Will The New MPEG4 Standard Make Your Current HD Receiver Obsolete By 2007?

[Gregg Lengling]

written by: Jerry Del Colliano
With HDTV sets selling at the million per month rate and no signs of slowing down anytime soon, consumers are quickly learning their desire for HDTV content is far greater than the current supply. Options for HDTV content often include either digital cable or satellite and a terrestrial antenna. Cable has its advantages in many markets, because it can reliably provide local HDTV feeds without the need for often clunky antenna. However, millions of early adopters, as well as HDTV newbies, flock to the satellite providers (DirecTV, Dish Network and upstart VOOM) for their content because of their large offerings of HDTV programming, HD-DVR equipment and access from practically every location in the United States.

Satellite providers know where their bread is buttered and it is right on top of the booming HDTV market. In order to compete with digital cable, which also can provide very fast Internet connections along with your HDTV feed, the satellite providers are rushing to win the HDTV war. Their solution is MPG4 video. MPEG4 is the latest encryption method for HDTV that providers like DirecTV are investing hundreds of millions of dollars in this process, which can easily double the amount of HDTV channels that can be broadcast on a satellite system.

MPEG4 sounds like a lifesaver for content-starved HDTV users. However, some critics are up in arms. CNET.com points out in a recent article that little has been said by any satellite provider about the backward compatibility of MPEG4 to the current standard of MPEG2. In the event that a major satellite provider moved to MPEG4 without backwards compatibility, millions of current users could be left holding the bag. When DirecTV finally offered an "HD TiVo," the demand was so strong that some consumers had to wait more than one year to get a unit at the $1,000 retail price.

Critics and consumers alike are worried that those users would be stuck with useless components in their HD receivers and current HD-DVRs. Their fears are likely in vain. MPEG4 looks somewhat unstoppable at this point because of its ability to broadcast so much more HD content nationwide. At the same time, satellite providers know how hard consumers and market share is to earn (just ask VOOM) and they aren't going to be looking to give it right back to cable providers, who still own upwards of 80 percent of the U.S. pay TV market. Satellite providers will offer aggressive trade-up or replacement programs to upgrade their users' equipment. Years ago, Dish Network replaced their early HDTV user's HD receivers (the only ones you could export HDTV to a D-VHS recorder on) with the first HD-DVRs. The ones who were recording to D-VHS were mad for a while, but virtually everyone else was pretty happy to have a new receiver. The cable industry has made a habit of being able to replace hardware for decades, but in their case they owned the hardware. With most satellite providers, the consumer owns the equipment however some providers are offering you the chance to lease your equipment. If you are worried about the future, this could be the option for you.

So if you are about to get into HDTV or pop for an HD-DVR and MPEG4 is worrying you before you make your decision, fear not. You will not only get your value from your $1,000 HDTV receiver-recorder, but you will likely be taken care of when the time comes to get a new receiver in the event your old one isn't backwards-compatible. My guess is that the hardware manufacturers will find a way to make all of the installed equipment work with the new MPEG4 codec. The real end game with HDTV is to get enough people watching so that they can start getting enough ratings to charge good money for ads. Shutting off a few million subscribers' equipment is about the least likely way to quickly make HDTV a viable media for advertising.