Terayon Updates Its CherryPicker
LR Cable News Analysis Alan Breznick, Cable/Video Practice Leader, Light Reading 2/21/2007
Terayon -- currently the subject of a three-way bidding war amongst Motorola Inc. (NYSE: MOT), Cisco Systems Inc. (Nasdaq: CSCO), and Harmonic Inc. (Nasdaq: HLIT) -- is rolling out a fresh set of software upgrades for its popular CherryPicker line of products. Designed to let cable operators and other video service providers insert localized graphics and ads into digital programming, the three software upgrades are part of Terayon's drive to keep CherryPicker a leader in the growing digital video processing business.
Besides Terayon, such tech players as Motorola, Cisco's Scientific Atlanta division, BigBand Networks Inc. (Nasdaq: BBND), and RGB Networks Inc. are all scrapping for share in this hotly contested space. That's the biggest reason why Motorola and Cisco, attracted to the CherryPicker family, are now competing with Harmonic in the bidding contest for Terayon. Sources expect the Terayon board to choose a winner in that contest this week or next. (See Moto & Cisco Joust for Terayon.)
With the new software applications, Terayon is looking to seize the competitive advantage in the young but promising market of digital program ad splicing and insertion. The company is promoting the three applications as inexpensive ways to transform cable advertising into more targeted and measurable Internet-like advertising.
"We see the TV screen real estate as being very valuable property," says Buddy Snow, head of product marketing for Terayon. "We think we're hitting a sweet spot in the market."
Terayon officials say the first application, known as "Static Graphic Overlay," allows service providers to take a picture, logo, or some other kind of graphic file and insert it into a video stream for branding purposes. Snow cites such examples as on-screen "bugs" that identify networks and stations.
The second app, called "Motion Graphic Overlay," lets providers insert ticker crawls, picture-in-picture displays, and other motion graphics into a digital program. Examples include local business or sports data running along the bottom of the screen.
"Squeezeback," the third app, enables cable operators to reduce the horizontal, vertical, or both dimensions of the main video feed, thus opening up space on the TV screen. As a result, operators can put crawls, motion graphics, static graphics, and other data on the blank part of the screen.
"When you combine these things, it can have a very powerful effect," Snow says. He contends that cable operators can use these tools to target promos, ads, and other messages to such smaller market segments as neighborhoods.
Although other tech vendors offer similar program insertion capabilities, Terayon executives claim that their company is the first to do so in a compressed MPEG environment. Instead of inserting data and graphics into an analog version of the digital video stream, they say their technology can insert the information directly into an MPEG-2 stream, thereby keeping the video quality high while cutting equipment costs.
"We're not decompressing it and taking it from digital video down to analog and back to digital again," Snow says. "There's no degradation of video quality this way."
While it plans to start offering the upgrades by the spring, Terayon is not revealing much about pricing yet. But Snow did say the list price for an upgrade package with a motion graphics overlay and a required DSP processing card would be about $20,000 per channel.
If all goes as planned, a later version of the new software upgrades will support MPEG-4 program insertions by the end of the year. Terayon executives note that CherryPicker software application sales have shown a "healthy" rise over the past two years.
Terayon officials say they're now conducting beta trials with six undisclosed service providers around the world, including four cable operators. Such major U.S. MSOs as Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), Charter Communications Inc. , and Cox Communications Inc. all use CherryPicker gear.
— Alan Breznick, Site Editor, Cable Digital News