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Sonic's President Ponders Future Of Roxio

1/24/2011 12:01:00 AM Eastern

LAS VEGAS — Among all of the companies that attended
the 2011 International CES, Sonic Solutions
had to be one of the busiest.

Just days prior to the event, integrated program
guide and copy protection giant Rovi announced plans
to acquire the company that itself had acquired digital
compression format resource DiVX a few months before.
Meanwhile, Sonic’s RoxioNow video Store Front
partners, including: Blockbuster On Demand, Best
Buy CinemaNow, and Sears and Kmart’s Alphaline,
appeared on connected TVs and Blu-ray players all
across the show floor.

On Rovi’s end, Samsung said it had integrated
Rovi’s TotalGuide system into its SmartTVs and is
collaborating on an Advertising Service via the Rovi
Media Cloud. Samsung will use Rovi entertainment
data and advertising capabilities, a Rovi TotalGuide
component, to enhance consumers’ content discovery
experience on Smart TVs within the Samsung
“Your Video” portal.

Though further details for the combined Sonic and
Rovi operations were still sketchy as approvals await,
the combination should deliver a powerful combined
force in the world of online digital video transactions
and delivery to a wide range of devices.

For a closer look TWICE pinned down Sonic stratgey
president Mark Ely for the following Q&A interview:

TWICE: What did you think about Rovi’s acquisition
of Sonic a few days ago?

Ely: There’s not a whole lot I can say about it at this
point, other than it is a really good match. I think Sonic
has some great consumer-facing brands, and great
over-the-top video services, and Rovi has a tremendous
patent portfolio, great position in the CE space,
great guidance and recommendation engine technology,
so they dovetail very nicely together. I can imagine that as a combined company there will be a tremendous
number of additional products and services that we will
be able to license to customers to better the end-user experience.

TWICE: As that dynamic starts to solidify, do you have
a feeling for who is going to be leading whom in the relationship?

Ely: I think it is too early in the process to really know
exactly how things are going to be combined. We’re starting
a fairly rapid process of looking at that integration, and
I think it will be through the next quarter or so before we
have a sense of how it is all going to look. But the whole
team at Sonic is really looking forward to working with
them, and we’ve been very impressed with how well they
understand our space and have been actively engaged in
putting together a great company.

TWICE: Rovi has an extensive portfolio of IPG technologies
— is that something you see integrating easily
into your various [RoxioNow] services?

Ely: In particular with the RoxioNow platform, everything
is set up to run through a set of Web APIs as a service, so
it is very easy to integrate into third-party recommendation
engine technologies. It’s also easy for partners to build
our services into their products. I think that bodes well for
a quick integration with Rovi products and services.

TWICE: Prior to the announcement of the acquisition
plan, Best Buy held a significant stake in Sonic. Will they
now become investors in Rovi?

Ely: In a real general sense, Sonic shareholders will
now become Rovi shareholders, and they will be given
an opportunity to acquire Rovi shares or a combination of
cash for their selling stock.

TWICE: Sonic is a member of the Digital Entertainment
Content Ecosystem (DECE), which has just announced
the UltraViolet content-locker initiative, how do you see
that fitting in with what you are doing with RoxioNow?

Ely: Our vision and the vision of UltraViolet are identical.
What we have today is a platform that supports a wide
number of devices for purchase or rental. We support the
specifications that have been published by UltraViolet,
and we are one of the first service providers to be engaged
in what are now UltraViolet products. We think that
having more flexibility around purchased content is going
to give consumers more reason to purchase.

TWICE: What’s your read on how Disney will ultimately
deal with this?

Ely: It’s to be determined. Disney’s [with the competing
KeyChest system] has the same general goal — how
can we give consumers a good value proposition for
movie purchases? I imagine that through the RoxioNow
platform we would support UltraViolet and KeyChest. In
some ways, we can bridge any of those solutions together
across devices to provide an UltraViolet-like experience.
The two systems are not mutually exclusive.

TWICE: One of the big stories of CES has been the
emergence of the tablet PC. How is Sonic going to handle
that new medium?

Ely: We think that tablets are a great viewing platform
for premium content. The Dell Streak is shipping with the
Roxio Store Front so you can access movies on Dell tablets.
We are doing some prototype demonstrations with
the iPad. Our DiVX technology is distributed on the Samsung
Galaxy tablet, so we are enabling quality playback
there. We see tablets as a major entertainment device,
and will probably be one of the most popular devices
when it comes to watching longer-form content. We will
be deploying our Store Fronts across a wide range of operating
systems over the coming quarters. Anything that
is going to end up in a tablet form factor — our customers
want to make sure they are going to be able to deliver
movies to those devices.

TWICE: Do you envision extending your software to
bring additional capabilities for these devices beyond
movie and TV show delivery?

Ely: Our focus is going to be on the digital delivery of
content you can typically get on DVD and Blu-ray Disc,
as opposed to doing things like multichannel live events,
for example. What we see as the use model is giving consumers
the ability to very easily browse for and rent or
purchase content on any device and then watch it on any
other device you might have, both in the home and outside
of it. But these new form factors, I think, will encourage the
consumption of more digital entertainment.

TWICE: Do you see the mobile environment as your
biggest opportunity on the horizon, then?

Ely: In terms of unit volumes, absolutely, just because
there are so many mobile devices that are shipping. We
are deployed right now on over 20 million Blu-ray players,
digital television sets and mobile devices, and the category
that we see growing fastest is mobile, because when
we turn on a new platform like iOS or Android, we can get
to millions and millions of devices very quickly. We think
consumers will want to consume more and more video
content as Wi-Fi, 3G and 4G services come online.

TWICE: Are you doing anything in your software to enhance
that quality for mobile devices?

Ely: We do. We use adaptive streaming, and that is
a core part of our value proposition … optimum
quality video for whatever the connectivity
rate is.

TWICE: What else is on the horizon?

Ely: We are a premium partner for Intel and
Warner Bros. in the Intel Insider initiative and
are working with them to get 1080p high-definition
video in movies to the PC as part of the
environment. That hasn’t been possible until
now because the digital rights associated with
the PC just haven’t been robust enough [for HD
downloads]. With Intel Insider there is a hardware
root of trust for any sort of digital content
that comes down to the device, and that’s given
the studios the confidence to open up the
rights for HD on the PC. That’s something new
that we are adding to our ecosystem.

TWICE: What is the status of that use in the
marketplace? Are more people watching movies
on PCs today?

Ely: There are a lot of laptop users that can
benefit from this, and there are some PC watchers
at home that use Media Center-style systems
connected to their big-screen televisions.
I wouldn’t say that use is taking off, exactly, but
it is a key part of the ecosystem, and part of the
value proposition to be developed further.


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