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IBC 2004

The IBC Conference and Exposition was held at the RAI Center in Amsterdam, September 9-14. It is Europe's NAB. It is an important meeting for broadcasters, producers, and production equipment makers.

The State of HDTV

Until recently, there was opinion in Europe that HDTV was never going to happen. This was due to the expensive failure of HD-MAC, and more recently, the failure of digital Pay-TV broadcasting.

Things are now looking more optimistic. According to one forecast, in 2008 there will be 17M households with enhanced TV sets, and 2.6M of those sets will be receiving HD programming. This is remarkably similar to the statistics presented by CEA earlier this year for the US market. If the forecast holds, then Europe is about five years behind the US in HDTV adoption. But more significantly, once again DVD is the driver, not the new HDTV programming services. The importance of DVD is consistently overlooked at these conferences.

There are other factors that will constrain HDTV adoption in Europe:

These factors will help promote HDTV adoption in Europe:

DTT

The successful conversion of Berlin is held as an example of the success of DTT. However, the conversion of the rest of Germany is going slowly, and the conversion of all of Europe is going more slowly still. Currently the most successful country is Finland, with 13% of homes converted to digital, followed by England. All other countries are well below 10%, most closer to 0%.

By looking at Europe, it is easy to appreciate the wisdom of some of the actions of the FCC in the US. The FCC felt that the digital conversion required the support of the analog broadcasters, so they chose policies to convert the analog broadcasters into digital broadcasters. In Europe, digital broadcasting was treated as a new, distinct opportunity that would compete against analog broadcasting. The result was that the commercial launch of every new digital broadcasting service failed.

Most countries are trying again. England, with the support of BCC, has a new Freeview service that offers several free-to-air channels. This is becoming the model for the rest of Europe. Still, the transition goes slowly. Some traditional commercial broadcasters are working against the transition. The governments are looking for a switchoff in the next decade, but in many cases it may take even longer.

Spain is on hold, after the failure of its Quiero service. They are studying Freeview.

France will launch a DTT service with 14 free-to-air channels in March, 2005, followed by 14 pay hcannels in September 2005.

Italy is looking at subsidizing DTT as part of an e-Government program.

The current DTT services are not HDTV services. The transition to HDTV broadcasting has not even begun yet.

The good news is that the DVB standards are being applied consistently all over Europe, so a single tuner package will work in all countries.

(By contrast, Australia followed more closely to the US model. Australian broadcasters must triple-cast, transmitting analog, SD, and HD. Broadcasters are not allowed to multicast, which I think is smart. 576p is considered HD. Growth is slow, but is much faster than Europe. And as everywhere else, it is being driven by DVD. Canada is about 2 years behind the US. Mexico adopted ATSC this year.)

All over the world, Broadcasting is losing dominance. Cable, Satellite, and DVD are becoming more important. Confusion about digital media products is a drag on all markets.

720p

NTSC television's ideal viewing distance is about 10 screen heights. Detail is lost if viewed at a greater distance because people tend not to see details smaller than one minute of arc. PAL's ideal viewing distance is a little less because the screen holds more scanlines, so it is about 9 screen heights. HDTV is about 3 screen heights.

That is the theory. But it turns out that people do not change the shape of their homes based on the size of the TV sets they buy, nor do people consider the size of their homes when they buy a TV. Budget and decor are much more important considerations. Regardless of the screen height, most people watch TV at a distance of about 2.7 meters.

An EBU study group has determined that for screen sizes 50 inches and below, there is no advantage to 1080. They also are concerned about the temporal artifacts of interlacing. Therefore, they are recommending that Europe adopt 720p50 as its HDTV presentation format. They believe that very few Europeans will want more than 50" inches of TV screen, so bandwidth spent on 1080 is wasted.

They also determined that these three formats have the same perceived image quality, but significantly different bandwidth requirements:

1080i50 MPEG2 19MB/s
720p50 MPEG2 12MB/s
720p50 WM9 or AVS 8MB/s

(At NAB, I heard someone from Microsoft claim that WM9 provided a compression factor of 2 or 3 over MPEG2. The EBU/BBC study shows that that claim was exaggerated.)

The EBU group felt that it is more important to make payloads small in order to allow more HDTV channels than to support very large screens.

While dropping interlacing is a big step forward, I think it is odd that they want to stick with 50fps. I do not know how rigid they will be. Will they be able to transmit film material at 24fps, or will it have to be converted to 50fps, introducing motion artifacts? Similarly, what will they do with 30fps and 60fps material from the US? Will that have to be converted to 50fps as well?

This recommendation has not yet been approved by EBU. Sony is protesting. This issue has become extremely controversial.

In the long term, there is pressure to adopt 1080p, as there is in the US.

Codecs

There are two new codecs available: H.264 (or AVS) and VC-1 (or WM9). They are very similar in their performance characteristics. There are no strong technical reasons to favor one over the other. They differ mainly in their licensing terms. VC-1 is licensed by Microsoft. H.264 is licensed by MPEGLA, which is so evil that it makes Microsoft look sweet by comparison. There was a lot of positioning by both sides to be adopted as the official HD codec for Europe.

Europe benefits from being behind in this case. The US will have a difficult time introducing new codecs now because MPEG2 tuners and STBs are already shipping.

I suspect that in the end, both codecs will win. Both will be required in the final standard. This will result in consumers needing to buy licenses for two codecs when only one is needed. This is already happening in the HD DVD formats.

DRM

I heard two speakers claim that the Content Industry is a $500B business, and that MPAA's estimate of losses due to piracy are $3B annually. If these estimates are valid, then the Content Industry's loss rate is under 1%, which is quite good. Other industries would be very happy to cut their losses to under 1%. I am concerned that the real cost of DRM to consumers, manufacturers, and broadcasters for DRM technology and licenses fees will be greater than MPAA's real losses.

There was an excellent panel discussion on DRM that included Brad Hunt, CTO of MPAA, who argued that DRM is good for Broadcasters. He looked angry when the other speakers contradicted him. Peter Weber, a German Broadcaster, representing EBU, argued that Broadcast Flag will be totally ineffective in preventing losses due to piracy because broadcasting is at the end of the value chain. Programs are first released to theatres, then PPV, then DVD, then Premium Cable, and then finally to Broadcast. By the time it gets to Broadcast, most of the value has already been extracted, and it is most likely that piracy has already occurred. The European Broadcasters do not want a Broadcast Flag. Donald Whiteside of Intel, representing the technology of DRM, admitted that "it is hackable. It is an inevitability. It will be hacked." Michael Petricone of CEA warned that DRM has a harmful impact on innovation and consumers. He pointed to the Induce Act as a very harmful example. Rich Chessen of FCC explained the philosophy behind Broadcast Flag, and said that FCC cannot attempt to influence foreign governments on this matter. He said that current TV sets are "super capable" compared to next year's TV sets. This is the first time that the FCC has required that consumer TV sets be less capable than the previous generation. The panel discussed the Digital Media Manifesto. Brad Hunt said that MPAA does not like it. Someone said that a Studio has been sending threatening letters to European Broadcasters. The letters demanded that the Broadcasters ask their governments to adopt Broadcast Flag rules. If the Broadcasters refuse, they will not be allowed to air the Studio's content. The Europeans were extremely unhappy about this. The moderator of the panel concluded by saying "Clearly the Europeans will not accept all of the restrictions flowing from the Land of the Free."

In another panel, Blake White of National Teleconsultants talked about the true source of content leakage. Most pirated content does not come from copies of programs that were sold to consumers. An AT&T study shows that only 5% of the illegal content on the web comes from copies of consumer products. MPAA argues that it is 13%. Even if MPAA is right, DRM will have an insignificant effect on illegal web content. A Harvard study shows that the impact of P2P on the sales of CDs has been insignificant. Patrick Fleming of Macrovision Europe described copy protection as "ineffective, but annoying". Peter Clay, a consumer digital rights advocate, agreed with Intel, saying that DRM is breakable. He also said that DMCA has had no impact on pirates. DMCA has had a big negative impact on industry.

Despite all of this, there are DRM activities in Europe. Philips has a DRM system. NDS, an Israeli Digital Pay TV systems company, is developing a silicon-based DRM system called SVP with Thompson. DVB is also developing DRM standards.

Ultimately, all of the DRM systems must work together. The marketplace cannot select a DRM winner because a free marketplace would naturally reject DRM. I think that ultimately all of the DRM system developers will have to pool their products and patents together, so that CE companies will be forced to license all DRM technologies.

Production

Europe will adopt 1080p as the production format regardless of the delivery format. This will happen long before HDTV becomes popular. The reason is that 1080p programs can be exported to the US and Japan. If Europe does not adopt 1080p for production, it risks being shut out of the world entertainment market.

Hollywood, meanwhile, is looking ahead to higher production standards, such as 4K (see below). Hollywood is also looking at DRM systems to protect its projects in development. This might be an effective use of DRM because it protects the most valuable content. They may find that the drag it causes will make it too expensive to use.

Projection

Resolution of displays for the home is measured vertically. For example, an HD monitor might have 720 lines. Resolution of theatrical projectors is measured horizontally. A really good projector is 4K, having nearly 4000 pixels per row. We were given a presentation of the film Shrek 2 in 4K. It looked very good.

(Everyone in the theatre was searched for cameras. There was concern that a conference delegate might record the movie with a camcorder and produce pirated copies that will destroy the global DVD market.)

Digital projection will be very good for the Studios. Film-less distribution to theatres will be a significant savings in time and money. It can also increase quality, which is important to theatres when competing with home video. Currently, the Studios' irrational fear of piracy outweighs the real benefits that will come with digital projection. The mood at the conference was "Don't wait for Hollywood." Europe is now setting up digital theatres for the showing of independent films.

Archive

Some news organizations have lots of interesting material that they have collected over many years. There is interest in using this material to make money, or to serve the public interest, or both. The issues of copyrights makes this a surprisingly difficult thing to do. Sometimes the archive does not hold all of the rights necessary for sharing the content that it holds. On the other hand, there are concerns about the rights granted to the new users of the content. DRM is imagined as a means of protecting the value of archives, but DRM, even if it worked, is not applicable here.

Low Definition

DVB-H is a standard for data broadcasting to mobile devices. Broadcasters are being encourage to dedicate a portion of their bandwidth to these new services. The nature of the services and the business models are still very speculative. This might have a faster adoption than HDTV because the devices are a lot cheaper, and the programming will be cheaper to produce.