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October - 2008 - issue > Company Spotlight
Verismo Networks Revolutionizing the 'Idiot Box'
Vimali Swamy
Wednesday, October 1, 2008
Over the years Internet has undergone a revolution and has moved away from being just a medium of connectivity. Development of services like YouTube, Flickr, and MySpace has elevated Internet to emerge as one of the prime medium of digital entertainment. With so many digital entertainment choices available on the Internet—movies, videos, songs, shows, news, sports, and what not—it is only fair that this source of entertainment be available in every home on their favorite gadget, the TV. With this vision of changing the way people experience home entertainment, the Mountain View based Verismo Networks has developed VuNow, a small set-top box for converged broadband and entertainment. One simply has to connect the TV and the Internet cable to VuNow and voila! One has the access to the millions of videos available on the Internet on the fingertips and can watch them seamlessly on the television without requiring a PC.

Since the boom of IPTV a few years earlier, the market landscape has seen a substantial change. Content providers who earlier partnered with service providers, which acted as middlemen, now want to reach the customers directly. Due to the presence of these middlemen, the regulation of content was very controlled and the exclusivity factor came into play. This did not allow content providers to have a wide reach of the viewers. With the rising popularity of mediums like YouTube, digital content providers are now willing to provide their content for free in order to attract viewers. For example, media houses like NBC, FOX, and others have come together to host a portal called Hulu that offers free streaming video of TV shows and movies aired in their networks and studios so that viewers can watch them at times of their choice. Hulu also provides Web syndication services for other websites including AOL, MSN, MySpace, Yahoo!, and Fancast, thus attracting as many viewers as possible.
Cashing in on this opportunity of demand and supply, Verismo positions itself as a service enabler for these entertainment houses. Leading content providers like Youtube, Google, BitTorrent, and Cinemanow have tied up with Verismo and the partnerships continue to grow. All the free and pay-on-demand content available on their networks can easily be accessed on one’s TV using VuNow. Verismo has also integrated an easy-to-use discovery engine thereby enabling access to over 90 percent of all the videos present on the Internet.
The Technology
The device, almost the size of a matchbox, measures just 3 x 4 x 1.5 inches but the quantum of technology that is packed in it is enormous. The product has been solely developed at the company’s development center in Bangalore that houses about 60 bright engineers. The device is powered by a TI DaVinci Media Processor which, depending on the network available in a particular geography, can be modified to change the speed of video streaming. Irrespective of the size of the TV screen, VuNow also adjusts the size of video display depending on the quality of the video. A USB port enables usage of external storage devices when one wants to download videos. Ably supported by a remote control with a full QWERTY keypad, one can search for videos, movies, and TV shows; navigate through different web pages; download the videos for a later watch, or simply browse the net. For VuNow, all that one needs to have is a TV and a high-speed Internet connection - LAN or Wi-Fi.

The beauty of the Internet is its openness that makes it simple for access by anyone. But it is to retain this simplicity that posed a great challenge for the engineers. We have come across several roadblocks while engineering the product, the foremost of them being user experience and the size of the device,” explains Satish Mugulavalli, Head of Technology. Since the market is swarmed with numerous entertainment devices such as DVD and VCD players and cable or satellite set-top boxes, the engineers took care of the fact that a consumer would not want his house stacked up with boxes. Hence, a lot of effort was put in shrinking the size of the device. VuNow, with its small size, is easy to store and can even be kept out of view by strapping it on the back of the television.

Versatility was the next big challenge for the engineers. Since Verismo aims at providing digital content from multiple sources, it was important that the device allowed one to see any available video irrespective of the format. “Currently, there are many types of video formats like Flash, MPEG2, 4, H.264, Windows Media, VC1, VP6, and several variants of each of these which are being used by various networks to host the videos. We did not want our device to be restricted to a single video format, because unlike PCs, one cannot download plugin software on a television for every video format,” says Satish. Thus, to avoid unavailability of any video content due to the difference in video formats, VuNow has implemented all the video formats directly on the device.
The Market Though one of its kind, Verismo is not the sole player in this area. Other companies such as Roku and Apple with its Apple TV are vying for a share in the same market. Still, Verismo is not perturbed by this fact as it has managed to develop its own space and edge over these players. “Most players partner with only one or two content providers. For example, Roku has a tie up with Netflix and is of use for the Netflix subscribers alone. But when one wants to move away from Netflix and subscribe to another content provider, Roku’s device becomes redundant,” he explains. Similarly, Apple TV allows one to view content that is available in the Apple iTunes store alone which it buys from the original content providers. VuNow, on the other hand, with its alliances with top content providers and a content discovery engine allows users to access over 150 million free and pay-on-demand digital content.

Priced at $99, VuNow is scheduled to hit the markets towards the end of this year. Verismo plans to market the product via channel partners worldwide. In the initial phase, the company sees business from the sale of the device alone. But over the time, it foresees revenue from the traffic that VuNow would help generate on the Web by following the ‘long tail’ business model. There is a wide variety of digital content available over the Internet for every viewer group. Contrary to common belief, video applications like movies are not the chief revenue generators, blockbuster movies excluded. Movies generate revenue that peak the highest but the revenue flow is short-lived. Special interest content like wildlife, education, health, and spiritual content that are user specific generate steady viewer-ship and constant revenue. Verismo has its eyes on building a steady traffic using such content as well.

Analysts have predicted a steady and substantial growth of Internet subscribers the world over. IPTV alone is forecast to lead to a revenue totaling $37.1 billion by 2012 and the traction towards Internet-based services is forecast to be the largest in Asia followed by Europe and North America. With a market as beckoning as this, Verismo has aptly positioned itself to ride the growth wave by revolutionizing the ‘idiot box’ and turning it into a multifunctional digital entertainment gadget.
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