Published in Issue 5.04 Part 2, May 14, 2003

Australia's Foxtel Selects OpenTV for New ITV Service
--OpenTV CEO, James Ackerman, Explains the Significance of the Deal

Australian pay-TV provider, Foxtel, announced last week that it will deploy a raft of OpenTV technologies to support the ITV service which it aims to roll out next year on its existing digital satellite network and its planned digital cable network. As part of the deal, OpenTV will also provide Foxtel with project management and other professional services. Foxtel will deploy OpenTV Core 1.1 (set-top box middleware), OpenTV Streamer (real-time carouselling technology), OpenTV PVR Extension (supports the deployment of DVR's on a network), OpenTV Account (ewallet software that supports tcommerce, self-provisioning, and direct- response TV), OpenTV Publisher (enables development, maintenance, and broadcast of ITV apps), OpenTV H20 (thin-client STB client-server solution), OpenTV Advertise (manages, schedules, and broadcasts ITV ads) , OpenTV Gateway (enables email, chat, and tcommerce transactions via the set-top box), and a number of stand-alone content applications that enable multi-streaming and news-on-demand. (Note: Foxtel also plans to use a number of technologies from News Corp.- subsidiary, NDS, to support the new service: NDS will supply Foxtel with its VideoGuard conditional access technology, its iVideoGuard conditional access system for ITV, its StreamServer digital broadcasting playout-management system, and its Value@TV ITV headend. NDS will also work with Foxtel to develop an EPG for the service, and will act as primary systems integrator for the introduction of new set-top boxes on Foxtel's networks. In addition, Foxtel plans to begin deploying NDS's XTV DVR platform, which is also the basis of the Sky+DVR, around a year after it launches the new service.) OpenTV CEO, James Ackerman, told [itvt] Saturday that the deal is significant because it involves the "broadest range" of solutions OpenTV has been asked to deploy to a single customer to date. The deal clearly demonstrates the success of OpenTV's ongoing strategy of diversification, he added: "By diversifying our revenue into new technology, content applications, and platforms upon which operators can generate recurring revenue in which we share, we're able to diversify our revenue and become even less dependent upon the middleware."

Foxtel recently purchased the ITV assets of communications provider Optus, after the latter decided to halt the 3000-subscriber ITV trial (enabled by technology from OpenTV competitor, Liberate) which it had been conducting in Sydney since early 2001. That trial, which offered customers VOD, email, video-dating, local real-estate info, gaming and enhanced-TV applications for Aus$15 a month, is said to have cost Optus approximately Aus$200 million. According to Ackerman, Optus' abandonment of ITV had to do with the shifting priorities of Optus' parent company, Singapore Telecom, which wanted to focus on telephony, multichannel cable television, and broadband Internet access. However, Ackerman said, "for Foxtel, ITV is an important part of their growth strategy. Optus' decision not to pursue ITV actually became an opportunity for Foxtel." [itvt] asked Ackerman if there had been a lot of competition for the Foxtel business: "It was absolutely a competitive process and we were able to prevail," he said. "Ultimately, after looking at a number of options, which included Liberate, Foxtel decided to choose OpenTV, which we're obviously very happy about. However, it was by no means a slam-dunk that we would get the business. We had to demonstrate that we had a cable-ready solution--which, if Foxtel had been making its decision 2-and-a-half years ago, would have been very difficult for us. However, today our solutions are very oriented towards cable--and not just satellite as before--as is demonstrated by the cable customers we have now." Over the next few months, Ackerman said, Core 1.1 will be flash-downloaded to Foxtel's existing satellite set-top boxes and then flash-download to its digital cable boxes when those are rolled out, "so that there is a consistent platform on satellite and cable." (Note: Foxtel just announced that it has chosen Pace Micro as its primary set-top box supplier for the new service. See article in this issue.)

[itvt] asked Ackerman if he thought the shared Foxtel "win" with NDS augured well for OpenTV's chances of becoming DirecTV's middleware supplier, should News Corp. succeed in securing regulatory approval for its purchase of the satellite-TV provider: "If you look at BSkyB, Sky Italia, and the other satellite platforms and cable platforms that News Corp is involved with, in the main they have deployed a combined OpenTV middleware/NDS conditional access solution," he said. "But can I guarantee that that's going to happen in every case? Absolutely not. It would be premature to say so." At any rate, Ackerman said, we should be hearing more from OpenTV in the coming months, as the company is set to come out of the "stealth mode" it adopted post its change in ownership (the company is now owned by Liberty Broadband Interactive Television, a subsidiary of John Malone's Liberty Media) and its purchase of Wink and ACTV (the latter deal is expected to be finalized in June): "After the ACTV deal is completed," Ackerman told us, "Peter (Boylan, LBIT's CEO and OpenTV's chairman) and I will get on the road and start telling the story to investors again. We've been through a very difficult period."

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