Gorfine Marches up VOD Hill: the creator of Federal Hill Communications discusses the future of VOD, pay-per-view and personalized enertainment

Cable World, Nov 20, 2000 by Tim Clark

CW: What's the deal behind Federal Hill teaming with Civic Video to roll out VOD in Australia?

Civic Video is essentially the Hollywood Video of Australia because they are the No. 2 provider. They have an agreement with the utility companies for 150,000 homes in Canberra, the capital, to roll out video-on-demand. So we are now in the throes of acquiring content.

CW: How does the content acquisition process differ overseas than within the United States?

It's not a simple process. It's not like you can call just one guy and say: `I need content for Australia.' Each studio overseas has a different division and ideology, whether it's residential or hotel, there are different windows.

So for Civic to deal with any Disney product, for instance, the representative might be in Hong Kong. It doesn't come out of the corporate office. Once you're fortunate enough to license the content, then you have to deal with very different types of masters. Where are the PAL masters located? Where are the NTSC masters located?

CW: Would you say the Federal Hill-Civic partnership compares to the Blockbuster-Enron partnership?

Let's put it this way: It surprises me that the first thing Blockbuster and Enron didn't do was announce who their content players were. Blockbuster is the brand. Enron is just the delivery system. There's no reason why the local phone company can't come to us and say, `We want to do this ourselves.' On the other hand, why is Blockbuster still selling DirecTV? Consumer choice. It's the same thing when you visit Circuit City. There's DirectTV, EchoStar, TiVo, Replay -- they're a jack-of-all-trades.

CW: Do you think Blockbuster is slowly turning itself into a dinosaur by becoming a jack-of-alt-trades? They're offering satellite and eventually, VOD. Don't these two delivery? systems eliminate their sacred late fees?

They are talking about charging a dollar or two above what you are currently charged in the video store, and I think there is value there. To offer convenience and choice, VOD can be offered at a buck or two more. But people still like the experience of smelling and touching. They still like the experience of going into a video store and looking at and touching all the rifles and asking people what they thought of a particular rifle. I think VOD is a different type of model. You pay that extra buck or two to have the convenience delivered to your home. I don't think it really dilutes anything.

CW: Will VOD have any problems overcoming security issues?

To date, there is not one security system that has been approved by the MPAA. When we negotiate, our clients certainly want the likes of Macrovision, which scrambles a signal so you can't copy it. The main problem is that now you've got a digital signal.

Before the studios sign with anybody, they have an engineer check things out. We have a questionnaire they have to answer, which deals with the type of system they are using. And yes, there are companies that are doing the encrypting while they are doing the compressing. PIN numbers are also being implemented that can only be unlocked from the provider's end. Sometimes logos are used, so if a particular title sneaks out onto market, you'll know where it came from. It's more of a deterrent.