In a recent interview, Peled referred specifically to the appeal of broadband offerings like “You Tube,” which rapidly gained widespread market awareness among younger viewers – and content creators. However, he also cautioned against expecting pay-TV broadcasters to embrace the technology immediately. “These developments can take a while to catch on. We started showing people our DVR concept in 1999, and Sky didn’t introduce it until 2003. So there is an inevitable lag, but I see these broadband-based services happening a little quicker because of competitive pressure within the industry. At NDS we have given these developments considerable thought, so that the technology is in place before they actually push the button.”

“I really believe we are in the middle of a natural progression where the world went from a handful of channels at best, to multiple channels measured in the high hundreds on cable and satellite and now with the Web, it can really reach 20 million channels. Why not? It is a natural progression in further and deeper specialization. One general channel once upon a time tried to offer you everything. Some still do.”

“The broadband aspect allows us to converge the old entertainment that is broadcast TV with the new entertainment that is Web-based and created.”
Dr. Abe Peled, NDS CEO

That model is changing fast, he stressed. “Now, thanks to digital TV, instead of just one Discovery channel you can watch a dozen sub-brands of Discovery. And that’s good, but Discovery will tell you that the next 10 channels that they’ll launch will only be on the Web. The more specialized the niche, the more relevant it is to a global audience. For them, the costs of launching a broadband channel are an order of magnitude lower than launching on satellite. Much of the emerging Web content, from short clips right up to Web-based dedicated channels, might cost a few hundred thousand dollars to launch a basic service, but then the incremental cost is directly related to the number of viewers you succeed in attracting. In other words you do not have to spend millions and millions on fixed satellite costs, which must be paid whether you reach an audience or not.”

“One general channel once upon a time tried to offer you everything. Some still do.”

While recognizing that today’s broadcasting models are changing, Peled says he does not wholly subscribe to the “death of network TV” argument. “If you look at “My Space” and skip over the personal chat then the majority of the chat is about current TV, whether it is last night’s episode of “American Idol,” or a similar TV show, so if [younger viewers] are not watching TV why are they talking about it? The mass media is not going to disappear. It is obviously fair to say there has been a gradual decline in audience share by the world’s major broadcasters, but I do not see them disappearing.”

Looking further ahead, Peled suggests that further change is inevitable, and might well have a profound impact on broadcasting. “Take a 20 year view and if network TV were to decline further then this would represent a profound change for us all. What would bind society? The reason people watch network TV is because it gives them a sense of belonging in a shared experience. Something catches our attention and we talk about it the next day.”

“Take a 20 year view and if network TV were to decline further then this would represent a profound change for us all. What would bind society?”

Gazing into his imaginary crystal ball, Peled says he is confident that companies like NDS will soon be designing sophisticated set-top boxes and the long-awaited “home network centers” easily capable of storing 5,000 Hollywood movies. “But it also depends not so much on whether a DVR might store 5,000 movies, but whether Hollywood’s creative community can drive us to watch this or that new movie. The challenge becomes harder, but “Desperate Housewives” didn’t achieve its success accidentally. It had a marketing budget closer to that of a Hollywood movie. Of course, the show itself still has to be good, and maintain that quality subsequently.”

“In the next five years we’ll see TeraByte storage at affordable levels which will hold about 1,000 movies in standard definition and around 250 in HD. I can see this representing a real threat to today’s physical distribution methods, especially of DVDs -- and we are already seeing this today,” Peled says. “Storing this content is easier to protect, and easier to restrict when it is on a hard drive than when it is pressed onto a DVD. It is simply more efficient to store it electronically, with a suitable backup. We are working hard at this archival storage, and we see archiving as being very important in the home. Once people start losing their content, and we all know that hard discs do fail, there has to be some sort of protection and we see this as being a good revenue opportunity for operators, or part of a premium service. They will definitely have to offer such a service or else risk having irate customers.”