Content sold with lock and barrel.

According to research house Strategy Analytics, at the end of 2003 there were 100 million digital homes worldwide, and that number is projected to pass 300 million by the end of 2008. Those are a lot of potential downloads, and the prospect of offering consumers a service that charges them to legally download what they want is an alluring one.

But the problem is piracy, or theft, as it is more properly known. With some analysts estimating that the industry is already losing $3.5 billion a year to piracy (see DVD story on page 26), the size of the potential problem becomes apparent. But now it seems that this dichotomy has been resolved, with the announcement on September 9 of the launch of the SVP Alliance.

SVP is an acronym for Secure Video Processor, a new technology developed jointly by NDS, a 78-percent-owned subsidiary of News Corp; STMicroelectronics, the world leader in System On Chip (SoC) technology, and Thomson Multi-Media, the world's largest producer of set-top boxes.

In addition to the three founding members, the SVP Alliance has three associate members who are in the process of becoming full members; these are chip vendors Broadcom Corporation, Conexant Systems and NEC Electronics (Europe) GmbH.

The significant difference between the SVP technology and previous conditional access (CA) technologies is that SVP is applied to the content and not to the platform. Additionally, SVP technology integrates fully with existing CA and Digital Rights Management systems, as explained by Jean-Charles Hourcade, senior vice president, Research and Innovation, CTO, Thomson Multi-Media, who is launching the new technology and announcing the formation of the new alliance to promote SVP as the new industry CA standard. According to Hourcade, "SVP will enable network operators to expand the range of devices and services they can offer to subscribers. For the first time," he continued, "operators will be offered a solution that optimizes control and increases revenue, while consumers can seamlessly access digital content at a fair price and transfer it from a public domain to their preferred device at home."

The arrival of SVP, expected to quickly be accepted as the industry standard, could not be more timely as video-over-broadband (VioBB) has already begun to arrive in Western Europe. Its arrival follows a string of Telco deployments over the past six months and the announcements by existing broadband DSL operators in France, Germany, Italy and Spain, of new VioBB services or up-graded existing ones.

And it is not hard to see the attraction to Europe's Broadband Service Providers. To begin with, VioBB would offer a potentially significant attraction that could be used to enhance customer growth, and reduce churn; it would introduce a new revenue stream over and above basic access services; and probably most important of all, it would allow them to follow a full triple-play strategy.

And that's not all. In early September, Newsweek began peddling the rumor mill with a story that TiVo and Netflix are to team up to launch a VioBB service. No firm details were available at the time of publication and a Netflix spokesperson would only say, "Newsweek recently reported on a rumored deal, but nothing has been announced." Nonetheless, the two companies would make natural partners as TiVo CEO Mike Ramsay is also a Netflix board member. Also, Netflix recently moved into the black with a quarterly profit of $3.3 million on a revenue of $63 million. TiVo, on the other hand, forecasted quarterly loss of $41 million on revenues of just $28 million. The successful launch of a viable VioBB service might provide the shot in the financial arm both companies seem to need.

If such a service is to be launched, it seems highly likely that it will use a new technology called Strangeberry, which TiVo purchased in January from Arthur van Hoff, one of the original developers of Java. But whether such a service will have the corporate muscle to take on the likes of Thomson, NDS and STMicroelectronics seems highly questionable, especially as Thomson is intending to start embedding SVP enabled chips in its consumer electronic devices commencing in 2005 and NDS expects to shortly announce the development of its SVP Manager that will extend the reach of its existing VideoGuard CA solution to home networks and portable devices.