by Bruce R. Elbert, President, Application Technology Strategy, Inc.
As content of all types becomes digital, the satellite communications industry finds itself at the center of an explosion that impacts the nature of entertainment and marketing. This article focuses on several applications for satellite bandwidth that all benefit from its inherent security, speed and simplified logistics for point to multipoint connections.
The first is the emerging field of digital cinema, which eliminates the need for physical film distribution and offers an ideal distribution model for big, live events. With satellite-connected digital signage, businesses can communicate more effectively with their customers while enhancing branding and the in-store experience. Improvements in satellite broadband have the capacity to tap new markets in electronic games and entertainment. Beaming content by satellite provides true mobility within the footprint to all forms of transportation vehicles, boats and ships, and aircraft; as a result, digital content can be accessed nearly anywhere there is power to run the equipment.
Digital Cinema is On the Air
This segment of the entertainment market is growing slowly but steadily. Currently, there are approximately 3,700 digital-capable screens in the United States, representing approximately 10 percent of the total. Delivery to a location with one or more of these enhanced screens works in one of two ways. The first is through the physical delivery of the files on an external hard drive. The other is to broadcast the files through a point to multi-point satellite connection and store them on a hard drive at the theaters.
Hollywood releases an average of five major films a week. On celluloid film, a movie takes up multiple reels, which weigh in the hundreds of pounds; contrast this with a single 180 GB hard drive containing the same movie in digital form. The amount of time required to download or transfer that digital movie would be around 8 hours, assuming a 50 Mbps transfer rate. As the movie itself is digital, and the method of delivery is digital, movie makers can continue to patch a project until nearly the last minute, even before a simultaneous global release. If that file transfer occurs mainly at night, the same 50 Mbps channel can be used during the day and evening to broadcast live content in an enhanced HD format.
The business models for digital cinema are still being hammered out between the studios and theater owners. Currently, parties other than the cinema owners may pay for the digital equipment installed at the screen. This is partly because the economic structure of big screen entertainment means studios have the most to gain in saved production and logistical costs by switching to a digital format. We will discuss important benefits to theater owners later in this article.
To grasp the economic power of digital distribution, lets initially review how distribution currently works for a standard print film:
The studio finishes a movie and sends the master negative to a film lab. The lab makes copies of the film and a distributor sends them out to the various theatres. As described above, films generally consist of multiple reels that are very large, heavy and expensive to ship. The lab/distributor charges the studio a print fee for every copy to cover duplication and shipping to the theaters.
With a digital print, the process is as follows:
The studio sends the master to the digital distributor. If the film wasnt shot digitally, the lab converts the film to digital format. As with print film, the movie is then distributed to the theaters. Whether by hard drive or satellite, the digital movie is encrypted to prevent unauthorized copying. Once the theater has the file, they are sent, through a separate channel, a key to unlock the movie file and permit the theater to show it. Alternatively, keys can permanently unlock the file, be good for a specific number of showings, or for a pre-determined time period. For each key, the studio is charged a virtual print fee.
Once the theater has the movie, regardless of film or digital format, they show it and pay a substantial percentage of the ticket sales to the studios. Theaters make most of their revenue on concessions, relying on the movies to bring audiences to them.
Steadily dropping technology prices and the fragmentation of content distribution channels are enticing consumers to enjoy more entertainment at home. Their options for home entertainment include home theatres, portable music and video players, computers, and video game consoles. As a result, cinema owners are looking to provide experiences on their big screens that audiences cant recreate with their own equipment.
One of the ways theaters can compete with home entertainment is by using networked digital cinemas to broadcast live events. A shining example of how well this works is the 2007 season of the New York Metropolitan Opera. At the Mets On Air and On Line webpage, it is reported that more then 325,000 viewers paid roughly twice the average movie ticket cost to see live performances transmitted from the Met in HD to 300 theaters in the US and around the world. According to Variety, these numbers made the Mets production of The Barber of Seville number 18 in the box office rankings for the week the opera was performed and broadcast.
While talking to The Economist, Bud Mayo of Access IT, Americas biggest digital-cinema distributor, acknowledges music is just the start. Imagine people watching lectures in cinemas. Cable television provides enormously varied fare; the key to its success is that people know where to go to satisfy their peculiar tastes. If people can get used to the idea that their local multiplex shows something other than flying superheroes and dysfunctional families, those empty seats should fill up.
The history of digital cinema is a fairly long one and this application has been evolving for more than ten years. What is different today is that there is a robust standard called Digital Cinema Initiatives (DCI). The objective of DCI is that of establishing and documenting voluntary specifications for an open architecture for digital cinema that ensures a uniform and high level of technical performance, reliability and quality control. In recent years, digital compression and digital movie projection have matured to the point that the risks are now greatly diminished and there are a number of companies like Access IT, Sony and Technicolor already active in this field.
Digital Signage for Out of Home Advertising at its Best
Digital signage is the use of video screens to display advertising and branding information at retail locations where static billboards and posters might have been used in the past. Resembling digital cinema, digital signage embodies a known quantity that has not yet achieved its potential greatness. To obtain a clear picture of this field, I spoke to Jeff Roberts, Vice President at JSAT International, the US subsidiary of SkyPerfect JSAT. JSAT International offers Ku-band services on their Horizons 1 and soon-to-be-launched Horizons 2 satellites. The company has also been active in digital signage for several years. Jeff shared his digital signage and satellite distribution experience and viewpoint with me.
Jeff observes that, advertisers want new ways to reach consumers. Digital signage emerges as a vehicle to present information and advertising to a more targeted audience. Networking signage through satellite bandwidth creates opportunities to utilize this Out of Home (OOH) medium to reach consumers in ways that traditional advertisements are unable to accomplish.
The fragmenting distribution channels for entertainment discussed above also make it easier for audiences to skip over advertising. The desire of advertisers to reconnect with consumers OOH is one of the driving forces behind the growth of digital signage.
In a separate interview with a senior executive in retail banking, I was told that content delivered in the retail environment significantly reduces the time between call to action and a result. A call to action occurs in most commercials, telling the customer how they can purchase the product. When the product is within feet of the digital message, the time for consumer reaction is greatly reduced and success rates can be measured through contemporaneous purchase transactions.
Digital signage generally falls into two categories: ad driven and brand building networks. In the ad driven model, the network is owned and managed by a third party that may place the same channels in more than one retail chain. The third party completes the installation and provides a large portion of the content, including selling ad time to other advertisers not necessarily related to the display location. The owner of the location enjoys less responsibility for content creation and upkeep on the equipment, but may sacrifice most of the control over the content. This is something the previously-quoted banking executive finds less than optimum.
The concept of the ad-driven network is not new; it was introduced in the late 1980s in supermarkets using radio channels. The programming, satellite distribution and in-store installation was provided with no initial cost to the supermarket chain; they would pay a monthly fee per store. Ads were sold to advertisers, or could be provided by the chain itself for an additional fee.
Premiere Retail Networks (PRN) established itself as the outsourcer for in store networks at Wal-Mart, Albertsons, Costco and Best Buy. In the case of Wal-Mart, each store receives several channels each of which is customized for a particular department. Advertising time is sold on these channels, with the frequency of placement being highest for the department where the advertised product is sold.
The brand building network contains fewer product-specific ads but is intended to tie the customer closer to the retailer and its brand. A third party provider such as JSAT International may still create the network. Jeff Roberts observes that the network and all or most of the content is dedicated to the retailer and can be targeted for a particular location or organization. These highly focused and customer-driven networks not only advertise products and services, but also can enhance branding with corporate messages and useful services as well.
Content for digital signage can be loaded onto hard drives in media players and shown on displays at the location. Another delivery method is a streaming video channel received by the store in much the same manner as a consumer might with satellite television. When the latter method is employed, it is sometimes called a narrowcast network. All of the features discussed above are embodied in a network JSAT International has developed with GlobeCast Enterprise Networks.
Some skepticism regarding the effectiveness of simply showing TV style ads has lead to innovations in digital signage useful to consumers. Jeff Roberts offers the example of a restaurant lobby with screens displaying the order in which parties will be called to their tables, including dynamically updated wait times. This motivates the consumer to look at the screen and provides a positive association with also shown advertising content. Regardless of whether or not the restaurant sells ads on their signage, they can include information about their own products, strengthening their brand and making the customer aware of items and services they might otherwise have ignored. This includes the possibility of up-selling an item they had already planned to purchase. (e.g., instead of simply ordering a margarita from the bar, the customer may order a specialty margarita seen on a dynamic display providing a higher profit margin to the restaurant owner.)
The benefits of networking signage with satellite bandwidth are similar to those discussed earlier with regard to digital cinema, including an improved distribution method and significant flexibility. Whether the content is displayed directly off the beam or downloaded and stored on a hard drive before use, a point to multipoint satellite network automates content distribution and simplifies expansion to new locations.
Digital cinema is not the only industry expanding the use of their screens to provide live and unique events to drive traffic to their locations. Going to a bar to watch a sporting event is a well-established social activity. Recently, major retailers have also started to get in on this act. In March of 2007, Wal-Mart partnered with Frito-Lay and country singer Tim McGraw to create a concert that was broadcast over Wal-Marts narrowcast network to provide in-store entertainment for customers.
The same network can be used to provide employee-training using either displays or desktop computers. In the past, schools that focus on distance learning and who operate satellite campuses have used a satellite connection to allow students at multiple universities to sit in on a particular class or speaking engagement, all remotely. Such a system has been in place at Cal State University, Chico since 1975.
Whether the intention is to advertise or educate, a digital signage network is a powerful tool to communicate information to a targeted audience.
Satellite Broadband And The Untapped Electronic Gaming Market
People have been fascinated by electronic games ever since William Higinbotham created Tennis for Two for a 1958 open house at the Jet Propulsion Laboratory. For almost as long as there have been computer networks, there have been computer games available for play and/or download. Satellite networks are something of an untapped resource in this area, though advances in satellite broadband can make playing through a dish more attractive to gamers. But the real issue is the response time of a satellite link as compared to most terrestrial links. Gamers gauge such response time using the ping, which measures the time taken for a short signal from the user console or computer to reach the game server and be reflected back to the gamer.
Currently, the driving force in the industry is the multiplayer game that engages many who play against other human beings, rather than versus computer-generated opponents. The principal approach for the multiplier game is where players pay a subscription for the use of a game hosted on the game providers servers. World of Warcraft (WoW) from Blizzard Entertainment is a strong entrant in this field with millions of gamer subscribers.
An alternative method for the multiplier game is by a direct connection between the games installed on the computers of the players. One player hosts the game on his computer or console, while the other player(s) connect to the host, usually over the Internet. The trick is in finding out who else is playing the same game and wants to engage others at the same time. This issue is addressed by matchmaking services such as GameSpy Arcade and Microsofts Xbox Live, both of which provide an on-line waiting room where players can locate one another.
Applications for satellite networks in games hold some interesting possibilities for gamers in rural areas who have no access to broadband. The key is to ensure the ping remains within reasonable bounds. Most demanding is the twitch genre of fast-action games, where the player can quickly see the effect of his or her actions. Hard core twitch gamers demand a ping of 100 ms or less, while the larger casual segment is considerably more forgiving.
While twitch gets a lot of attention, there are a wide variety of games that are more forgiving in the area of timing and reflexes. Ping is of prime importance to the hard core twitch gamer as timing is so critical to their style of play. These include shooting games like Halo, as well as real-time strategy games like Warcraft III, massively multiplayer games such as WoW, and puzzle games such as Tetris. Thus, there is a substantial segment where ping is less important and current satellite broadband speeds are quite acceptable.
Turn based games where the players act one at a time, such as Poker, Uno, Chess, and Puzzle Quest, are even less dependent on timing. With less than optimal ping, a current satellite connection is more than likely to be quite sufficient for the casual gamer playing fast action twitch-like games. This can be enhanced if the response time of the satellite service is shaped to accelerate game performance.
As up and download speeds of satellite broadband are brought more in line with what one expects from a conventional Internet connection, multiplayer computer gaming could become the killer app that brings a new market segment into satellite broadband. There is also the option of optimizing game performance by tuning the satellite link with special software, similar to what is used to enhance the web page downloads. These steps will likely improve the latency/ping issue over satellite and provide a consistent connection across a wide area.
Making it Mobile and Enjoyable at the Same Time
In an address to the Association of National Advertisers on October 11, Microsoft CEO Steve Ballmer predicted that all media will be digital by the year 2017. We will have rich databases of information to deliver the right message to the right person at the right time in any communication, The devices that people use to communicate, get news, watch video, and play their games are increasingly mobile. With digital traffic increasing, there is a greater need for wireless infrastructure in areas that are not currently economical to serve.
Mobile products from companies such as KVH Industries and XM/Sirius, which provide satellite video and audio, can impact markets for digital content. Currently, satellite delivery is one-way on a broadcast basis, but two-way interactive delivery is developing quickly. Yet satellites remain an ideal backhaul medium in existing and expanding markets in rural and remote areas, especially in developing countries. The appropriate ground elements can be obtained on the commercial market and the necessary satellite capacity rented on a wholesale basis, thus reducing time, risk and cost.
I want to thank Michelle Elbert, associate consultant at ATSI, for her considerable contributions to this article, particularly with regard to the computer games market. Also, Jeff Roberts of JSAT International was extremely helpful with comments on digital signage and digital cinema.
Bruce Elbert has more than 30 years experience in satellite communications and is president of the consulting firm Application Technology Strategy, Inc. (ATSI), which assists major users and developers of satellite systems and applications. He is an author and educator in this field, having published seven titles and conducted technical and business training around the world. During 25 years with Hughes Electronics, he directed major technical projects and led business activities in the US and overseas. He is the author of "The Satellite Communication Applications Handbook, 2nd edition" (2004, Artech House).