Road Tips

The Pros and Cons of 3D at Home

I recently became a 29-year veteran of the audio/video industry.  Hard to believe that one can actually make a living selling what are basically high-priced toys.  Over the past few months I've been getting some questions from friends and acquaintances regarding the validity of 3D televisions for the home.  With the fall and holiday selling season rapidly coming on, a number of national, regional and local retailers are banking upon selling 3D video to main stream home video buyers.  There's been a lot of pressure from manufacturers and industry groups on these retailers to adopt and embrace 3D for home, but is it really worth it?   Let me see if I can help clear up some issues. 

A few years ago, my company used to distribute a 3D processor from a Canadian company, Sensio, that featured the first somewhat affordable 3D capable processor in the industry.  Priced at $3000, the Sensio stereoscopic processor was definitely ahead of its time.  But it performed at or better at a price about 1/8th of what previous 3D processors where available at that time.  Being that 3D was a relatively new process at that time, I had to learn a lot about how 3D works, the different formats and where the industry was going before I could go out and sell Sensio. 

About seven years ago, I was interviewed for an article by the Sioux City Journal regarding the Sensio 3D processor.  At that time, HD television was just beginning to become a reality, but the Sensio processor was far from being an HD source.  I incorrectly stated at the time, "(3D will) never be a high definition format just because of the anomalies at go into (the process).   But the wow factor is at the point where people don't care if it's high definition or not.  It's something that's completely magical."  Given the limitations of the processor at the time, I truly believed that 3D would not be available in HD. 

Well, I have been proven completely wrong in my statement.  Technology marched on and a number of companies were able to provide 3D in an HD format.  3D programming is now on DirecTV with channels such as ESPN-3D, DirecTV Cinema 3D and N3D.  Blu-Ray movies in 3D are beginning to become available, as well.  And earlier this year, Sony announced that their Playstation 3 game box will have the capabilities of being able to play both movies and games in 3D via a firmware upgrade that is scheduled to be released at any time. 

As I said, manufacturers have jumped on the 3D bandwagon with both feet and have pushed their product onto the floors of retailers across the nation.  Samsung claimed at the end of August that they've sold 1 million 3D flat panel units in the first six months the televisions were on the market.  They have a goal of selling 2 million units by the end of this year.  The question is, how many of those are making it to the homes of consumers?

Nearly any audio/video store worth its salt has a 3D display on their floor.  Most of these are 55-inch flat panels, although Mitsubishi has models up to an 82-inch rear-projection  that feature 3D capability.  While a number of people have seen 3D in action on the floors of many A/V stores, according to the salespeople I've talked to - especially at American TV and Ultimate Electronics - they aren't exactly flying out the doors. 

Oh, Now, before I go on, I cannot claim that I am an expert at 3D by any means.  But I had to learn much about 3D, the history, how it works, how movies are produced and what type of content is available when I was working with Sensio that I'm dangerous enough to be able to form strong opinions on the subject.  So let's take a look at all the angles of 3D to help you make your decision as to whether or not this is what you really want to get for your home.

Products -

Nearly every major television manufacturer is jumping on the 3D bandwagon.  Panasonic, Samsung, LG Philips, Sharp, Mitsubishi and Sony all have a number of models to choose from that incorporate 3D technology.  Projection companies Runco and Digital Projection debuted new 3D projector units at the recent CEDIA Expo held in Atlanta.  JVC and Sony both showed new 3D projectors, as well, that will come in with price tags from between $5,000 to $11,000 each.  The Digital Projection unit was shown on a 180" diagonal 2:35 to 1 screen.  I didn't get a chance to see it, but I heard it was just stunning. 

While Digital Projection's system is an active stereoscopic system, Runco's system (left) is a passive polarized dual projection system, similar to what you'd find at an IMAX theater.  But the glasses Runco uses are different from the polarized glasses used at an IMAX 3D theater.  The lenses on Runco's glasses are a circular lenticular style rather than the linear style for IMAX.  Supposedly, you can easily move your head around and still see the 3D images, whereas at an IMAX theater you have to keep your head nearly still at all times to see the 3D image. 

 

Italian projector manufacturer Sim2 also showed a dual projection system at CEDIA.  However, they'll use the same polarized glasses as what IMAX uses. 

Both dual projection systems were not cheap - $50,000 bucks for the Runco and $80,000 for the Sim2.  But they certainly weren't as expensive as this thing - the Panasonic 152-inch plasma with 3D capabilities.  This little number, which was first shown at the annual Consumer Electronics Show in Las Vegas earlier this year, comes in with a hefty $150,000 price tag.  It was on display at CEDIA in Atlanta and I had to stop and take a picture of it (see below).   

With 3D bigger is definitely better with picture size which makes me wonder about Toshiba's new models that they recently announced will be introduced in December.   Toshiba will be coming out with 3D televisions where the user won't have to wear glasses, but the televisions will only be available in 12" and 20" screens.  How 3D is accomplished with the Toshiba models is with a perpendicular lenticular sheet that will be placed in front of the screen.  However, Toshiba is promoting these models as "personal" 3D televisions as the viewer has to be very close to the screen to see the 3D effects.   And it won't be cheap - reports are that the 12" television will be approximately $1400 while no price has been established for the 20" models. 

Picture Size - 

My first exposure to Stereoscopic/Active Shutter 3D (the format that most manufacturers use today) was on a 110-inch diagonal screen with the image projected from a projector mounted on a ceiling.  Even with the flickering image on the screen, the effects were just stunning.  

The IMAX passive polarized system is great for those who are bothered by the flicker on an active 3D system.  However, the 3D effect is not as prominent.   

What both a large projection unit and the IMAX theaters have in common is picture size.  It's quite simple - the larger the picture, the better the 3D effect on the screen.  

Earlier this year, I took a look at a 55" Panasonic 3D panel at Ovation in Indianapolis.  I wanted a demonstration from one of their guys and he sat me down about four feet from the television, I put the glasses on and a computer generated program came up on the screen.  Yes, there was less flicker than the original Sensio processor.  And there was some good depth to the picture.  But I then asked the salesperson, "How far back do your customers normally sit at home with a 55-inch flat panel like this one?"  

He said, "Oh, I'd say anywhere from 10 to 15 feet."  

I got up, measured off about 13 feet from the front of the flat panel and placed my chair there.  I said, "OK, play it again."

The 3D image was nowhere near as defined as it was when I was closer to the set.  Even the salesperson agreed with me that the 3D had lost its impact when we sat further away.  "There's a much smaller visual 'sweet spot' when you're further back," he remarked.     

Ambient Light - 

The other thing most projection units and the IMAX theaters have in common is the lack of ambient light that filters into the room during the playing of the 3D movie.  As I also noted during my 3D demo/experience at Ovation, there was a lot of ambient light in the room - not only from incandescent lighting, but from the late evening sunshine coming through the windows. 

Even with a direct view flat panel television, the more ambient light in the room, the less effective the 3D image is.  If you have the money to spend on your own home theater room with controlled lighting and shades, then 3D is probably worth the investment.  But most people don't have the disposable cash to put down for a large home theater system - and a lot of people don't have the space, either. 

Cost - 

The suggested retail price of most of the flat panel, 3D-ready televisions on the market place runs around $3000 dollars.  Well, that's great if you have $3000 bucks to blow on a television when you could get a great non-3D set for half that price.  The 82-inch Mitsubishi model - the WD82838 has a suggested retail of $4499.  Still not all that outlandish, but still a chunk of change.

However, some careful shopping with find you some bargains - probably from dealers who are already worried about their 3D televisions in the stock room turning into expensive boat anchors because no one is buying them at the rate the manufacturers are churning them out.  The Mitsubishi 82-inch unit is already being sold at around $3300 on sites like Amazon.com. 

But you can also find bargains on the Samsung UN55C7000 55-inch flat panel - down to as low as $2597 at some places. Best Buy was recently running a promotion on a Samsung PN50C490B3D 50" model that came in just under $1000 bucks! 

The cost of the televisions include two to four pair of glasses and a 3-D movie.  But if you need more glasses, it's gonna cost you...

Glasses - 

Yep, you gotta wear glasses to make the 3D image work.  Some manufacturers are including up to four pairs of glasses in packages with the sale of 3D televisions.  But if you decide you need a couple more because you have a family of six, glasses will range in price from about $100 to $150 a pair, depending upon the manufacturer.  

If you wear regular glasses just to see a program on television, you'd have to put the 3D glasses over your regular glasses just to see the effects.  That's not very comfortable and it makes for a horrible fashion statement.  Some companies, such as Runco, are reportedly working on prescription glasses that will allow people to watch polarized 3D content both at home (on the Runco system) and at IMAX theaters without having to put 3D glasses over regular glasses. 

Oh, and glasses from different manufacturers are not compatible.  If you have a Panasonic 3D television and your neighbor has a Mitsubishi 3D set, you cannot invite one another over to your house to watch a 3D program with the different make of glasses.  This is another shot in the foot the industry has given to the consumer when it comes to compatibility issues between companies.  

However, at the recent CEDIA Expo in Atlanta, a company called XpanD debuted some universal 3D glasses that will reportedly work with any active stereoscopic 3D system.  Prices range from $109 to $129, depending upon the retailer.   

Content - 

One of the things that initially doomed Sensio was the lack of viable 3D content that could be shown.  Toward the end of their life of selling the Sensio 3D processor, only about 12 to 15 titles were available in 3D.  And, believe it or not, a couple of the titles were porn movies.  

A lot of the DVD's they had were computer generated features that had little or no storyline or actual meaningful content.  The first mainstream 3D movie for Sensio - Spy Kids 3D- featured both computer generated graphics and live action 3D.  But by the time the movie came out, it was too late to save Sensio as a manufacturer/distributor of these processors.

(Note - Sensio continues to do business designing 3D broadcast and processing systems for other manufacturers, most notably JVC.  The guys - Nick and Richard - were truly ahead of their time.  Today, they design and develop chip sets for Stereoscopic/active lens 3D systems.  They found that being in the engineering and development end of 3D was much more lucrative than being a manufacturer of 3D processor units.)  

The biggest problem with content had to do with the production problems that 3D posed to movie studios.  There were a number of 3D movies that came out in the 50's and 60's that used dual 35mm cameras set up side by side with the center of the lenses approximately the same distance apart as the width between the eyes on a normal human face.  The cameras were heavy and cumbersome, and it was very difficult to film action shots.  And they were generally travelogue films or low budget sci-fi movies such as Cat-Women of the Moon or It Came From Outer Space.  Sensio had access to nearly every 3D movie that was made from the 50's on, but getting a studio to produce the movies to work in a stereoscopic/active lens format was a major obstacle.  Add to this, none of these movies were in high definition.  The transfer to DVD was costly and the quality would be poor.    

Sensio had meetings with notable film directors such as James Cameron, Tim Burton and Robert Rodriguez - all of whom saw the value of 3D production and the opening of a whole new frontier with modern 3D.  Cameron went so far to help develop a special 3D camera that was digital and lightweight.  It could be easily mounted or even carried by hand.  Cameron made an IMAX documentary - Ghosts of the Abyss - where two robotic 3D cameras were used to go through the Titanic as it rests on the North Atlantic ocean floor.  And, of course, Cameron scored big with his movie, Avatar, which featured both live action and computer generated 3D images.  

Even with that said, there is still a dearth of Blu-Ray 3D titles available for home viewing.  Warner Brothers studios recently announced the release of six titles this fall - effectively doubling the number of 3D titles available in Blu-Ray.  Three of the Warner Brothers releases will be IMAX titles that were initially going to be packaged with televisions when they were sold. 

The long-awaited and highly anticipated Avatar 3D Blu-Ray release has consisted mainly of rumors floated by various camps.  James Cameron said earlier this spring Avatar will be released in November, but other on-line sources are saying that it may be only available when you buy a Panasonic 3D television beginning December 1.   We'll have to see if that comes to fruition.

 

Broadcast 3D -

Up until earlier this year, programs broadcast in stereoscopic 3D were only available via closed circuit, shown primarily in large halls or movie theaters.  The last three BCS Football Championship games were shown in 3D via closed circuit - but not without some pitfalls and hiccups along the way.  The biggest problem was that in order to get a good 3D effect, most of the camera shots were at field level - not from a high vantage point that allowed the viewer to see plays unfold.  

Earlier this year, The Masters was made available on-line and through Comcast cable systems in 3D.  I understand the images were just stunning.  This worked well because many of the camera shots in a golf tournament are from the ground.   

In June, just in time for the World Cup, ESPN 3D debuted.  Each of the World Cup games were shot in 3D.  However, once again, much of the 3D was lost when they went to a camera shot from a high vantage point.  Only when they went to a field level camera point of view was the 3D image prevalent.  And it's difficult to follow the action at the field level.  

As I pointed out earlier, DirecTV - in addition to ESPN 3D - has two other channels devoted to 3D content.  And HBO recently announced that they will have on-demand 3D programming starting in 2011.   

Gaming -

3D is what the gaming industry has been clamoring for for a number of years.  3D video games will allow users to fully immerse themselves into the experience.  However, industry pundits differ on the impact 3D will initially have on the gaming community.  Some are taking the stance of "too much, too soon", primarily because of the poor quality - both visually and strategically - of some of the initial 3D games that are in beta testing.  Others, however, say, "Who cares?!  It's 3D!" 

But there is an ominous cloud on the horizon that both 3D television and 3D gaming manufacturers are significantly downplaying, or in some cases, not even addressing - the issue of health problems caused by watching 3D programming for long periods of time. 

Health Issues -

At the Consumer Electronics Show in 2004, the guys from Sensio met with developers and designers from Sony Playstation, Microsoft XBox, Nintendo Wii and other gaming companies about the possibility of using the Sensio 3D processor in conjunction with gaming platforms.  Each manufacturer said that doctors had advised them to not to go deep into 3D gaming because of the effects stereoscopic 3D can have on a person. 

Prolonged exposure to 3D images on a screen can cause headaches, nausea, disorientation, and in some cases even epileptic fits and strokes.  Children and teens under 18 are especially susceptible to discomfort and problems with long exposure to 3D.  Of course, these are usually the ones playing video games.  And they play them for hours on end.    

Another warning doctors had for prolonged 3D exposure was no alcoholic beverages should be ingested before or during the 3D experience.  Disorientation is heightened and blood pressure can rise dramatically.  I also understand that pregnant women should not be exposed to 3D for long periods of time.  I think it has something to do with their blood pressure, as well. 

What is specified as prolonged exposure?  The guys at Sensio told me nearly 7 years ago that doctors who advised the gaming companies said that anything over 45 to 60 minutes of 3D exposure is excessive. 

3D movies and now broadcast content can get away with this because most of the 3D content is shown in segments of less than 60 minutes before going back to 2D for commercials or 2D segments in movies.  It's nothing for a kid to be seated in front of a television playing a video game for two to four hours at a time.  And think of all the college-aged kids who come home from the bars at 1 a.m. and stay up and play video games until 5 or 6 a.m.?   

3D, basically, tricks your brain into thinking a three dimensional image is appearing before them on the screen.  This process, called Stereopsis, is what makes you see optical illusions transform in front of you either in a drawing or in a picture.  Because each eye works independently, the image in your brain is focused from the two retinas in your eyes.  That's why when you hold a pencil at arms length, then close and open each eye one at a time, a different view of the pencil pops into your brain.  If your brain is exposed to 3D content for long periods of time, once you go back to normal viewing your brain is still trying to figure out the Stereopsis process.  This is what causes disorientation in many people. 

The Stereopsis effect is stronger with some people, they can process the 3D images more easily.  But with most Stereoscopic/active lens 3D content, there is a high rate "flicker" that occurs.  Some people see that flicker more so than others, makingthe 3D image not as effective in their brain.  But the flicker is also what can cause epileptic seizures in some people.  This is called a photosensitive seizure. 

In April of this year, Samsung Australia came out with a warning regarding the prolounged exposure to 3D content.   (Read the warning here.)   It addressed conditions such as altered vision, dizziness, loss of awareness, convulsions and motion sickness that can be caused by watching 3D. 

Initially, North American branches of the major 3D television manufacturers downplayed or refuted the claims by Samsung Australia.  But Samsung's corporate office in Korea later backed those warnings, but said that it would only affect a small percentage of the population.  In other words, Samsung basically put out the warning to cover their ass in case someone comes home drunk, fires up a 3D movie on a Samsung television and falls down the steps from disorientation.  "We told you not to do that," they can claim when a lawsuit will be inevitably brought against them for such a scenario. 

While the above information is probably more than you asked for in trying to make your decision whether or not to buy a 3D television this fall, I believe I've given you enough ammunition to make such a decision.  I can guarantee there will be a lot of pressure on retailers to sell 3D televisions, and that's based upon the number of trainings the television manufacturers are doing with some of the salespeople of national and regional audio/video chain stores. 

But because both the Consumer Electronics Association and manufacturers are both pushing 3D hard, retailers may end up losing money on the sales of 3D televisions.  Profit margins are slim already, and if they have to begin to give deep discounts just to move televisions out the door during the holiday selling season the only one who wins are the manufacturers and you, the consumer.  The store that you may buy your 3D television from this year may not be around in six to twelve months.   And it will be the fault of the television manufacturers pushing a new technology on people who probably don't want it and don't need it.  Not for awhile - at least until more content becomes available.   

In consumer research conducted by the Consumer Electronics Association, 50% of the people surveyed said they had experienced a 3-D demonstration either at a retail electronics store or at someone's home.  79% of those surveyed said that their experience with a 3-D demo was good to excellent (46% of those said their experience was excellent).  64% of those who saw a 3-D demo said they would probably browse for a 3-D television on their next visit to an electronics store.  However, only 30% of those surveyed said they would probably buy a 3-D television within the next 12 months.  And only 18% of those who were questioned by the CEA said they'd buy a 3-D television in 18 to 24 months.

A recent trip to St. Louis allowed me to talk to a lot of salespeople at the Ultimate Electronics and American TV stores in the area.  Nearly every store said they were selling "some" 3-D televisions, but they were doing more demonstrating than selling.  One of the sales guys at an Ultimate Electronics store told me, "We're selling a few (3-D flat panels), but if people are coming in looking at a similar priced 2-D set, they'll end up taking the regular non-3-D unit 80% of the time."

3D television has its backers and its detractors.  But it appears that it isn't going away anytime soon.  The biggest question will be if it gains traction with consumers who will use the 3D feature on a regular basis or if they'll look at it a couple times, say, "Neato!" then go back to watching 2D content.  Making 3D content available both on Blu-Ray discs and via broadcast medium will be the big key.  It may just be better to hold out for a little while longer as prices go down and watchable programming goes up. 

2010 Consumer Electronics Show - Las Vegas

The annual Consumer Electronics Show was held recently in Las Vegas and for the, let's see...  Let me do the math here...  It was my 24th consecutive CES in Las Vegas.  Each year, I get more jaded regarding this show.  And I'm not alone as this year overall attendance was down, and a number of major manufacturers in specialty audio and video products either did not show at CES, or they showed off-site.  My company did the latter as we showed at the Mirage this year, which is not part of CES.  More about that later on.

The big buzz at CES this year was 3-D television and a number of companies - including LG and Panasonic - showed prototype flat panel units that featured built in 3-D capabilities.  These televisions will require special glasses for viewing 3-D images on the screen and the first ones should be on the market by this summer.  The 3-D format these manufacturers will be using is similar to the same type of 3-D that is used in IMAX movie theaters where polarized glasses make filtered images appear to pop out of the screen.  I'm not quite sure how these manufacturers achieve this as IMAX and other 3-D systems I've worked with in the past have always had projected images on screens. 

No manufacturer announced prices for their 3-D televisions, but industry estimates peg the price for a 42" flat panel with 3-D capability as starting at around $3000.  3-D content will be coming in the form of games, Blu-Ray DVD's, and programs broadcast in 3-D.  DirecTV and Panasonic announced a joint venture at CES that will culminate in the satellite provider upgrading their system this summer to allow their subscribers to view 3-D content that is broadcast by a 3-D network.  ESPN recently announced the debut of ESPN 3-D will take place on June 11 when they broadcast a World Cup game between host South Africa and Mexico.  DirecTV is also working with other broadcasters such as Fox Sports, NBC, CBS, HDNet and TBS who hope to be able to deliver 3-D programming beginning this summer. 

One thing that really isn't being discussed is the possible harmful effects of 3-D television.  A few years ago when we were working with Sensio, a Quebec company that was pioneering stereoscopic 3-D processors, we learned that prolonged exposure to 3-D images can affect the equalibrium of some people to the point where they can get physically sick.  I was told by a Microsoft engineer who had been working on 3-D games for their XBox platform that doctors told them that the most a person should be exposed to 3-D at one time is 45 minutes.  That's why they were leery of coming out with 3-D games as some people play these games for up to 4 to 6 hours at a sitting.   But prolonged 3-D exposure affects people differently and the only warning I've seen from manufacturers in regard to how 3-D will physically affect a person is to go to a 3-D movie and see if it doesn't make you ill.  That's it.  It will be interesting to hear some instances where watching long periods of 3-D made someone sick. 

Interactive TV was also big at CES.  Manufacturers will have televisions that will have built in Wi-Fi capabilities, some will support Skype communications, and Panasonic and Vizio announced a collaboration with Netflix which will allow the consumer to download movies directly to their television.  The up and coming Vudu on-demand movie service will be featured on some Mitsubishi, Sharp and Toshiba models later this year. 

Speaking of movies, Blu-Ray players continue to grow in numbers and in performance.  A number of manufacturers showed units that will feature upgraded BD-Live capability that will enhance the movie you're watching by being able to download additional content from the Internet and be able to add features as you're watching the movie.  For example, the BD-Live content for the movie "Julie and Julia" will allow for a person to download some recipes Julia Child used in her cookbook, "The French Chef".   The movie "Transformers" allows for a BD-Live download of a short feature called "Robot Ninjas".  The jury is still out on the benefits of BD-Live, but one thing is for certain.  We probably won't see any conventional DVD players being manufactured by 2012 - or sooner.  The good thing is that you'll be able to play your regular DVD's on a Blu-Ray player (as well as CD's, SACD's and HDCD's). 

Computer geeks are breathlessly awaiting the arrival of the long rumored Apple tablet-style computer that will allow a user to take their computer just about anywhere.  That didn't happen at CES, but a number of other companies showed their prototype versions of slate tablet computers that will no doubt come out soon after Apple finally releases its tablet. 

Mobile DTV will be even bigger come 2010.  Qualcomm's Flo-TV has been hampered by the lack of programming (only about 15 channels) and the fact that only a handful of users could pick up the system.  However, Qualcomm announced at CES that they have partnered with Apple to bring Flo-TV to iPhones.  They've developed a new battery pack for iPhones that will double as a receiver.  Not to be outdone, a new company by the name of Tivit (right) showed a device that will allow for streaming of television programming to any Wi-Fi device - including iPhones and Blackberrys.  It's small and will fit in a pocket to stream video instantly. 

With the recession still a hot issue with manufacturers, retailers and consumers, we saw a number of specialty audio and video companies pull back from CES this year.  For the past four years at CES, my company has shown our products in suites at the Hilton.  The Hilton was part of CES, but we found ourselves more and more isolated as many other manufacturers began to show privately off-site at other hotels along the Las Vegas Strip.  With a number of high-end exhibitors over at the Venetian, we found that a number of our dealers and clients weren't willing to make the long trek between the two hotels.  

This year we had three suites at the Mirage, just across Las Vegas Boulevard from the Venetian.  I was hoping we'd get into the penthouse suites on the top five floors of the hotel, but we were relegated to smaller suites on the 2nd, 3rd and 6th floor.  It was possible that we couldn't get those suites because it was our first year there.  While it was nice in that our bedrooms were attached to the suites, but it didn't afford us much of a view.  Whoever said that nearly every room at the Mirage had a spectacular view didn't stay in room 3001.  

While we showed a few new products from Focal and Cambridge Audio, the biggest splash my company made was showing the Micromega WM-10 Airstream wireless hi-fi music network in our 2nd floor suite.  The WM-10 Airstream is a dedicated WHi-Fi network that allows users to stream WAV or lossless music files from their computers to their hi-fi systems.  It uses 802.11 technology - the best wireless technology available - to stream music to the unit, then it has a built in high-quality digital-to-analog circuit that converts the information to high-fidelity analog information that then plugs into an existing stereo system.  

As more and more people are using their computers to store music, they've found that the sound quality of the outputs on most computers is pretty bad.  It's usually caused by cheap D to A converters that inhibit the sound quality.  We've been selling the Cambridge Audio DacMagic unit for a little over a year and while it does a remarkable job in upgrading the sound quality out of computers, it doesn't allow for wireless transfer of music.  Since most computers in homes are in a room away from the main sound system, the DacMagic doesn't allow for the mobility of music.  The Micromega WM-10 Airstream is a great alternative for a wireless D to A converter.  I had one in my house for a couple weeks before I began to let dealers use it before Christmas and the sound quality was just stunning.  You honestly couldn't tell the music was being streamed from a computer.  It sounded almost as good as listening to my Cambridge Audio 840C CD player - and that's a helluva CD player.    

We had a morning press conference with editors and writers from nearly 20 print and on-line audio magazines showing off the WM-10 Airstream.  While I didn't attend the press conference, I understand the demonstration was a huge hit and nearly everybody who witnessed and heard the demo requested a unit for themselves so they could do their own review on the product.  We even had people seeking us out who had heard about the demo from others.   

It was up in the air as to whether we'd attend CES in 2011.  Frankly, my "give-a-shit" factor for CES is pretty low.  But our showing off-site at the Mirage was deemed as a success by my boss and he plans on having us come back again next year.  While we were affected by the economy in 2009, it didn't hurt us as it did other manufacturers.  Still the savings we realized by not showing as part of CES was amazing.  It cost us about 1/8th the amount to show at the Mirage as it did at the Hilton.  I've always liked the Mirage and even though it is showing some wear and tear, it's still one of the nicer places in Vegas.  I think I'll actually look forward to going back next year.

The Beatles in Mono

I grew up in a household that played Beatles music incessantly.   I was hooked by The Beatles from the first time I saw them on The Ed Sullivan Show on Feb. 9, 1964.  My older sisters and my cousins all had Beatles records and albums.  For Christmas and birthday gifts, I received Beatles albums.  The first CD I bought was Sgt. Pepper's Lonely Hearts Club Band when it was released on June 1, 1987 - 20 years to the day the original vinyl Sgt. Pepper's was released.  (How ironic - the opening line of the album is "It was 20 years ago today..."  Or was it a calculated marketing ploy?)  So, yeah, I've been a Beatles fan for years. 

The first 8 Capitol Records Beatles albums were released on CD a few years ago.  I got those when they came out.  All 8 feature the Beatles songs in both monophonic sound and stereo.  The only problem is that the mono songs sound so much better than the stereo ones.  The reason?  The Beatles and their production engineers, headed by George Martin, put more emphasis into the mono mix because - at the time - there wasn't the proliferation of stereo sound systems available until the boom of stereo in the early 70's.  Car audio was mono, most record players had a built in mono speaker, and AM radio was only broadcast in mono. 

After the tracks were laid down in mono, production engineers would go back and mix the songs in stereo.  Unfortunately, many of those tracks featured the vocals in one channel with the instruments in another channel.  The mono tracks on the re-issues sounded so much better, more vibrant and lifelike.  I ended up using some of the mono Beatles songs for demo material.  They were well recorded, but still lacked some of the dynamics that you find in today's digital music.

For a reported 4 painstaking years, EMI chief engineers Allan Rouse and Guy Massey remixed the entire Beatles catalog in both stereo and mono.  The result was an early September release of The Beatles Stereo Box Set and The Beatles in Mono, all of which are based upon the British release of the albums.  While the differences between the originals and the remixed songs are not as dramatic as to what George and Giles Martin pulled off with The Beatles "Love" album, the songs are definitely more dynamic, more full and amazingly clean. 

Rouse and Massey have been working on Beatles projects for over 20 years at Abbey Road Studios, so the remix of the box sets was a labor of love.  The mono tracks were easy, mainly because that's how 10 of the 13 Beatles album releases were recorded.  Even Sgt. Pepper's was recorded in mono.  Then it was up to the engineers to transfer and mix the recordings to stereo.  Even to me, it boggles my mind as to the work that had to go into these albums to record and release both in stereo and mono. 

The feedback from audio critics was overwhelmingly positive - especially for the mono box set.  Although it was smaller than the stereo box set (the stereo box set has all 13 Beatles albums plus a documentary DVD, while the mono only has 10 albums plus a bonus disc called "Mono Masters 1962-1969"), critics and audiophiles raved about the sound quality of the mono box set remixes.  I first heard a track of the mono mix at the Rocky Mountain Audio Fest in Denver earlier this fall and I was blown away.  It immediately became a "must have" item to my collection of Beatles discs and albums that I've collected over the years.

(As an aside - speaking of Beatles collections:  One of the more difficult albums to find is an original copy of The Beatles "Yesterday and Today".  This is because the original cover for the album featured The Beatles holding decapitated baby dolls and blood on their white smocks.  The outrage caused Capitol Records to change the cover.  Over 25 years ago, a friend of mine ran a record store and he was able to get me an original copy of the album from Canada.  I think I paid something like $75 bucks for it.  It was a prized part of my record collection.  And, of course, like a dumb shit, I proudly showed it off to my friends - both savory and ne'er-do-wells, alike.

Through the years with many moves, many hazy nights and many people filtering through the places where I lived, I ended up losing a number of albums - one of which was the original "Yesterday and Today".  I was sickened to find out a couple three years ago that the album (which is what collectors call a "first state" album) was worth up to $7,000 in mint condition.  I don't know if mine was in mint condition, but it still would have been worth a lot of money.  But someone else has it now.  Just goes to show you never know about your friends.) 

However, only 10,000 of the mono box sets were released.  And even at a whopping $239 (U.S.) they sold out rather quickly.  One of my dealers in Chicago, Music Direct, had sold out of their shipment of the mono release before they had them in stock.  A friend of mine told me that you could find them on eBay for $1000.  It looked like getting a set wasn't going to happen.

Due to heavy demand, EMI announced that it would release more of the box sets - both mono and stereo.  The mono box sets were the first to show up in early November, while the stereo box sets were re-released last week.  I heard tracks from both the mono and stereo box sets and relied upon recommendations from other friends and colleagues to tell me what I probably already knew - the stereo box set was nice, but the mono was the one to get. 

Bes from Music Direct told me earlier this month that they had just received more of the mono box sets and I told him to hang onto one for me.  I was in Chicago recently and picked up my box set from Bes.  I couldn't wait to get it home and put the discs on the stereo in the family room. 

The first disc I opened was "Beatles for Sale", which was roughly the same album as "Beatles 65" here in the U.S.  I sat back on the sofa, hit "play" on my Cambridge Audio 840C CD player and waited for "No Reply" to begin.

From the first breath from John Lennon's mouth, his first words and the first chords on the guitar, I was blown away.  It was so open, so lively, so airy, so dynamic, so LIFELIKE!!  It was like the friggin' Beatles were playing in my family room!  The cymbal crashes were open and sustained, the bottom end of Paul McCartney's bass was more pronounced and forward.  The harmonies were more bright and subtle nuances like background hand-claps were more noticeable.  It was just unbelievable.  And I'm not kidding you a bit - the hair on the back of my neck stood up, it was that spectacular. 

I could close my eyes and imagine The Beatles playing about 20 feet in front of me - dead center in the room.  You couldn't even tell they were playing through a sound system.  (Of course, that's sort of the hallmark of a good sound system, as well.  Mono or stereo recordings.)  Each subsequent album that I put on the CD player and played, I was even more impressed with the job Rouse and Massey did on the albums.  The spectacular sound quality only enhanced the stellar performances the band put forth. 

In addition to the great sound, the discs in The Beatles in Mono box set has all the original record sleeves and inserts that were in the 10 EMI mono releases in the U.K.  The Beatles Stereo Box Set has all the Beatles albums, plus it has more paraphernalia and memorabilia to go along with the discs.  While the mono box set is more geared for the audiophile Beatles fans, the stereo box set is more for the hardcore Beatles fan who craves more information on the Fab Four.  I'll eventually get the stereo box set, but for now I'm overly happy with The Beatles in Mono.  Even with the steep price, either box set should be at the top of every steadfast Beatles fan.  To me, it's worth it. 

Ready or Not - The Digital Conversion Starts Today!

The previously delayed conversion from analog to digital television broadcasts begins today across the United States.  Many television stations switched over from analog broadcasting to digital broadcasting overnight.  The rest will switch later today. 

The original conversion date was supposed to be on February 17.  But there was an outcry by politicians who said many people weren't ready for the change, even after the FCC had given people ample time (over a year) to get digital ready with a slew of information both in print and in television ads.  When the proposed delay was announced in January, television stations said they would have to spend a lot of money to continue to broadcast both digital and analog signals into June.  And companies, such as Qualcomm, who had spent millions of dollars to buy the transmission rights of the analog bands being used for television broadcasting had to wait another four months to launch new services, losing millions of dollars worth of potential revenue in the process.  

The switch to digital has been a long time coming.  I saw one of the first public demonstrations of digital television at the 1988 Summer Consumer Electronics Show in Chicago.  Zenith, which was based in Chicago at the time, had a demonstration where they broadcast a digital signal that was able to be picked up in about a 20 mile radius from the broadcast site.  I can't really remember what the program content was, but the picture was pretty clear.  Not as clear as a pure digital signal we get today, but it was better than what was available via an analog signal at the time.    

I had a number of posts on the delay and the circumstances leading up to the decision to push back the conversion date to June 12.  You can read them here, here, and here.  A number of smaller market television stations went ahead with the digital transition on the original February 17 date.  Some stations - such as WQPT here in the Quad Cities - switched to an all digital broadcast signal just recently before the June 12 deadline. 

We had a couple of older analog televisions in our "lodge" and in our bedroom that needed to be replaced once we got DirecTV in March.  I ended up getting a couple Samsung 32" televisions to replace them.  We ended up giving the old TV's to Cindy's dad who lives out in the country near Cedar Rapids and who doesn't watch much television.  He was initially reluctant to take the televisions because he would have to get a converter box.  I told him that he could get up to two $40 vouchers from the Federal Government to help pay for the units.  I'd even sign him up on the Internet. 

About 10 days later he got the vouchers in the mail.  He went to a place and bought a converter box for $49.95 plus tax.  We gave him the televisions and he hooked one of them up in his living room.  He was incredulous as to how good of a signal he was getting with the digital broadcasts.  "I can even get Channel 2 now!  I've never been able to get Channel 2," he exclaimed. 

So, ready or not - the digital conversion is here.  In my opinion, if you weren't ready for it, it's your own damn fault.  It's called progress folks.  And with this, we'll begin to see a number of pretty neat services being offered for cellular and personal viewing devices.  I can't wait. 

This is Only a Test...

On Wednesday of this week, the Federal Communication Commission announced that it will ask local television stations who are not already broadcasting in digital to show three five-minute public-service ads on Thursday, May 21, as part of a test to let Americans know that their televisions are ready for the digital transition.  Tests are to be conducted at 7:30 a.m., 12:30 p.m. and 6:30 p.m. local time.  The public-service ad will be part of the first coordinated nationwide test to see if people are, indeed, digital ready for the conversion coming on June 12.

Already, about 1/3 of the nation's local television stations have gone to digital broadcasting - mainly in rural and low population areas where less than 1 percent of the population was deemed not to be digital ready by the original transition date back in February.  The original transition date was moved back to June after heavy lobbying by the Obama administration.

For months up to the original digital transition date, local television stations had been running their own public-service programming that would allow viewers to test to see if their television was digitally compatible.  The delay for digital broadcasting to begin in June has cost many television stations thousands of dollars as they were continued to be forced to broadcast both analog and digital signals. 

Depending upon which research group you want to believe, there are still between 2 million and 3.5 million households still not ready for the digital transition.  The National Association of Broadcasters pegs the number at 2.1 million, while Neilsen Media Research says 3.5 million are not ready.  However, Neilsen's figures are half as many than they tallied in December. 

One thing that I've noticed in public service ads being run on local stations as of late is the prominent mention of having the right antenna for the digital conversion box.  Before, the antenna was sort of an afterthought.  But a number of horror stories arose across America as people thought all they had to do was buy a digital conversion box, hook it up to the television and their existing antenna and - voila!  They'd be able to watch their favorite programs.  But that turned out not to be the case in many instances. 

Some elderly people are miffed in that not only do they have to buy a converter box (even with a $40 rebate coupon from the Federal Government), but they now have to buy a new antenna, as well.  Many instances cropped up where people felt they were misinformed about the possible need for a new antenna.   To their credit, the FCC is doing a better job of getting that bit of information out there.  

With the digital transistion right at five weeks away, as I've said before, if you don't know that the switch is occuring you either live in a cave or on Mars.  Contrary to the opinions of some, I think that local stations and the FCC have done a wonderful job in educating the public about the digital transistion.  If June 12 comes around and you can't watch "Wheel of Fortune" on your old analog television, you have no one to blame but yourself. 

Paul W. Klipsch

If you're somewhat familiar with some of the top name brands in consumer electronics, you'll no doubt recognize the Klipsch loudspeaker brand name.  This is a "Brushes with Greatness" story involving the founder of Klipsch speakers - Paul W. Klipsch - that I've been wanting to write about for a long, long time, but never really got around to it.  And it's kind of a long story, coupled with some side stories within the story, so maybe that's why I've had trouble getting it started. 

Paul Klipsch was an audio industry icon for years and years, long revered for his innovations in loudspeakers and his blunt assessment of many of his competitors.  In fact, one of Paul Klipsch's trademark phrases was "Bullshit!", often used when one of his competitors would excitedly claim of "breakthroughs" in sound reproduction.  Klipsch began to hand out little yellow pin buttons with the "Bullshit!" phrase on it.  These buttons were worn by Klipsch disciples with pride.

Paul Klipsch also wrote what was sort of the first audio/video industry newsletter.  Called "The Dope from Hope", Klipsch's newsletters spanned over 20 years, and they were never written on a scheduled basis.  Some of the information in the newsletters were strictly "propeller-head" stuff, but there were also useful tips in setting up systems, getting around obstacles in room acoustics, and some ramblings about how some companies had tried to infringe on the Klipsch design and their miserable failures at trying to do so. 

Years ago, I was the General Manager of an audio/video store in Davenport, IA by the name of Audio Odyssey.  (Audio Odyssey is now Planet Audio - part of the Hawkeye Audio chain out of the Iowa City area.)  We were a Klipsch dealer and as part of a sales contest, three people - one from the East region, one from the Central region, and one from the West region - would be picked at random to travel to Hope, Arkansas to spend a weekend with Paul W. Klipsch.  It turned out that the guy picked to go from the Central region couldn't go due to scheduling problems.  So, the Klipsch Central regional sales manager, Ernie Coulter, pulled out another name - mine.  Ernie told me later on, "When I pulled your name out, I thought, 'Oh, this guy is going to have a lot of fun.  I wanna be there with him that weekend.' "

It was September of 1992 when I caught a flight from the Quad Cities to Little Rock via St. Louis.  I was met at the Little Rock airport by Georgia Bell (seriously, that was really her name!), who was kind of the "every woman" at Klipsch at the time.  She wore many hats for the company and was really the glue that kept the company together.  I met the other two contest winners - a kid from a store in Portland, Oregon who was mesmerized by his surroundings all weekend long; and a store owner from Portland, Maine who, I found out later, took the trip away from one of his sales people who had been originally picked for the trip.  The guy was kind of a prick for doing that and he wasn't very social all weekend long. 

The Klipsch speaker company was undergoing some internal changes as Paul W. Klipsch had recently sold the company to a distant cousin, Fred Klipsch.  Fred Klipsch headed Klipsch Lanham Investments and before he bought the Klipsch speaker company in 1990 he really had no idea there was a Klipsch speaker company out there, or that Paul Klipsch was a distant relative.  Fred Klipsch orchestrated a rapid growth of the KIipsch brand - much to the consternation of audio purists who were Paul Klipsch disciples - and today it is the second largest speaker manufacturer in the world, trailing only Bose Loudspeakers. 

Now, this was also the point in history where a local Hope boy by the name of Bill Clinton was on the verge of gaining the office of President of the United States.  When we were on the way to Hope from Little Rock, Georgia said that she lived caddy-cornered from the boyhood home of Bill Clinton.  When we were in the hotel lobby getting ready to go over to Georgia's house for a cook-out with some Klipsch employees, there was a map that showed Bill Clinton's boyhood home.  I said, "So, Georgia, show me where you live in conjunction to Bill Clinton's boyhood home."

She pointed to a place that was six blocks from the Clinton home.  I said, "Wait a minute.  I thought you told me that you lived caddy-cornered from Clinton's boyhood home." 

She said, "Oh, well, technically I do.  The house they have on the map is the house he lived in when he was 2 or 3 years old and on.  The 'original' house he lived in when he was first brought home from the hospital and where he lived for his first couple of years is just over my back yard fence.  I'll show you both homes and tell you the story of why they call that other place his boyhood home." 

The first house she drove us by was a very nice little bungalow not far from the downtown area in Hope.  It had a sign in the yard designating it as Bill Clinton's boyhood home.  Then she took us to another house not far away.  This house - a nice southern style two story home - had burn marks coming from the upstairs window.  The place was really in disrepair on the outside.  Georgia said, "This was the original home for Bill Clinton when he was born."

Sure enough, it was just across the fence on the southwest corner of her yard.  She explained to us that the first boyhood home she showed us was owned by a couple of lesbians, which caused some consternation with the locals when they decided to put up signs calling their house Bill Clinton's boyhood home.  However, the second house with the burned out windows was owned by a poor black family who suffered a fire in the second story the year before.  They couldn't afford to do anything with the second story of the house, so they just closed it up and lived on the first floor.  Georgia told us, "So, you see it's easier for the town leaders to allow the two lesbians to have that sign up because they couldn't put up a sign for this house."

(As an aside, after Bill Clinton was elected, a foundation was set up to get donations to buy the house and to fix it up.  Opened in 1997, the Clinton Birthplace Museum showcases some Clinton items and other memorabilia.  The house was owned by Bill Clinton's maternal grandparents and he eventually moved to the other house in 1950 when his mother married Roger Clinton.  Actually, it turned out that Bill Clinton lived in a lot of homes while he was growing up as there are locations in Hot Springs, AR that he lived in, as well.)

The following day, we had a tour of the Klipsch factory.  During the tour, we were taken into an office in the research and development area of Klipsch and sitting there was Paul Klipsch, himself.  Paul Klipsch was a tall man - easily 6'5" - with unruly white hair, a full mustache and menacing eyes that look you up and down as he mentally sizes you up.  While we were scheduled to meet Paul Klipsch later in the day at the original Klipsch "factory" across the road from the main office, he took the time to meet us.  Even though he was no longer the owner of the company and was officially retired, he still came into the office every day to fiddle around.  Even at the ripe old age of 88, Klipsch's mind was still pretty sharp.

After the introductions, Klipsch said, "Which one of you are from Davenport?"

I spoke up and said, "I am."

It turns out that Paul Klipsch spent a lot of time in Rock Island and Davenport before and during World War II working on munitions and ballistics for the U.S. Army at the Rock Island Arsenal.  In fact, the land on which the Klipsch plant was built was part of an old munitions testing ground during the war.  And the "original factory" for Klipsch was the munitions assembly block house that had thick concrete walls and a thick concrete floor to help guard against any explosions.

Now, here's another side story on Paul Klipsch.  He was quite an interesting man who lead a colorful life.  Klipsch was the holder of 20 U.S. Patents.  He held patents in his work with General Electric when he helped develop Chile's electric train system in the 1930's.  He holds patents in his work with the Army in munitions and ballistics.  And he holds a number of patents in his work with loudspeakers and their components.  

Eccentric is also what Paul W. Klipsch was.  He was one of the first people to jog around Hope in the 60's long before the fad of jogging came about.  One time, he took off all of his clothes and turned up the heat in his office to see if a new digital thermometer really worked.  On Sunday's, he was known to sit in a pew and take notes from the preacher's sermon, then use the notes to debate parts of the sermon with the preacher.  Once when church was letting out, Paul was getting annoyed that the line to greet the preacher at the front door wasn't moving fast enough for his liking, so he began stepping on the pews to make a quick exit from the church. 

When they had a big parade for Bill Clinton in Hope in early 1992, at the very end of the parade was a solitary Paul W. Klipsch carrying a "Bush/Quayle" sign.  In fact, on the way out to the factory that is located north of Hope (see map), there were all these signs for "Clinton/Gore" up and down the roadside.  Then you turned the corner before the plant and there was a plethora of "Bush/Quayle" signs.  

One Paul Klipsch story that a long-time Klipsch employee told me when I was in Hope - As part of his "workout" Klipsch would swing his legs over the parking meters in downtown Hope.  When he found that he couldn't get his legs swung over a meter, he'd make a note of its location.  Then he went to the mayor's office to report the discrepancy in height of that particular parking meter.

When Paul Klipsch went to Stanford for his graduate degree in electrical engineering after his three-year stint with G.E. in Chile, he was called upon to teach a couple classes.  Two of his pupils were Bill Hewlett and David Packard - the founders of Hewlett-Packard (and if you're a regular reader of Road Tips, you know how much I detest H-P).  When asked by one of the guys who made the trip to Hope how Hewlett and Packard did in school, Paul said, "They passed."  

When you asked Paul Klipsch a question, it was often followed by a long moment of silence as Klipsch would measure his answer.  It was a good ten seconds before Paul Klipsch said that Hewlett and Packard had passed their course with him.  

Later on during the day, we met up with Paul Klipsch again at the little bunker that housed the original Klipsch "laboratory and factory".  Paul Klipsch got the idea for a horn-loaded speaker that has made the Klipsch company famous all over the world from a large multi-chambered, folded-horn public address speaker that was used in the old movie theater in Hope.  When he was in the Army, he would take his first wife, Belle, there for movies.  Klipsch got to thinking that there had to be a way to reproduce that type of folded-horn sound for homes.  

After the war, he bought the bunker and the land surrounding the building for pennies on the dollar from the Federal Government.  In the bunker, he made his first Klipschorn loudspeaker.  Actually, the first four failed.  The first one that worked - marked "X-5" on the outside of the cabinet - was sitting in a dusty corner of the bunker.  To me, that's big audio history, right there.  

There were a number of other speaker projects that Klipsch had in the little bunker.  When he was asked why he didn't have these speakers in a museum setting somewhere, he looked at the person for a moment and finally said, "I find this somewhat boring.  I'm sure others would, too." 

Oh, no way.  It was way interesting to me.  

One of the more interesting things Klipsch had in the bunker was the original Bell Labs horn speaker from the old Hope movie theater from which he got his first idea of the Klipschorn speaker.  It was huge - about four feet high and six feet wide.  He said, "This was what constituted high-fidelity in the 40's.  I knew there had to be a way to make it smaller and more efficient to run with smaller amplifiers."  So a guy who had patents in munitions and electric trains started up his own speaker company and the rest was history.  

We were invited to go over to Paul Klipsch's house for drinks and snacks.  Paul asked, "Does anyone want to ride with me?"

Oh, God!  I JUMPED at the chance.  The other two guys declined.  I thought, "You FOOLS!"  So in the ride from the Klipsch plant to Klipsch's home in Hope, he talked about his days coming to Rock Island and Davenport, where he used to stay in downtown Davenport, some of the places he used to frequent and some of the people he got to know in the area.  We didn't talk speakers or hi-fi the whole 20 minute ride to his house.  It was kind of cool to be with an audio industry icon in his Mercedes talking about everything he remembered about where I lived.  

At his house, we were met by his second wife, Valerie (Belle had passed away a number of years before), a slight lady with a heavy German accent.  She was a little spitfire and a perfect compliment for Paul Klipsch's somewhat biting tone from time to time.  In the Klipsch's living room were matching Steinway baby grand pianos, faced back-to-back like you see at some of the modern piano bars that are popping up across the nation.  There was a pair of Klipschorn speakers with acoustic walls made especially for them.  (Klipschorn speakers are what they call "corner loaded" speakers - they need to sit in a corner to help extend the bass waves for better low-end response.  The Klipsch living room had doors in three of the corners and the pianos were in the fourth corner.  Paul Klipsch came up with an acoustical wall to place the Klipschorns in his room.  The instructions for building the acoustical wall are part of the "Dope from Hope" newsletters.) 

And in the middle of the speakers, smack-dab in front of a 20 foot wide picture window that looked out into the backyard, was a single Belle Klipsch speaker.  Paul Klipsch was the first guy to advocate a center-channel fill speaker in the 50's.  That was at a point where stereo was just beginning to become more than a novelty (most hi-fi systems were a single channel amplifier and a full range speaker up to the mid-to-late 50's).  Then a guy from Hope, Arkansas said that the best way to listen to stereo was to have a third speaker in the middle.   

Well, people thought he was crazy.  They'd say things like, "First of all, you're telling me that we have to have TWO speakers in order to be able to listen to music.  Now this Klipsch guy says that we need THREE speakers?!"  One guy said it was heresy for Klipsch to promote the idea of a center channel speaker.  So what did Klipsch do?  He made a center channel speaker and called it the "Heresy."  As a stereo pair, the Heresy's really rocked. 

In Paul and Val Klipsch's back yard was a lap pool - also an eccentricity of his.  When people would get a pool to relax in, Klipsch had a 4-foot deep, 25-yard long lap pool installed to swim back and forth in.   His neighbors thought he was nuts. 

Surrounding the back yard was a seven foot high wooden fence.  Inside the fence was a foot wide shelf that was mounted with model train tracks that went all around the perimeter of the fence and across the face of the back of the house.  When I inquired about the train tracks, Paul Klipsch jumped up out of his chair and went outside to activate the train.  It was pretty cool.  It was this Lionel O gauge electric train set with a locomotive, some cars and a caboose.  When Klipsch hit the power to the tracks, the train started up slowly at first, then gained speed as it went down the side fence toward the back.  His eyes darted back and forth looking at the train and making sure a squirrel hadn't deposited a walnut on the tracks down the line which would cause a derailment.  Honestly, he was like a little kid at Christmas when I asked him if the train really worked.  He couldn't wait to show me. 

As we enjoyed cold St. Pauli Girl beers and snacks in the living room and back yard, he talked about his time he spent drinking in the great beer halls of Germany.  Each fall, Klipsch would make the trip to Munich for Oktoberfest.  That would have been a kill to see that guy in one of the beer tents in Munich at Oktoberfest. 

Over time that late afternoon, I noticed that Paul Klipsch had sort of taken a liking to me.  He kept calling me "Herr Veber", probably from the Germanic pronunciation of the name "Weber".  He kept wanting to show me things, almost pushing the other two guys who made the trip out of the way to show me a picture or a clipping of some item that fascinated him.  I noticed that a lot of the conversation he started was directed toward me, calling me by my name and asking if I needed anything else.  It was quite the time, to say the least. 

The next day before we left Hope to go back to Little Rock for the evening, Paul Klipsch had lunch with us at the hotel restaurant.  Once again, he seemed to favor me in conversation - asking questions about my family heritage, inquiring about old landmarks around the Quad Cities that he remembered, and sharing stories about his days in Chile.  When we left, I shook his hand and I said, "Mr. Klipsch, it's been truly an honor."

He gave me that somewhat nefarious look and didn't reply right away.  Then he said, "If it was an honor for you, it was a pleasure for me."

About 18 months later at the 1994 Consumer Electronics Show in Las Vegas, the Klipsch company had a 90th birthday celebration for Paul Klipsch at a hotel off the Strip, even though Paul's birthday wasn't until March.  I was long gone from working retail and selling Klipsch speakers, now back on the road working for a rep company.  But I'd heard that he'd be there and I wanted to go over and give him my best wishes.  I ran into some people that I knew from Klipsch and they were surprised that I'd make the time to show up.  Ernie Coulter led me over to where Paul was seated and he asked Paul, "Do you remember this guy?"

Paul gave me the trademark "Klipsch Up-and-Down Look" before he finally said, "Herr, Veber!"  I told him that I wanted to come over and give him my best wishes for his birthday.  In a measured response he said, "They must not think I'm going to last for another two months!" 

We made small talk for a moment, then I told him that I had to be going.  I said, "Besides, there's a long line of people who want to talk with you."

He looked at the people behind me and he said, "They can wait."

Tomorrow will be the seventh anniversary of Paul Klipsch's death.  He was 98 when he passed away in Hope in 2002.  His wife, Valerie, gave Klipsch's alma mater, New Mexico State, a number of items that Paul had in the bunker and in his office for the Paul W. Klipsch Museum in the College of Engineering at NMSU.  The museum also catalogs all of Klipsch's calculations, experiment results and white papers.  Although it's only open to the public on Tuesday and Thursdays for 90 minutes, I think it would be cool to go through sometime.  Although I'm not certain 90 minutes would be long enough for me to bring back the memories of the weekend I spent with Paul Klipsch. 

Liberty Media Bails Out Sirius/XM

Liberty Media, headed by billionaire John Malone, has reportedly agreed to invest $530 million dollars in Sirius/XM.  Malone's investment staves off bankruptcy for Sirius/XM which owed a $175 million dollar convertible bond payment to EchoStar - Liberty Media's chief competitor for satellite television programming - that was due today.  Sirius/XM's stock price per share more than doubled to .21 cents a share after the announced investment was made this morning.

According to Bloomberg Financial News, Sirius/XM CEO Mel Karmazin was playing Malone off EchoStar's Charlie Ergen, who has been trying to take over the company since it merged last summer.  Both Dish Network (which is a separate entity from EchoStar after breaking off from the parent company last year) and Liberty Media's DirecTV are interested in Sirius/XM's satellite capacity for both radio and television programming.  

Malone agreed to give Sirius/XM $280 million today to help pay the bond payment to EchoStar and to have additional working capital.  Malone also agreed to pay off $100 million in loans taken out by Sirius/XM, and to loan the company $150 million for working capital. In exchange, Liberty Media will receive seats on the corporate board of Sirius/XM and Malone will assume an equity position in the company.  

While this will keep Sirius/XM afloat for the short term, analysts still look at the company's debt - which is close to $3.25 billion dollars - and say that concessions or even the cancellation of programming contracts might have to be made for the long term success of the satellite radio service.  Many of the contracts paid out to talent such as Howard Stern and Martha Stewart, as well as programming rights to Major League Baseball and the National Football League were grossly inflated due to vigorous and somewhat acrimonious bidding between Sirius and XM when they were separate companies. 

This is good news for guys like me who have grown to love certain aspects of Sirius XM.  I really can't think of ever driving along lonely stretches of Midwestern roads any longer without Sirius XM.  I really hope Malone is able to kick some sense into the egotistical Mel Karmazin and help pull the satellite radio service from the shit hole it's in right now.

(P.M Update - The Chicago Tribune reports that LIberty Media will have approximately a 40% equity stake in Sirius/XM, with John Malone and Liberty Media President and Chief Executive Greg Maffei assuming seats on the Sirius/XM board of directors.)

The Change from Analog to Digital

Today is the day most Americans were supposed to begin to watch digital broadcasts on their televisions.  However, Congress voted a couple of weeks ago to delay the switch until June 12.  This threw another monkey wrench into what has already been a very confusing ordeal for many technically challenged Americans who don't want to risk missing Wheel of Fortune every night. 

In delaying the changeover, Congress put a provision into the bill which said local stations could ask for permission to go digital either on or BEFORE the original February 17 date.  To date, there are nearly 500 stations that have already turned digital, or who have requested to go digital early.  To see a list of those stations, click here (you'll need Microsoft Excel or equivalent). 

Most of the stations listed are in small markets where they've determined that less than 1% of the area population isn't ready for the digital switchover.  After the delay bill was signed by President Obama, a number of stations in mid-to-large markets announced they would go ahead with their planned switchover.  However, public and government pressure forced many of these stations to back down from asking the FCC to make the change. 

Some of the stations that either have or who will go digital today will continue to broadcast a "night light" screen on their old analog channel for the people that do not have the analog converter boxes.  This "night light" will say something along the lines of "If you can see this, you do not have a digital converter."  The message will include a phone number to call for more information on how to get a digital converter box for their analog television.  If every television station in a given market goes digital today, they must ensure that for 60 days after Feb. 17 at least one station in the market will continue to provide analog local news, public affairs, and emergency programming. 

A dealer friend of mine told me that he thinks having the whole country change at once is a bad idea.  He thinks the FCC call centers will be inundated with phone calls from frustrated viewers who are having trouble getting a digital signal on their analog sets.  He said, "You know, allowing some markets to go digital on February 17 will help the Feds gauge how much problems they're going to see on June 12."  He said a rolling regional changeover would have been the way to handle it, starting in the Midwest, Southwest and Rocky Mountain regions because the least amount of people live in those areas.  That way, the FCC would have seen what they were up against and could tweak the changeover policies and ramp up for better service when larger areas came on line with digital broadcasts.

There's been a lot of debate as to whether or not the Federal Government did a good enough job in preparing the public for the initial February 17 changeover.  I think they have - and they haven't.  As I said in an earlier post, I think you have to be living in a cave to not know that there was going to be a drop-dead date for the analog to digital switch.  I think the Feds - along with local television stations - have done a remarkable job in getting the word out.  Where I feel the Feds failed was to mention, "Oh, by the way - you may have to get a new antenna in order to pick up the digital broadcasts."  

Most people who have bought the analog to digital conversion boxes have antennas that work fine.  But I'm beginning to hear horror stories from some of my dealers about how some people feel they're getting ripped off because they thought they could get the converter boxes, hook it up to the television and begin to watch their programs with no interruptions.  It turns out their antennas may work with a couple of the digital channels, but not all.  Then they have to spend an additional $75 to $100 bucks on an antenna to get all the channels.  That's where I think the Federal Government fell short in spreading the message about the conversion.  

Another problem that's popped up in the conversion is that the message evidently hasn't gotten out to Hispanic viewers very well.  The largest metropolitan areas that have been identified as having the most viewers not ready for the digital switchover are Albuquerque-Santa Fe, Dallas-Fort Worth, Houston, Phoenix and San Diego - all of which have large Hispanic populations.  All of these metro areas have been deemed "entirely unready" for the digital transition by the FCC.  

I've also been hearing reports that in addition to the lack of $40 coupons available to help defray the costs of the converter boxes, the FCC says there is now a shortage of converter boxes.  To this I say, "Bullshit!"  In my recent travels, I have walked into big box stores such as Best Buy, Target and Tiger Direct and have seen piles of converter boxes.  I've talked with some of my specialty audio/video dealers who have told me that while they don't carry the converter boxes, they can get them for their customers in a day or two from a distributor.  Congress already screwed up the coupon program by not allocating more money for the program.  But now they're trying to say there's not enough converter boxes and may not be until April.  Well, my bullshit detector is red-lining on that one.      

As I've pointed out in earlier posts, the delay to convert to all digital television broadcasts are holding up some companies who want to use the analog channel bands they bought for new features and broadband communications.  Not only is it costing them millions of dollars of lost revenue, the delay is also costing a number of stations in mid to large markets a trunk full of money in having to continue to broadcast both an analog and digital signal up to the June 12 date. 

The one saving grace through all of this is that in order for the delay to go through, Congress had to agree that there would NOT be another extension past the June 12 date.  While stations in the markets that won't turn digital until then will continue to educate the public on the transition, by the time June rolls around their message will change to the old adage, "If you snooze, you lose."

Pioneer to Exit Flat Panel Television Market

Industry giant Pioneer has announced they will exit the television market by March of 2010 and concentrate their efforts on the car audio industry.  This is a shock to many of my dealers who were Pioneer video dealers and sold the brand as their top of the line offering.  And I have to say, of all the televisions I've seen in my visits to audio/video stores over the past couple of years, the Pioneer's had the best picture, by far. 

Pioneer's announcement comes on the heels of a report that sales of flat panel televisions dropped for the first time in history during the 4th quarter of 2008.  With a glut of flat panels on the market, look for prices to continue to drop on larger televisions (42" and higher) in the coming months.  

The rumors of Pioneer exiting the television market surfaced late last week.  During visits to dealers in Nebraska, Missouri and Kansas previous to the rumors coming out, I was told by the Pioneer dealers that they were being offered some sweet deals that would pair Pioneer Elite Kuro flat panel plasma units with either the Pioneer Elite Kuro projector or with Blu-Ray players.  One dealer told me they got a deal where they bought the 60" Kuro plasma flat panel and got the Elite projector for $1200 invoice cost.  Normal invoice cost is over $6000 dollars!  When the dealer asked the distributor if they were discontinuing the line, he was told, "No, we're just giving a helluva deal on some Pioneer products."  

Pioneer announced last year that they would no longer be manufacturing their own panels for their Elite plasma televisions.  They said they had entered a partnership with Panasonic to make the Pioneer Elite flat panels beginning later this year   Panasonic was in the midst of building their fifth facility for plasma production, but delays have pushed back the opening of that factory.  With the delay in the new facility, plus Panasonic cranking out their own televisions in their other factories, it became evident that they would not be able to provide plasma panels to Pioneer in a timely fashion.

Add to this that Pioneer's video division has lost millions of dollars annually over the past four years - and that the outlook for 2009 was bleak, at best - the company decided to pull the plug on video and concentrate on their car audio division.  Well, this is somewhat curious, as well, as car audio sales have been plummeting over the past five to seven years as new cars have incorporated some decent sounding factory systems in their vehicles.  And with the significant drop in new car sales over the past 18 months, car audio has become less and less important.  

As I said, when I was looking at flat panel televisions to buy last year, the best picture, by far, of all the ones I saw were the 50" and 60" Pioneer Elite Kuro plasma models.  The picture was vivid and vibrant, the detail was exceptional, the black level and contrast were both superb, the look of the chassis exuded elegance and class.  The only problem was - well, two problems - the Pioneer at dealer cost was well above my budget, and we didn't have the space to put a 50" television in our family room.  I went with a great television for my budget, the Samsung 46" LCD 650 series. (You can read about the process of buying the Samsung here.) 

And it may get worse for the television industry before it gets better.  Rumors and reports are that many of the manufacturers are hemorraging money at an unbelievable pace.  While it could be good for consumers in the short run with lower prices on the horizon, we could see some companies exit the television manufacturing market place - like Pioneer - or cease overall operations all together.  Oh, there's always going to be televisions to buy, but the number of choices may dwindle.  And that may be very soon.  

(Update - Pioneer announced in late January 2011 that they would grant Sharp a license to use the Pioneer Elite name on a series of high-end flat screen televisions.)  

Sirius XM on the Verge of Bankruptcy?

Earlier this week The New York Times reported that the satellite radio provider Sirius XM is on the verge of bankruptcy and may have to drastically cut costs - including the possibility of restructuring or terminating the contracts of high-priced talent such as Howard Stern, Martha Stewart and, sadly, Major League Baseball. 

With assets of over $5 billion dollars, a bankruptcy filing by Sirius XM would be the second largest behind the $7 billion dollar bankruptcy filing by Smurfit-Stone.   When the FCC approved the merger between Sirius and XM last summer, Sirius XM took on a debt load of $3.5 billion dollars.  Before the merger, neither Sirius or XM had made a profit. 

Now that credit has dried up - along with declining car sales from America's Big Three automakers - Sirius XM has suffered from a cash flow crisis.  Sirius XM had been relying upon new car owners - like me - to continue to pay for the service after the three month trial period is over.  People aren't buying new cars and sales of home-based receivers have not lived up to expectations and projected sales when the two services merged.

Industry reports persist that Charlie Ergen, the CEO of EchoStar, may make another formal bid to buy Sirius XM.    According a story in the Wall Street Journal, Ergen made an offer to buy Sirius XM last summer but was shot down.  Echostar has loaned Sirius XM about $400 million dollars over the past year to help keep the company afloat. 

Next Tuesday, a $175 million dollar payment is due from Sirius XM to Echostar as part of the pay-off on the debt.  And $350 million dollars in loan payments to various banks is due by the end of the month.  If the payments can't be made, Sirius XM may be forced into bankruptcy.  Ergen doesn't want them to go into bankruptcy and reports are that the current offer on the table to buy controlling interest of Sirius XM is about $100 million dollars.  Wall Street analysts say that the offer may be too low.  They say that it may take as much as $750 million to $850 million in cash to bail out Sirius XM.

Should Ergen convince Sirius XM stockholders to sell (the stock is hovering around 10 cents a share), his leverage would be that any bankruptcy would effectively wipe away any shareholders equity in the company.  And Mel Karmazin, the CEO of Sirius XM (right), may have to capitulate because filing bankruptcy would undoubtedly mean a series of shareholder lawsuits against management for failing to preserve at least some of the equity in Sirius XM shares, no matter how small it may be.   

While services during the bankruptcy period wouldn't go away, speculation persists that if Ergen were to take control of Sirius XM, he may get a chance to either dump or renegotiate the rich contracts that burden the company.  Many of the deals with Howard Stern, Major League Baseball, the NFL and Oprah Winfrey were severely inflated due to bidding wars going on between Sirius and XM when they were separate entities.

Finally, one of the big issues that's causing Sirius XM the problems they face today goes back to the foot-dragging by the Federal Government as they deliberated whether the merger between the two satellite radio companies didn't violate anti-trust laws.  When the Feds finally got around to agreeing to the merger, the two services had exhausted themselves in terms of legal fees, lobbying efforts and other expenses.  Add to this, there was the continued negotiations for on-air talent and content that led to over-inflated contracts that sank both services deeper into debt.  By the time they said it was OK to merge, Sirius XM had a debt load of around $3.5 billion dollars.   

The Feds also tacked on some weird arbitrary rules such as the one that forces Sirius XM to hand over 8 percent of their allotted channels for "public service" or "non-commercial" programming.  Since most of their programming is already non-commercial, this really only affected the notion of "public service" channels.  And the definition of "public service" is so vague that it could really be any sort of programming that is deemed "public".   It was actually designed to encourage "minority" programming.  But so far, nothing has come about as to what that really means.

The situation is entirely fluid as Karmazin and Sirius XM are scrambling to find funding to stave off the unsolicited takeover by EchoStar.  The Wall Street Journal reported yesterday that Karmazin had turned to John Malone of Liberty Media Corp. to help fend off the EchoStar takeover.  What is ironic throughout all of this is that Liberty Media - which is a large shareholder in DirecTV - is a direct competitorwith EchoStar - which owns Dish Network. 

This ought to be pretty interesting.  Stay tuned...

House Approves Legislation to Delay DTV

The U.S. House of Representatives voted on Wednesday to delay the start-up date for digital television broadcasts for an additional 115 days.  The new "drop-dead" date for the end of analog broadcasts will now be June 12. 

This is a setback for local television stations who were hoping to be able to stop broadcasting both analog and digital signals on February 17.  And it was also a setback for telecommunications companies and public communication services who were hoping to begin to use the analog bandwidth for multi-media and public safety applications by the end of the month. 

The following article was written by This Week in Consumer Electronics reporter Greg Tarr:

Washington — The House of Representatives approved legislation Wednesday, 264-158, to delay the analog cutoff  TV date 115 days to June 12, 2009.

The measure, which was identical to a bill passed unanimously by the Senate for a second time, will now be sent to President Obama, who is expected to sign it into law.

House Republicans, who had voted down the delay last week under a rules suspension that required a two-thirds majority vote, failed to win a procedural change that would have opened the bill to amendments.

The House Rules Committee granted ground rules proposed by House Energy & Commerce Committee Chairman Henry Waxman (D-Calif.), who had asked the bill be brought up under the so-called “closed rule,” which prevented the proposal of and votes on amendments that could slow down the process.

Rep. Joe Barton, (R-Texas) pointed out repeatedly that the delay measure had never been given an opportunity for mark-up discussion in the House Energy & Commerce Committee. He said Republicans had prepared six amendments that would have made the delay better, including the authorization of up to $250 million of already allocated funds to clear up a waiting list for converter-box coupons.

The funds would have come from the $1.3 billion National Telecommunications & Information Administration (NTIA) coupon budget that has been tied up since December, when the program ran out of money. Under rules, the NTIA cannot issue new coupons until funds have cleared from the expiration of coupons in the field after 90 days.

Prior to the vote discussion, Waxman and House Telecommunications & Internet Chairman Rick Boucher (D-Va.) updated figures on the number of households in each congressional district that are on a waiting list for DTV-to-analog converter-box coupons.

Democrats pointed to Nielsen estimates for January, showing some 6.5 million people, who receive television only via terrestrial analog signals, were still not prepared for the transition date with 13 days remaining until the previously established cutoff date.

Boucher argued that even if the funds for converter-box coupons were in hand today, there wouldn’t be sufficient time to get impacted people ready to receive digital broadcasts.

Boucher and Waxman also indicated in a letter to House members prior to the vote reaching the floor that another 200,000 households had been added to the coupon waiting list, raising the number to 1.8 million overall.

Barton also sought unsuccessfully to establish an amendment that would have enabled the Federal Communications Commission to take back on or before Feb.17 analog frequencies from TV broadcasters whose analog stations sit on frequencies that have been allocated to new broadband communications for emergency first responders.

During the floor debate, Rep. Darrell Issa, (R-Calif.) also questioned the motives of advisors to President Obama on the DTV transition question. Issa said that one of the president’s advisors was associated with Clearwire, a wireless communications company that will benefit in a delay in analog spectrum being turned over to competitors who have purchased that spectrum at auction.

In addition to changing the analog cutoff date, the delay in the all-digital TV broadcasting measure allows broadcasters to end their analog transmissions on the previous Feb. 17 deadline. The bill also allows TV households to reapply for expired coupons using $650 million currently in the economic stimulus package to fund the new coupons. Some of the money will also be used for additional education and outreach.

The measure also contributes more resources to DTV education and outreach efforts, including improving and expanding call centers that will handle consumer questions and problems during the transition process.

Commenting on the House action Wedneday, Gary Shapiro, Consumer Electronics Association president and CEO, said: “Our nation is leading the world in the digital migration, and CEA again pledges full support for a successful transition to digital television.  We will quickly update our consumer education material as necessary and we will devote a significant portion of our Washington Forum event in April to DTV education.

“As CEA has repeatedly cautioned, this date change will inject uncertainty into the market and may result in a shortage of converter boxes, because manufacturers and retailers planned box inventory based on a February 17 transition date.  CEA urges Congress and the Administration to take the necessary steps to ensure converter box availability and to urge consumers to act immediately to enjoy the benefits of DTV.”

Acting FCC Chairman Michael J. Copps said: "I welcome Congressional passage of the DTV Delay Act. It has long been clear to me--and it's even clearer since I became Acting FCC Chairman two weeks ago--that the country is not prepared to undertake a nationwide transition in twelve days without unacceptably high consumer dislocation. 

"The additional four months provided by the law affords urgently-needed time for a more phased transition, including a consumer-friendly converter box coupon program, stepped-up consumer outreach and support--particularly for vulnerable populations -- and dealing with coverage, antenna and reception issues that went too long unaddressed. We've got a lot of work to do, but thanks to great leadership in the Senate and House of Representatives, we now have an opportunity to do it better."

U.S. House - "NO!" to Delaying Digital Television

In a reversal to Monday's overwhelming vote by the U.S. Senate to delay the switchover from analog to digital television from February 17 to June 12, the U.S. House of Representatives on Wednesday blocked the delay for the digital transition to occur on the original federally mandated date.  House Republicans effectively blocked the proposed delay saying that postponing the changeover would only lead to more confusion on the part of consumers. 

President Obama and Democrat backers in Congress have said that a delay was needed as an estimated 5.5 to 6.5 million households were not ready for the digital transition.  Studies have found that the most affected families are Hispanics and African-Americans, with Santa Fe and Albuquerque, NM being the two largest metropolitan areas with the most people not ready for the digital changeover, followed by Dallas-Fort Worth and Houston, TX. 

Texas Republican representative Joe Barton said that the "DTV-transition is neither stuck nor broke," and that problems can be overcome.  At the top of the list of problems is the lack of funds for the coupon program that would provide up to $80 per household to go toward the purchase of digital conversion boxes for analog televisions to receive digital signals that are broadcast over the air.  Barton and Rep. Cliff Stearns (R-FLA) introduced a bill that would authorize an additional $250 million for the coupon program without delaying the transition. 

It appears that House Democrats are looking to revive the proposed bill sometime next week.  This excerpt is from the Washington Post:

The bill was considered in the House yesterday under suspension of the rules, a procedure generally used for noncontroversial items. As a result, the bill saw only a short debate and no amendments were allowed. The vote was 258-168, with most Republicans voting against it. The bill needed a two-thirds majority to pass.

Rep. Rick Boucher (D-Va.), chairman of the House subcommittee that oversees telecommunications issues, said he wants to bring the same bill back to the floor next week under regular order, meaning that it would need only a simple majority to pass.

Given the Democratic majority in the House of Representatives, it appears that if the measure is brought back for a regular order vote, it should pass rather easily. 

Even with the possibility of a delay, television stations are still running informational commercials on the digital transition still touting the February 17 date.  The proposed delay is being met with overwhelming opposition from owners and managers of television stations who are spending money to broadcast both analog and digital signals.  Also, they say that continued public service commercials educating people on the digital transition will cut into ad revenues. 

Also looking at the possibility of the delay costing them millions of dollars are the telecommunication corporations that paid $19.6 billion dollars for portions of the analog 700MHz bandwidth that would be used for a variety of new technologies for both the public and private sector.  Qualcomm was hoping to soon activate their new MediaFlo technology which would provide real time video and audio content to be broadcast to cell phones, PDA's and personal viewing devices.  Qualcomm was planning on beginning to deploy MediaFlo in four metro areas - including Miami and the San Francisco Bay area - sometime in March.  Qualcomm reports they could lose up to $550 million dollars in revenue generated by MediaFlo if the proposed delay goes through. 

One of the reasons the Senate bill delaying the transition passed overwhelmingly was a promise from West Virginia Senator John Rockefeller (D) that he would not seek another extension past the June 12 date.  And House Democrats said the delay is needed to make use of a proposed $650 million stimulus package to fund the coupon program and call centers to assist customers during the transition.

Although I'm not directly affected by the digital transition, I think it's time to throw the switch and go digital.  Even a four month delay will not help the true stragglers get ready for the transition.  You literally have to be living in a cave to have not known about the February 17 changeover date, and there's a good chance that the person who doesn't know about the February 17 deadline probably doesn't own a television.  Plus, I've been a big proponent of the future technology that would bring real time media to personal electronics and I really want to see that happen sooner and not later. 

A Delay in the Digital TV Switchover?

As I said in my entry on the Consumer Electronics Show from earlier this week, the Obama transition team recently asked Congress for a delay in the switchover from analog to digital broadcasts that was supposed to take place on February 17.  Their argument was that a large percentage of the American public wasn't ready for the change.  The government sponsored and financially backed program to provide up to two $40 coupons to households who need the analog to digital conversion boxes - and who don't have cable or satellite service - ran out of money earlier this month.  There is a reported backlog of 2.1 million of requests from people for the coupons, up from 1.1 million requests that was reported just a week ago.   

Yesterday, Senate Republicans blocked a bill sponsored by West Virginian senator John D. Rockefeller that would delay the changeover to June 12.  Republicans said they didn't want to consider a delay for the planned changeover until the National Telecommunication and Information Agency received more money from Congress to restart the coupon program.  Senate Democrats plan to bring the bill back up for consideration next week, and the House of Representatives plan to bring up a similar bill for discussion this next week.  The bill, sponsored by Rep. Henry Waxman, includes a proposal to make the coupon program easier for people to use.  

Critics say the coupon program is flawed not only because the program ran out of money for the coupons, but it didn't begin until January 1, 2008.  Critics charge that the coupon program should have been in effect much earlier than the first of last year as the Federal Government mandate to changeover to Digital from Analog has been in place since February of 2006.   And because signing up for the coupon program was available only on the Internet, critics say that the people most affected by the digital transition - the poor or the technologically challenged - wouldn't have the means of signing up for the coupon.  

Democratic members of Congress have long said the government's program to educate the public regarding the changeover hasn't been in effect long enough, plus they haven't provided enough money toward the education and coupon program.  Critics point to ads by the cable companies that are "confusing" to the public saying that if they have cable, they won't need a converter box.  There's also some people who say that electronics retailers have confused the buying public saying that they won't need a converter box if they buy a new television that already has an ATSC tuner built in.   And another complaint is that some people have found that not only do they need a converter box, but they'll need a new antenna, as well, as the digital signals are being broadcast in both VHF and UHF frequencies. 

The Republicans contend that the $1 billion the federal government has spent on the digital transition - for both the coupons and on education - is sufficient.  90% of the television station managers polled earlier this month said they didn't want a delay in the changeover.  A delay would also cut into their ad revenue as the majority of television stations have been running public service commercials on the changeover.  Some also say what will happen if by June 12 there are still 2 million people that don't have capabilities to receive digital signals.  Would there be a further delay?

Watching this with keen interest are a number of telecommunication providers who have been waiting in earnest to use the 700 MHz analog spectrum bands they paid for in a government auction that raised over $19 billion dollars in March of last year.  The analog spectrum that was auctioned off is well-suited to wireless broadband, capable of carrying loads of data, can travel long distances, and easily penetrates walls with great efficiency and speed.  This will not only benefit telecommunication providers with video on demand programming for personal viewing devices, but will also benefit public safety organizations with quicker and better communication devices for police, fire and other agencies.   

Last week, Hawaii became the first state in the United States to changeover from analog to digital broadcasts.  While there were some minor technical glitches that were resolved within a couple three hours, most of the transition came off without a hitch.  There were some calls from technology-challenged people who had trouble hooking up their converter boxes, but for the most part the transition was smooth and orderly.  The FCC was monitoring complaints and helping those people who were having trouble with the conversion boxes.  There have been no major complaints or reported problems with the changeover.

Residents of Hawaii who were still on analog could only receive a seven minute video tape message played in a loop that was hosted by a local television personality telling them that the analog signals have been shut off.  Called the "analog night-light", the video gave out information and phone numbers of who to contact and how to get a converter box for their television.  It wasn't known how long the analog video message would run. 

While the estimated number of households that aren't ready for digital has dropped significantly over the past month, governmental hold-ups of the coupon program isn't helping anything.  While the government has begun to re-issue coupons as millions of dollars worth of unused coupons have now expired, Democrats are blaming the Bush administration for dragging their feet in providing more money for the coupon program.  But Republicans counter that Democrats are holding the Federal Government's financial purse strings and could have passed legislation long before the money ran out to replenish the program. 

Don't you just love how the federal bureaucracy runs our day-to-day life? 

CES - 2009

It was my 23rd Consumer Electronics Show in Las Vegas earlier this month.  And with the down economy, there wasn't really any *big* news that accompanied the annual show held primarily at the Las Vegas Convention Center and at other sites around the famed Las Vegas Strip.  Oh, there was plenty to see, but there just wasn't any blockbuster products that stood out among the others.  But there was still a lot of new technology that will show up in products that will hit the market in 2009. 

Attendance was down significantly at the 2009 Consumer Electronics Show.  After hitting 141,000 in 2008, attendance barely topped 110,000 this year.  And I always question the Consumer Electronics Association's head count at the show.  I've heard rumors that the CEA gets kickbacks on room prices from hotels if their determined attendance hits a certain level.  Each year, I think there's always 25,000 to 30,000 less people at CES than the CEA reports.   

Televisions are always a big thing at CES.   However, this year, no one showed a huge television to compare to the Panasonic 150" plasma monitor that was on display last year.  I think the "arms race" between the panel manufacturers had maxed out on that one.  

Speaking of Panasonic, it certainly appears that plasma - in the eyes of that company - is far from being dead.  With most companies going to LCD panels, plasma has been slowly dying on the vine with many of the major television manufacturers.  No so with Panasonic.  In addition to the announcement of a fifth major plasma manufacturing facility, Panasonic unveiled a number of new plasma display units.  While there are some advantages with plasma over LCD, LCD still rules the market place in flat panel televisions. 

For LCD displays, Samsung's LED back-lit technology and Sony's 240Hz picture refresher rate caught the eyes of other manufacturers.  I have to tell you - the Samsung top-of-the-line 950 models that they have on the market have just stunning pictures with the LED back-lit picture feature.  This year, you'll see a number of Samsung models at lower prices with LED back-lit technology.  The result is a more crisp, more sharp and more defined picture. 

And other companies, such as Sony, Vizio, and LG will feature LCD back-lit pictures.  In fact, Vizio (of which I'm not a big fan of, but their monitors are *OK*) will have a 55" LCD panel with LED back-lit technology available later this year at $1999.  Now, that's one helluva price for a 55" panel with that type of technology. 

I first saw Sony's 240H refresh rate LCD panel at the CEDIA Expo last September in Denver.  While I didn't think the difference between a 240 cycle refresher rate was much different than a 120 cycle refresh rate.  But a number of manufacturers have picked up on this technology and you'll see models from Samsung, LG - even Vizio - and a handful of others that will have the 240Hz picture refresh rate in models for the 2009 season.  In fact, I heard that LG was showing a panel that had a 480Hz refresh rate!  I understand the picture was very clear, but it was difficult to tell that big of a difference in side-by-side comparisons of the same picture on 240Hz and even 120Hz refresh rate panels. 

There are a number of companies that showed Internet-ready televisions that allow you to use your television as a big Internet portal.  Although somewhat pricey and still sort of complicated compared to just using a computer, companies such as Samsung (which has had limited Internet connectivity in the past), LG, Toshiba, Hitachi, Sharp and Panasonic all showed a number of models that feature Internet capability that will be available later this year.   

And the realization of 3-D television is becoming more apparent with Sony, Panasonic, Phillips and Westinghouse all showing models that either have been available or will become available later this year.  The sets will all come with polarized 3-D glasses - I believe they're made by 3-M - and will allow for the processing of 3-D information to be shown on the screen. 

(As an aside, my company used to distribute a 3-D processor from Sensio that was years ahead of its time.  I actually have a couple of them at home and they do a pretty good job.  It's just that there isn't a lot of available software to view with the units.  While Sensio used "stereoglyphic" 3-D (sort of what the old Viewmaster viewers were like), nearly all of the new 3-D televisions will use polarized 3-D, like what is found at Imax 3-D theaters and at theme parks.)

The biggest hurdle many people will find with 3-D viewing in their home is that the larger the picture and the darker the room, the better the 3-D image.  Panasonic was showing their 3-D image in a darkened room on a 103-inch 3-D plasma set.  The major hurdle to 3-D continues to be the glasses, which will be required - and will have to be worn OVER regular glasses of that person wears them regularly.  Plus, when you take the glasses off, you'll have to take a few moments to re-orient your eyesight before you can see normally. 

And if there's one term that I'm already tired of, it's concept of going "green".  Especially in electronics.  Going green in electronics means making products with more eco-friendly parts that can be easily recycled when the unit's days are over; as well as having a high Energy Star rating for power consumption.  Energy Star is the international standard (created by the U.S. Federal Government in 1992) for measuring the energy efficiency for electronic products - everything from home appliances, to personal electronic items to home entertainment. 

In November, Energy Star adopted a 3.0 standard for all televisions to be designated as an Energy Star product.  That means that new televisions have reduced power requirements when they're first turned on.  (No more vivid picture right off the bat - you've got to let your television warm up like your grandparents had to years ago.  Only it won't be as noticeable as it was for your grandparents and it won't take as long.)  And since most televisions in the U.S. are in stand-by for 80% of the time, new Energy Star requirements only allow for a television to draw less than 1 watt of power while they're turned off.   

Blu-Ray players were also big news at CES with many entry level players being introduced at around a $200 dollar price point.  And to further confuse the buying public, as our industry is wont to do, the desirable Blu-Ray players will now come with a format called Profile 2.0, also known as BD Live, which allows a user to hook up the player to high-speed Internet and allow for the download of high-definition movie or gaming content.  I didn't really get a chance to read up on this Profile 2.0 format, other than all the trade magazines were saying that if a person didn't have a Blu-Ray player with Profile 2.0, you may as well just throw the thing away.  Blu-Ray players with the Profile 1.1 format will continue to work, but you can only download firmware upgrades onto your machine, and not movies or games.

(To further confuse the issue, I was reading up on the Profile 3.0 format that will be the next thing that will come to Blu-Ray players.  But this doesn't have to do with upgrade downloads or content downloads - it has to do with an audio format to go along with downloaded high-def content.  It just makes me want to pull my hair out what the industry is doing to continually shoot themselves in the foot when it comes to all these formats.)

And in the category of "What Are They Thinking?" - Panasonic proved they can make 150" high-def televisions, but they want to show the world they can make small high-def devices, as well.  They introduced a portable Blu-Ray player at CES that will also allow for wireless Internet video streaming.  The only problem is that the screen will be about 8" in diameter and you really won't be able to pick out high-definition images all that much.  Knowing Panasonic and the buying public, the thing will probably be a hit.

Also on the video front, tiny projectors - known as "pico" projectors - were a hot topic at CES.  These projectors range in size from the size of a small toaster to the size of cellphones.  These small projectors can be used for the projection of pictures, movies or other video content on the wall.  To read more about the pico projectors shown at CES, click here.  I didn't get a chance to look at them, but they can't have an overly great picture.

Actually, one of our lines - DreamVision- got a lot of press at CES with the official unveiling of the Dream'E projector.  The projector features a Liquid Crystal on Silicon (LCoS) panel with remarkable clarity and color.  We showed it with a Panamorph lens on a 126" diagonal, 2:35 to 1 screen.  At just under $8995 with the optional lens ($4995 without), we had many people say it was the best looking 2:35 to 1 image they saw at the show - at ANY price, let alone being under $10,000 bucks.  On the strength of its showing at CES, we will have a minimum of six upcoming reviews on the Dream'E in video magazines in the coming months.  It was really a hot ticket. 

And, of course, there's always a number of new camcorders and cameras that debut at CES.  One of the more interesting cameras that was unveiled at CES was a small consumer version of Casio's professional Exilim series that can shoot up to 1000 frames per second.  The Casio XF-FC100 and XF-FS10 cameras are ultra-thin 9 megapixel models that can shoot up to 30 frames per second at 6 megapixels - and both can fit easily into your pocket.  That's quicker than most SLR cameras on the market.  I was blown away at the possibilities of having a camera like this when I was reading about it in a trade paper one morning.

Another big thing at CES were digital picture frames - a fast-growing segment of the consumer electronics industry.  Digital picture frames allow you to be able to download a number of your JPEG pictures from your computer (usually via a USB memory stick - or via a wired hook up) and you can have crystal clear images shown on a decorative frame.  You can keep the same image on the frame, or set the frame to random and show a number of your pictures that change once every, say, 30 to 60 seconds. 

Some digital picture frames can be large - up to 15" or more in diameter - and can be attached to your wall.  But most are 8" or so and are usually table-top models.  These picture frames can handle up to 8 megapixels and beyond, and some can also play recorded video formats.  We have neighbors that have digital picture frames.  It's sort of neat to have a couple on and around when you have guests in the house.  The price has been a little prohibitive for me, but many are starting to come down to below $100 dollars.

Finally, two big pieces of news came out of the 2009 CES.  The first was Apple's announcement that beginning in 2010, they would exclusively show their Mac-based products at CES.  This surprise announcement comes on the heels of Apple's surprise announcement that they would no longer be involved in the Macworld Exposition held in San Francisco either right before or during CES in Las Vegas. 

(Another aside, our company just signed an agreement to sell the Focal XS multimedia speaker system in the over 200 Apple corporate stores.  We showed at Macworld for the first time this year and the XS was a major hit among attendees.)

And the other announcement didn't really come from CES as much as it came during the heart of CES.  (Then) President-elect Obama announced that he was asking Congress to push back the cut-off date when television stations have to switch from broadcasting in analog to digital from February 10 to later this June. 

The main reason Obama and others would like the date moved back about four months is that the government literally ran out of money that was earmarked to help citizens buy the digital conversion boxes just after the first of the year.  The federal government spent $2.2 billion dollars that went toward coupons that provided financial relief to families who needed the conversion boxes, as well as going toward educating the public regarding the digital changeover.  An estimated 7.7 million people are not ready for the transition that is still scheduled to take place in less than a month.

Over 40 million $40 dollar coupons have been sent to consumers since the program was started by the National Telecommunication and Information Agency.  However, nearly 13 million of those coupons went unused and have since expired.  The agency is backlogged with a list of over 1.1 million requests for the coupons to purchase the converter boxes.  Obama transition teams have been working with Congress to try and delay the changeover because of these backlogs, but critics are saying that Obama and his team are overreacting to something that is nothing more than a quick fix by Congress to make things right. 

Another group of people who don't want to see the digital transition delayed are the telecommunications companies that bought coveted analog television airwaves through an auction last year.  The federal government sold nearly $20 billion dollars worth of the airwaves to companies that will provide more and better telecommunication services in the coming years.  These companies are ready to provide services such as video streaming to personal viewing devices and other new technologies that can be used with cell phones.  

Politics are in play now with Democrats blaming the Bush Administration for the debacle, while Republicans are saying the system just needs to be tweaked a bit.  Either way, it may not be until early February before we find out if we have to wait another four months for clearer pictures on our televisions.  

That's what I found to be interesting at this year's Consumer Electronics Show.  And here's a good little tip for those of you looking to buy a new television - wait until after the Super Bowl.  There's a lot of televisions on the market place right now and more will be flooding the pipelines with the liquidation of Circuit City.  If you can wait until after the Super Bowl, we may be seeing some unbelievable prices on televisions.  I'm amazed at the low prices I'm seeing now on some televisions (including the 46" Samsung that we bought last fall).   Remember, it wasn't that long ago that we were seeing prices on 42" televisions at around $5000.  There are a number of good 42" televisions that are now available at prices of between $1000 and $1500 bucks.  I think we'll see even lower prices after February 1. 

The Demise of Circuit City

The second largest electronics retailer in the U.S. - Circuit City - announced on Friday that they could not sell their assets to another party who would agree to keep their doors open.  They opted to sell their assets to liquidators who began yesterday to sell what remaining inventory and fixtures the 567 remaining Circuit City stores have in the U.S. with another 200 or so in Canada.

While this development wasn't all that surprising, nor was it as devastating to my company as the announcement of Tweeter liquidating their assets last fall, it's devastating to a number of huge manufacturers in our industry.  And it also raises a red flag in the eyes of manufacturers as the playing field of where they can sell their products just became tremendously smaller.   

Circuit City began innocently enough in 1949 as a television store in Richmond, VA.   It grew into a number of different types of stores along the Atlantic seaboard and up into the Northeast in the 60's and 70's.  One of those stores, a large warehouse-style store called Circuit City Superstore, garnered the most attention from consumers and the format stuck.  In the 80's, Circuit City began an aggressive growth pattern that put over 1000 stores from coast to coast, including Canada. 

The demise of Circuit City probably began with their expansive growth, growing too fast and putting stores into markets that either didn't need another electronics store, or putting too many locations into markets that didn't need that many Circuit City stores.  And since Circuit City leased most of their buildings, they also didn't have the greatest locations for their stores.

A number of people in our industry point to one such location as a great example of Circuit City's questionable decisions that helped bring on the beginning of the end.  In the mid-90's, Circuit City opened a store - a nice location, actually -  that was literally across the street from Nebraska Furniture Mart in Omaha (see map).   Then Circuit City began a very aggressive pricing campaign to either match or go below the everyday low prices Nebraska Furniture Mart had to offer.

What Circuit City didn't realize, or were too full of themselves to realize, is that the Blumkin family, which was backed by gazillionaire Warren Buffett, had deeper pockets and could afford to get into a "pissing" price-war with the upstart chain.  When the Mart began to sell like-products UNDER cost to make their point understood with Circuit City, the chain kept playing the game with NFM.  This kept up for a couple years before Circuit City threw in the towel and began to play nice with their neighbor. 

But many in the industry continued to question Circuit's strategy in locating their Omaha store next to the Mart.  While many business professors will say it's a great plan to be near your major competitor, Omaha was a growing community to the west.  There was nothing in the new western end of Omaha that could have kept Circuit City from having a terrific market edge in the area.  But Circuit wanted to show the electronics world that they had the might to take on the venerable Nebraska Furniture Mart in their own backyard.  All it showed was what many of us already knew - you don't screw around with Nebraska Furniture Mart.  The Omaha location finally closed in February 2004 - one of approximately 14 Circuit City stores that were losing money at the time.   

The reasons for the end of Circuit City are many, with the economy being the biggest factor.  But Circuit City was in trouble long before this recent economic downturn.  Many analysts point to mismanagement by Circuit City decision makers and too much inventory on hand in stores and warehouses.

One of the major blunders by Circuit City management was the decision in 2004 to fire nearly 3400 "high paid" sales people who were making good money selling products on commission.  These long-time sales people were seasoned employees and really knew their stuff when it came to products.  They were replaced by people willing to work for $8 bucks an hour - young people who were really nothing more than clerks who had just a fraction of the knowledge the fired sales staff had garnered over the years.   This, alone, alienated some of Circuit's long time customers who though they could trust the sales staff over personnel at other national chain stores. 

Circuit's decision to stop selling appliances in the 90's also helped lead to where it ends up today.  It didn't embrace the electronic home-gaming industry until it was too late.  It had a chance to partner up with computer companies such as Apple for in-store promotions, but failed to do so.  While Circuit City snoozed, Best Buy garnered more of the market share of consumer electronics.  When Circuit City finally woke up and began to address some of their competitive issues with Best Buy head-on, WalMart nearly caught both of them. 

Circuit City is presently saddled with over $1.2 billion dollars worth of inventory that has to be liquidated.  That, wont for a better term, is a SHIT-LOAD of products that will be flooding the market place in the coming weeks.  As of last week, Circuit still owed Hewlett-Packard about $120 million dollars (couldn't happen to a better company) and Samsung approximately $115 million.  There was a report in industry trade magazines late last fall that Samsung was trying to take back approximately $75 million in inventory from Circuit. 

The biggest problem with the closing of Circuit City is that the major electronics manufacturers now have even fewer places to sell their wares.  The fear is that the major electronics retailers - Best Buy, WalMart and Amazon.com (yes, Amazon.com!) - will be able to put pressure on manufacturers to lower prices on products even more, allowing for more profit margin for themselves, while cutting into the already razor-thin margins manufacturers enjoy today.  While this sounds great for the average consumer, this is turning into a horrible scenario for manufacturers.   Things are already tight for many manufacturers with some announcing wholesale and widespread lay-offs in late 2008 and early 2009.  If they have to continue to drop their wholesale prices to move product, or to appease a power retailer like Best Buy, they could suffer millions of dollars in losses just to keep making products. 

Speaking of Best Buy, things are going so well for the Minneapolis-based company.  Just before Christmas, Best Buy announced they had offered buy-outs or early-retirement to nearly 4000 of its corporate employees working in the home office in suburban Richfield.  Sales are down at Best Buy and profits are eroding.  Best Buy also put a clamp on expenses, including the discontinuance of all non-essential expenditures that were deemed OK in the past.  It wasn't a great Christmas selling season for Best Buy, or for a number of other electronics retailers.  This is not a good time for my industry. 

The closing of Circuit City stores means more market shares for places like Best Buy, Fry's, Ultimate Electronics and other regional chains.  But the retailers I fear the most are WalMart and Amazon.com.   I can foresee a major price battle going on between those two that could lay Best Buy to waste at some point in the future.  And that won't be good for anybody in my industry.

The "New" XM Radio

As I said in my post from a couple three weeks ago, after living with XM Radio for three months there's a lot to like about it.  Yesterday, it got even better as a number of Sirius satellite radio programs merged with XM programming.  I spent a good portion of the day in the car listening to what's new.  And what's good. 

The selection of good music channels on XM grew precipitously yesterday with the addition of "Little Steven" Van Zandt's Underground Garage, Bruce Springsteen's E Street Radio, Jimmy Buffett's Radio Margaritaville, BBC Radio 1, Outlaw Country and Jam On (a channel featuring jam-bands), just to name a few.  The 60's on 6 channel added some Sirius personalities in addition to some of the XM Radio people who were on the air. 

There are now six comedy channels on XM Radio with the addition of Jamie Foxx's "The Foxxhole" channel and the Blue Collar comedy channel.  Both channels are uncensored raising the number of uncensored comedy channels on XM to four.  Blue Collar comedy channel features American comedians while "The Foxxhole" features African-American comedians. 

XM's old X Country station was replaced by Outlaw Country.  It's not quite as edgy as X Country was, but it's more eclectic with performers such as Lyle Lovett, Mary Chapin Carpenter and Lucinda Williams playing on it today. 

I thought Radio Margaritaville would be Jimmy Buffett, all the time.  But it was actually pretty good as I never heard a Buffett tune during the times that I was listening. 

I really liked the Underground Garage.  The programming was all over the place from the Beach Boys to the Kinks to White Stripes to the Ramones.  It reminds me a lot of the Deep Tracks channel on XM, playing a lot of obscure "B" side tunes.  It's a fun channel to listen to. 

I was under the impression that I had NBA play-by-play on XM prior to today, but I couldn't find any games, save one - New York at San Antonio - the other night when I was driving down the road.  I knew there were other games on, but that was the only one I could find.  Now, there are five channels that are dedicated to just NBA programming and I'm sure some of the other sports channels XM has will be used for NBA games if more channels are needed.  Not that I like to listen to NBA games (not like I like to listen to Major League Baseball games), but I thought it would be good to listen to for a while while driving down the road.

When I bought my new car, the sales guy pointed out that I had a 36 station pre-set on my radio.  He said, "I don't know why anyone would need 36 pre-sets on a radio."

Well, now that there's all this new programming on XM, I wish I had a radio with 50 pre-sets. 

If you were on the fence on getting a satellite radio, now's the time to hop off.  The choices are broad and varied, the programming is stellar and for $12.95 a month it's a bargain.

Trouble in the Electronics Industry

The announcement of Circuit City filing for Chapter 11 bankruptcy protection yesterday sent shock waves through the electronics industry.  The bankruptcy announcement was on the heels of an announcement last week that Circuit City would be closing 155 stores, including all stores in Kansas City and Phoenix, all but one store in the Atlanta area, 14 of 17 stores in the region, and 10 of 14 stores in the San Francisco Bay area. 

This is also after regional electronics retailer Tweeter sold their assets to a liquidation company and filed for bankruptcy protection last week.  This is the second time in two years Tweeter had filed for bankruptcy.  

While Tweeter is going through a company-wide liquidation of product, Circuit City just got a $1.1 billion dollar loan to help keep it going through the Christmas selling season.  The loan will allow Circuit City to continue to procure products while liquidating the inventory of the closing stores and hopes to emerge from bankruptcy protection in 2009.  

Circuit City's bankruptcy filing came after their major suppliers cut off all credit terms to the Richmond, VA-based chain over the weekend.  Circuit City owes Hewlett-Packard nearly $119 million (couldn't happen to a better company), Samsung about $116 million, Sony Computer Entertainment (PlayStation 3) $60 million, LG Electronics (Zenith) $41 million and Toshiba $18 million.  

The Circuit City bankruptcy announcement was anticipated for quite some time.  There were a number signs leading up to the announcement that Circuit City had been losing money for quite sometime.  Over a year and a half ago, Circuit City fired over 3400 salespeople because the company deemed they were making too much money.  They then hired a number of salespeople making just over the minimum wage.  Many of these new salespeople were not seasoned in the art of sales and Circuit City sales began to fall.  

Circuit City reported even wider losses than anticipated for their fiscal quarter that ended on August 31.  The chain lost over $239 million in the period, compared to losses of $63 million in the same quarter in the prior year.  Sales dropped nearly 10% during the quarter. 

Tweeter announced toward the end of October they had closed all their distribution warehouses, told employees to cancel all deliveries and installations scheduled after November 14, and sold the inventory to a liquidator.  Tweeter had reported a loss of $40 million dollars in an Oct. 20 filing in U.S. Bankruptcy court. 

While Tweeter's losses weren't as large as Circuit City's, the company knew that if Circuit City announced store closing, liquidations and bankruptcy first, Tweeter would have little to no chance of recouping any money through sales of their inventory.  Tweeter did a pre-emptive strike in the audio/video world by announcing their intentions first giving them a head start over Circuit City. 

Tweeter was a major retailer for my company.  We sold them Focal loudspeakers and Cambridge Audio electronics.  While they owe our company a lot of money, it's not as bad as others.  Sony ($1.7 million owed), Samsung ($865K) and Pioneer ($554K) topped the list of manufactures Tweeter owed money to.  Let's just say I don't anticipate getting any type of a Christmas bonus this year. 

Although the Chicago area stores that I called on for Tweeter were profitable - well, 7 of the 8 stores were profitable - many of the stores in Arizona, Texas, Georgia and Florida were not.  They were caught up in the housing crunch in those areas and custom installation sales dropped dramatically.  Schultze Asset Management Group, who bought the assets of Tweeter during a bankruptcy auction last year, had recently gone through a change of upper management.  They brought in an expert in corporate restructuring to head the company on an interim basis, but less than two weeks later they had pulled the plug. 

There are two major concerns within the industry with the bankruptcy filings and liquidations from both Tweeter and Circuit City.  One is for the short term, the other for the long term.

The short term concern is more for smaller A/V retailers this fall and holiday selling season.  The market is literally getting flooded with televisions, audio gear and computers selling as little as 60 cents on the dollar.  Tweeter had a total inventory of $400 million in their 94 stores across the nation, while Circuit City listed inventory assets of over $3 billion dollars in their locations.  While 155 of the 714 stores in the United States will close, Circuit City hopes they'll be able to raise $350 million in cash from sales in those closing locations. 

The long term concern is more for manufacturers and vendors.  Many in the industry feel that if Circuit City doesn't come out of bankruptcy, the amount of retailers that will sell national brand names suddenly becomes much lower.  Best Buy, WalMart and Amazon.com are the three biggest electronics retailers.  The less avenues manufacturers or vendors have to sell their goods, the more power the larger retailers have over the manufacturers and vendors in regard to inventory, pricing and even model selection.  

We're hoping the downturn in the economy will bottom out and begin a slow climb back toward levels we saw in previous years.  But for now, the consumer will be the winner when it comes to buying electronics, while retailers, manufacturers and vendors will be paying the price.  Am I concerned for my job?  Yeah, a little.  But we're a strong company and we have other irons in the fire to help us get past this major bump we've just experienced with Tweeter.   We'll be fine. 

XM Radio

It's been right at three months since I got a new car.  And it's also been three months in which I've been able to live with XM Radio and get a good idea of what I like and what I don't like about satellite radio.  And, believe me, there's not much to dislike about XM Radio.

I had been holding out getting a satellite receiver until after the merger of XM Radio and Sirius, hoping to be able to get one of the new ala carte receivers they just released earlier this month.  Unfortunately, my old car didn't hold out as long as I wanted and I got a new Impala that came with XM Radio service. 

Now, I've had rental cars in the past where I've been able to listen to both XM or Sirius programming.  There were things I liked about both, and some things that I was upset about that you couldn't have both.  Actually, I guess what I wanted was the chance to have radio broadcasts of both Major League Baseball and NFL games on one format.

Actually, other than XM Radio having more baseball and collegiate sports to offer and no NFL games, programming on both formats is about the same.  Both have similar music channels featuring focused genres of music.  Both have the same news, sports and weather programming.  Both have comedy and entertainment channels.  About the only difference is that Sirius has Howard Stern, Martha Stewart, and the NFL; while XM has Opie and Anthony, Oprah and Major League Baseball. 

Earlier this month, XM Radio and Sirius announced cross programming platforms called "The Best of..." for both formats.   While I had been waiting a long time for this cross programming to commense, I have to say now that I am VERY happy I have XM Radio and not Sirius.  "The Best of XM" is definitely a better deal for Sirius subscribers than "The Best of Sirius" is for XM subscribers. 

The Best of XM that Sirius subscribers can now get for an additonal $4 bucks a month offers up Oprah, NBA and NHL broadcasts, the PGA Tour Network and some collegiate sports programming.  The Best of Sirius made available to XM listeners only offers Martha Stewart, two Howard Stern channels and the NFL games.   I'm not a big Howard Stern fan and I'm usually home on Sunday's when NFL games are on.  And if I am driving on a Monday night, ESPN Radio has the NFL game on their channel.  I'm going to keep my subscription for XM only. 

So what do I like about XM?  I do enjoy the focused programming.  I have a radio that has 36 presets.  As the guy who sold me the car said, "I don't know anyone who would use 36 presets."  Well, he didn't know me very well, because I use a lot of 'em, especially when the baseball season was on. 

One of the XM channels I find myself listening to a lot is Channel 40 - Deep Tracks.  This is a channel where they play some really obscure music from famous and not-so-famous rock bands and performers from the late 60's, the 70's and into the early 80's.  And the music is far from bad, it's just songs that were either not in the consciousness of most people due to radio station playlists at the time, or songs from bands that didn't quite make it big.  Sirius has a similar channel - The Vault.  But I found it to be repetitious with a lot of Jethro Tull, Moody Blues and Rolling Stones being played on the channel.  Deep Tracks on XM is all over the place with different performers and bands.  It's fun to listen to.

I also find that I listen to Channel 6 - the 60's - an awful lot.  This was the music I was weaned on.  Having older sisters and older cousins who played a lot of music and had the latest records in the early to mid-60's, a lot of songs played on this station are sort of a time line of my growth in the 60's.  I'm not ashamed to say I like to listen to some of the music, even though I do have to suffer through an occassional Archies, 1910 Fruitgum Company or any other bubblegum performer from the late 60's. 

But that's what a radio with 36 presets is for - to immediately go from one station to the next.  And lately I've been listening to any one of the four comedy channels on XM.  Channel 150 - XM Comedy features comics doing uncensored routines.  Channel 151 - Laugh USA features comedy routines and comics spanning from the golden age of radio through a roster of current comedians.  And Channel 153 - Laugh Attack focuses on comics from Canada and their irreverant humor.  I find that I listen to those three stations a lot as of late, especially on long trips.  It really seems to make the time pass by much more quickly.   

Channel 151 features a lot of comics such as Bob Newhart, Henny Youngman and Bill Cosby.  In fact, we used to have a number of Bill Cosby's comedy albums while I was growing up.  Listening to his routines from the 60's brings back a lot of good memories.  There's also some vintage Bob and Ray, Mel Brooks and Carl Reiner, and some old Smothers Brothers routines that we used to have on albums years ago, as well.   

Since I first began to travel for my job in the mid-80's, I've said the most boring stretch of road that I travel is Interstate 35 between Kansas City and Des Moines.  You get out of either town by about 60 miles and the selection of radio stations to listen to drops off dramatically.  Those that you can pick up feature country and western music with farm reports.  If I wasn't in the mood to listen to some of my CD's, I just drove down the road in silence.  I always said that if I got satellite radio, it would make the trip bearable. 

Well, I made the trip between KC and Des Moines recently and I have to tell you - being able to jump between a multitude of offerings on XM radio did make the time go by rather quickly.  I got to about 50 miles outside of Des Moines before I realized that I had been on the road for two hours.  For someone like me who travels a lot, satellite radio is the way to go.  I find myself thinking outloud, "How did I live without this for so long?"

The New Television

We broke down and had to buy a new television for our family room in our basement.  Our Loewe (pronounced LOO-va) television, a very good German-made television, and one of the first digital televisions offered in North America, died last May.  Now, we don't watch a whole lot of television in the summertime, but with fall upon us I knew we had to get a new TV as Cindy loves to go down and veg out on the couch watching television on Sunday afternoon and on some evenings when the weather's cold. 

Being in the Audio/Video industry afforded me the chance to take a look at a lot of different televisions, most recently at the CEDIA Expo in Denver, as well as at various independent dealers I call on, as well as at national and regional chains such as Best Buy, American TV and Tweeter.  Since I also am in the industry, I have a lot of places where I can go and buy a television wholesale, saving a few bucks in the process.

And a few bucks saved is the operative term here.  Profit margins are not very good on a number of televisions you see in stores these days.  It's been that way for quite some time, ever since the Japanese manufacturers began to flood the market with flat panel televisions a number of years ago.  On a sale of a $2000 television, the store may make a profit of a couple hundred dollars.  In order to do that, they have to make a whole lot of sales to make their bottom line stand up.  A 10 percent profit margin is not a healthy margin for any store.

Add to this, I hadn't bought a new television for - well, I guess, since about 1986.  Let me rephrase that - I had paid retail for a new television since 1986.  That was when I bought a 13" Sony television for my office.  It was a display model at a Walmart store.  It had been on every day for a year and half, a minimum of 12 hours a day.  I bought it for $200 bucks.  It worked until about three years ago.  It was a great television.

I also bought a Bang and Olufsen television when I was the representative for them in 1988.  It was the most overpriced television ever.   I paid $1000 bucks for it - normal retail price was $2000.  B&O offered the special price to their field sales people and it was sort of a deal where outside salespeople were not required to buy one and the matching VCR (also an overpriced piece of shit), but were heavily lobbied to do so.  The VCR gave out about four years later - the television about four years after that. 

In the meantime, I also represented NAD who offered a television back in 1987.  They gave me a 20" television for free.  I always liked the people at NAD for doing that for me.  It wasn't a very reliable television - a lot of them broke.  But the one I had worked great - right up to the time and years after I lost it in a messy breakup with an old girlfriend. 

And the Loewe set that I just lost was also given to me by the company back in 1996.  It was a great television - one of the best pictures of any direct view picture tube on the market.  But Loewe couldn't make a go of it in the U.S. (primarily because they were high priced televisions) and they pulled out a few years ago.  I thought about having it fixed, but then realized that it would probably me a minimum of $500 bucks to get it fixed.  And $500 bucks is a nice down payment on a new flat panel high definition television.

The main dilemma for me was whether to go with a plasma or with an LCD flat panel television.  The LCD's had gotten tremendously better over the past couple of years and were coming down in price.  They still didn't attain the black level or high contrast ratio you find in the plasma sets, but the colors are vibrant, they are usually more sleek in design than the plasmas, they're lighter than the plasmas and they definitely run much more cool than a plasma set.  And now that many of the new LCD televisions have a 120 hz picture refresh rate, the digital artifacts that occurred during sports programming or movies that featured a lot of action scenes are almost eliminated. 

Plasma's also have a more wide viewing angle than LCD's.  But our family room isn't all that big and off-axis viewing wasn't going to be that big of an issue.  I found myself leaning more toward the LCD's.  I knew I would be compromising the picture quality, especially in terms of the black level and contrast ratio.  But reports I was hearing were that LCD's were beginning to show that they were more reliable than plasmas.  And because the plasmas do run hotter - and heat is the number one enemy of all things electrical - I surmised the LCD flat panels would probably have a better chance of longevity.

The other thing that was sort of a bone of contention between my wife and me was the size of the screen.  I wanted to get a 50" television.  Cindy thought we really didn't need anything larger than a 37" or 42".  After making some measurements, I agreed that a 50" would probably be too big for where we wanted the television to sit on our cabinet top.  But a 46" would work fine.  Cindy still thought that would be too big.  I told her, "I'll guarantee you that once you get used to a 46" television, you'll start to say, 'Boy, it's too bad we couldn't have gotten the bigger screen'.  It always happens."

I ended up taking her to a local American TV store here in the Quad's to show her the size of the televisions.  I'm sure the salesperson had to know something was going on when I kept rattling off model numbers, specifications and features of some of the televisions they had on hand.  A compromise was made and Cindy said that we could get the 46".

I'd saved up money from working events for the City of Davenport this summer.  I put a budget of $1600 bucks, which usually means another $200 on top of that.  I knew I'd be able to find something in that price range.

I looked primarily at televisions from Samsung, Mitsubishi, Pioneer, Toshiba, Sony and Sharp.  I looked hard at the Mitsubishi's because a good friend of mine is a regional manager for the company and he would have given me a great deal on one.  But I began to see some problems with the picture on the Mitsubishi's, especially during fast moving scenes such as in sports or panning of the camera. 

The Pioneer Kuro and Pioneer Kuro Elite plasma televisions are great units.  They may be the best out there.  They have great black levels, unbelievable contrast ratios and have the best picture of any flat panel television I looked at.  And they also came with a hefty price tag.  Plus, they only come in 50" or 60" models.  If I had the bucks and the space, I would have sprung for a Pioneer plasma in a heartbeat.   Unfortunately, I didn't have either.

I was turned onto the Toshiba's from one of my dealers in Des Moines.  He was raving about the 42" Toshiba LCD panels.  I took a close look at them at CEDIA.  I thought the color did look good, the high refresh rate helped give it a good picture and the price of it was pretty good.  The problem was that Toshiba was at the end of their life cycle for existing televisions in stores.  Some stores were out of the 2008 Toshibas, and the 2009 models weren't scheduled to hit the stores until later this month.  No, I needed to do something now. 

My cousin's girlfriend works for the canteen service for Veteran's Administration hospitals.  She was telling me a 46" Sharp flat panel television was going to go on sale through the canteens at V.A. hospitals sometime soon for a great price of $999.  She said, "It's even under Sharp's cost."  They only problem was that the model she told me that was going on sale had only a 60 hz refresh rate and it wouldn't be on sale until early November.  I wasn't that destitute to wait for a good bargain.  $999 was a good price, but I wanted to get a television that I would be happy with for years to come.

I checked out the Sony's at CEDIA and elsewhere.  Sony has a new flat panel LCD coming that will feature a 240 hz picture refresh rate.  But compared to the picture quality of the much lower priced 120 hz refresh rate televisions sitting next to them, I didn't see that much of a big difference.  Besides, Samsung has been making the panels for Sony and Sony usually charges more for their televisions than Samsung did.

Which brought me to the Samsung models.  Now, years ago, the name Samsung equaled trash.  It was generally known in the AV industry that Samsung was a low rent Korean manufacturer that made entry level electronics - and not very good ones, to boot.  Suddenly, about 10 years ago, Samsung made a conscious effort to upgrade not only their goods, but their name recognition, as well.  Samsung teamed with Texas Instruments to show the first really good looking rear-projection DLP television set.   I remember going to Texas Instruments for training about nine years ago and seeing a Samsung television in one of the lab areas.  It had a stunning picture.  I turned to a colleague friends of mine and said, "This is a Samsung?!"

The model we were looking at - a 43" rear projection DLP model - had just come back from a debut at a high-end AV show in New York CIty.  I read reviews of that television in the coming months and the reviewers couldn't stop raving about how good it was.  With each review I read, I kept thinking, "That was a Samsung?!"

I was told by T.I engineers that more than any other company, Samsung adhered to the parameters set forth by Texas Instruments for their DLP displays.  Suddenly, Samsung televisions began to show up in stores.  The picture quality was superb, but more importantly, they didn't break. 

For a long time, when anyone would ask me what television I'd want to get for my own use, I never hesitated when I said a Samsung rear-projection DLP.  However, this was well before the quality of flat panel televisions got to where they are today.  And while DLP is still a great technology, periodic service - such as changing the bulb every 2500 hours at the tune of $600 per bulb - doesn't make it as economical today compared to what's out there.

The Samsung LCD panels and plasma panels were the first ones I looked at.  Each time I would look at a line of televisions, I'd always go back to the Samsung models.  While the picture quality of each of the ones I looked at was superb, I still kept seeing little things in the picture of Samsung's that made it be a little better than everyone else out there. 

The problem with the Samsung models is that they literally have too much to choose from.  They have about six or seven different levels of quality in their LCD panels.  There's about three levels in what would be classified their entry models, and three or four in what they call their higher end - or "Touch of Color" models.  The main differences between their 650 and 750 and 850 Touch of Color models are primarily features.  Features that I don't really need.   And the price difference was not all that bad, but I didn't want to be paying for features that I knew I wasn't going to use. 

However, the Samsung 950 LCD models were very nice.  They feature LED back lighting in their picture that allows for a more brilliant picture than the other models.  I saw a demonstration at a dealer's store in Green Bay recently and even though the 650, 750 and 850 models from Samsung have outstanding pictures, the LED back lighting for the 950 models makes the others look dull and lifeless.  Once again, however, you get what you pay for.  The 46" 950 model retails for about $3495. 

I ended up pulling the trigger on a Samsung 46A650, a 46" LCD flat panel.  Before I bought, I went to the Samsung A650 owner's forum at AV Science Forum, an Internet site that helps techies, consumers and others know what's going on with audio and video equipment on the market.  I read many of the posts (there's over 1,000,000 posts on this thread alone indicating it's a very popular television) and I came away more impressed with the performance I was hoping I'd get. 

I ended up getting the television from a distributor friend of mine and he got it shipped out of Chicago and I had it the next day.  He also confirmed that the 46A650 was one of their best selling - if not THE best selling - LCD television they had to offer.  I saved about $250 bucks on the unit had I bought it at American TV here in the Quad's.  Like I say, it's not a lot of money as there's not a lot of profit margin in video gear.  But $250 bucks is $250 bucks.   

I've been playing it as much as I can to get some hours on it before I sit down and properly calibrate the picture on the unit.  So far, I've been knocked out at how good the picture is without any calibration.  Cindy still thinks it's too big for our family room, but I'm sure she'll be saying in a couple months, "Boy, it's too bad we couldn't get the larger one..."

CEDIA - 2008

I recently attended the CEDIA Expo in Denver, the most important  annual show for specialty audio and video companies such as ours.  This is the final year it will be held in Denver, with the show moving to Atlanta for the next two years and possibly a third.  That is contingent as to whether the city of Indianapolis can A) finish the addition to the convention center there; and B) if the city can get more hotels in the downtown area.   If that doesn't happen, we'll be in Atlanta again in 2011, then go to Dallas for three years starting in 2012. 

While the Consumer Electronics Show in Las Vegas has long held the title of the most attended consumer electronics show in the world, the CEDIA Expo has been viewed as THE show for our industry to introduce new products such as video panels, whole house control and specialized electronics.  With gas hitting $4.00 bucks a gallon earlier this year, a lot of dealers suffered this summer and many stayed home.  That was OK with me as the past couple of years I was so over run with dealers that I couldn't spend quality time with a lot of my key and new accounts.  This year we probably saw a 10 to 15 percent drop in attendance.

There really wasn't anything earth-shaking or cutting-edge as far as new technology was concerned.  A lot of the specialty audio companies showed Blu-Ray prototype players.  It was expected as a lot of the specialty companies were waiting for the fall out from the Blu-Ray/HD-DVD wars that ended earlier this year.  We'll begin to see good quality Blu-Ray players from a number of companies later this year and into early 2009. 

"The latest and greatest" race in flat panel televisions is beginning to slow down.  Sony showed their new generation of LCD panels that featured a 240 Hz refresh rate (the higher the refresh rate, the better the LCD panel is able to recover during fast action scenes).  Toshiba showed some new models that were pretty impressive, as well. 

Whole house control products continue to be big at CEDIA.  The Crestron and AMX booths were packed throughout the show.  Those two companies continue to show growth during a period of lackluster sales among other AV categories. 

Probably the biggest push at CEDIA this year was iPod compatibility in products.  More and more companies - including speaker manufacturers - are marketing products that feature docking and control components for iPod's.  It's rather interesting in that a lot of companies who were ignoring iPod and MP3 devices, calling them sub-standard in regard to sound reproduction (which in most case they are), are now embracing the product. 

In addition to iPod's becoming part of the whole audio/video experience, the merger of XM Radio and Sirius has now allowed specialty audio/video manufacturers to begin to include satellite receivers on their tuners.  We should begin to see a number of A/V receivers with this feature in the coming months. 

By the way, this coming Monday, Sirius XM will begin making ala carte services available with the introduction of the first ala carte receivers on the market.  Just yesterday, Sirius XM introduced cross platform programming that will allow some XM Radio programming to be made available on Sirius.  Also this coming Monday, Sirius XM should announce the "Best of Both" service that will provide cross platform content for subscribers that will cost $16.95 a month. 

And we're beginning to see a handful of outboard Digital to Analog converters (DAC) that will work in conjunction with computers and game consoles such as  X-Box and PlayStation 3.  One of the selling points of the game consoles is that they can also play DVD's and CD's.  However, it's universally known that the sound output of those units is pretty bad.  Having an outboard D to A converter hooked up in between the game console and a stereo or home theater receiver will significantly improve the sound quality of the units.

Plus a lot of people are storing music on computers and playing it back through audio systems.  An outboard DAC will also improve the sound quality of the music that is stored on computer hard drives.  I have a lot of music both on my laptop and on my desktop computers.  One of our companies that we distribute in North America - Cambridge Audio - will be coming out with an outboard DAC - the DAC Magic - sometime in October.  I can't wait to hear the improvement in the sound coming from my computers.  

But, all in all, there was nothing huge in new products at CEDIA this year.  It's not that technology is slowing down.  It think the industry is slowing down the development of products as to not leave the buying public behind.  And as slow as things have been in the AV industry over the past few months, it's probably a good thing to allow the consumers to catch up.  And with the uncertainties of the American financial markets, the AV industry could see a significant downturn through the end of the year.

The Big Ten Network Comes to Town!

After months of haggling between Mediacom and The Big Ten Network, it was announced late Thursday that the two had agreed to come to terms to allow the cable provider to show the channel on their system.   Speculation had been rampant since Comcast had come to an agreement with the network earlier this summer that other cable providers would fall in line.  Reports last week said that a Mediacom/Big Ten Network agreement was in the final stages and a few details needed to be worked out.

The agreement between the two parties ends a sometimes contentious negotiation period that had been going on for well over a year.  For earlier entries I've had on Road Tips regarding the on-going process, click here, here, here, here and here.   This entry continues to be one of the highest viewed entries on my blog.

All this comes just in time for the start of the college football season.  Today, Iowa hosts Maine in their opening game of the season.  The game will be shown on the Mediacom Connections channel, but the rest of the full network will not be available for a few days while Mediacom puts some equipment in place to receive and distribute the channel on their system.  This will include multiple channels of simultaneous live games, HD broadcasts and video-on-demand. 

While the main bone of contention between the Big Ten Network and cable providers was the high cost of per subscriber fees (reportedly $1.10 per subscriber) and the network's demand that they be part of the basic cable package, the Big Ten Network backed off those demands with the largest cable providers in the Midwest during recent negotiations.  The network will be shown on Mediacom's expanded tier of channels.  Locally here in the Quad Cities, it will be on channel 78.  And Mediacom representatives said that the cable provider will absorb the subscriber fees initially. 

This is good news for thousands of fans across the state of Iowa.  But the Big Ten's tough stance in launching the channel showed other major conferences that having their own conference channel would be hard to pull off.  Speculation had rested upon the Southeastern Conference as the next one to to step up and start their own network.  However, the concept was pretty much squashed after the SEC agreed to a $2.25 billion dollar 15-year contract with ESPN to carry conference games.  Other conferences, such as the Big 12, the ACC and Pac 10 are still watching the evolution of the Big Ten conference's network to see if a similar network plan could be in their future.

So, at 11 a.m., I'll be hanging in our "lodge", cold beer in the cooler, food in the kitchen, bathroom down the hall, fully rested from not having to get up early to drive to Iowa City, and with no stress from having to find a place to park as I get ready to watch the game from the comfort of my couch. 

But it's still too damn early for football...

FCC Tentatively OK's Sirius/XM Radio Merger

Late yesterday afternoon, the Wall Street Journal reported that the commissioners for the Federal Communications Commission has tentatively given their blessing to the merger of Sirius and XM Radio, the two satellite radio services who have been competing for customers for the past few years.  The merger will allow the two former competitors to combine their broadcasting services and allow for one format in which to receive the satellite radio signals.

One FCC commissioner, Deborah Taylor Tate from Tennessee, is expected to cast the deciding swing vote in favor of the merger.  However, it was Tate who helped hold up the merger for a long time as she pushed for concessions from Sirius and XM Radio to provide programming for educational and minority groups, and to impose fines on the two services for excessive power output from repeater towers the two satellite radio providers use to extend their signal.  It appears XM Radio will pay $17.5 million in fines, while Sirius will pay $2.5 million for exceeding the power limits set forth by the FCC. 

This will mean that audio manufacturers will be able to make one receiver for one format for home tuners.  Car manufacturers will be able to focus on just one service, rather than picking one or the other for their car radios and hoping their customers like that given provider.  There will be ala carte programming available to subscribers that will allow them to choose 50, 100 or unlimited stations in the system.

To people like me who didn't get either XM Radio or Sirius, mainly because I couldn't make up my mind which service I wanted, this is a glorious day.  However, not everyone is on board with the merger.  Most notably, the National Association of Broadcasters is not too happy with the merger. 

The NAB has been lobbying against this from the start, saying that it inhibits growth of local broadcasters and creates a monopoly for radio.  Sirius and XM Radio have long said their services are just one of the plethora of entertainment options available to people and the merger will allow them to compete against these growing options.  One thing the NAB lobbied  for was to allow local radio stations to provide their digital channels on the local satellite repeater systems.  The FCC didn't see it that way and didn't stipulate the merging companies had to provide for local broadcasting content. 

Radley Balko at Reason.com wrote an in depth analysis last year of why the NAB doesn't want the merger to go through.  You can view the article here.  It's a pretty interesting article about the politics of a large lobbying group and the threat to local stations the organization sees in regard of the merger of Sirius and XM Radio.   I'm guessing that even though the merger is about to get stamped as complete, the NAB will be fighting it for years to come. 

Still, with the aspect of future competition with video and audio being available just about anywhere through the developing WiMAX technology, satellite radio should be the least of the NAB's worries.  Like newspapers, local radio and television stations need to become more competitive in today's digital world.  When WiMAX technology becomes affordable enough to allow for personal viewing devices or notebooks to receive the signal virtually anywhere, the staid old franchises of local broadcasting could be left in the dust.  The NAB and their constituents must realize that technology has passed them by and is on the verge of burying them if they don't get their heads out of their asses. And in some cases, it may be too late.

 

 

The Sirius/XM Merger and Comcast aligns with the Big Ten Network

There have been a couple announcements in the past few days that have stoked the fire in the general public's clamoring for unified satellite radio, and to see their favorite Big Ten team on their local cable outlet.  The first announcement was the blessing by Federal Communication Commission chief Kevin Martin for the merger between XM and Sirius satellite radio.  Martin said that he backs the merger and  said that the transaction satisfied the requirement of being “in the public interest” with the conditions that the companies had accepted.

Some of the conditions set forth by the FCC was converting 24 channels to be run by minority and/or non-commercial ventures.  The FCC also said that subscription rates to the combined service could not be raised for three years more than the current $12.95 per month fee both XM and Sirius now impose.   And the merged company would have to work with radio and audio manufacturers to help develop and sell compatible radio receivers, including HD radio receivers.  This will also be beneficial to manufacturers in the audio industry who, for a long time, wanted to incorporate satellite radio tuners in stereo and home theater receivers, but were gun shy in doing so due to the competing formats.  XM and Sirius radio tuners are not compatible with one another.  

I've been driving around a rental car for the past 10 days that has a Sirius receiver as part of the radio.  I programmed 18 stations into the radio (six stations per auxiliary tier on the radio).  What I've been finding myself listening to more than anything are the Classic Vinyl and Classic Rewind stations on Sirius.  They also have a channel called "The Vault" where they play obscure music from the late 60's and early 70's.  During a long, boring drive in North Dakota, I found myself playing a little game to see if I could recognize the artist before hitting the text button on the radio to see the song title and the artist.  They also have a station called "The Spectrum" that plays adult oriented rock music.  That's kind of interesting to listen to, as well.

The one music station that I like is something called "Iceberg Radio" which showcases Canadian independent artists.  They call themselves "an adult alternative" station that plays a wide mix of eclectic music.  It's no one I've ever heard of - although they did have a Robbie Robertson song on the other day.  But for the most part, it's pretty interesting to listen to. 

My friend, Bill Hesson, has Sirius and he listens primarily to Channel 74 - the Blues Channel.  I have the Blues Channel programmed as my first button on the first tier.  But after listening to it for a while, I found the songs to be all sounding the same.  I pop it on every once in a while, but I find the channel boring compared to other blues stations I've heard with "over the air" radio.  Still, it was better than some of the over-the-air offerings you'll find in Western North Dakota.

I haven't pulled the trigger on either XM or Sirius because there's things on XM that aren't available on Sirius, and vice-versa.  But with the anticipated vote by the FCC governors in the coming weeks, it could mean that program offerings that were exclusive to XM before - like Major League Baseball - would be available to Sirius customers.  And the NFL, available on Sirius, would be available to XM customers.  Seriously, that's the major reason why I haven't gotten either one is because of the difference in sports programming. 

Speaking of sports programming, the largest cable provider in the nation, Comcast, has finally come to an agreement with the Big Ten Conference to carry the Big Ten Network.  As I reported here in March, the Big Ten Network finally blinked and backed down from their initial demands of putting the channel on basic cable channels and charging cable companies $1.10 per subscriber.  Only ESPN would have had a higher charge per subscriber.  

And it was exactly a year ago today when the now infamous blog entry - "Comcast to Big Ten Network - 'Blow it Out Your Ass'!" - was posted on this site.  The entry remains one of the top five most viewed posts on "Road Tips".  A year ago, it appeared there would be no hope for any agreement between Comcast and the Big Ten Network, especially after Big Ten officials pushed for an apology from the cable provider after a Comcast executive called the Big Ten Network's offerings as "second and third tier programming."  The thing about it is, at less than a year old, that's a pretty correct statement.

Comcast reportedly will pay between 70 and 80 cents per subscriber in the Big Ten footprint, still a hefty fee compared to other channels offered on cable.  Plus Comcast will air the network on their expanded basic service in the states of Illinois, Minnesota, Pennsylvania, Michigan, Ohio, Minnesota and Indiana.  The Big Ten Network will allow Comcast in Philadelphia put the network on a digital tier.  In 2009, Comcast has the option of moving the network to a digital tier.  However, beginning in August, Comcast customers will have the Big Ten Network available via cable, broadband and video-on-demand services. 

The Big Ten Network is hoping Comcast's agreement with the conference will expedite the remaining large cable providers in the Midwest - Mediacom, Time Warner and Charter - to come to an agreement before the 2008 football season begins in late August.  In an article in the Des Moines Register, a Mediacom official said he was hopeful the Big Ten Network would be as flexible in negotiations with them as they were with Comcast. 

As reported in the Quad City Times, Phyllis Peters, senior manager of communications for Mediacom’s North Central Region, said, so far, that flexibility has not been offered to Iowa’s largest cable operator during previous talks with network officials.

“We welcome any flexibility other than the ‘our way or no way’ discussions we have had in the past,’’ Peters said. “The flexibility we hear about in their arrangement with Comcast is a change from previous conversations. It’s a positive sign from our perspective.’’

Officials at Wisconsin, Ohio State and Iowa have grown weary of the barrage of criticism from fans and alumni in not getting the conference to work with Charter, Time Warner and Mediacom - all three, ironically, are the largest cable provider in those particular states, respectively.  I'm sure school officials are hopeful that once the Comcast agreement is cast in stone, the other cable providers will fall in line.

The Comcast agreement will allow the Big Ten Network to be shown in up to 55 million homes nationwide, and it nearly doubles the current homes in the Big Ten region from 6.2 million to about 13 million.  Mediacom, with 900,000 subscribers in the Midwest, would significantly raise the total number of homes that would have access to the network.  

I'm all for the network, considering that I believe Iowa will be better in football and basketball this coming year versus last year.  But it remains to be seen if the Big Ten Network will have enough viable programming other than football and men's basketball to garner the audience the advertisers are looking for.   

And as an end to this, our main television died about a month ago.  I either have to get it fixed or pop for a new one before the football season starts.  I'm hoping Mediacom will have the Big Ten Network by the end of August.  If they don't, I'll still be able to go to some bars to catch the games.  And the money I've saved on not buying a new TV or fixing the old one can go into more beers for at the bar.

Oh, yeah.  My wife's gonna go for that...

Sirius - XM Merger Closer to Reality

The United States Department of Justice yesterday put their stamp of approval on the proposed $5 billion merger of satellite radio companies Sirius and XM Radio.  The DoJ said in a lengthy ruling statement that the takeover of XM by Sirius does not constitute antitrust violations and that there are no indications that prices for the combined service would rise or that programming would be affected. 

Critics called the proposed merger a monopoly and that programming, especially those aimed at minorities, would be impacted with the combining of the two satellite services.  However, the Department of Justice said that combining Sirius and XM would give them better leverage in their battle with current and upcoming entertainment technologies, such as iPods, Internet radio and video on demand on handheld units. 

Like the demise of HD-DVD in favor of Blu-Ray technology, this gives consumer one option of buying just one satellite receiver in the future.  Sirius receivers were not compatible with XM and vice-versa.  This will, no doubt, grow the number of satellite radio subscribers which sits at nearly 17 million, combined, right now.

There was some talk during CES that there will be some "cross-pollination" of some program between XM and Sirius for those people who have one or the other receiver.  It's not immediately known when the new "all-in-one" receiver will be available.

The final hurdle in the combining of the two services will be the blessing from the Federal Communications Commission.  However, that appears to be a formality as the biggest challenge to the merger was the government's investigation into whether a Sirius-XM marriage would be construed as a violation of antitrust laws.

North of the border, the two Canadian subsidiaries of Sirius and XM will most likely be forced to merge after the FCC OK's the takeover.  XM Radio Canada and Sirius Canada rely upon the bulk of their programming from the United States.  A Canadian merger would not face the scrutiny of government regulators as one company would merely give up their license when the two combine.   

The Canadian companies biggest problem, however, would be to figure the market value of each service and divide the stock in a fair manner.  XM Canada says their programming and their ties to the car industry make it more lucrative to Sirius Canada.  However, Sirius Canada says their stock is more valuable as they have more subscribers than XM Canada.  So, it will be interesting to see what transpires up there.

Traveling as much as I do, I've held off on getting a satellite radio just for this moment.   There's a lot of things on XM that I like, but there's a lot of programming on Sirius that interests me, as well.  I'm going to wait until the new all-in-one receivers come out and then I'll probably sign up.  Then I won't have to listen to country and western stations with farm market reports between Des Moines and Kansas City.   

Comcast - Big Ten Network Close to Deal?

The largely acrimonious negotiations between the Big Ten Network and Comcast Cable pertaining to the cable company carrying the network on their system may be close to handshakes all around.  Sports Business Journal announced yesterday in an article that the two entities are close to an agreement to have Comcast carry the Big Ten Network. 

In previous posts, here, here, and here, I highlighted some of the issues that have caused the largest cable companies in the Midwest to not carry the Big Ten Network during it's inaugural season.  The biggest impediment was the price per subscriber the Big Ten was asking for the cable companies to carry the network.  Plus, they were demanding that the network would be available on the basic tier of channels.  Cable companies were wanting to put it on either the expanded basic tier or the digital tier of sports channels. 

The Big Ten Network said that having on an expanded basic or sports tier would limit the amount of people who have access to the channel.  That, in turn, would limit the amount of income the network would receive from advertisers.

After watching a few games on the Big Ten Network this winter, it was apparent that few advertisers were coming on board.  Many of the commercials were "info-mercial"-type ads for schlocky products.  Later in the season, they did get a couple three national advertisers to come on board, most notably Red Lobster and Esurance. 

As the Big Ten Basketball season entered February, it became apparent that the major cable providers in the Midwest were not going to back down to the Big Ten Network's demands.  Suddenly, the Big Ten Network was looking at having little leverage with the cable companies after the Thursday and Friday sessions of the Big Ten Tournament coming up this weekend.  Other than some track, baseball and softball broadcasts this spring, the network wouldn't have any meaningful programming until next September. 

And it appears the Big Ten Network knows that.  It appears now that Comcast, the largest cable provider in the Midwest, will be allowed to carry the network on their expanded basic cable.  The Big Ten Network has reportedly relaxed their "basic cable only" demands to cable operators. 

Through all of this, there's been some cracks in the hard line approach the Big Ten Network, conference school administrators and coaches have been taking since the network debuted last summer.  Michigan State Basketball coach Tom Izzo called the Big Ten Network "a P.R. nightmare" last month, saying that it was hurting the sports programs and their fans across the Big Ten region.  Izzo, a highly respected coach, was most likely saying what a number of other coaches and administrators were thinking.

Another turn has been the leverage Fox has with the Big Ten Network and cable providers.  Fox, which owns 49% of the network, has been in negotiations with the Detroit Pistons and the Cleveland Cavaliers of the NBA to carry their games on Fox Sports Channel.  Evidentially, Fox would have an exclusive on showing Pistons and Cavaliers games, effectively freezing out cable competitors AT&T and Echostar from starting up a new sports channel in those markets. 

This situation, along with the BTN's relaxing of their hard line stance, has reportedly triggered the pending agreement with Comcast.  And the network is hoping that once Comcast falls in line, the other large cable companies in the Midwest - most notably Time Warner, Mediacom and Charter - would follow suit.  But reports are that those cable providers are not close to an agreement with the Big Ten Network.

As they say in television land, stay tuned, folks...         

Our Speakers Featured in a Commercial

We have a new dealer in Chicago - Music Direct - who specializes in high-end audio equipment.  We haven't been selling to them all that long.  In fact, they made a lot of overtures to us in the past and we always turned them down.  With the slow economy and the fact that more people are shopping from home, my boss, Daniel, made the decision to sell selected products to them late last year.  These were the guys who turned me on to Salerno's Pizza on West Grand in Chicago.

Anyway, we got a call from them in December and they requested as many of our Focal loudspeakers that we could send to California for an American Express commercial shoot featuring Music Direct.  It was a spur of the moment thing right before Christmas and my colleague from upstate New York, John, made it happen. 

We shipped a large quantity of speakers from Montreal to a studio in Santa Monica for the shoot.  The commercial features Jim Davis, the owner of Music Direct, with a voice over touting the new American Express Plum Card, a new credit card targeting small business owners.  A couple of the guys who work for Music Direct, Josh and Bes, are seen in the background at the very end of the commercial.  The ad has been featured on a number of national cable channels over the past couple weeks.

In the commercial, they show a lot of high-end audio equipment.  And all the speakers they show in the spot are our Focal loudspeakers, including the $23,000 Alto Utopia Be speakers (right).  (We have speakers that go up to $100,000 at retail.  And, yes, we actually do sell a few pair of those.)  Even though we don't get a full plug, just the visual plug is great exposure for us.

Music Direct also owns Mobile Fidelity, a long-time audiophile record company that offers re-issues of classic vinyl albums and CD's that use the original master recording for the best sound quality possible.  With vinyl albums making a comeback - and Music Direct having a large catalog to choose from - I usually spend a couple hours each time I go in.  An hour to talk to the sales guys and an hour to look through the albums. 

Music Direct is located in a non-descript building with no signage in a gentrified area of old warehouses on Chicago's west side. (see map)  It's tough to find, but worth it if you're into high-end equipment and vinyl albums .      

If you haven't seen the commercial, here it is courtesy of You Tube:

The End of HD-DVD?

Following the uphill climb and major setbacks that I talked about here, here and here, industry insiders say that Toshiba may be ready to pull the plug on the HD-DVD format in the coming weeks, according to an article published yesterday on the Hollywood Reporter web site.  While Toshiba insists it's not going to dump the format, they say that recent market developments have caused them to rethink their strategy concerning HD-DVD.

Late yesterday, Wal-Mart, the largest retailer in the U.S., announced they would only stock Blu-Ray high-definition DVD's and hardware beginning this June.  This is on the heels of an announcement earlier this week from both NetFlix and Best Buy that they would not be supporting the HD-DVD format any longer.  Now that Wal-Mart has made their decision, industry analysts are predicting a quick end to the format wars between Toshiba's HD-DVD and Blu-Ray, backed by Sony.

Blu-Ray's top selling movie for the past week, "Across the Universe", sold three times more than the best selling HD-DVD release, "Elizabeth - The Golden Age".  Industry watchdogs report that as of right now, Blu-Ray holds 81% of the high definition DVD market place. 

On top of that, due to drastic price reductions in HD-DVD players over the past month, Toshiba is reportedly losing - possibly - several hundred dollars on each machine that is sold.  I'm sure given the outlook on the dwindling support both from movie studios and retail outlets for HD-DVD, Toshiba may be looking to pull the plug and stop the bleeding.

As I said in my post earlier this week, it could be a win-lose situation for consumers.  Now that there will only be one high definition format for DVD's, it will finally allow consumers who were on the fence in regard to buying into one format or the other to have a clear choice.  However, at the same time, it could mean that prices on Blu-Ray units and movies, already high to begin with, probably won't go down in price, and possibly go up.  The drawback with Blu-Ray was that manufacturing costs of a single DVD - due to the greater amount of content that can be placed on the disc - is much higher than the costs to make an HD-DVD disc.

There's no word as to the future of HD-DVD from two of the top six movie studios - Paramount and Universal - who continue to support the HD-DVD format.  However, more independent movie studios and National Geographic have recently announced they'll go to Blu-Ray exclusively with future productions.   I'm sure both Paramount and Universal are looking at the alternative option.

And Amazon.com has been sort of silent in all of this.  The largest on-line retailer for DVD's does have a number of HD-DVD titles on sale at 50% off, but they've not made the decision to carry only Blu-Ray DVD's.

For those who bought HD-DVD players - like my company did for demonstration purposes at trade shows - it's probably money down the drain.  Once Paramount and Universal announce they'll go to Blu-Ray, the war will be over.  But not unless Toshiba announces they're surrendering first.  And the Wal-Mart announcement may just be the final straw for HD-DVD.

(2-18-08 Post Script - Japan's government run NHK Network announced over the weekend that Toshiba has made the decision to halt all production of HD-DVD units.  A formal announcement will be made later this week.  According to the news release, Toshiba stands to lose hundreds of millions of dollars to scrap players and recorders as they exit the business.  But financial analysts in Japan say the long term effects on Toshiba will be negligible, noting that the company was hemorrhaging money to keep HD-DVD afloat.  Toshiba shares jumped 6% on the Nikkei Index on Monday.)       

Two More Nails in the Coffin for HD-DVD

The battle between the Toshiba-backed HD-DVD and the Sony-backed Blu-Ray high definition formats is beginning to wind down as two big announcements drove two more nails in the HD-DVD camp's coffin on Monday.

First, on Monday morning, Netflix, the on-line video rental service that delivers DVD's direct to customer's homes via mail, announced it would be stocking only Blu-Ray formatted discs by the end of this year.  Although Netflix boasts over 6 million customers, the number of people who order high definition DVD's is a fraction of the total number of customers.  It is significant, however, since Blockbuster announced late last year that it would stock only Blu-Ray discs in their stores.  Industry analysts have been waiting for Netflix to pick one or the other format since that time. 

But in a more significant announcement on Monday afternoon, retail giant Best Buy, based out of Minneapolis, announced they would recommend Blu-Ray discs and video players to their customers starting March 1.  Best Buy will continue to have the more popular HD-DVD titles in stores and available on line, but will have more of a marketing emphasis on Blu-Ray products. 

Although a Blu-Ray disc can hold up to three times the amount of information than HD-DVD, some experts have found the clarity of an HD-DVD is a bit better than Blu-Ray, mainly because of a wider information track on their discs over the Blu-Ray.   HD-DVD also is a less expensive format in terms of prices for both the players and discs.  But the success of Sony's Playstation 3, which uses the larger content format of Blu-Ray for their games, drove Blu-Ray sales and convinced movie studios, video rental stores and now retailers into carrying or promoting only the Blu-Ray products. 

Also, there's been some "behind-the-scenes" stories that Sony actually paid Warner Brothers $400 million to go exclusively Blu-Ray.  Reportedly, Warner Brothers was looking to go exclusively to the HD-DVD format (after supporting both formats initially) and was pushing Toshiba to line up another studio to do so, as well.  Toshiba reportedly had Fox lined up, but they backed out at the last moment.  Toshiba supposedly offered Warner $100 million to go exclusively to HD-DVD, but Sony countered with an offer that was 4 times that of their competitor.

There is some good news and bad news throughout this deal.  The good news is that many consumers who have been holding off making a purchase of a high definition format player can now determine that one of the two formats has a considerable edge over the other one.

However, the bad news is that there is some worry within the industry that if Blu-Ray does become the only format, the consumer will be the loser in the long run.  Prices for both the players and the discs probably won't come down all that much, if at all. 

There are still going to be HD-DVD discs and players available for the time being, but it's beginning to look like Sony - and Blu-Ray - is going to be the eventual winner.  Now they'll be able to recoup all that money they lost when they came out as the losers with the Beta format versus the VHS format for VCR's.

You remember VCR's, don't you?   

The Downfall of HD-DVD

One of my colleagues from Canada just sent this to me.  This is a scene from "Der Untergang (The Downfall)" starring German actor Bruno Ganz as Hitler.  They've taken out the real sub-titles and replaced them with some amusing dialogue as if Hitler is the head of the HD-DVD consortium.

I thought it was pretty funny and rather clever.

CES 2008 - Las Vegas

I spent a good part of last week at the 2008 International Consumer Electronics Show in Las Vegas.  By my calculations, this was my 22nd CES that I attended in Vegas.  I've certainly seen a lot of changes during that time, not only in the consumer electronics industry, but in Las Vegas, as well. 

First of all, I have to tell you this was the first year I took a direct flight to Vegas for the show.  I flew on AirTran, an up and coming airline based out of Orlando.  I normally fly on United or American, mainly because I have accumulated a lot of miles with both carriers.  But flying on either one of those two airlines means you have to change planes in either Chicago, Denver or Dallas/Fort Worth.  And flying in the winter is so iffy, especially if you have connecting flights in Denver or Chicago. 

Actually, booking the flight on AirTran was a no-brainer.  I checked prices to Las Vegas last October on both American and United and the fares were astronomical.  I believe United wanted something like $869 bucks for a round-trip flight from Moline to Vegas thru Denver.  Now, my company doesn't usually bitch about my travel expenses, but my Midwestern fiscal conservatism came through on this one and I checked out AirTran.

It turned out that they had seats for $99 each way from Moline.  And if I wanted a row with a little more leg room, it was an extra $10 bucks each way.  I opted for the leg room on the way out and took my chances on the way home.

The only problem is that with one flight out of Moline to and from Vegas four days a week, the travel times are kind of funky.  I had to leave at 7:00 a.m. on a Saturday, and I didn't leave Vegas until 5:55 p.m. the day after the show ended.  I had a full day to kill in Vegas, but being there so many times before I really didn't want to stick around if I didn't have to. 

One thing to know about AirTran - they don't screw around when it comes to getting out of there on time.  I almost missed my flight home last Friday night in Vegas.  I was in the gate area, but never heard them call for the flight.  Finally, 20 minutes before the flight was scheduled to take off, I heard the "boarding all rows of AirTran flight 730 to Moline."  So I got up, went to the bathroom, which wasn't far away, and then went to the gate.  Imagine my horror to see that there were no AirTran personnel at the gate, the door to the jet way was closed, and the plane's door was shut with the jet way pulled away from the plane.  It was 15 minutes before we were scheduled to leave. 

I finally found an AirTran employee who was standing near the gate.  I showed her my ticket and she said, "Oh, you're going to Moline, too?"  She immediately tried to get someone on the radio, but to no avail.  She opened up the door and ran down the jet way.  I next saw her knocking on the pilot's window to get his attention. 

Sure enough, the jet way came back to the plane and the door opened.  She ran up the jet way to open the door for me.  I got on, they shut the door, I sat down and 30 seconds later, they were pulling away.  Five minutes before the scheduled departure. 

I figured out the next day that the Air Tran crew has the 7:00 a.m. departure the next morning.  And FAA rules state that a crew must have 8 hours of rest overnight.  The plane is scheduled to come in at 10:55 p.m. in Moline, giving them just a couple minutes over the 8 hours needed between the flights.  No wonder they wanted to get going.

But the bottom line is that my experience flying AirTran was very good.  The seats are roomy, they take credit cards instead of cash for alcoholic beverages - and they keep the credit card open in case you want more, and they have XM Radio at every seat.  And for a nominal fee, you can bump yourself up to Business Class for each flight if seats are available.  I'll fly them again if I get the chance.

Anyway, I digress from the subject matter at hand...

First of all, attendance at this year's CES was down nearly 10% from last year's high of 143,000 people.  Attendance would be down even more if the Consumer Electronics Association wouldn't allow consumers and end-users into the show like they did years ago.  The CEA says they're doing their best to keep non-industry people out of the show, but gauging the amount of baby-strollers reportedly seen on the main floor of the Las Vegas Convention Center they're not working all that hard to keep 'em out. 

Once again, our company showed our products in four suites on the 28th floor of the Las Vegas Hilton.  Most of the other high end manufacturers were over at the Venetian, but we like showing at the Hilton because it isn't overrun with consumers like the Venetian.  The Hilton suites are destination locations for dealers who come to see us.  We can have meetings, can take our time with them and not have to worry about some guy from Bakersfield interrupting us and asking for confidential price sheets on Focal loudspeakers.

The big buzz as CES this year had to do with the on-going format war between HD-DVD and Blu-Ray.  Just after the first of the year, Warner Brothers Studios made an announcement that they would distribute only Blu-Ray format movies starting in June of this year.  They had been the only studio to distribute both HD-DVD and Blu-Ray movies.  Now with over 70 percent of movies in a high definition format available on Blu-Ray, two HD-DVD studios - Paramount and DreamWorks - were rumored to be looking at dumping their 2007 agreement with the HD-DVD camp.  However, both studios were vehemently denying any such action during CES.

Paramount, whose agreement with the HD-DVD camp ended on December 31, 2007, said they have not abandoned the HD-DVD format even though a new agreement is not in place and won't be in the foreseeable future.  However, rumors are that the Blu-Ray camp is putting financial pressure on Paramount in the form of subsidies and incentives to move to their format.

With the federally mandated cut-off date for the end of analog television broadcasts looming in just 13 months, LG and Philips showed their analog to digital broadcast converter boxes at CES.  These converter boxes will be necessary if you get your signal via an over-the-air antenna beginning on February 19, 2009.  The boxes will be available by this spring thru most of the big box stores such as Best Buy and Circuit City for $50 bucks.  However, vouchers for the converter boxes worth $40 dollars are available through the federal government.  If you get your non-HD television signal through a cable or satellite system, you won't need one of these boxes.

In the continuing saga of "Mine is Bigger than Yours", Panasonic unveiled a 150-inch plasma television at CES.  Panasonic showed a 103-inch plasma television at last year's CES and were stunned to sell over 3,000 units of that product last year.  Panasonic touts the 150-inch plasma as a digital home theater/promotional install product.  Price and availability of the monitor was not released.

Of course, the convergence computer and entertainment technology continues to be a big topic at CES.  A number of companies showed new products that tied in mobile computer capabilities with on-demand video content.  A year ago, these units were being called "Personal Viewing Devices" by the industry.  Now, the common phrase being used is "Ultramobile" devices.  While still not available with optimum capabilities, ultramobile content will get better in the next couple of years with the advent of WiMAX and Verizon's Evolution-Data Optimised (EV-DO) network that is scheduled to come on line this summer.

Pioneer's Project Kuro television - a prototype plasma television that promises "absolute black levels" that will make for eye-popping pictures was unveiled at CES.  People who saw the television told me it was absolutely stunning.  Some industry pundits said the Pioneer Kuro television will make the current 8th generation plasma televisions obsolete before they fully reach the marketplace later this year.

Mitsubishi debuted their new "laser television" panels that promise double the color vibrancy of other models that will be released later this year.  Laser televisions, compared to plasma or LCD models, don't degrade in visual output over time, they have a wider range of colors promising more vibrant and stunning pictures, and they're about 50% less in price than most plasma or LCD units.  Plus, they weigh about half the weight of current plasma or LCD monitors.  Oh!  And they have a built in 3-D processor to be able to watch three-dimensional encoded programming with a pair of special glasses that come with the set.

My friend, John Smith, who is a regional manager for Mitsubishi, told me the first time he saw the panels he was just stunned.  I understand that many dealers who saw the debut at the Palms last week were equally stunned by how great the picture looked.

XStreamHD announced a new service that will allow customers to receive movies, games and other on-demand programming in a 1080 progressive format via a satellite and a receiver box.  The XStream HD will also feature 7.1 lossless surround audio, and either 4:3 or 16:9 screen size content. 

Actor Michael Douglas (right), who is also an investor in XStreamHD, was on hand at CES to introduce the product and service.  The XStreamHD box will be available for $400 through retail locations.  Also needed is a small satellite dish that will go outside the house with a hard wire connected to the receiver box.  There will be a monthly subscription fee for the content, but if everything they said XStreamHD will be comes true, it could be a major player in content distribution.      

Navigation devices, cellular phones, digital photo frames and digital cameras were also hot at CES.  I guess I didn't realize the intense interest in these digital photo frames.  But that segment of the consumer market place has just exploded over the past few months.  I've never really seen them or played around with the digital photo frames but there was a lot on display at CES.  While most of the digital photo frames are sized not much larger than 8X10 inches, Smartpants showed a 32" 16X9 digital photo frame at CES (left).  Geez, a 32" digital photo frame?  I wonder how good the resolution would be for that size...   

Some other fun things that came out at CES - Nikko Electronics came out with their R2-D2 projector.  Yep, it's a projector that's mounted in a replica of the Star Wars robot.  No, I'm not kidding.  Reportedly, it will run $2500 bucks, but the picture quality was supposedly not that good.  Still, if you're a Star Wars nut, this would be a fun thing to have.

There were some really "out-there" items shown at this year's CES.  There was the Electric Swatter; a mini-washing machine; and the "Guitar Hero Air Rocker" which consists of a small amplifier that attaches to a person's belt, along with a magnetic pick that sends impulses to the amplifier which will then play up to 10 different "riffs", depending upon the beat and motion the person is doing.  For more info on those and other weird items shown at CES, click here.

In conjunction with the Adult Entertainment Expo that goes on the same time as CES, FyreTV showed a set top box that promises to bring over 20,000 porn movies to your home for only $10 a month.  The box must be hooked up to an ethernet and promises to deliver high quality adult movies to your television.  Hey, it's better than renting the adult movies from Family Video, I guess.

Still, with all the glitter and glamour Las Vegas conjures up, there continues to be problems with the show.  Just before the show started last week, reports surfaced in a number of local media outlets in Las Vegas that the CEA was looking to move the show from Las Vegas after the current contract expires in 2012.

One of the big problems with CES is the high prices hotels charge in conjunction with the show.  Hotel rooms that are normally $99 to $159 a night go for $599 to $799 during the show.  Hewlett-Packard announced they brought 15% less workers to the show this year because of the high price of rooms and meals in Las Vegas during CES.

Some hotels reportedly charge larger corporations up front not only for the blocks of rooms they'll stay in during the show, but also for guaranteed food and beverage service in the hotel's restaurants and bars.  This guarantee for food and beverages is angering a number of companies who are reassessing their CES strategy for the short term.

CES organizers have reportedly talked to officials in Chicago and Orlando - both have venues and hotel space capable of hosting the show - about the possibility of a move.  I'm sure it's more of a leverage ploy than anything.  CES officials can't make hotels change their pricing policies, but they can sure threaten to move in a few years if action isn't taken.  After all, CES is the largest trade show in the U.S. and Vegas would take a noticeable hit if it were to move.

CES has lost its luster among the industry's heavy hitters for home audio and video.  Many of the companies in the audio field now show only at the annual CEDIA Expo.  I think I had - maybe - six dealers from my Midwestern territory show up for CES this year.  We're supposedly going back again next year to display our products, but it's up in the air after that.  Frankly, I'd rather not go to CES as long as the CEDIA Expo exists.  It's much more of a relevant show for my business.  Plus, I've had my fill of Las Vegas.         

The NFL Blinks

Late yesterday, the NFL announced the game between the New England Patriots and the New York Giants this coming Saturday will be simulcast by both CBS and NBC.  Originally, the game was only scheduled to be seen on the NFL Network, the league's television channel. 

Given the historical implications of the game - the Patriots are going for the first unbeaten regular season since 1972 - a lot of people were in an uproar that they wouldn't be able to see the game.  The NFL Network is only available to about 43 million of the American public, mainly on DirecTV and Dish Network, as well as a number of smaller cable companies across the nation. 

Many of the big cable companies, such as Time Warner, Mediacom and Cox, do not carry the NFL Network because of high per subscriber fees the NFL demands.  Plus the NFL doesn't want to allow cable companies to add the network to sports-tier programming, rather keeping it on a basic tier.  However, earlier this year, Comcast won a court ruling that allowed them to add the NFL Network to some of their system's sports-tier programming.

This Saturday's game will be the first simulcast of an NFL game since the very first Super Bowl in 1967 when both CBS and NBC broadcast the game.  However, for those broadcasts both networks used their own announcers and production staff.  For the Patriots-Giants game, the NFL Network's Bryant Gumbel and Cris Collinsworth will call the game for all three networks. 

(As an aside, Gumbel has been getting brutal reviews for his broadcasting of NFL Network games.  This should give much of the country who hasn't seen an NFL Network game a chance to make up their own mind as to how well Gumbel does behind the mike.)

Reportedly, NBC and CBS had been in contact with the NFL since earlier in the fall when it appeared the Patriots could end up going into the game undefeated.  Both networks were looking at the potential of record ratings for the game, considering New England has been involved in three of the highest-viewed NFL games this season.

According to NBC Sports head Dick Ebersol, as late as last week he didn't believe the NFL would allow the simulcasting of the game on any over-the-air network.  However, the NFL contacted NBC and CBS earlier this week about both networks simulcasting the game.  Both networks jumped at the chance.

What could have caused the normally hard line NFL to do an about face and allow this weekend's simulcast?  An NFL spokesman said it wasn't because of mounting pressure from Congressional leaders -especially delegations from New England - that made them do a quick about-face in allowing the simulcast of the game.

Well, my "bullshit detector" went into hyper-drive when I read that this morning. 

Rhode Island and Connecticut congressional delegations protested to the NFL that because of their proximity to both New York and Boston, many fans have loyalties to one team or the other and were being left out in the cold when it came to watching the game.  They were upset with the league's definition of "home markets", which narrowed the area as to who would be able to get NFL Network games of local interest broadcast on a local over-the-air station.

For the Patriots-Giants game this Saturday, the NFL had designated greater New York and Boston as the home markets.  That would have added nearly 11 million homes to the total that normally get the NFL Network.  But it would have left out viewers in parts of New England and New York who consider themselves fans of the teams.

Also, the NFL was warned by Senator Patrick Leahy of Vermont - the chairman of the Senate Judiciary Committee - and Arlen Specter of Pennsylvania, who is the ranking member of the committee, that it was “exercising its substantial market power to the detriment of consumers.” Both Leahy and Specter cautioned that the NFL's strategy might lead to a re-examination by Congress of the league’s exemption from anti-trust laws regarding the joint negotiation of its broadcast television rights.

Earlier this month, the NFL announced they were going to make the NFL Network available for free for a week after Christmas to any cable company who would agree to going to a third-party arbitrator to settle the dispute between the league and the major cable providers.  Not one of the cable companies agreed to do so.  The NFL is still pushing for Congressional hearings over the ongoing disputes between cable operators and television networks.

Through all of this, I'm sure Big Ten Conference head Jim Delany is watching these developments with the NFL Network.  Given that the Big Ten Network is wanting even higher fees per subscriber than what the NFL Network is pushing for, there has been little to no movement from any of the major cable providers in the Midwest to pick up the network channel any time soon.  And with the start of the Big Ten basketball conference season coming next week, a lot of fans in the Midwest will not be able to see their favorite teams play when most of them were able to in the past.

The NFL Network may be a very narrow niche network in the eyes of many people, especially those within the cable community.  But the Big Ten Network is even more narrow of a focus and definitely doesn't have the marketing clout or the national appeal the NFL possesses.  I think it's going to be a long winter for the Big Ten Network.  And it will be interesting to see just when they blink. 

Internet Radio

I've found myself getting more and more into Internet Radio over the past few months.  With the proposed merger of XM and Sirius satellite radio about to become a reality, one of the bigger arguments proponents of the merger have been making is that Internet Radio is making a strong headway into the mainstream listening habits of people at work and at home. 

And with a new DHTML code coming that was created for Windows Mobile Internet Explorer, people will be able to enjoy Internet Radio through their mobile phones via Internet Explorer.  And there's a good possibility that Internet Radio will be available in cars sometime down the road. For me, I'm just happy to hook my computer up to my upstairs sound system and have Internet Radio available throughout the house. 

Internet Radio had a set back a couple three years ago when the FCC prohibited radio stations from streaming their content on line as long as they played commercials on the stream.  However, many stations were able to get around that by either blacking out commercials or running public domain musical content during the commercials. 

Now, a number of stations have begun broadcasting in HD Radio, a digital signal format that promises more clear reception and better sound. Over 1200 stations are broadcasting in a digital format with another 500 or so FM stations broadcasting multi-cast channels - offering another up to three more stations under that one stations umbrella.

OK, got all that?  We're going to have a test on this someday.

With that all said, I wanted to tell you about a station out of New York City that I've found myself listening to a lot on my computer since I got back from the AES Convention a couple months ago - WAXQ - Q104.3. 

Q104.3 is a classic rock station that I fell in love with when I was out in New York.  During set up for the AES Convention, one of the union guys had a boom box playing right next to our booth.  The songs and artists they played were absolutely incredible.  It was one great 70's and 80's hit after another, played by artists that had played at one time or another at Madison Square Garden.  I asked the guy what he was listening to and he said, "I don't know.  I think it's Q104."  Sure enough, that's what it was.

I checked the web site when I got back home and found that they had streaming capabilities.  So I clicked on the "Listen Now" on the top banner of the web page and about 30 seconds later I was listening to great classic rock from a lot of various artists.  I was amazed as to the songs they were playing.  It was almost mesmerizing as I was sitting there and listening just like I was in New York. 

A few days later I was going through the web site and saw a click on button for "Deep Classics" under the web sites main banner.  I clicked on that and found that it was Q104.3's HD site - a nearly commercial free channel that played even MORE obscure classic album songs from great artists in the 60's, 70's and 80's. 

After clicking on the "Listen Now - WAXQ - Q104 New York Deep Classics", I was listening to an old Allman Brothers song, followed by an early 80's Kinks song, followed by something off of Pink Floyd's "Animals" album.  Oh, man.  This was heaven to me.

And while you're on the Q104.3 HD web site, they have a listing of a number of other HD radio stations around the U.S. that stream their programming via the Internet.  Anything you want - country, oldies, soft rock, hip hop, etc. - they've got it listed and it's all just a click away.

Right now, I'm listening to Janis Joplin's "Mercedes Benz".  I just reduce the window the radio is playing in and I'm able to use my computer just like I've got the radio playing in the background.  Considering that most of the local radio stations around the Quad Cities are being programmed by people who are no where close to this area, it's very refreshing to listen to a radio station that doesn't follow a set play list that someone in Texas or Florida says that station should play. 

The merger of XM and Sirius will allow me to get programming in my car that I normally wouldn't get.  But when Internet Radio is available in cars, I'll deep-six the satellite radio.  And, quite honestly, Mobile Internet Radio may come much sooner than later.

Oh my God!  They're now playing Iron Butterfly's "In-a-Gadda-da-Vida"!  And it's the long version!  Where's my bong and bell bottom jeans?    

Updates on XM/Sirius Merger; HD-DVD vs. Blu-ray

A couple updates today on the on-going sagas that are weighing heavily on the audio/video industry - the proposed XM/Sirius satellite radio merger; and the continued format war between Toshiba's HD-DVD and Sony's Blu-ray technology.

Earlier this month, a New York analyst reported the Department of Justice will recommend the merger of XM and Sirius even though there would be a staff recommendation against the deal.  Tom Watts, an analyst with Cowen and Company, said he believes the FCC will fall in line with the DoJ recommendation to allow Sirius to buy XM and combine both formats into one.

At nearly the same time, the Institutional Shareholder Services (or ISS), recommended that shareholders of both XM and Sirius vote to merge the two companies.  Shareholders are to vote today on the merger and the vote is expected to be overwhelmingly in favor of merging the two. 

And last week, the FCC sent both XM and Sirius questionnaires seeking detailed information on the proposed merger.  The FCC asked the companies to have the questionnaires returned by this Friday sparking speculation the Department of Justice is close to allowing the merger.  If the Department of Justice wasn't going to allow the merger, there would be no need for questionnaires.  Given the deadline of Friday for the returning of the questionnaires, it could very well be that the DoJ could allow the merger next week, with the FCC falling in line soon thereafter.

Not everyone, however, is enamored with the proposed merger.  The Reverend Jesse Jackson vehemently opposes the XM/Sirius merger saying the merger would monopolize the industry and have the "real potential of eliminating diversity."  In a keynote speech at the Digital Hollywood conference, Jackson said it was "time to put some Democracy into the way the FCC does business".  Jackson has also testified in front of the FCC against the merger. 

And The Washington Post's Marc Fisher said the a ala carte pricing system touted by the two systems would result in less choice over time with higher prices.  Fisher said the danger in offering choice packages with fewer channel will shift the bulk of the audience to a handful of channels.

But in an interview last week with the Chicago Tribune, Sirius chairman Mel Karmazin - the man who is spearheading the merger effort - said he would sue the federal government if the merger did not go through.  However, I don't think Mel has to unleash the lawyers just yet.

Personally, I'm kind of excited with the prospect for the merger.  I see some things on Sirius that I like, and there's some things on XM that I like.  It was to the point that I really couldn't make up my mind what I'd rather have, so I just haven't made the choice yet. 

Regarding the continuing format wars between HD-DVD and Blu-ray technology, Sony's CEO Howard Stringer said last week the two competing technologies are virtually in a stalemate. The on-going battle between the two camps took a turn earlier this summer when Paramount studios jumped the Blu-ray ship and went exclusively with HD-DVD for their high definition movies. 

"We were trying to win on the merits, which we were doing for a while, until Paramount changed sides," Stringer said.

While most of the Blu-ray player sales have been with Sony's Playstation 3, the stand alone Blu-ray machines continue to struggle with price tags that are twice to more higher than the Toshiba-based HD-DVD players.  Toshiba recently lowered the price on their HD-A2 player to $199.

And on top of that, Wal-Mart and Best Buy had a special $99 price on the HD-A2's earlier this month.  In addition to buying the player at $99, consumers could still get the five free movies Toshiba was giving away with the purchase of one of their HD-DVD players.  Whatta deal!

Most of those players are gone now, but Toshiba recently introduced the new HD-A3 player that will have an on-going price of $249.  That's still significantly lower than the lowest priced Blu-ray players on the market. 

Once again, the only problem with HD-DVD is the lack of titles available.  However, with Paramount now on board - along with the likes of Warner Brothers, Dreamworks and Universal studios - we should be seeing more HD-DVD titles in the pipeline by the end of the year.  Already, the recent release of the movie "Transformers" on HD-DVD sold nearly 200,000 copies in the first week.  That's some pretty significant numbers.

I'm sure the format war is still long from over.  But it is rather interesting that Sony's Stringer recognized the fact that no matter how much spin the Blu-ray camp could put on its product, HD-DVD was a viable and formidable opponent to be reckoned with.

As I've said before, stay tuned...    

More from CEDIA - 2007

At the annual CEDIA Expo held recently in Denver, the audio video industry showcased the products that will be in homes across America and around the world in the coming months.  Actually, not a lot of new and exciting products were introduced.  Most of the new products shown were basically minimal upgrades of existing technologies.  Still, CEDIA managed to draw over 29,000 people to the four day expo - the highest attendance ever for the event. 

Of course, the Blu-Ray vs. HD-DVD war was the biggest topic on the minds of people at CEDIA.  (Check out my earlier post on the most recent developments regarding the Blu-Ray/HD-DVD battle here.)  While audio manufacturers like Marantz and Denon showed new Blu-Ray machines at CEDIA (both with $1995 price tags), a number of audio manufacturers are still waiting to see which way the wind is going to blow in regard to who will have the upper hand in the format war.  Or, they're waiting for lower priced dual-format transports to become available. 

Flat panel televisions continued to be the rage on the expo floor with a number of companies showing new products for the upcoming fall and holiday selling season.  Many manufacturers (and retailers) are hoping for more stable pricing and better profits during the last four months of the year compared to last year's price wars that erupted around Thanksgiving. 

Panasonic showed a number of new lower priced plasma monitors that had fewer features than some of their previous models.   I checked out the new Pioneer Kuro plasma displays and they looked stunning.  But I'm still a fan of the Samsung televisions.  Their plasmas and LCD units looked great, and their new DLP projection screens are using LCD technology, making the bulb and the color wheel in the old DLP units obsolete. 

3-D was a big draw at CEDIA.  A number of companies showed monitors capable of projecting three dimensional images on screen, primarily for gaming or motion pictures.  I didn't really look closely at the 3-D displays, I'm a little turned off by the 3-D experience after working with a Canadian company by the name of Sensio for a couple three years.  We were distributing it in North America until things went a little sour and we were stuck with some old technology that Sensio refused to upgrade.  Long story short, we no longer distribute Sensio. 

Anyway, 3-D capable monitors seemed to be the hot "new" thing to show at CEDIA.  The only problem is that most of the 3-D capable monitors were very high priced and out of the range of most consumers.  It's my experience that 3-D is neat for the first few times someone sees it, but after that it's "OK, what else is on?"

Home automation is still one of the main components of the show.  More companies are beginning to incorporate lighting, security and whole house audio/video control into nice little packages.  They're still pretty expensive, but the problematic factor that plagued the control industry has gone down in recent years making the controllers easier to program and use. 

Convergence units that combine downloading of music and movies via the Internet were also shown at the CEDIA Expo.  Apple TV was among the first to address this, but others were showing new models at CEDIA.  Antex showed their multi-zone Sirius or XM digital tuner. Inteset displayed their Denzel TP420 combination cable and HD tuner along with an 750 gig hard drive unit to store movies, pictures, music and other media.  And my friend, Brad Paulsen, helped unveil the new Sooloos music server, the most unique music server I've ever encountered.  Sooloos is pricey - $12,000 for the unit and the music to download into it is extra.  But it was pretty damn cool with its touchscreen menu system and high quality sound. 

All in all, there wasn't any major breakthroughs of technology at this year's CEDIA Expo.  Products are always improving, but the steps seem to be smaller than some of the technological giant leaps we've seen in the past few years.  Still, it's a fun business to be part of and it's always fun to go to a show like this and to be able to look into the future of home electronics.      

CEDIA 2007 - The Blu-Ray vs. HD-DVD Wars Continue

The annual CEDIA Exposition is going on in Denver this week and the big buzz continues to be the ongoing format war between Blu-Ray technology - backed by Sony, and HD-DVD technology - backed by Toshiba.

As I said in this post last January, the consensus at the Consumer Electronics Show in Las Vegas was that it was quite possible that HD-DVD would eventually be the winner.  The discs were cheaper, the equipment to play them on were cheaper and it seemed to be a more widely accepted format among video aficionados. 

While HD-DVD seemed to be in the lead since Toshiba introduced the first player in March of 2006, Sony silently made partnerships with a number of motion picture studios to distribute Blu-Ray discs exclusively.  In addition to their own movie production company, Sony has forged alliances with MGM, Fox, Disney, Lionsgate and Warner Brothers studios.

On the HD-DVD side, Paramount, Universal, Dreamworks and Warner Brothers are supporting that format.  It's interesting WB is supporting both formats.      

Earlier this summer, Blockbuster announced it will only stock and rent Blu-Ray discs at their 1700 locations in the U.S.  Their reasoning was that in test marketing in 250 Blockbuster stores, 70% of the high definition discs that were being rented by their customers were of the Blu-Ray format.  The reason is clear - Sony's PlayStation 3, which uses Blu-Ray technology, is driving the market place at this time. 

And considering a large number of movie titles are more readily available on Blu-Ray than HD-DVD at this time, suddenly Sony and Blu-Ray has the clear lead. 

Or does it? 

Sony is kind of getting a big head about Blu-Ray.  The release of Spiderman 3 has caused an outcry from consumers as Sony's asking price of $49.95 for the movie has been deemed outrageous.  That's the downside of Blu-Ray.  Their players and the movies are more expensive than HD-DVD.

Prices on machines have come down since they were first introduced, but Blu-Ray machines are still higher than HD-DVD machines.  Sony's Blu-Ray player retails at $499.99, while Toshiba has a player now at $299.99.  Of course, there is a universal player now available from LG which retails at $999.99. 

So you're probably asking, "OK, what's the big difference?   Why the discrepancy in pricing?"

The biggest difference between Blu-Ray and HD-DVD is the amount of information that can be stored on one disc.  While most DVD's offer 10 gigabytes of information that can be stored on them, HD-DVD offers 15 to 30 GB of information, depending upon whether it's a single layer or double layer disc. 

Blu-Ray, on the other hand, has the capabilities of storing 25 GB of info on a single layered disc, and up to 50 GB on dual layered discs.  This is more desirable for the gaming aspect of Sony's PlayStation 3 which has dynamic and stunning graphics when game discs - basically Blu-Ray discs - are played on them. 

Why Blu-Ray and HD-DVD discs can't be played on each other's machines is simple.  The optical pickup between the two - the mechanism that reads the digital information on the discs - are set at different angles.  The difference only .2 of a degree, but when you're talking about billions of bytes of information in a microscopic area, 2/10ths of a degree is akin to a mile.   

Plus, Blu-Ray has a tighter track groove than HD-DVD.  That's one of the reasons it allows for more information on a disc that is the same physical size as an HD-DVD disc. 

What makes Blu-Ray more expensive is that their formatted discs do not share the same thickness layer as DVD's.  Production facilities have had to be modified or re-manufactured to produce Blu-Ray discs.  And because their surface thickness is thinner than HD-DVD, a special coating must be applied to the Blu-Ray disc to protect the information that is stored just 1/10th of a millimeter below the surface.  But because of this, Blu-Ray discs can have multiple layers that could theoretically boost their total capacity to 200 GB of information.

A number of "mid-fidelity" to "upper-mid-fi" companies have been taking a "wait and see" approach as to where the format wars will end up.  Denon was the first of the "upper-mid-fi" companies to announce a Blu-Ray player that will be released this fall.  The only problem is that the unit will retail for $1999.99.  However, it is the first machine to employ the 10-bit Silicon Optix Realta processor chip - a truly high-end videophile chip that offers outstanding video playback for both Blu-Ray and DVD discs.  (All other processors in Blu-Ray players employ an 8-bit chip.)

I'm sure a handful of other upper-mid-fi companies will be announcing which format they'll be supporting shortly - possibly even before the CEDIA Expo ends this weekend.  The electronics company we distribute in North America - Cambridge Audio - is still taking a firm "wait-and-see" approach in regard to the battle between HD-DVD and Blu-Ray. 

And the battle isn't over by a long shot... 

XM-Sirius Propose A La Carte Programming

The proposed merger of satellite radio providers XM and Sirius took another turn on Monday as they jointly announced an a la carte plan for subscribers offering either XM programming, Sirius programming or a combination of the two. 

The proposed merger of both companies would offer consumers the choice of lower-cost service by picking and choosing programming packages, and/or individual channels. 

The proposed merger has faced stiff federal approval, but recent developments have analysts more optimistic the merger will eventually go through.  The new a la carte plan will definitely help. 

Right now, both XM and Sirius offer 170 and 130 channels, respectively, for a $12.95 monthly fee.  Under the a la carte plan introduced on Monday, both services will offer a basic a la carte package starting at $6.99 a month that offer 50 channels per service, with optional channels available at 25 cents each.  Premium packages with talk shows, such as Howard Stern; and sports such as Major League Baseball and the NFL, will be available for an additional $3.00 a month per package.  Full premium packages from both carriers would be available for $6.00 a month. 

Both services will offer a second-tier a la carte plan of 100 channels, with cross-breeding of XM and Sirius programming for a monthly fee of $14.99.  Both services will offer an "Everything" for one service and "select" channels for the other service.  The monthly cost of that will be $16.99 for "Everything XM and Select Sirius"; and $14.99 for "Everything Sirius and Select XM". 

There will also be a la carte package services that cater to family programming (while blocking adult oriented programming), music programming, and news, sports and talk show programming on both XM and Sirius.  Those package will range in price from $9.99 a month to $14.99 a month.

I've been holding off getting either an XM or Sirius satellite receiver just for this situation.  There's a number of programs on XM that I'd like to have, but there's a number of things offered on Sirius that would be great, as well. 

But here's the real catch - Offering an a la carte line-up will require existing Sirius or XM customers to purchase new equipment.  And most of the packages will not go into existence until up to six months after the proposed merger.  That's why I'm in a holding pattern.   

I keep getting e-mails and phone calls from friends who ask me, "What's the best deal?  Who should I go with?"  Even though it's still less than a 50-50 chance the proposed merger will go through, industry analysts now think that the a la carte schedule proposed by XM and Sirius will soften the federal government's hard line stance against the merger by showing the average consumer some savings and a choice as to what they would like to listen to.   Both companies are hoping to clear procedural hearings by mid-September, giving more hope the merger will eventually go through.  Stay tuned... 

Comcast to Big Ten Network - "Blow it Out Your Ass!"

The war of words between the fledgling Big Ten Network and cable companies heated up last week with Big Ten Conference commissioner Jim Delany blasting cable provider Comcast for comments a company executive made in a recent NY Times article that depicted the network's proposed offerings as "second and third choice" programming with many of the premium contests already available on Comcast's system.

Delany was also upset at Times reporter Richard Sandomir for supposedly making disparaging remarks regarding Iowa's women's volleyball team.  The only problem is that Sandomir said nothing of the sort. 

Sandomir interrupted a teleconference Delany was conducting with sports writers from around the Big Ten region on Wednesday to refute Delany's comments about supposed slights Sandomir made toward the Iowa women's volleyball team.  (Read about that exchange here.)  Delany eventually backed away from those comments.

Still, Delany pushed for an apology from Comcast, which is embroiled in what is turning into a bitter negotiating war with the Big Ten, regarding a Comcast executive's "second and third choice" statement in the NY Times article. 

Comcast's reply to Delany?  In so many words they said, "Blow it out your ass!" 

Basically, what the Comcast exec said was accurate.  Most of the prime conference contests in football and basketball will be available on channels already part of nearly every cable system across the region.  The Big Ten Network will exist on the table scraps and throw-away games the major networks don't want to air.

The continuing tough stand both the Big Ten and Comcast are taking probably means the Big Ten Network will not be available to Comcast's 5.6 million subscribers in the Midwest - easily the largest cable provider in the region - when the network begins broadcasting in August.  And Comcast isn't looking to bow to the Big Ten Network's demands any time soon.

To reiterate the stalemate that I've talked about in earlier posts (here and here), the Big Ten Network is asking for a per subscriber fee of $1.10 from cable companies in the eight states that comprise the Big Ten region.  That would be the third highest per subscriber fee in the cable industry (behind ESPN and TNT), and more than double the subscriber fees of such networks as USA Network, CNN and TBS. 

What Comcast and other cable providers would like to do is to include the Big Ten Network on a premium tier of channels - most likely a sports tier.  However, the Big Ten is balking at this saying the network must be available on the cable provider's basic channel package.

Comcast is sitting pretty right now after recently winning a lawsuit brought on by the NFL Network who sued the cable provider when Comcast put the network on a premium sports tier in some markets last fall.  The NFL Network also wanted to have cable providers include their network in a basic channel package.  Comcast maintains that having the NFL Network on a sports or premium tier allows people who may not want the channel to not have to pay extra in the form of increased rates for basic cable.  Their argument regarding putting the Big Ten Network on a sports tier and keeping it off basic is the same.

During Delany's teleconference last week with reporters, he tried his best to paint a rosy picture for the advent of the Big Ten Network later this summer.  He talked about the procurement of nearly 4000 Big Ten archived games - classic matchups in basketball, football, wrestling and other sports that will initially contribute to the bulk of the Big Ten Network's programming.

In the first year of broadcasting, the Big Ten Network is shooting for about 400 live broadcasts of conference sporting events.  Of those 400 broadcasts, the majority will be available in HDTV. 

Delany also talked about how the Big Ten Network will be a "gender equity" network within three years - meaning the proportion of women's sporting events shown on the network will equal the participation ratio of athletes in the conference.  That ratio now stands at 53 percent male and 47 percent female.  Delany hopes to have nearly 40 percent of the broadcasts on the network be female athletic events during the first year. 

But the burning issue still remains - only one of the 13 largest cable providers in the Midwest is signed on with the Big Ten Network.  While the Big Ten Network has made concessions to allow cable systems outside of the Big Ten region to put the channel on a premium tier, they're also only asking 10 cents per subscriber from those providers hoping they'll put it on their basic tier. 

But this is what gets me.  The Big Ten uses funky math in trying to get the public to see that it may not cost them any higher fees, especially in regard to Comcast customers.  They figure the total cost to Comcast will only be about 31 cents per subscriber if the cable provider picks up the network nationwide.

Delany figures that Comcast has 20 million subscribers across the nation.  Approximately 14.4 million (give or take a couple hundred thousand) of those subscribers are outside of the Big Ten region.  So if 5.6 million subscribers are paying $1.10 for the network, about 14.4 million subscribers are only going to pay 10 cents for the network.  Delany said that Comcast's overall cost will be 31 cents per subscriber, not enough to warrant a rate increase. 

(Actually, I came up with 38 cents per subscriber, but I'll give Delany the benefit of the doubt.  He probably has the exact subscriber figures from Comcast.)

My question to Delany - what about Mediacom?  Mediacom is located primarily in the Midwest, and primarily in Iowa.  There's no way that he can use that sort of math logic to pacify Iowa Hawkeye fans across the state.  Either way you look at it, Mediacom is going to get socked for $1.10 per subscriber and won't be able to spread lower costs over an area outside of the Big Ten region to make it easier for the cable provider to absorb the blow of higher rate fees.

While the Big Ten is urging fans to call their local cable operators and demand the network, don't look for cable companies to buckle under right away.  Comcast, Time Warner, Mediacom and other cable companies are talking to the Big Ten about showing the network, but they're all maintaining the per subscriber fee is too high to pass along to their customers to include it in a basic tier package. 

While the Big Ten Conference is looking to extend the league's brand name and image far beyond the eight states, cable operators are not looking to foot the bill which could be as high as $237 million annually going into the Big Ten Network's coffers.  While cable providers call the $1.10 per subscriber fee a "Big Ten tax", the Big Ten views putting their programming on a premium or sports tier in the Midwest as blackmailing the public into paying more for cable services.

Either way, at $1.10 per subscriber the general public is going to pay.  I'm usually against the cable companies, but on this one I like how they're looking out for the interests of people who may not want to pay higher fees for basic cable service.  I'd gladly pay to have the Big Ten Network on a premium tier.  But I can tell you the majority of my neighbors won't and shouldn't pay higher fees for basic cable if the Big Ten Network goes on the basic tier.

I'm starting to get the idea from his recent strange comments and quirky actions that Jim Delany has suddenly realized the Big Ten is quickly running out of time - and out of ammunition - in getting the major cable providers in the Midwest to sign up for the Big Ten Network.  There seems to be a lot more "defending" of their position these days. 

If the Big Ten wouldn't be so arrogant about their situation I think deals with cable providers would have been completed months ago.  But the arrogance has now forged a major wedge between the conference and cable companies to the extent the biggest losers will be the fans of Big Ten teams who won't be able to watch their favorite teams play on TV this fall.    

More on the Big Ten Network

There was a lot of interest in my recent post regarding the Big Ten Network, thanks to a couple three readers who posted the link of the blog entry on some highly visible Iowa Hawkeye sports boards.  Here's a follow-up piece with some more information. 

On the heels of the annual Cable Show held recently in Las Vegas at the Mandalay Bay Events Center, the Big Ten Network announced that Buckeye CableSystem, the 12th largest cable provider in the Big Ten Conference area, has agreed to pick up the Big Ten Network when it begins broadcasting on August 1.  Buckeye CableSystem has 150,000 subscribers throughout parts of Ohio and Michigan. 

Given that DirecTV has already signed on with the Big Ten Network, Buckeye CableSystem's agreement now means only two of the top 13 cable and satellite providers in the Big Ten region have signed on to broadcast the network.  The $1.10 per subscriber price has caused a number of the larger providers to balk at signing up for the channel. 

Plus, it's been reported the Big Ten Network will not allow the channel to be shown on anything other than the cable provider's basic channel package - a provision Big Ten Network president Mark Silverman won't confirm as being part of the negotiation process.

However, Silverman is optimistic for the immediate future.  He believes the package deals on the table to cable and satellite providers are fair.  "We have three months (before the first broadcast)," Silverman recently told the Chicago Tribune.  "And Buckeye proves what we're asking for is fair, reasonable and doable." 

However, a recent article in Street and Smith's Sports Business Journal wasn't as optimistic as Silverman.  The article cast considerable doubt on the chances of the Big Ten Network being added to the Midwest's remaining large cable systems in time for the August 1 start-up. 

The NFL Network - which is charging 40 cents less per cable subscriber than the Big Ten Network - hasn't been picked up by a number of large cable providers across the nation. It's being viewed by many providers as "a niche channel with a narrow focus."  However, Time Warner Cable spokesperson Judy Barbao believes the Big Ten Network will have more of a broad appeal - especially in the Midwest.

"We know enough of our customer base (to know) there will be interest in the channel," Barbao told the Columbus (OH) Dispatch.  "Customer interest is another factor in these decisions.  It will be one of the factors we look at, along with cost and (tier) location."

Barbao said Time Warner is very hopeful to sign up with the Big Ten Network at some point.  "At this stage, we have no reason to believe it won't get done." 

By the way, the Sports Business Journal article implied that cable providers outside the eight-state Big Ten region may pay a significantly lower price for the network than those in the Big Ten area.  National and regional cable providers in non-Big Ten states could pay as little as 10 to 15 cents per subscriber to carry the Big Ten Network. 

If this is the case, this will provide the impetus for nationwide broadcasts of the Big Ten Network, broadening the appeal of conference contests, as well as providing live broadcasts for fans of Big Ten teams who don't live in the Midwest.  While that significantly lowers the overall cost for national cable providers such as Time Warner or Comcast, it hits the Midwestern regional providers, such as Mediacom - or more importantly, their subscribers - in the wallet.

At $1.10 a subscriber, and with an edict to keep the network off of digital or premium tiers of cable channels, the Big Ten Network is betting on a public outcry from fans across the Midwest for local cable providers to pick up the channel - especially if it's the middle of football season and fans can't see their favorite teams play. 

I've said for a number of years we're looking straight down the barrel of a "pay-per-view" formula for sports at the collegiate and professional level.  The NFL Network and, now, the Big Ten Channel are both proof that day is a lot sooner than we'd like to believe.

Back to School

Recently, I was asked to come to Grinnell College and talk to a group of students regarding high end audio equipment.  The person who invited me, Ralph Helt, is a long time friend and a former audio/video dealer from Des Moines.  Ralph is now the head of AV Services at Grinnell College.  When he explained to me the students were really into audio equipment, I jumped at the chance.  These days, it's not often you'll find young adults who are into good audio equipment and good sound. 

First of all, if you don't know much about Grinnell College, it is a small, yet prestigious liberal arts college located in the middle of Iowa - very close to where I grew up (see map).  The college has about 1500 students and most of them come from wealthy families from out east.  About a quarter of the students are from overseas.  But as Ralph told me, "The foreign students are probably more 'American-ized' than the American kids.  They're all neat kids." 

What a lot of people probably don't know is that Grinnell College has a lot of money.  The market value of their endowment assets is close to $1.5 billion dollars easily making it the college with the highest endowment assets in the state of Iowa.  In fact, they have the 36th highest endowment in the United States rivaling the endowment assets of some very prestigious colleges and universities across the nation. 

A lot of the money was generated by the financial prowess of Joe Rosenfield, a Grinnell College alumnus and a trustee of the college.  Rosenfield struck up friendships and financial relationships with Warren Buffett of Berkshire-Hathaway fame, and with Robert Noyce of Intel fame (and also a fellow Grinnell College alumnus) long before those two men became famous.  Rosenfield's savvy investments and relationships with business leaders guided Grinnell College to its present day endowment - the largest per student endowment of any liberal arts college in the U.S.

With that said, the campus at Grinnell College is simply unbelievable.  The buildings are either new or completely updated.  Housing for the students is immaculate.  The athletic facilities are top notch and the equipment they have for teaching aids in the classrooms are top of the line.

Here's an aside to show you how much money the college has - I had to go to the restroom before I did my little talk and demonstration.  I walked into the men's room and was astonished to see that the floors and walls were made out of marble!  A college restroom made out of marble!  I was just blown away.  It was nicer than some public restrooms I've been in at five-star restaurants or hotels.  I almost expected there to be a washroom attendant in the place. 

I was asked to give a lecture about high end audio equipment and was asked to bring along some things to listen to.  The system I assembled and took with me - a Cambridge Audio 840A integrated amplifier, the matching Cambridge Audio 840C CD player, a pair of Focal Profile 928 loudspeakers, as well as Shunyata power conditioners and power cables, and Tara Labs speaker cables - is not what I would call "high-end".  But at just a tad over $10,000 for the whole system at retail, it's a lot higher end than most people's systems at home.  And it sounds damn good for the money.

The group of about 20 to 25 kids, as well as some faculty members and workers at Grinnell College, assembled on a Friday afternoon around 4 p.m. and I gave my presentation on "Audio 101" - a look at the basics of audio.  Then I talked about the differences as to why the gear I was demonstrating was better than the stuff being sold at most mass merchants.  And then we got in to the listening aspect of the presentation. 

The room I did the presentation in had state-of-the-art equipment for visual aids, computers, and industrial audio.  But it wasn't conducive to good sound.  I had a lot of trouble getting the speakers to sound right - getting the image of the speakers to sound like there were no speakers in the room.  After finally moving the speakers out a little further, the image became transparent and the speakers literally disappeared.

We listened to a number of things from classical music, to soft jazz, to hard rock, to world music, to funk and rhythm and blues, to hip-hop.  I was actually pretty impressed with some of the music selections the students brought in to listen to on the system.   And they all had pretty good ears - it was pretty amazing.  They really understood the nuances of what they were listening to.

By the way - I was recently turned on to recordings made by Mapleshade Records, a small eclectic record label out of Maryland that specializes in classical, blues and traditional jazz recordings.  Some of the recordings are breath-taking in their sound.  These recordings are some best I've ever encountered.  And the performances of the artists are absolutely great, as well.  Even if you don't have a good audio system, I still recommend going to their site and at least buying their sampler discs. 

Many of the students rely upon iPods or their computers to listen to music.  I did a demonstration using an iPod hooked into the system and showing them the difference of playing a track of compressed music from a Mapleshade disc on an iPod and then playing the same uncompressed track on the CD player.  The looks of astonishment when I "A-B'ed" the two sources showing the sonic differences between the two was worth the time I put in to this little event.  Even Ralph, who has been associated with audio for over 30 yeas, was blown away by the demo.         

Little by little, the crowd began to dwindle after I did my presentation - which lasted about an hour and a half - and then the subsequent demonstration of the system, along with the inevitable questions and answers.  By the time the last kid left the room, it was 7:45 p.m.  All in all, it was fun and exhilarating to teach these kids about audio.  They all seemed to get a kick out of it.  Let me just say it was a lot better than trying to do the same demonstration to a bunch of tired and bored audio guys. 

The Big Ten Network

                                       I've read a couple three articles lately (here, here and here) regarding the negotiation process the Big Ten Network is going through to sign up cable companies for their network before the August 1, 2007 inaugural broadcast. 

         So far, a number of smaller cable companies across the Midwest have agreed in principle to carry the network on their systems, including about 20 in the state of Iowa.  However, negotiations are on-going with Comcast in the Chicago area, and Mediacom across the state of Iowa to carry the Big Ten Network.  A number of other cable companies in metropolitan areas including Indianapolis, Columbus, Detroit, Milwaukee and the Twin Cities are also in negotiations with the league regarding the broadcasting of Big Ten games.

        The major sticking point?  The Big Ten Network wants to charge cable companies $1.10 per subscriber to carry the network.  That's a hefty price to pay for a start up network.  And with on-going negotiations with the NFL Network - who wants to charge *only* 70 cents per subscriber - the cable companies are balking at bringing both channels to their core channel line-ups. 

        Most of the larger cable companies in negotiation with the network want to include it in a premium tier or on their digital tier of channels.  Both the Big Ten Network and the NFL Network have steadfastly refused to allow cable companies to put their respective channels on anything but the basic channel package. 

        Although ABC and ESPN will continue to have the first and second pick of the weekly Big Ten football games, the conference is hoping for a grass-roots effort by the fan base of Big Ten teams to pressure the cable companies to pick up the network.  Especially if, say, the Ohio State/Iowa football game is available only on the Big Ten Network and hundreds of thousands of fans across Iowa and Ohio don't have access to the game. 

        The league also announced that it will have a "plus" channel in case two games are going on at the same time.  "We will be that local," said Big Ten Network president Mark Silverman.  "The passions of Big Ten fans in a given area will be our passion." 

        Even though I like the concept of the Big Ten Network, I'm not too keen on the high per subscriber charge the league is demanding for cable companies to carry the network.  I'm getting this large sense of arrogance on the Big Ten's part that will do nothing but drive up already skyrocketing cable and satellite rates across the nation. 

        Their goal is to get every cable outlet in the Midwest signed up before August 1.  Then they'll go for more regional and national cable companies across the nation later on.  Right now, the only nationwide cable company on board with the league is AT&T Cable.  DirecTV has also signed up to show the channel.  Dish Network continues to negotiate with the Big Ten Network to carry the programming, but an agreement should be in place sometime this summer.

        Each Big Ten school could initially realize income of about $7.5 million from the Big Ten Network.  But the league is hoping member schools will benefit beyond the monetary compensation in terms of exposure for each school's academic qualities. 

        Producers for the network toured Iowa's athletic facilities earlier this week looking for a location for a small studio that would tie into the network's Chicago-based operations.   Not only will the league focus on athletic events other than football and basketball, it will also showcase the academic side of life at member institutions.

       With rising costs associated with college athletic programs across the nation, logic dictates that colleges and universities must realize new revenue streams to help fund their teams.  The Big Ten Network is one of those revenue streams that we all may be helping to pay for sooner than later.  And it will be the forerunner of what will more than likely become a "pay-per-view" society in terms of watching sporting events that were available over free TV just years prior. 

       And like the owners of NFL teams (see prior blog entry here), the Big Ten's Athletic Directors are hoping the network doesn't cave in with their demand of $1.10 per subscriber to carry the network.  The Big Ten Network believes it has the leverage and are hoping for an outcry from cable and satellite customers demanding their companies put the network on their systems. 

       I know the "pay-per-view" aspect of sports is coming, but I don't know if I like the subtle "blackmail" aspect The Big Ten and The NFL Network are using to pressure cable and satellite companies into carrying their channels.   

Dr. Robert Adler

A moment of silence in remembrance of the man who helped make the world couch potatoes - the co-inventor of the wireless remote control for television, Dr. Robert Adler.

Dr. Adler died last Thursday in Boise, ID at the age of 93.  A native of Austria, Dr. Adler emigrated to the United States just before the outbreak of World War II.  He landed a job with the Zenith Electronics Corporation in 1941 and worked on a number of communication projects for the U.S. Armed Forces during the war. 

After the war, his research work with Zenith included a number of projects for the Zenith primarily in communications.  But it didn't include working on a remote control.

History shows that in 1955, Eugene Polley devised a wireless remote control for Zenith called the "Flashback".  The remote used photo cell flashes that a receiver in the television would pick up and change channels, mute the volume and turn the television on or off. 

Zenith marketed the remote television system and it was a big hit - selling over 30,000 units.  But it had a big problem - it didn't work well in sunny or well-lit rooms. And it was battery powered and people thought their televisions were malfunctioning when the batteries got weak. 

Dr. Adler, who had been working on high-frequency signal technology for Zenith and the federal government, took on Polly's project and devised a remote control that used high-pitched tones to change the functions.  The remote worked by the pressing of a button activating an aluminum rod that sent a tone the television would recognize.  Thus, the invention of the Zenith Space Command remote control.

The cost of the remote control function added about a third to the price of televisions, but it was an immediate hit.  And the unique thing about the original Space Command control was that it used no batteries. 

Still, the Space Command had some problems - simple sounds such as keys rattling would cause the set to change channels or turn off. 

Dr. Adler worked on projects that refined the Space Command control in the 60's, introducing a unit that used ultrasonic frequency tones instead of the much lower frequency tones.  The rest, as they say, is history.   

For years, a few historians believed that Dr. Adler got a lot of unwarranted credit for being the first designer of the remote control.  Polley's Flashback device had been on the market for a year before the Space Command became part of the American culture. 

Polley (left) went through life privately stewing about the perceived slight he was receiving for not getting the full credit for the invention of the wireless remote control.  A lot of AV aficionados don't recognize Polly's name when the history of the remote control is brought up.  In fact, Zenith only pays tribute to Dr. Adler and not to Polley on their web site.  Polley does get a small mention in the story of the history of the remote, but that's all. 

For Polley's efforts with the Flashback, he was paid $1000 dollars.  Polley once said, “Not only did I not get credit for doing anything, I got a kick in the rear end.”

Through all of this, Dr. Adler remained stoic about his accomplishments.  He realizes that history has embraced his name as the father of the remote control, but he'd been uneasy about the recognition.

“I don't believe (the remote control) has a single father,” Dr. Adler said one time.  "But the general public wants one name to attach to something.”

For his efforts, it should be noted that Polley's use of photo cells was way ahead of it's time.  Most remote controls today use low-level infrared signals to control televisions, DVD players, CD players and a number of other consumer electronics. 

When Zenith was given a lifetime achievement Emmy Award in 1997 for the invention of the remote control, the company directed that co-awards be given to both Dr. Adler and Polley.   

In all, Dr. Adler had 180 patents on a number of inventions, the last was published just a couple weeks before his death on advances in touchscreen technology.  His wife, Ingrid, said the remote control probably wasn't even his favorite invention.  In fact, he didn't watch much television. 

"He was more of a reader," she said last week.

Still, Dr. Adler was a true pioneer in the development of a device that is now considered a necessity in the control of electronic products - including non-audio and video units - in the modern home.  I just couldn't let his passing go by without paying some sort of homage to the man.

Breaking News - XM and Sirius Announce Merger Plans

A tip of the hat to the observant Tony Jobe who just sent me this press release:

"XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. have agreed to merge, the two companies said Monday.

"The deal would consolidate the only two companies in the emerging business of subscription-only satellite radio, and is sure to face tough scrutiny from federal regulators. Investors and analysts have been speculating about a deal for months.

"The two companies said in a statement that Mel Karmazin, the CEO of Sirius, would become chief executive of the new company while Gary Parsons, the chairman of XM, would remain in that role."

In a previous post here, I talked about how the rumor of the proposed XM/Sirius merger was the talk of the recent Consumer Electronics Show in Las Vegas.  The merger will have a combined enterprise value worth about $13 billion with about $1.6 billion in net debt.

The merger will face two major obstacles - having to get past the Federal Communications Commission, which has a history in turning down similar deals in the past (i.e., the proposed merger between Dish Network and DirecTV); and the issue of compatibility between Sirius and XM receivers. 

If the proposed merger were to go through, it would certainly solve a problem a lot of Audio/Video manufacturers are having by trying to choose between the two satellite formats for their receivers or tuners. 

And it will also probably knock a lot of people off the fence - like me - who was having a hard time trying to decide which satellite service to subscribe to.  I see a lot of good programming on both systems, but there is a lot of redundant programming on both, as well. 

Read the full press release on the proposed merger here.

As more information becomes available, I'll be sure to pass it along.

More Television Battles

Just in time for the Super Bowl, Mediacom and Sinclair Broadcasting announced an agreement last week to allow the cable provider to re-transmit the signal of 22 Sinclair owned stations on their system.  Mediacom had been denied to re-transmit Sinclair owned stations since January 5. 

When it became apparent the federal government wasn't going to put the screws to Sinclair to conduct a peaceful mediation to the dispute, Mediacom threw in the hat and signed an agreement to allow the cable provider to re-transmit Sinclair stations thru 2009. 

The CEO of Sinclair Broadcasting, David Smith, is a Bush Administration ally.  Earlier in the dispute, the Federal Communications Commission ruled in favor of Sinclair in the matter.  It became apparent that Mediacom was in a no-win situation with the government and ponied up the extra money as well as legal expenses Sinclair accrued during the dispute. 

A day before the announced agreement between Sinclair and Mediacom, the cable provider announced a nominal rise in basic rates beginning March 1.  And just days after the Sinclair agreement, Mediacom announced that the agreement would eventually raise subscriber rates even more.

The Wall Street Journal has been watching all of this very closely.  In an excellent article from last Monday, Peter Grant wrote that the shift of balance between cable providers and broadcast corporations is becoming increasingly tilted toward the broadcasters.  It also takes an interesting look at the behind the scenes negotiations between Sinclair's Smith and Mediacom CEO Rocco Commisso. 

While this drama continued to unfold, Major League Baseball recently announced that satellite provider DirecTV will have the exclusive rights to show MLB's Extra Innings package of baseball games on their system.  Extra Innings is a service that shows up to 60 out-of-market baseball games per major league team.  Previously, Extra Innings was available through On Demand and available in 75 million homes with cable and satellite service in the United States.

The 7-year, $700 million dollar agreement between Major League Baseball and DirecTV will limit fans who live out of their favorite teams market to watch the action, or they must subscribe to DirecTV.  Right now, only 16% of the homes in the United States have DirecTV.

Extra Innings is also available on computers for $79 annually, but it requires a broadband interface to watch it.  And the quality of watching a game on a computer is not as good as watching it on, say, a 42" plasma television.

The agreement has raised the ire of members of Congress, including Massachusetts senator John Kerry, who is head of the Senate Commerce Committee, which oversees communications matters.  Kerry called on FCC chairman Kevin Martin to investigate the deal and the implications it will have upon consumers. 

In a statement, Kerry said, "I am opposed to anything that deprives people of reasonable choices. In this day and age, consumers should have more choices -- not fewer. I'd like to know how this serves the public -- a deal that will force fans to subscribe to DirecTV in order to tune in to their favorite players."

So far, the FCC - in its typical bureaucratic fashion - hasn't commented on the MLB/DirecTV deal, other than to acknowledge that Martin has received the letter from Kerry.

Pennsylvania senator Arlen Spector feels the deal between MLB and DirecTV constitutes a violation of MLB's antitrust exemption status and has directed government antitrust lawyers to look into the matter.

Spector said that while they can't charge MLB with an antitrust violation, he felt that the government should continue with MLB's antitrust exemption only if they avoid exclusive packages like the one with DirecTV. 

With the start of the baseball season less than two months away, I seriously doubt any of this will get resolved before then.  But I certainly do like the bi-partisan effort Congress is showing on behalf of common people to stop MLB from becoming even more of a monopoly. 

Upon Further Review...

As a wise man once told me, "There's two sides to every story."

Or maybe I got that from a song from Joe Walsh.

After talking in a post yesterday about the fun-haters at the National Football League putting the kibosh on planned gatherings at churches and public places to watch the Super Bowl on a large screen projection television, it turns out that it's not the NFL making up arbitrary rules regarding where and how games can be watched.  It turns out that they are fully working within the copyright laws of the United States.

I happened across a radio talk show yesterday where the guest was talking about copyright laws on the heels of the NFL's demand that the Fall Creek Baptist Church does not show the game on their 120" projection screen on Sunday evening.  It turns out that it's illegal for any private party to charge to watch a program, movie, sporting event, etc. on a television larger than 55" diagonally. 

Here's the part of the U.S. Code that deals with watching performances and charging admission for the broadcast performance (shows, concerts, DVD's, sporting events, etc.):

(II) if the performance or display is by audiovisual means, any visual portion of the performance or display is communicated by means of a total of not more than 4 audiovisual devices, of which not more than 1 audiovisual device is located in any 1 room, and no such audiovisual device has a diagonal screen size greater than 55 inches, and any audio portion of the performance or display is communicated by means of a total of not more than 6 loudspeakers, of which not more than 4 loudspeakers are located in any 1 room or adjoining outdoor space;

Even after the church said they would not charge admission to offset the cost of the food they'd serve, the NFL still said, "Huh uh." 

It was because they were going to show it to a large group of people at a church on a screen larger than 55 inches diagonally. 

Thanks to Tony Jobe who sent this along:

NFL spokesman Greg Aiello said the league's longstanding policy is to ban "mass out-of-home viewing" of the Super Bowl. A major exception to the rule is made, however, for sports bars and other businesses that show televised sports as a part of their everyday operations.

"We have contracts with our (TV) networks to provide free over-the-air television for people at home," Aiello said. "The network economics are based on television ratings and at-home viewing. Out-of-home viewing is not measured by Nielsen."

The U.S. code on exemptions for copyright infringement can be found here:

http://www.law.cornell.edu/uscode/html/uscode17/usc_sec_17_00000110----000-.html

By the way, it turns out that you can watch the game on two televisions in your house.  And a thanks to Bill Hesson for the homework on finding that provision in the U.S. Code. 

Still, I think the NFL could have done a better job of conveying their position as to why they threatened legal action on the Fall Creek Baptist Church - and other similar gatherings around the nation.  The NFL doesn't need to be so heavy-handed.  In fact, if they had just cited the law instead of been so cold and callous in their delivery, I would have never brought this up in the first place. 

For as good of a public relations department the NFL seems to have, they clearly fumbled on this one... 

Look Out for the NFL Police This Sunday

The Super Bowl is Sunday and the NFL is continuing to confound the common fan/viewer with some pretty silly rules regarding parties and gatherings that will be watching the game. 

The NFL said no to a church group in Indianapolis who wanted to show the game to members of its congregation on the church's large screen projection television.  NFL officials spotted a flyer from the Fall Creek Baptist Church that advertised showing the game on the church's 120-inch projection screen.  The flyer used the term "Super Bowl" which is a major no-no (hence, all the advertisements that refer to the Super Bowl as "The Big Game"), and the church was going to charge a nominal fee to cover the cost of refreshments during the game. 

The NFL sent the church an overnight "cease and desist" letter.  When church officials offered to take the "Super Bowl" out of the flyer and to not charge the nominal admission, the NFL would still not agree to the church showing the game.  The reason?  The screen was larger than the NFL's allowable maximum size.   

The NFL has threatened a number of other churches across Indiana and around the country with legal action.  The league flatly said it will not allow any church group to show the game on their large screen projection televisions.  A number of planned gatherings have since been canceled. 

This was on the heels of an NFL ruling that Indianapolis Colts fans cannot congregate at the RCA Dome to watch the Super Bowl on a large screen projector. “It’s prohibited,’’ Greg Aiello, the NFL’s vice president of public relations said. “Mass, out-of-home viewing is not permitted by our television contracts.’’

The NFL reiterated their stance against mass-viewing of the game with a press release reminding not only churches and organizations, but people holding private parties of the rules of mass viewing. 

NFL PARTY RULES 

For groups that want to host Super Bowl parties -- other than sports bars and businesses that normally show televised sports -- here are the rules the NFL says must be followed:

• No admission fees (even to pay for snacks).

• Only one television (55 inches or smaller).

• No use of the words "Super Bowl" in promotional materials.

• No exhibition of the game in connection with events "that promote a message."

       From what I gather from these guidelines - I cannot have more than six or eight people invited over to my house via a printed invitation and have the 32" television in our family room tuned to the game, while also having the 20" television in our "lodge" also turned on to the game at the same time. 

       That also knocks out people who just went out and bought a 61" plasma television for the game, and who have invited a bunch of buddies over to watch the game and slam back a few beers.

       The NFL does allow sports bars and other establishments that regularly show football to carry the game and they don't have to adhere to the "mass-viewing" rules they set down for private gatherings. 

       Along with the NFL's continuing fight with cable companies over the stipulations they're placing on showing the NFL Network on cable systems, the NFL continues to alienate the people that hold the key to their future growth - the common fan.

       Their conviction on holding ground on their demands for 70 cents per subscriber for cable systems to show the network could be viewed as admirable by some, but their "mass-viewer" rules for groups watching the game is downright asinine.

       I truly believe the NFL is slowly losing their grasp on reality... 

More About Mobile TV and Mobile Video On Demand

"Television as we know it today will become obsolete in the next 10 years."  Bill Gates, November 10, 2006

As I pointed out in my post on the Consumer Electronics Show recently held in Las Vegas, personal viewing units supporting Mobile Television and Mobile Video on Demand were the rage among several companies at this year's show. 

And now according to Understanding and Solutions, a U.K. based specialist information and consulting firm who tracks worldwide developments in the media, consumer electronics and digital communications, the total annual worldwide revenue for Mobile TV and Video on Demand programming will collectively reach $18 billion dollars by 2010 with the bulk of the growth coming from the United States, Great Britain and France.   

The basic differences between Mobile TV and Mobile Video on Demand are simple - Mobile TV will allow you to access television programs as they happen.  Sporting events, live programming, full show programming.  Mobile Video on Demand will allow you to "dip in and dip out" by downloading snippets of programs, music videos, even specific performances on a given show.  It is also big with gaming enthusiasts who can download quizzes and other types of interactive games. 

The 18 billion dollar figure does not take into account the revenues generated by advertising, sponsorships and added interactive services.  So the amount of generated revenue could be much higher. 

With Mobile TV, watching a live sporting event on a personal viewing device is what very well could be what drives the market.  Considerable interest was shown in Europe for Mobile TV devices during the 2006 World Cup tournament.  And at that time, only one Mobile TV broadcast - 3 Italia from Italy - had the capabilities of showing Mobile TV content over its WalkTV system.  Today, 3 Italia has over 500,000 subscribers to it's Mobile TV and Video on Demand programming.  But that's still less than 10% of 3 Italia's total user base. 

While smaller ventures have started in Germany and in Great Britain, the world's most successful Mobile TV service was based in South Korea.  There, TU Media's highly successful service boasts over 3 million subscribers. 

In the U.S., Verizon will launch their V Cast Mobile TV service sometime in the second quarter of 2007 utilizing Qualcomm's MediaFlo system.  Verizon already has a V Cast music service that allows for downloads of music and the V Cast Video on Demand that allows for downloads of music videos, highlights of shows, replays of newscasts and other quick down-loadable video segments. 

Like other Mobile TV providers, Qualcomm's Media Flo system will feature the Digital Video Broadcast - Handheld (or DVB-H) format which features excellent error correction capabilities, power efficiencies, and high scalability.  The DVB-H format will allow upwards of 80 channels to be accessed by a person with a personal mobile viewing device. 

As Mobile TV catches on there will be a larger demand for that format, much more than the Video on Demand services.  Understanding and Solutions peg the revenues from Mobile TV to be four times times higher than Mobile Video on Demand by 2010. 

Still, some are doubting the current mobile phone infrastructure can handle the bandwidth needed to pull off Mobile TV.  Right now, MobiTV - which is featured on cellular carriers such as Cingular/AT&T and Sprint/Nextel - is offering broadband video capabilities bringing the convergence of movies, television and music to both cellular phones and to personal computers. 

With the convergence of telecommunications and personal computers in the coming months, people will be able to stop and watch a live newscast, sporting event or television program on their laptop/phone/personal viewing device.

Considering where we've come from in the nearly 70 years of commercial television broadcasts, it's safe to say that we will see some monumental changes in how we watch television in the next 10 years.  The biggest losers in this?  Cable companies and satellite providers.  Actually, the satellite providers may not be hurt as bad as there will continue to be a need for satellite feed programming.  However, cable companies are already gearing up for the changes to come by offering high speed internet and tele-communications services in addition to their cable television offerings. 

The changes to come in television technology will be exciting and daunting at the same time...

Sinclair Broadcasting Vs. Cable Providers

One of the more interesting skirmishes going on in the world of television these days has to do with the one between Mediacom cable and Sinclair Broadcasting.  Sinclair broadcasting has denied Mediacom to carry the signal of 22 of their stations in eight states unless Mediacom pays the broadcaster $1 million dollars above and beyond what the cable provider is willing to pay. 

         It hasn't impacted any television viewing here in the Quad Cities television market, but it has in the Des Moines and Iowa City/Cedar Rapids and Waterloo markets - especially in regard to Iowa Hawkeye Basketball. 

         I first heard about the simmering feud between the two companies when I was having a beer with Scott Schroeder one evening just before Thanksgiving.  As a Iowa basketball season ticket holder, Scott was telling that he got a form letter from Iowa Athletic Director Gary Barta explaining that his department was looking into contingency plans if Mediacom drops KDSM in Des Moines and KGAN in Cedar Rapids from its line-up. Both stations are contracted to show Iowa basketball games in their local markets.

         I said, "What?! Hold it - what's all this about?" Scott explained to me that it had something to do with those two stations not broadcasting with a digital signal yet. I was incredulous on two fronts - one, that these two stations aren't broadcasting in digital; and two, that Mediacom would do something like that.

         I did some digging and found out that the real reason is that Mediacom is upset at the Sinclair Broadcasting Group who has demanded the cable company pay a premium above what the cable company is willing to pay to carry the KDSM and KGAN signals on their system. Mediacom and Sinclair are embroiled in a lawsuit that the cable company is accusing the broadcasting group of violating anti-trust laws for strong-arming Mediacom into making what they deem as excessive payments to Sinclair.

          Just before Thanksgiving, a Federal judge refused a request by Sinclair to stop the lawsuit:

http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=2006611220373

          On the day after Thanksgiving, Mediacom announced that it would show same-day, tape-delayed broadcasts of Iowa games in Central and East Central Iowa through an agreement with ESPN:

http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=2006611250338

          An even more detailed article on the situation was chronicled in a later Des Moines Register article.  Officials from both Mediacom and Sinclair Broadcasting had been summoned to Washington for a meeting with the Federal Communication Commission to head off the Dec. 1 midnight deadline for Mediacom to pull the plug.  After that meeting, both parties agreed to extend the deadline to January 5, 2007.  After continued talks throughout the month of December proved to be fruitless, Sinclair told Mediacom to "pull the plug" at midnight on January 5.

          One of the interesting aspects is that Sinclair began offering people in the Central and East Central viewing areas a $150 rebate to pick up DirecTV:

http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=2006611260339

         And why did Sinclair not make the same offer with DirecTV's main competitor, Dish Network?  Because Sinclair and Dish Network's corporate owner - Echostar - were embroiled in their own little skirmish regarding the carrying of local Sinclair owned stations over that satellite provider's system.  That dispute was just resolved last week.

         I understand that Mediacom is offering free "rabbit-ear" antennas to consumers who want to pick up the local stations (See article here.) But KGAN is one of the WORST stations to pick up with even a top-of-the-line, over-the-air broadcast antenna.  My father-in-law lives just south and east of Cedar Rapids and he gets horrible over-the-air reception with KGAN. 

         And it's not just Mediacom who has been having trouble with Sinclair Broadcasting.  Time-Warner was been told they have to shut down retransmissions of local channels beginning January 12.  But an eleventh-hour agreement to extend the current agreement ended that stalemate.   

        And Comcast Cable has been told they have until February 5, 2007 to pay Sinclair more money for the retransmission of local stations over that cable providers service or be forced to drop the signals altogether. 

        Iowa's congressional delegation has urged Sinclair Broadcasting to enter into binding arbitration with Mediacom to get the impasse settled.  Mediacom appealed to the Federal Communication Commission to force Sinclair to allow the local signals back on the cable provider.  That appeal was subsequently denied.   

        Mediacom then urged Congress to intervene over the Federal Communication Commission's ruling, while also agreeing to go to arbitration with the FCC's Media Bureau (something they had resisted up to that point).  But a few days ago, Sinclair chairman Dave Smith wrote Congressional members in the affected states to "back off". 

           In a press release after sending the letter to Senators and Congressmen, Smith said "Mediacom, having failed in both the courts and at the FCC, would now try to obtain intervention from the legislative branch of the federal government is not surprising.  Mediacom's efforts represent nothing more than the desperate attempt of a private enterprise to seek congressional assistance to remedy its failure to reach agreement during private negotiations."

        Sinclair Broadcasting, some of you may remember, was the group that ordered all of its stations to air an anti-John Kerry documentary in the days leading up to the 2004 Presidential Election. They also pulled the plug on a "Nightline" broadcast with their ABC affiliates where the names of those killed in the Iraq war were read. Sinclair deemed the broadcast to be "anti-war".

       Sinclair seems to be holding the cards in this matter.  The corporation is very close to the Bush administration and the favorable rulings by the FCC seem to reinforce that notion.  Still the big losers are the American public.  If the FCC says that Sinclair is justified in charging the re-transmission fees they're seeking, Mediacom and other cable companies will have no choice but to raise rates. 

         And with the U.S. Senate conducting hearings on the rapidly rising cable rates (a nearly 90% increase in 11 years), the cable providers are stuck between a rock and a hard place.  They have to raise their rates to keep up with the payments they're making to networks and broadcast companies, but at the same time they're facing increased pressure from Congress to curb rising rates.  It's a no-win situation for them. 

XM - Sirius to Merge?

One of the more interesting pieces of news to come out of the recent Consumer Electronics Show in Las Vegas was the possible merger between the two satellite radio companies - XM and Sirius.  Rumors have floated for sometime that the two satellite radio companies may be in low-level talks to merge the two entities.  But the talk about a possible merger seemed to be more prominent at CES.

Sirius had a good year in 2006 with an 82% increase in subscribers.  On top of that, Sirius gave its marquee star Howard Stern $83 million in stock bonuses to share with his agent for helping the satellite radio company surpass their subscriber projections for the year.  Stern and his agent received over 22 million shares of Sirius stock.

XM ended the year short of subscriber projections, but it was still ahead of Sirius in subscriptions (7.63 million vs. just over 6 million).  XM also had missteps that included a forced modification of hardware to bring it into compliance with the company's Federal Communications Commission license, and a messy resignation of board member Jack Roberts.

Still, both companies are hemorrhaging money because of lower than expected advertising revenue.  However, Sirius' advertising income quintupled in 2006 vs. 2005 from $6 million to $30 million.  Coupled with subscriber sales of about $650 million, the company turned a positive cash flow profit for the 4th quarter of 2006.  However, it is still far below the $1 billion in annual income the company needs to offset previous and projected losses. 

One person is not so certain a merger would go through.  Ryan Saghir of Orbitcast.com listed five reasons on his site over a month ago why a merger between XM and Sirius would never go through.  Some of his reasons are pretty cogent. 

However, Wall Street is taking notice with the on-going conversations between XM and Sirius.  And Sirius chairman Mel Karmazin is not down-playing the talk of a possible merger.  "We are responsible for acting in shareholders' interest, and creating value," Karmazin said. "One of the ways you create that value is through consolidation – particularly in a fragmented industry like the radio industry."

And FCC chairman Kevin Martin is not certain they would allow a merger of the two companies (read here).  The precedent is the FCC's decision to block planned the merger of the two satellite television providers Dish Network and DirecTV back in 2002.

If a merger were to go through I'd probably sign right up for satellite radio.  The choices on both systems are too numerous for me to make a decision on right now. 

Merging the two systems would definitely be in the best interests of electronics manufacturers who are also planning on including satellite radio in home stereo and surround sound receivers.  At this moment, the manufacturer's hands are tied figuring out whether to make their products XM or Sirius compatible.  It's beginning to be a minor mess in the electronics world, and one that could get bigger if satellite radio subscriptions continue to grow.   

CES - 2007

The 2007 Consumer Electronics Show was recently held in Las Vegas.  It was my 21st year attending the annual show which celebrated its 40th anniversary this year.  Since my first show in 1987, the show - and the city of Las Vegas - have both changed dramatically.

But even as things change, sometimes they stay the same.  As in 1987, video products still dominate the show floor at the Las Vegas Convention Center; but computers, whole house control, personal communication devices and accessories make up the bulk of what is shown at CES.  Most of the main stream companies in the specialty audio/video world either do not show at CES any longer, or they show at a hotel near the convention center.  This year, as with last year, my company showed our products in four suites on the 28th floor of the Las Vegas Hilton. 

The highlights at CES were many including the "mine is bigger than yours" posturing going on between Sharp and Panasonic.  Panasonic showed a 103" Plasma display unit (above), billing it the world's largest plasma television, beating out the 102" Samsung plasma display unveiled at last year's CES.  The Panasonic plasma retails for about $70,000, but is significantly less than the over $100,000 price tag the Samsung plasma was introduced at last year. 

(Just to give you an idea as to how plasma display prices have dropped over the past year - LG's 71" plasma display now has a suggested retail price of $15,000.  It was $75,000 when it was first introduced last year.) 

Sharp immediately unzipped their pants to unfurl a 108" LCD display unit.  This unit will be available in the fall of 2007 and a suggested retail price hasn't been announced.  But guesses are that it will retail at or around $75,000. 

The biggest problems with these units are - of course - the price, and the size.  Getting them into any conventional home will be a nightmare.  Plus the fact that they weigh so much, special installation brackets will not only be needed to hold the panels up, but it could be that a fork lift may be needed to maneuver the unit to it's final resting space.  That's not to feasible in the vast majority of today's homes.

LCD displays have come a long way in the past year in terms of size (many units over 40" are available on the market place) and in technology.  Manufacturers have finally doubled the frame rate on the televisions from 60 frames per second to 120 frames per second to cut down on the motion artifacts that plagued LCD panels - especially during fast motion scenes or sporting events.  This now puts them on a par with many plasma display units in terms of picture quality.

Industry forecasts call for nearly 20 million flat panel displays to be sold in the United States in 2007 with 75% of those units sold being LCD displays.    

Other big revelations at CES this year included the Apple Iphone, but Microsoft and Sony announced plans that will close the gap between television and personal computers to allow complete access to communications and internet use, as well as distributing personal video content to the user. 

Users will be able to watch their favorite television programs on demand on a personal viewing device, similar to a laptop computer.  And in the future they may be able to watch sporting events live as they happen.   Industry experts say this process - called "connectivity" - is the next wave of how a person will view television programming. 

Microsoft's Bill Gates also heralded the arrival of products that will connect the video, entertainment and gaming experience all bundled into the Xbox 360 game console.  Similar to a personal viewing device, users will download content from Microsoft's Xbox 360 Live web site. 

Panelists on a television program that was broadcast live to Las Vegas hotel rooms during the Consumer Electronics Show said the cable television industry and satellite providers could ultimately be the ones that feel the hurt over personal viewing devices.  And with the mini-skirmishes going on now between cable providers, satellite providers, broadcast companies and specific networks, "connectivity" could play a big role as to how these factions work together in the future.  (I'll have more on the little wars going on in the broadcasting world in a future blog post.)

The Venetian was the home to the high-end audio exhibits this year.  I talked to a number of dealers and manufacturers representatives who spent some time at the Venetian.  While they all said it was a great change from the Alexis Park in terms of display areas, it was so overrun by techno-geeks and end-users that it was difficult to get around in the hallways and to talk with manufacturers one-on-one. 

For years, I've been sold on DLP technology over other formats for rear or front projection televisions.  I'm starting to change my mind.  One of my companies, DreamVision, unveiled a new front projector - the DreamBee - (I know, it's a stupid name) that featured a three-chip Digital Direct Drive Image Light Amplifier, or commonly known as D-ILA.  The picture on the DreamBee was stunning.  We had industry press people and critics saying it was the best video display at the show.  I have to say I was overly blown away at the picture quality of the unit, as well. 

The biggest obstacle with D-ILA continues to be the price.  D-ILA projection units still are much higher priced than their DLP counterparts.  (The suggested retail price of the DreamBee is $7799, while DLP rear projection televisions are beginning to come down below $2000.)  And as DLP projection televisions continue to drop in price, many of the ones on the market are still very good for the price. 

However, the biggest advantage with D-ILA is that you don't get the "rainbow" effect from the color wheel DLP televisions use, the contrast ratio (the mathematical formula that figures the difference between the darkest blacks and the brightest whites) is very high on D-ILA units vs. DLP, and the colors are about as true as you can get on any television.

The HD-DVD vs. Blu-Ray format war for high definition DVD's was still hot and heavy in Las Vegas, even though most video aficionados have declared HD-DVD the winner when it comes to providing top drawer video content.  Blu-Ray, with their higher capacity for storage of digital video information, may be relegated to the computer gaming industry and multi-media storage; while more companies are pushing HD-DVD for movies. 

Blu-Ray isn't going out with a whimper, however.  During a press conference at CES, the Blu-Ray consortium - headed by Sony - announced the format war was over and the winner was Blu-Ray.  However, their creative mathematics hid the fact that more companies - both electronics companies and movie studios - have embraced HD-DVD over Blu-Ray. 

Blu-Ray pointed out that their software sales were up over 700% in 2006 vs. 2005.  But most of that had to do with the introduction of Sony's Playstation 3 which uses Blu-Ray discs for much of the games.

For those of you who are confused about the formats and would like to have one video player to play both, LG Electronics introduced a dual format high definition DVD player. The player will be available in the first quarter of 2007, but will carry a hefty $1200 price tag.  I think you'll see more of these combo machines from other companies, but it's my firm belief HD-DVD units will be the choice of most manufacturers and end-users in 2007 and beyond.   

There's so much more that I could go on and on about that was featured at this year's CES.  But the best thing to do is to go to your local audio/video store and see the bulk of these products when they're introduced later this year.  Going to CES is truly like looking into the future. 

The NFL Network

I've been following some interesting aspects in the world of television broadcasting over the past few weeks.  There are a number of little "wars" going on right now between different factions - cable companies vs. satellite providers; broadcast companies vs. cable companies; satellite providers vs. broadcast companies; networks vs. cable companies.  The posturing and preening going on in television broadcasting right now is bordering on the absurd.

        I've shared some of my insights with some friends of mine who are part of a little group of Iowa Hawkeye fans who talk about Hawkeye sports and/or other things going on in the world. 

       

       A couple of the guys felt the information was pretty interesting and suggested I put it on my blog.  One of the things that I've been talking with them about is the situation with the current fight that is pitting the NFL Network versus cable television companies. 

         The NFL Network is available in about 1/3 of the nation's homes right now, primarily over Dish Network and DirecTV, but also with cable providers Cox and Comcast. But the remaining large cable companies (Time-Warner, Cablevision, Charter Communications, Adelphia, Bright House and Mediacom) are balking at the demands the NFL is putting upon them to carry the network on their systems.

         The NFL wants the network to be part of the cable provider's expanded basic service, while cable operators want it to be part of their digital service.  Cable operators want the NFL Network and the upcoming Big Ten Network to be choices the viewers will make if they want the new networks or not. 

         The cable companies are already under fire from the U.S. Senate about rapidly rising basic cable rates.  The proposed pay package the NFL Network is demanding from cable operators is causing a number of them to balk at the league's demands.  Right now, the league is demanding .70 cents per subscriber from the cable companies (up over 300% from the initial demand of .20 cents a subscriber in 2004). And cable companies believe that's too high of a price for a network in which the pertinent content is broadcast only six weeks a year.

          The NFL is continuing to have negotiations with cable companies - especially those in states where NFL teams are located. Case in point - Wisconsin. The NFL has designated that "home markets" can receive the NFL network game via over-the-air broadcasts.

          However, in Wisconsin, the designated "home market" is Milwaukee and Green Bay, which effectively left the rest of the state out in the cold (so to speak) when Green Bay met Minnesota a couple of weeks ago. Packer fans proliferate the state of Wisconsin and the outcry was none louder than in Madison, a market that is three times the size of Green Bay and home to arguably more Packer fans than those in the Green Bay area.

         Charter Communications, the local cable provider in Madison, has ceased negotiations with the NFL network saying that the league is "blackmailing" and "strong-arming" cable companies into paying the fees to show the games of interest.  They, like other cable companies, are not willing to pay out more money that would, in turn, raise cable rates - again.          

        The director of communications for Charter said that the NFL is continuing to demand the network be part of an expanded basic plan, when the cable companies want it to be part of their digital package. 

        (Locally, here in the Quad Cities and across Iowa - I've heard that Mediacom is wanting to package the NFL network as part of the new sports tier of channels that include ESPNU, CSTV and the Fox College Sports channels. No word yet if ESPN Classic would be brought back as part of this package.)         

          Ironically, Charter was one of the first cable companies to carry the NFL network in 2004, only to drop the network when the NFL demanded that it be part of Charter's expanded basic cable package instead of part of the digital package Charter was offering subscribers to show the network.

          Right now, ESPN gets $3.00 per subscriber for their basic service of ESPN, ESPN2 and ESPN News - by far the highest per subscriber fee charged to cable companies. At .70 cents a subscriber, the NFL network would be the fourth priciest cable network providers would carry.

          The Wall Street Journal said that the NFL left about $400 million on the bargaining table with over-the-air networks during their last negotiations to be used in reserve for the six Thursday night and two Saturday regular season games the network is going to show each year for the next three years. If cable companies don't pick up the network, the NFL could be out as much as $250 million dollars.

          And that doesn't seem to faze NFL owners who are showing solidarity behind the NFL's negotiations with cable companies. New England Patriots owner Robert Kraft recently told the Wall Street Journal that NFL owners have no problem waiting a year or two for positive results, clearly a sign the owners will stand firm in negotiations with the unsigned providers.

          "There's a desire and a need for this," Kraft said. "I don't think we should sell our soul for a bowl of porridge in the short run."

          It will be interesting to see who blinks first in this...