This morning, Akamai, Ascent Media and Sofatronic announced the creating of a new integrated digital workflow and distribution solution for the production, hosting and delivery of BD Live functionality for Blu-ray Discs.

The companies say the new service provides a more efficient and cost effective way for movie studios and content creators to harness the full power of BD Live’s Internet-enabled features, such as bonus content, online community, and interactive and e-commerce applications.

While it's a smart idea for all three vendors to partner on the new service and lay the groundwork for the future, I wonder just how many of the over 1,200 Blu-ray movies offered today have BD Live functionality? And more importantly, how many studios moving forward are going to support the extra costs involved with providing additional content via the Internet? Ideally, this is where Akamai, Ascent Media and Sofatronic's solution would come in, reducing the cost and complexity of making this content available.

But outside of fixing the workflow issue, there are two other problems that need to be resolved, the biggest of which is convincing consumers to purchase Blu-ray players. At the end of Q3 2008, the Blu-ray Disc Association said that "more than 6.5 million Blu-ray capable players, including PS3, have been sold in the U.S. and more than 15 million units have been sold worldwide." But what the Blu-ray Disc Association doesn't say is how many of those units are broadband enabled? Depending on which research report you want to believe, it is estimated that between 20-30 million Blu-ray units are expected to be sold in 2009, with the percentage of those capable of connecting to the Internet unknown. That being said, nearly every analyst report in the beginning of 2008 predicted 30 million units would be sold for 2008, and those estimates were high by at least 10 million. The bottom line is that broadband capable Blu-ray players need to get adopted first and movie studios need to make a commitment to BD Live functionality.

In addition to the adoption problem, the other issue is whether consumers get any real benefit getting extra content from a BD Live enabled service as opposed to just including that extra content on the disc itself. Three months ago when the Iron Man disc came out, whoever was serving up the BD Live content had servers that could not handle the load, which prevented many customers from getting the extra content. And as pointed out in an article on CNET, the fact that most BD-Live features could easily be fit on a Blu-ray Disc, instead of having to download them from the Internet, makes you wonder if the BD Live feature is really worth it. It might just be too new for consumers to see what will be possible with BD Live, or it may just be an industry using a technology because it exists, even if the demand does not. For now, it sounds too early to know either way.

Over the coming weeks I will be getting hands-on with an Internet enabled Blu-ray player and taking a look at the BD Live functionality and the Netflix streaming service. I'll be posting a review of both shortly.

I wanted to pass along the sad news that Ezra Davidson, former co-founder of SyncCast and a previous writer for StreamingMedia.com passed away over the New Year’s holiday. Sadly, he was killed by a family member who the LA Times is reporting is being charged with his death.

Ezra was a long time veteran of the online video industry and co-founded SyncCast in 1998 which he departed in 2007 when it was sold to Technicolor. While I never got to know Ezra on a personal level, through our business relationship he was a friendly guy who was always excited to talk about the online video industry. Every time I saw him at a Streaming Media show he was always laughing and had a smile on his face.

Some of his friends have put up a memorial website with more details on Ezra’s background and photos of Ezra with some of his colleagues.

Updated: The family welcomes all those who knew Ezra if they want to attend the service. 10:30 AM, Saturday January 10, 2009, Memory Chapel, Forrest Lawn, 21300 Via Verde Drive, Covina, CA 91724

Updated March 2010: Phillips Ranch woman gets 50 years to life for husband’s killing

As the CES show in Vegas kicks off this week, the buzz and announcements around broadband enabled TVs is starting to heat up. Netflix and LG announced that come later this spring, a new line of broadband enabled LCD and plasma TVs will be capable of streaming content from Netflix without the need for any type of external box. While this is not the first broadband enabled TV that will be capable of streaming content, both Panasonic and Sony already have models, it is the first TV manufacturer deal for Netflix.

The CES show also brought announcements from Adobe and Intel who are looking to bring Flash to Intel's Media Processor CE 3100, which Intel hopes will be used to bring web content to digital TVs before mid-2009. In addition, Intel plans to announce with Yahoo! support from TV manufacturers to sell sets that come with widgets that allow you to watch web content on your TV using the TV's remote control.

While the idea of broadband enabled TVs sounds like a great idea and catalyst for helping to bring more IP video directly to the TV set, the reality is that these devices won't have any major impact on the industry for many years to come. The poor economy has killed the sales growth of new TV sets, let alone new LCD and plasma displays like LG's where the broadband enabled versions cost an estimated $300 more than ones without the functionality.

But of course, that's not stopping the companies building these sets and analysts to say things like, "I think this will be a big, growing sub category in TV" or "Streaming video from the Internet and other means of direct digital delivery are going to put optical formats out of business entirely over the next few years.” It all sounds nice, but it's wishful thinking on their part, especially the idea that broadband enabled TVs and streaming will make the DVD obsolete in a few years time. The real question is how quickly will these new sets be adopted when Netflix says that most research data shows that the average consumer holds onto their TV set for at least a decade?

Parks Associates predicts that by 2012, about 3.6 million broadband enabled sets will be sold in the U.S., or about 14% of total new TV sales. If those numbers are accurate, three and half million sets in three years is not a very big impact on the market considering devices like the Xbox 360 and PS3 sell that many devices in one or two quarters alone.

Broadband enabled TVs could be the future, but the impact they have on the market will not be felt in any major way in the next three years. And while most in the industry are talking hardware, the real question in my mind is what the user interface is going to look like that allows viewers to find and control how they get web content to their TV set? The software layer is going to be the most important factor in the success of broadband enabled TVs and not the actual hardware itself. Building added hardware functionality into a TV set it the easy part, providing the software overlay that will control and operate the new user experience is where the real challenge comes in.

Amazon just announced that in "early 2009" they will enable more than 40,000 commercial-free movies and television shows to be viewed with the Roku player. This marks the first new content partner for the Roku device which to date, was only capable of playing content from Netflix.

While the release states that all content will be encoded with H.264 and streamed up to 1.2Mbps, it sounds like HD quality content from Amazon won't yet be offered on the Roku, even though the Roku box is capable of getting HD quality streams.

While it's good to see Roku start to add more content partners, I think they need to add a lot of video content that you can't already get on your TiVo, Xbox 360 or PS3. While most seem to be focusing on the mainstream content offered by Netflix and Amazon, I think that much of the content outside of the mainstream movies is really what would make the Roku box even more interesting. Especially since that for only $100 more than a Roku, you can now get an Xbox 360 and do more than just stream movies.

Today, Malaysia based Aflexi is pre-launching a new CDN platform targeting web hosting providers and small ISPs who want to enable CDN services across their network. The service is very similar in theory to Velocix's Metro service that was launched last month, but without much of the scale, functionality and support that Velocix is offering.

While the idea of trying to build a network of networks for video delivery is not new, the execution is very difficult and the service only has a shot at making it if enough ISPs and hosting providers sign up to use the platform. Aflexi is selling their platform for $150 a month to hosting providers which enables them to deploy unlimited copies of Aflexi's server software and will be charging ISPs a higher, yet disclosed rate. Clearly Aflexi is not going to make any revenue with that type of pricing model and instead charges hosters and ISPs a "royalty" of just under one cent per GB delivered, based on the volume of traffic they push.

While the concept is an interesting one, the Aflexi platform is missing a lot of functionality and the company is just a handful of folks with no marketing or sales force. Aflexi's strategy is to leverage the co-location and hosting providers resources to sell the service to content owners. The platform does not support Flash, does not come with a SLA and has no ecosystem tools, amongst a host of other much needed functionality. Aflexi is targeting to sign up 20 small ISPs and hosting providers by the end of the year.

While I don't see Aflexi making any major impact on the market anytime soon, CDNs are going to need to develop a software layer to handle the many different pieces of the video ecosystem. And with the number of CDNs that continue to flood into the market, it's only a matter of time before someone starts developing software overlays for CDNs.

During the holidays, on December 29th, the Judge denied Limelight's motion for a summary judgment in their patent suit with Level 3 and stated the case will still go to trial. If you want to get a good overview of the patents in dispute, without too much legal mumbo jumbo, the summary judgment document details what's being argued by both sides.

In other patent suit news, while it was expected that the Judge in the Akamai and Limelight case would issue a ruling before the New Year, no ruling has yet to come out. When it does, I will post it as soon as I get a copy of it.

As expected, this morning Roku announced that the Roku player is now capable of playing hundreds of HD quality movies from Netflix. While my Roku player got the software update over the weekend, Roku says all players will be updated over the next few weeks. In addition to the new 720p HD support, the new Roku software upgrade also allows for up
scaling of SD titles to 720p and enables Roku's switch to the new VC-1 AP
streams, which previously used to be VC1-MP. The switch to the new encoding gives similar or
better quality for lower bit rates. Roku's HD quality videos are now encoded at 2.7Mbps and 3.8Mbps.

While it is great to see HD quality content from Roku, I have to worry about the impact that HD quality video is going to have on Netflix's operating costs. Between the Xbox 360, TiVo, Roku and other devices capable of streaming HD quality video, Netflix is spending more money each month to deliver all of this content. And as more content is made available in HD, that delivery cost to Netflix only continues to grow each month. Even with the economics of scale kicking in and Netflix getting a lower price due to increased traffic, their overall cost continues to go up as the business scales.

While Netflix is betting that in the future they will be able to show revenue from delivering movies online, they don't have an unlimited window of time to prove this. I think sometime next year they are going to have to outline what their online video business model could potentially look like going forward, how they plan to generate revenue or how this offering might help offset other costs associated with their traditional DVD business.