Douglas Crockford




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NCTA 1994: Clichés in Transition

This year's convention of the National Cable Television Association was the biggest ever, with over 20,000 attendees. Cable is under the spotlight because it is an industry bound for the information superhighway, and its conventions feature big name entertainment and porn stars. The telephone industry is much bigger and more important, but everything about it is boring. The Cable Business is Show Business, and like Show Business, it's like no business I know.

The exhibits can be divided into roughly three categories:

The traditional cable folks were curious about the new digital stuff. The most obvious influence of the new stuff: The explosion of new, limited appeal cable channels. The developers of these networks are depending on increased channel capacity to deliver their signals to market.

New Networks

There is not sufficient channel capacity currently to carry any of these new networks. Recent "must carry" rules have caused some cable operators to delete C-SPAN because of a shortage of channels.

Clearly, these new network developers are counting on increased capacity due to deployment of fiber backbones. In some cases, they are also depending on home satellite reception.

The target audience for most of the new networks is small and narrowly focused. The trend of narrowercasting and audience splintering continues with the introduction (or hoped for introduction) of many new cable channels.

Most of these networks require no description. The title of the network could as easily be the title of a television program or magazine. The hopes of the owners of these networks is that digital expansion of the cable systems will provide them a slot, and that the demographics of their targeted splinter will be adequate to assure profitability.

One of the consequences of splintering is that there is less money available for production. That leads inevitably to fare made up of talk shows, reruns, old movies, and commercials.

The greatest irony of cable is the huge growth in all-commercial formats. The success of cable is due in part to the non-advertising alternative to broadcasting provided by HBO. There are now many all-commercial channels, with many many more hoping to enter. Is there a sufficiently large market for this stuff? It seems doubtful.

A number of contenders are going after MTV. It is likely that many of the contenders will merge their efforts into a single channel.

The Economics of VCR Programming

What is it worth to you to learn how to program your VCR? That question can now be answered in dollar terms.

A new on demand service called YOUR CHOICE TV records selected regularly scheduled programming from the popular networks, and allows you to access it for a fee. The fee is usually about a dollar. If you learned how to record it yourself, it would be free.

There are also many on-line program guides, which will transmit your choices to your VCR. It is not clear yet what price the market will accept for this service, although some giddy optimists hope that it might range around $10 a month.

Near-video-on-demand (NVOD) is a special form of pay-per-view (PPV), offering several starting times per hour, perhaps in 10 minute increments.

PPV has been a huge disappointment. Most homes don't use it, those homes that do don't use it very much, generating maybe $2.50 a month, on average.

The convenience offered by NVOD is that less planning is required on the part of the viewer, and so there will be more impulse buying. This might have the effect of doubling the PPV revenue, although that may also be optimistic. It requires the deployment of many more channels, probably by means of digital compression, which is expensive and which in its current form causes some degradation in image quality.


As currently practiced, video compression introduces artifacts. It turns out that analog television is already highly compressed by color subsampling and interlacing. Digital compression suffers from those defects and adds many more. The greater the compression factor, the greater the defects.

I has watching a demonstration of compression in the Fujitsu booth. The program material was a football game. Much of the time the image seemed acceptable. But then the play starts, and everything that is motion gets fuzzy. The football itself disappears until the play is over.

I could not have selected a better example to show the weakness in wholesale digital compression. For most football fans, they want to SEE the play. They want to CALL the play. A video system which gives a clear picture of the guys on the bench, while obscuring the guys in play, is simply the wrong technology. Get outta here.

Really Interesting

So much of this stuff is just hype, and is pretty silly if you can see it for what it is. There are a couple of trends though that have some substance and should be examined closely.

The first is local telephone traffic in the cable. This is much easier to accomplish than many of the nutty video-on-demand schemes. It is a terror to the RBOCs, because it means real competition in the local loop, a competition they haven't experience in almost a hundred years. Technology is available from FPN, Tellabs, Motorola, General Instrument, and Scientific Atlanta.

The second is the electric utilities installing demand-side management (DSM) service, which includes the operation of a two-way fiber network between the electric company and the customer. Such systems can be justified on the basis of telemetry. The data capacity is a bonus.

The third is the defining of the role of the phone companies. They want to get into the content business in order to avoid being trapped forever in the role of a commodity common carrier. But that is all they are good at. That is all they will ever be. The phone company just isn't creative enough or daring enough or fast enough to do anything else. They're the phone company.


The merger frenzy has seemed to have slowed down. After reaching a frenzied peak with the Viacom/Paramount deal, many of the subsequent deals have fallen apart, including Bell Atlantic/TCI, Viacom/Blockbuster, and Sprint/EDS. This is due in part to a heightened sense of reality in the finance community, which is now prepared to look beyond the hype.

The partnering craze is continuing. It is fueled by the observation that no single company has all the competencies required to dominate the new media business, and so complementary companies are banding together. These bands are far less binding than mergers, and also tend to be non-exclusive.

But when you get past the hype, partnering can also expose unexpected points of competition and antagonism. Here is an important example:

TV Guide On Screen was partnering with Time Warner in the Full Service Trial in Orlando, Florida. Time Warner dumped its partner TV Guide in favor of Prevue Network's Prevue Express. Why?

They had a difference of opinion about the Main Menu, and the means of access to services in general. TV Guide wanted everything the system had to offer to be available through the program listing function. They felt that it would give the viewers convenience, and it increases the importance of the TV Guide trademark.

Time Warner, on the other hand, wanted to restrict TV Guide to only listing the analog TV offerings, and all of the newer services would be available only through Time Warner's menus.

This appears to be a trivial argument, but it gets to issues of monopolization and control. Time Warner now views their Main Menu as a crucial corporate asset. It is their most powerful instrument in restricting the viewer's options to those which benefit Time Warner.

The incidence of these sorts of squabbles between partners and allies will increase as their apparent business interests become clearer.


Results of a Survey of 1000 US Cable homes, reported by Broadcasting & Cable magazine, May 23, 1994. These results mostly indicate a lack of demand for new On Demand services.

Would you be willing to shop from your home using interactive TV?

    21.5%   Yes
    71.1%   No
     7.4%   Don't Know

How much would you be willing to pay for goods or services purchased through interactive TV?

    14.0%   Willing to pay more
    54.0%   Willing to pay the same
    28.4%   Only willing to pay less
     3.6%   Don't know

What goods and services would you be interested in buying through interactive TV?

    57.7%   Clothing
    54.0%   Household goods
    50.2%   Sporting goods
    47.9%   Consumer electronics
    44.7%   Travel services
    35.8%   Groceries
    34.0%   Jewelry
    24.7%   Financial services

If you would drop existing services to add interactive services, what would they be?

    37.2%   Premium channels
    25.0%   Basic cable channels
     8.1%   Broadcast TV channels
    29.7%   Don't know

What on-line information is useful to you?

    39.0%   Weather
    36.8%   News
    33.1%   Consumer reports
    32.5%   Movie listings
    29.4%   Encyclopedia
    24.1%   Sports scores
    19.6%   Theater listings
    19.0%   Airline info
    18.7%   Restaurant listings
    18.3%   Book reviews
    16.5%   Traffic reports
    16.3%   Hotel/car info

Would you subscribe to a direct broadcast satellite service if you had to pay $600 for the reception equipment?

    14.0%   Yes
    68.1%   No
    17.9%   Don't know

Would you be willing to pay extra for HDTV service?

    26.2%   Yes
    73.8%   No

Would you pay $800-$1000 for an HDTV set?

    19.5%   Yes
    65.8%   No
    14.7%   Don't know

If your telephone company offered TV services comparable to your cable service, what would you do?

    27.1%   Switch to Telephone company
    45.8%   Stay with cable
    27.1%   Don't know

If your cable system offered telephone service comparable to your telephone company, what would you do?

     7.9%   Switch to cable
    69.9%   Stay with telephone company
    22.2%   Don't know

About the respondents:

    91%     Own a VCR
    38%     Own video game player
    71.9%   Own PC
    45.2%   Own a modem
    17.2%   Subscribe to an on-line service
     2.6    Number of TV sets
     1.9    Number of sets hooked up to cable
     4.5    Number of video tapes rented per month
   $29.80   Average month cable charges
    42%     Those using a set-top converter
     0.4    The number of PPV purchased each month
            by those with set top converters

Really Silly

This is Microsoft's list of interactive TV services, according to On Demand, the Magazine for Transaction Television. It looks like a list that might show up on a white board after some brainstorming. It demonstrates a pretty serious lack of "getting it." It is astonishing that they gave it to the press, and similarly astonishing that it was printed without comment as Microsoft's Vision. Isn't anyone paying attention?

Home shopping
Multiplayer gaming
Software downloads
Software distribution
Information channels
Airline schedules
Local events
Interactive ads
Consumer rating guide
Information databases
Interactive multimedia
TV guides
Yellow Pages
Local Yellow Pages
Travel guides
Restaurant guides
Shopping catalogs
Prodigy/America OnLine/Sierra Network
Video telephony
Integrated answering machine
Multimedia education
Creativity software
Group canvases
Topic hopping
On-line and off-line integrated sourceware
Senior citizen services
Rotisserie leagues
Chat forums
Video bulletin board
Adult entertainment
Personal finance
Home banking
Emergency system
Home control


Time Warner is betting on home shopping via cable. It is also betting against it. It has set up an organization called Time Warner Cable Direct (TWCD) that will sell the cable subscriber lists to mail-order companies.

I was getting a demonstration of GTE's Main Street. They were particularly proud of the feature where I could select a restaurant and make a reservation. I asked "How does the restaurant know?" and they said that the signal is sent from my remote controller through the telephone system to the head end so I repeated my question "How does the restaurant know?" and they repeat the story about head end and so I said "How does the restaurant know? Is there a terminal at the restaurant that says 8:00 PM Party of two? Or does someone at the head-end pick up the phone and call the restaurant for me? How does it actually work for the restaurant? How does the restaurant know?" They didn't know.

And of course, there is lots of activity in trying to create a set top box standard. This work is proceeding well ahead of the work of determining what exactly a set top box is supposed to do.

The Digital Transition [2004 - 2005]