By Stefanie Olsen
Staff Writer, CNET News.com
July 24, 2002, 4:00 a.m. PT
Far from Hollywood and Silicon Valley, a key battle over the future of digital entertainment is looming at a federal courthouse in Georgia.
There, a judge will decide on a patent infringement lawsuit filed by Gemstar-TV Guide International against its rivals in the market for "interactive programming guides" used in TV
"The interactive programming guide is going to be the first thing you see when you turn on the television, and that's what everybody's fighting about," said Richard Sherrill, senior vice president of the ITV group at Kitro Media, who has a long history in the cable TV industry. "They all want to control it: The cable guys say they own it, TV Guide says it owns that real estate, even TV manufacturers want a piece of it."
For years, on-screen programming guides have been little more than electronic versions of paper TV listings, reflecting the limited designs of the boxes that housed them. But today, Gemstar and its competitors are experimenting with set-top devices that combine the functions of a DVD player, video recorder, digital jukebox and game arcade, as well as deliver hundreds of channels.
Navigating this vast terrain poses a daunting challenge for consumers--and a huge opportunity for companies that can stake out a role as middlemen, guides and promoters.
"The more choices you have in entertainment programming, the more time consumers will spend in front of a guide," said Josh Bernoff, analyst at Forrester Research. "Any guide company is in a central, powerful position. The same way companies like Yahoo and AOL are crucially important to guide people on the Internet."
So it is understandable why Gemstar, the dominant player in the interactive programming guide market, is fighting bitterly to protect its franchise. The company, which owns TV Guide, reaches about 16 million homes, or about 80 percent of the market.
Competitors have denounced the vanilla-style grid format of its guides but have yet to break its virtual lock on the business, which is based on nearly 200 patents it holds on the listings format and on-screen guides that are built into set-top boxes.
Although Gemstar said it will file an appeal, the ruling could influence a parallel action the company has taken in federal court against the same competitors. A hearing in that case is scheduled for next month in Atlanta.
A court decision against Gemstar could help other companies not directly involved in the dispute, including cable operators that may be able to renegotiate or break long-term contracts with the company if it is found guilty of patent abuse. Rivals such as WorldGate Communications, OpenTV and Microsoft, which in May announced that it would build an interactive programming guide, could be freed to compete more aggressively. And software starts-ups that are building personalized guide services, such as Metabyte Networks, iSurfTV and Predictive Networks, will have more leeway to innovate.
A view of one's own
Metabyte, which is backed by Scientific-Atlanta, sells personal TV software applications and a "preference determination engine" that profiles viewers and serves up shows it thinks they would want to watch. The company's technology is used on Scientific-Atlanta's newest box, the Explorer 8000, which includes many features similar to those of the popular digital video recorder TiVo.
Sunnyvale, Calif.-based iSurfTV has designed highly personalized guides, but with 3-D interfaces that incorporate such topics as news, weather and sports, much like an online portal. Of many of the Web portals, MSN and AOL are best positioned to make the leap into programming guides because of their stakes in cable access.
Predictive Networks, based in Cambridge, Mass., in May introduced a "smart" guide. The company, which is testing the technology in a handful of homes around Boston, creates a "digital silhouette," or composite of the viewers' personal preferences based on shows they watch, and then can serve ads, shows or an array of content choices targeted to those viewers from the guide. Its technology can even detect different viewers in a four-family home, based on biometric technology built into the remote control.
Yet such personalization technology can have drawbacks, as shown by the recent uproar over Web tracking software that sends people highly targeted ads based on their surfing patterns. Many companies aren't betting on personalized services alone to lure customers and plan to offer a variety of services, such as program filtering and advanced search capabilities.
Gemstar, for its part, is aiming to build greater features into its guides to stay competitive. The company recently acquired retailer SkyMall to build "t-commerce" into its guides, giving viewers the ability to buy a product or service directly from the page.
"People have to go to the guide," said Lauren Snyder, spokeswoman for Gemstar. "It's a growing part of our business, no question."
In search of engines
It stands to reason that Web search companies such as Google might be natural for this market, but there are many other companies tailoring their efforts for multimedia devices that go well beyond online surfing. Companies such as GraceNote, whose software allows people to manage and label music libraries, plans to let people search by music genre or scrub mislabeled files downloaded from the Net, thereby bringing order to a music repository.
"When you have hundreds or thousands of albums on your hard drive, managing your music becomes necessary," said David Hyman, CEO of GraceNote, which is built onto the most popular Net players, such as Winamp and Realjukebox.
For video, labeling segments within programming could be an important technology advance for personal video recorders such as TiVo, ultimately giving people the ability to advance or rewind to a specific scene based on language. It could also be essential to build in notification engines so that, for instance, a San Francisco Giants fan could specify parameters to be notified when Barry Bonds is batting next in a televised game.
Still, some experts say interactive programming guides will amount to window dressing on a veritably empty store if the quality of the content offered on broadcast television doesn't improve. Jaron Lanier, lead scientist for the National Tele-immersion Initiative and visiting professor at Dartmouth, said the fundamental economic model of the cable industry, which produces only a handful of quality shows, will butt heads with the innovation of the Web and stifle content creation.
And if there are only a few quality selections to make, people won't need such sophisticated search technologies.
"Unless you have things you want to search for, the viewer won't spend the time to search for anything," Lanier said. "A fancy catalog to choose between seven good TV shows is absolutely useless."