Masters of the 'media highway'

An Israeli encryption company is changing the world's leisure time.

By
March 17, 2007 20:24
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If you're the type who prefers to get away from it all, you'll probably not welcome the upcoming technological revolution, with its promised access to "all the media at any time and in every place." Look for a quiet forest instead. But if you love to be aware of the latest news, play hot videogames, watch your favorite movies and TV shows from around the world and surf the Internet from wherever you are, you'll be pleased by what's ahead. It will be "anytime, anywhere on any device" media, and you'll be a traveler on the world's "media highway." NDS, a company founded in 1989 by a group of religious Jerusalemites, most of them English-speaking immigrants, has blossomed into a leading provider of encryption technologies that enable content providers to enjoy the fruits of their labors instead of having them copied, downloaded and otherwise stolen without compensation. Spending a large chunk of its impressive revenues on research and development, and with a 34 percent share of the world market in this field, NDS has great influence on how the media revolution will work out. TODAY, NDS (the initials don't represent anything) is part of Australia-born media magnate Rupert Murdoch's News Corporation. Founded in 1989, the subsidiary has its headquarters in the United Kingdom and over 2,700 employees - including over 1,000 in Jerusalem's Har Hahotzvim industrial park and others doing development work in India, China and France. The managing director of the Jerusalem facility is Raphi Kesten, and about half of his employees, mostly engineers and technicians, are from English-speaking countries; some 70% are religious Jews. Ironically, a considerable number are so observant that they prefer to avoid home use of the technologies they themselves develop. "One can't stop the world," shrugs Abe Peled, the company's Israeli chairman and CEO, when asked whether he has thought about the implications of this revolution. Having a greater variety of things to watch, play and do in front of a computer or digital TV screen, and to see them in high resolution, people will be even less likely to get out of their chairs. The obesity epidemic will spread, and multitasking users won't have a moment's peace. Peled - an electronics engineer who spent years at IBM in the US, then returned to Israel and worked for the legendary former chairman and CEO of Elron, Uzia Galil, and less than a decade ago was picked by Murdoch to head NDS - says he is aware of these facts, but that there is nothing to be done. People will just have to use these electronic toys wisely, he suggests. Israeli cable and satellite TV subscribers will be able to opt for high-definition (HD) digital TV broadcasts by the beginning of 2008, according to officials at NDS. Among the company's new technologies, some already available abroad but not yet in Israel, are HD television over cellular phones and portable video players; Internet-based video that can be enjoyed in rooms that lack a computer; a special disk-on-key that transfers media for which one has purchased a subscription to a laptop computer that can be watched anywhere; the wireless sending of personal content - photos, music and the like - over a home network to screens in all the rooms of a house; and the integration of broadcast TV from around the world with Internet and advertising on a single digital screen. Users of NDS technology can record programs on one channel while watching another, halt them while children eat dinner, and then pick up where they left off without missing a scene. HD, FACILITATED by patented NDS technology, sets new standards for high-resolution viewing not only on TV, but also on the Internet and cellular phones. HD TV looks completely realistic. During the first-ever journalists' tour at NDS in Jerusalem, management stressed that they didn't need the publicity to attract new customers - who come largely by word of mouth - but to attract more highly qualified engineers and other professionals. About 40% of the staffers here don't live in Jerusalem, said Boaz Amram, a financial officer at NDS. The international company, with annual revenues of $600 million, is eager to invest some of the $500 million in its bank account to purchase relevant companies. Peled says that while the company has a strong base in North America and Europe, with millions of subscribers to content providers that use NDS technology, it has put a special focus on developing countries such as India and China, which have huge populations and a growing middle class. Hardware, in the form of set-top boxes (STBs or converters) have become much cheaper. It's worthwhile for providers to charge low prices to get a large volume of subscribers. "Some 500,000 new subscribers have been signed up in India in just four months. It's only the beginning," Peled said. Peled noted that its patented technology makes NDS the world's leading provider of conditional access to digital pay-TV. Its smart cards provide access to digital services while preventing piracy. The technology enables broadcasters, network TV operators and content providers to profit from the deployment of digital TV, including innovative solutions for digital video recorders, interactivity, secure broadband, home networks, and content on the go. NDS TECHNOLOGY secures $32 billion a year in pay-TV revenues, and there are almost 70 million active smart cards in use in 25 countries and 15 languages. The potential market for HD TV is huge, as there are 1.73 billion households around the globe with televisions - more, said Peled, "than the number of families who brush their teeth." Of these, 142.7 million are digital TV subscribers. The digital video recorder (DVR) is revolutionary, continued Peled. There are already 14.6 million households around the world with them, and 10 million with HD television. "It's hard to describe DVRs to the general public, because they remember VCRs (video cassette recorders) that ran on tapes and were hard to program. You can't compare those primitive devices with DVRs, which allow subscribers to easily record and replay digital TV, or record one channel while viewing another. Pressing a button on the remote, you can pause in the middle or rewind live shows, automatically record favorite shows with a click of the remote control and replay, order programs and movies through video on demand, and pay for movies you order only if you actually watch them." Its XSPACE technology offers "the best of Internet video on your digital TV screen." An electronic program guide (EPG) eliminates the complexity of gaining access to Internet content by integrating it with broadcast TV offerings. You can view video podcasts and blogs to thousands of streaming radio stations and video feeds all seamlessly. It is "everything on demand," said NDS executives. Interactive videogames can be accessed and viewed by subscribers to such services with highest-resolution HD technology. NDS's Xtremeplay technology can be deployed over satellite, cable or terrestrial networks, without having to buy DVD players. And suppliers are happy because the services are available only to subscribers. In addition to interactive games on demand, where betting over the Internet is legal such services can be highly lucrative. As the PC, and increasingly the laptop, becomes an important platform for viewing content, NDS has developed hardware and server-based software solutions. The VideoGuard Key is a USB disk on key that contains security and rights data. When you plug it into a PC's USB port, it can show specific programming for download. It can also transfer movies and other content between DVRS and PCs and a variety of mobile devices, including cellular phones. If you go to another person's home or office, just insert your own VideoGuard Key into his USB port to watch TV that you subscribe to at home. You can also set up a home network to move content among various STBs, DVRs, mobile and portable devices and storage systems. NDS's personal electronic program guides appearing on a digital TV can be programmed as visual files that can be viewed by pressing buttons on a remote control. It is not only icons that appear, but actual screens-within-screens that show you the action before you choose. Subscribers can create their own channels with schedules that reflect their preferences, or select programming to be recorded, played or deleted on their DVRs. Hundreds of channels around the world will be available; you will no longer have to depend on Israeli executives at Channel One, Channel Two or Channel 10 to decide what you can watch. Ads will be an option: If you are interested in buying a new car, for example, you can call up the model you fancy, view it from all angles and even order a test drive; ads may also be targeted by providers according to subscribers' preferences and habits. High-definition cellular phones will soon be offered with larger screens for comfortable TV watching. It'll even be possible to order programs by VOD. The NDS technology also allows improved parental supervision, as smart cards not only prevent certain channels from reaching subscribers, but can even delete such channels from onscreen schedule guides. There is a growing Israeli community that eschews Internet, third-generation cellular phones, TV and other media - the haredi sector. Can NDS customize hardware and software so that their rabbis would approve? Amram said NDS technology is perfect for this, due to smart cards and VideoGuard Keys. But nobody in the ultra-Orthodox or other religious communities has turned to NDS yet. If they want it, it will be easy to accommodate them, said Amram. Peled concludes: "The general public will soon get used to these media opportunities. Just as today we can't conceive of having only one TV channel, it will soon become normal to expect an unlimited supply of global media."

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