for Interactive TV
conversation with Andrew Wallace at Pace Micro about
world interactive TV development trends.
Wallace serves as the vice president of global marketing
for Pace Micro Technology, the world's largest
manufacturer of digital set-top boxes for interactive
television services. Each production run of any Pace box
is made-to-order, so network operators alter the box to
fit their network rather than change their network to fit
campaigns targeting digital satellite, cable, and
terrestrial operators internationally, Wallace spends
less time at Pace headquarters in Yorkshire than he might
like. The good thing about globe hopping, however, is
that it affords a global vision.
far-flung appointments, Wallace spoke with me by
telephone shortly before NAB2000.
KF: Let's start
with the role of Pace in the North American television
marketplace. How do you see yourselves?
WALLACE: We are a
catalyst for change. U.S. television operators must
invest in broadband services, and they want to know what
their options are for digital boxes. We have digital
compression licenses from General Instrument, Scientific
Atlanta, Silicone Graphics and others, so our presence in
the U.S. market increases competition.
KF: What is the
most significant recent trend in interactive
stands out is the rapid change in the middleware
business. I can name three huge things in the last few
Microsoft's new relationship with NDS, in which they'll
work together to deliver middleware and browsing
capability to lower-end set-top boxes. Microsoft is
working on this with NDS as NewsCorp suppliers [for
The second thing is
that OpenTV just bought Spyglass for its web browser. We
provide a reference platform for OpenTV, and we're
already seeing great interest from TV operators worldwide
in a Spyglass-enabled OpenTV box.
The third thing is
Liberate's high-speed cable implementation of middleware
for the national rollout of digital television by Cable
& Wireless, starting in Manchester. Meanwhile,
Liberate has bought MoreCom [broadband Internet on TV
with a suite of enhanced TV applications].
Fortunately, we have relationships with all of
deals in the past few months indicate how fast the market
is moving. What this means is that the ability to
integrate new technologies into set-top boxes is being
KF: What are the
market forces underlying these changes?
digital dawn has caused an awakening to the importance of
the interactive TV market and how fast it can grow.
A 60 percent a year
growth in the interactive TV market is causing the major
players to start looking at every way possible to
establish a position as the market evolves. With the
market is evolving so fast, any opportunity to change the
competitive landscape over each quarter is valuable.
That's why Pace recently bought VegaStream for voice over
KF. What would
be another example of this force at work?
WALLACE: Take home
networking. For about a year, we've been working with an
array of partners, from retailers to car companies, to
put together systems that use the set-top box as the
gateway for the home network. This means less contention
for the TV screen, so activities like home shopping can
be done with other devices, like the ShoppingMate service
on a PDA that uses a wireless link to a Pace box. The STB
serves as a node and resource for other devices, because
the box has more processing power and storage capacity.
The rapid evolution
in middleware is changing the home networking landscape
even as we speak. The emergence of the MHP
[Multimedia Home Platform] standard for DVB will
make it easier for everyone, such as advertisers, to
create programming for multiple platforms without having
to produce multiple versions of the content.
KF: All this
presumes a two-way box, but until recently, the mere
mention of a set-top was anathema to terrestrial
WALLACE: We have
not talked about one-way boxes with any broadcaster in a
few years. Since it's impossible for a TV operator to
increase revenues through a box if they can't talk to it,
we would regard it as inconceivable for a box not to have
any return path.
KF: Is this the
case in America, too?
terrestrial boxes are already shipping in the UK for the
ONdigital service based on DVB-T. American broadcasters
are now talking to us about building for them an ATSC box
with a phoneline return. They see what increased
competition in interactive TV is doing for the business
in western Europe, how it's driving significant
innovations in both interactive services and marketing
strategies, so Americans are very open to looking at new
ways to compete.
across the pond, what do you see as the key market forces
shaping interactive TV in Europe.
WALLACE: A major
force on the continent is the renovation of the cable
systems, especially in Germany and Belgium, accompanied
by an accelerating rollout of digital services with
established business models. As a result, we're starting
to get fair competition between the cable and satellite
platforms, such as in Italy.
Another major force
is that we're seeing the five main players in interactive
TV -- OpenTV, Liberate, Canal+, Microsoft, and PowerTV --
all starting to expand their marketing efforts in the UK
and western Europe.
however, still has a pretty low digital penetration per
capita. Digital TV is not driving market development in
eastern Europe as it is in western Europe and America. In
a year or two, eastern Europe may begin catching up, but
that depends on their economies.
KF: If you look
five years down the road for the U.S. and Europe, what do
WALLACE: I see the
growth of digital television rising toward 60 to 90
percent penetration in the UK and western Europe, and
perhaps 20 percent penetration in the United States. I
see the evolution of the set-top box into a home gateway
for high-bandwidth video, data, and voice services.
Within the household, I see the emergence of the set-top
box as the central node for home networking.
Contributing to the
expansion of interactive television services surely will
keep Pace busy. So, Andrew Wallace will keep globe
hopping. Marketing a transnational corporation is not
exactly a spare-time job.