XStreamHD is the real deal, but challenges lie ahead
Instead of taking a cursory peek at XStreamHD and writing it off, we actually sat down with the company's CEO to dig deep into the new satellite-based video delivery service.
On display for the first time at CES but in development since 2002, XStreamHD sees itself as a "transport network" for content providers. The platform is built on a simple premise: the Internet isn't fast enough to do broad distribution of high-definition video and existing hardware boxes like TiVo aren't able to handle full 1080p HD.
While broadband operators like Verizon and Comcast have continued to increase downstream speeds, they still have inherent infrastructure limitations, explained XStreamHD CEO George Gonzalez. XStreamHD went back to the drawing board and architected a system that could handle not only 1080p video, but also 7.1-channel lossless audio -- essentially delivering a full Blu-ray or HD DVD disc over the air.
Gonzalez previously served as the president and CEO of iDirect, which offers satellite broadband services. Thus, like DirecTV and Dish Network, XStreamHD utilizes satellites to beam movies and programs into homes.
Gonzalez says that XStreamHD would eventually introduce a Cable Card capable Media Server, but said the technology was already so disruptive that it didn't want to start off by competing with cable operators.
Content received from the satellite signal is stored on the XStreamHD Media Server, which has two hard drive bays. The company counts Seagate as a close partner and will have different storage options for customers. The base model will have one 500GB drive, but customers can opt for up to two 1TB drives.
Because the XStreamHD Media Server is fully DLNA complaint, new computers and televisions can simply access the content using their own built-in interfaces. Alternatively, XStreamHD has built a Media Receiver that can be hooked up to any television to view content stored on the server.
In order to handle the high-definition data streams -- the Media Server has three built-in off-air HD tuners -- the XStreamHD box has 4 RISC processors and the company has developed its own chips with TSMC, the world's largest semiconductor fabricator. Motorola, ATI, NVidia and Broadcom are all customers of TSMC. The software code is also entirely in-house. "Linux, which TiVo uses, isn't fast enough," said Gonzalez.
What's unique about XStreamHD's technology that required new chips is its ability to lock onto a satellite with only 2 degree spacing, which lets the company utilize any existing orbital satellite. In contrast, DirecTV and Dish have 9 degrees of satellite spacing, which was granted specifically by the FCC.
XStreamHD's chips arrived only a week before Christmas, so only 20 prototypes have currently been built by the company. It expects to begin beta testing immediately and continue through the end of the second quarter.
On the user end, XStreamHD is fairly simple: customers select what movies or other content to be downloaded to the Media Server. Although playback is not entirely progressive, content can be played when it has been 50% downloaded (it's not yet clear how on-demand XStreamHD will be). In addition, the system learns what the user likes, and automatically downloads content. Gonzalez says the suggestions technology is superior to that of TiVo.
But while it sounds great on paper, XStreamHD has some big challenges ahead.
First of all, the company is not licensing any content itself; instead, studios decide what content to make available over the network and share the revenue with XStreamHD. In turn, there are no established pricing tiers, although the company says this will give more freedom to studios -- which means they can have different rental prices based on geography. Studios could also ship physical copies of films to customers that buy them electronically, creating a new model for distribution.
XStreamHD hasn't actually signed any content deals yet, but says it will be making announcements in the second quarter. Gonzalez told BetaNews that three of the top Hollywood studios are likely to talk up XStreamHD's copyright protection technology -- the boxes use AES 256-bit encryption to prevent content from being shared.
In addition, XStreamHD hasn't announced any satellite partners yet -- that is also coming in Q2. The company said it will not be deploying its own satellites, but rather working with a partner, possibly the same used by iDirect.
Another big hurdle is convincing customers to pay a $10 subscription fee in addition to the cost of renting or purchasing movies and programs. Gonzalez says this fee is to cover administration of the network and the device's program guide, but that might be a sticking point for consumers who would otherwise be willing to make the initial investment.
Nonetheless, XStreamHD has set a launch date of October 2008, and has priced the hardware at $399 USD, which includes the satellite antenna, 500GB Media Server and one Media Receiver. Sales will be done via the company's Web site initially, although it may branch out into retail over time as it expands the number of users it can handle simultaneously.
BetaNews expects to get a hands-on look at the service in action in the coming months, and will put XStreamHD side by side against TiVo, Vudu and other similar offerings.