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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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