January 7, 2007 9:00 PM PST

Aiming to sell set-top boxes to the masses

Are cable TV customers willing to go to an electronics store and buy a set-top box? Digeo, an interactive TV services company, hopes so.

The company is lining up manufacturers to make and market set-top boxes built around its software and hardware designs, said CEO Mike Fidler in an interview ahead of the Consumer Electronics Show. Digeo, which merged with Moxi Digital in 2002, provided details on its plans at the show.

Currently, cable TV customers use the set-top box installed by the cable provider and pay a monthly rental fee. But later this year, federal regulations will require cable companies to give consumers the option of taking a box from their carrier or buying their own.

"The market changes pretty dramatically by July," Fidler said.

But will consumers buy a set-top box? The boxes based around Digeo's technology sport a programming guide that's easier and more intuitive than the one offered by most cable TV providers, Fidler said. The Digeo boxes can also serve as DVRs and can be used with more than one TV at a time.

The Digeo boxes, which will come out around the second half of the year, over the long-term will also cost less than renting a set-top, he added. Ideally, manufacturing partners will make their money off selling the box, though some may also charge small monthly service fees, he said.

"Our goal would be not to have a service fee," Fidler said.

History, though, has not been kind to set-top box specialists. Many start-ups and established companies have laid out plans to develop sophisticated set-top boxes that could one day rival the PC as the nerve center for a home network. Most have flopped. Liberate, formed back in the '90s at Oracle, filed for Chapter 11 bankruptcy protection in 2004. WebTV and other TV experiments at Microsoft have wooed few consumers.

Sun Microsystems Chairman Scott McNealy once described his company's purchase of set-top specialist Diba this way: "About four minutes into the acquisition we said, 'Whoops!'"

Six years ago, Moxi, founded by Steve Perlman, was one of the market's big stars. In 2001, venture investors plunked $67 million into Moxi (then called Rearden Steel). At the time, it was one of the largest first-round investments to date. The investment also came after the Internet bubble had burst.

The company then changed its named to Moxi Digital and unveiled a prototype set-top at CES in 2002.

Motorola has made and shipped set-top boxes based on the company's designs, and cable carriers like Time Warner and Charter Communications have put them in certain markets. But Digeo's footprint is still moderately sized. Through cable providers, about 400,000 units have been installed in about 100 cities in the U.S., said Fidler.

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As the owner of a Tivo Series 3, I can tell you the cable companies are well aware of how to get their money regardless of whether you buy your own box or use their box.

Comcast in my area charges a $6.95 "digital access fee" for my Tivo which just coincidentally is the price of renting their box. So basically they get their money either way. You might as well get their box and then if it breaks they'll replace it.

The only way these companies have a chance is if they can offer a better box for less money. And it is pretty hard to be cheaper than free.
Posted by joecm (7 comments )
Reply Link Flag
Well ...
Cox charges $4.95 for "DVR service" (which is entirely in the box) and $9.95 for "Digital Converter--DVR" (which I expect is actual rental for the DVR). These are on top of the several fees for various digital channels (which are programming fees, not equipment fees).

If I could scrap these two fees for a $6.95 digital access fee, I'd be ahead (yes, annoyed--it's rather like charging you to attach a TV to your paid-for cable, but I'd still be ahead). Now, if the FCC has their act together, they may have proscribed these fees ("What? You're paying a monthly fee for digital cable and NOW you want to connect a box so that you can watch it????").

--mark d.
Posted by markdoiron (1138 comments )
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DVR will be increasingly less relevant for cable
When Moxi was introduced at the 2002 CES, I used it working with Dish Network (it was awesome), and they said they planned cable boxes for the future. After the Digeo merger, they scrapped Moxi's satellite version and spent the next 2 years to get out a cable version, presumably because of Paul Allen's control of both Digeo and Charter cable. Satellite will always need DVR because it is broadcast-only, but cable has been increasingly moving toward offering DVR-like features from the cable head-end. It will be an uphill battle (Tivo is pursuing the same strategy) to sell a DVR set-top box to compete with a service that records almost everything using a free set-top box, even if the DVR user experience is better.
Posted by creatix (2 comments )
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Good Idea
I remember the days of mandatory rental phones from the telephone company. There was almost zero innovation and, consequently, zero features. As soon as the FCC directed opening the phone lines up there were dozens of great phone styles that came out, eventually incorporating all kinds of technological advances.

The same thing will happen here. I'd love a DVR that's in the color I want (I HATE silver!!!). And I think it would be great if instead of buying a "set-top box" I could buy a full-featured video center--Digital Cable Receiver, DVR, DVD player (or whatever flavor of high def eventually wins out, if any), DAR (for wirelessly receiving audio/video from my wi-fi network), etc. This won't happen until we get the cable companies out of the way. It will happen very quickly once we do.

--mark d.
Posted by markdoiron (1138 comments )
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Monthly service fees will likely stick around
CableCard is already positioned to allow consumers to bring along their own devices, but most DVR's also requre things like programming, channel lineups etc. that they tend to use proprietary formats for.

This is the reason you can get a TiVo for cheap, but you have to pay $19.95/month to Tivo and have it connected to the Internet to use it.

I would say they are charging too much money, but I don't believe they are profitable.

DVR's like the Scientific Atlanta Explorer 8000 that are offered by cable companies are not quite as feature rich as the TiVo software yet, but they are newer to the DVR game and you can usually pick them up for cheaper than a TiVo or a Moxi (my SA was $8/mo total)

I like my TiVo better, but right now the sales numbers for the SA Explorer are exploding becasue the cable companies are pushing them and only the $800 Series3 TiVo currently supports CableCard, so you won't get some of your channels on the TiVo.

As feature rich as TiVo and Digeo/Moxi might be, it looks like SA might be taking over their market in a hurry.
Posted by Dachi (797 comments )
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Cox's digital box.
I hope this works out. The guy who installed my Cox Cable digital box didn't understand it. He and I put our heads together and finally got the thing to working.
I would welcome a digital box that I could buy and set up myself.
Posted by kakodes_too (20 comments )
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Using Mythtv is the best way to go for analog, but digital is antenna only
If we could have our own box then we could use a computer.

Advantages with using a PC are mainly room wise. I have a 400GB & a 250GB drive in mine.

Try getting that kind of room elsewhere.

Mythtv (runs on Linux) has all kinds of more features than MS Media Edition and is free.

If you go this route however be aware that some cards are better supported than others. I use the WinTV 150.
Posted by slim-1 (229 comments )
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