smoke-filled back room, the HD and BD camps touted their superior solutions. At the same time two camps for an even more attractive storage solutions were demonstrated at NAB…holographic.

The technology has been rattling around in the R & D labs for more than 20 years and has been tried with everything from tape to discs to who knows. But it now appears to be commercially viable albeit for business and professional use for the next five years and then move into the consumer space around 2010.

The big deal is that it a single disc will hold about 300GB out of the gate and can ultimately have a capacity of up to 3.9 TB on a single disc. Burners and media will initially be about the same cost as Blue technology stuff but as we have seen prices deteriorate rapidly as manufacturers rush to buy marketshare.

Both the HVD (holographic versatile disc) and HDS (holographic data storage) camps claim they will be first with real product early next year. While the HDS group showed some really polished videos of their technology, the HVD folks showed real prototype hardware and media.

From what we heard and saw, if we were a manufacturer or software developer we'd put our money on the HVD horse being the first one out of the gate late this year/early next year. The technology already the intense support it has from disc, material, device and tester producers. Best guess is that drives and media will initially be about the same cost as Blue-based products (which is a long way from consumer prices).

Can't wait for Christmas…have to wonder who will be the first with a $50 H.264 codec DVD burner and sub-$500 HD camera? Our DVD collection is starting to look like a good long-term investment for our home theater.