Consumers Prefer MPEG Digital Video, Study Shows; New Research Could Spur Entertainment Industry to Digitize More Movies.

SAN FRANCISCO--(BUSINESS WIRE)--Nov. 21, 1995--To help the converging entertainment and telecommunications industries untie the Gordian knot of video compression standards, four major telecommunications companies recently consulted the final authority -- the American consumer. The companies asked consumers to watch and rate the relative quality of movie clips which had been encoded in a wide range of compression algorithms and bit rates.

The study found that consumers prefer the picture and sound quality of both MPEG-1 and MPEG-2 formatted video when compared to VHS-formatted video, and they prefer MPEG-2 over MPEG-1. Consumers saw a greater quality improvement between the different algorithms than they did between different bit rates or picture resolutions.

The study showed that a bit rate of 3.0 megabits per second (Mbps) will provide the best improvement in perceived picture and sound quality over current storage and transport media, when taking into consideration movie content on a range of television set sizes as well as cost performance of a carrier network. The study also demonstrated that customers find video compressed with MPEG-1 and delivered at 1.5 Mbps -- the parameters for Asymmetrical Digital Subscriber Line (ADSL) network architecture -- to be very acceptable and prefer it over video on VHS format.

Pacific Telesis Video Services initiated the study and announced its results today on behalf of the four companies that funded the research -- Pacific Telesis Video Services, AT&T Network Systems, Bell Atlantic Video Services and NYNEX. ASI Entertainment of Glendale, California conducted the consumer study.

"Our companies undertook this research to help find the best standard for the digital compression of movies," said Himanshu Choksi, director for Pacific Telesis Video Services. "The industry needs to converge on a benchmark that produces the high quality picture and sound that customers and movie studios want, at a cost that telecommunications networks can support. Through this study, we've found that MPEG-2 video delivered at 3.0 Mbps is the standard that best meets those requirements -- a very important step for moving video-on-demand forward as a viable business."

For the research, approximately 400 consumers were selected from a random sample in the Los Angeles area, representing a broad demographic range in income, age, gender, family composition, and number of TVs and VCRs. Seated in small groups in a living room-type setting, the consumers watched a wide variety of movie clips on TV sets the same size as their own sets at home, as well as on two other popular set sizes. As they watched, the participants rated the picture and sound quality of movie clips on VHS format, and the same clips compressed using MPEG-1 and MPEG-2 algorithms. The MPEG-compressed content included a range of different bit rates (1.5 Mbps to 4.0 Mbps) and different picture resolutions (SIF, SIF Large and CCIR-601).

Equipment used for the study included the following: MPEG-2 video content was encoded on an AT&T R1.0 Program Encoder by AT&T Network Systems; MPEG-1 video content was encoded on an IBM Power Visualization System by Laser Pacific; and participants watched the movie clips on three sizes of new Sony Trinitron consumer television sets.

In addition to this study, Pacific Telesis Video Services, Bell Atlantic Video Services and NYNEX also are collaborating on the development of video content and technology platforms through TELE-TV, their joint venture. TELE-TV Systems Digital Service Bureau will provide video encoding services for the three partners as well as for others in the industry. TELE-TV also will evaluate and determine the requirements of other types of video content and applications, such as video recorded at 30 frames-per-second, high-speed sports programming, and real-time encoding.

Pacific Telesis Video Services is a subsidiary of Pacific Telesis Group, a diversified telecommunications company based in San Francisco, California.

CONTACT: Pacific Telesis

Craig Watts, 415/542-6864