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Multi-Channel Digital Entertainment Market

The multi-channel entertainment market includes video technologies geared towards consumer needs in the home. In the past, the household television has served as the primary device to view video content.

Within the last five years, there have been broad improvements in sound and picture quality, the variety of programs, and new types of applications to manage the TV-watching experience. Digital TV has enabled video to be repackaged with improved navigation and customized to meet consumer entertainment demands.

Current Analysis prepared the following assessment of the U.S. digital home entertainment market.

Digital TV Offers Much More: Cable and satellite pay-TV providers are offering their customers an abundance of digital channels and VoD programming covering genres such as news, movies, and sports. The limitations of analog TV have caused cable providers to push for all their premium services to be available only with a digital TV set-top box. The major cable providers have managed to convert about half of their basic subscribers to digital cable service.

DVR Changes Viewing Habits: The DVR provides the consumer with more control over programming. The DVR was launched in 1997 by TiVo as a new service with its own equipment, which millions of TV viewers embraced. Now, the cable, major telcos, and satellite companies provide DVR as an add-on service for around $10 per month, with proprietary DVR services combined in a single set-top box to have similar functions to the original TiVo DVR service.

HD Quality: Once consumers see and hear it for themselves, they understand the attraction to HDTV programming, which packs in four to five times as much information as an analog signal for a sharper picture. HDTV programming is usually part of a premium channel package or sold extra for an additional $5 to $10 per month -- or a free promotional upgrade in some cases, such as the AT&T U-verse offering. Sales of digital TVs with HDTV capability are on the rise with reduced prices, and more programming is being formatted in HD.

So Many Channels to Watch: Cable and satellite TV providers offer a similar amount of programming, with hundreds of channels, including all the premium movie channels (i.e., HBO, Showtime, Cinemax, and STARZ!), sports premium packages including out-of-market games, and international programming. With so many types of content available to watch, navigation channel guides have become more important to categorize programs, organize them, and potentially customize them to make programs of interest easier to find.

VoD Programming Options Are Growing: Content creators are releasing more programming to be available to consumers through Video on Demand (VoD), which allows instant access to content with the added benefit of letting the subscriber pause, fast forward, and rewind the program. The largest cable provider, Comcast, had 1.8 billion VoD viewings in 2006 -- up 36 percent from the previous year.

Set-top Box Expanding Role: Cable and satellite TV providers are increasing the capabilities of their set-top boxes to carry out more functions beyond just channel navigation. Video provider's set-top boxes today can handle HDTV programming, an expansive library of video-on-demand content, and built-in DVRs with large hard drives. Advanced boxes such as the 2Wire MediaPortal for AT&T Homezone are linking the TV to PC content such as digital music and photos, and they are able to download unique programs off the Internet directly to the TV screen.

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