I’d argue that this is because of the monopolies that surround most major professional sports, but it may also have something to do with the temptation to release a new game every single year. After being burned too many times, I did finally cut my upgrade cycle from every year to once every 2 or 3 years, but even with less frequent purchases I still notice that there are pieces of each game that seems to be endlessly recycled year after year after year.

Specifically, I’m talking about the commentary in EA Sports games. Whether you’re playing NBA Live or John Madden football, having live commentators lends a certain amount of realism to the experience. Sure, their puns are cheesy and sometimes there are glitches where they’ll tell you how bad you did on a great play, but overall I enjoy having someone critique my every press of a button.

The problem is though, that after you’ve played a few games, you start to hit repeat commentary and what was once cute and funny quickly becomes annoying. If EA provided entirely new commentary with each new version of the game, this would be less obnoxious, but in recent years they’ve added almost zero new commentary and just continue to repeat the same tired expressions from past versions of their games.

While I understand that there are limitations to how much content can be put on a disc and financial considerations over how much time these famous celebs can spend in a sound studio, I do think that EA is missing out on an extremely lucrative market.

Just like people are willing to purchase ring tones to customize their cell phones, I bet that sport franchise customers would happily pay a dollar or two to get their favorite commentators “in the game”. As someone who grew up watching the Lakers play, I’d be thrilled to hear some of of Chickisms that legendary sport commentator Chick Hearn used to say. Even though Chick has passed away, it wouldn’t be hard for his estate to use some of his in-game footage to re-introduce expressions like the Dime Store score or Leapin’ Lena to an entirely new generation of sports fans.

Better yet, EA could set up some kind of an online locker, where fans of the game could share their own commentary and use people’s own social networks to give us a reason to upgrade. When I was in school, I had a friend of mine who’d say “that was slammin” everytime we played and while this expression would get old if John Madden used it, I’d pay real money to hear my friend sitting next to me while I played. This could also be a good avenue for the professional players to extend their own brand. Whether it’s Shaq talking smack about Kobe or Darth Vader calling plays for John Madden, the creativity would be endless.

From EA’s perspective, they could not only use these updates as a source of revenue, but it would also give their customers a reason to buy more games. By allowing customers to make free updates over the course of a season, it would provide a strong incentive to always have the latest copy. It would also make some of the personalization even more meaningful.

It’s great that I can create a superstar player that looks like me (even if I’m not 6’5″ with one percent body fat), but how much fun is it when the game calls out “great basket by number 35″, instead of pronouncing Freeberg as my last name? Given how small audio files actually are, there shouldn’t be any technical difficulties associated with implementing this type of system. While the repetition from in-game commentary might not be noticeable to the control groups who are testing EA’s games for an hour or two, for long time fans like myself it’s a great feature that becomes irritating the longer you play. Instead of creating a product that causes less satisfaction over time, EA should be using dynamic sports commentary to improve how their games age.

Even though the financial wiz kids over at Engadget, still have TiVo on their “death watch”, I’m beginning to see a much different picture. With 6 quarters of EBITA profitability now under their belt, $200 million in cash (minus the zero in debt on their balance sheet), and partnerships with a significant portion of the DVR market waiting to be implemented and rolled out, it’s no surprise that TiVo has gone from being a small cap child with plenty of dissenters, to an emerging mid cap teenager looking to establish a legacy.

The last ten years may have been characterized by one rumor after another of who TiVo was going to be acquired by next, but the next ten years will be a much different chapter for the little DVR that could.

At the risk of counting my chickens before they hatch, I wanted to kick off the next ten years of innovation by highlighting a few companies that TiVo could use to transition themselves from a niche DVR provider to a diversified corporate conglomerate. Of course there’s no guarantee that TiVo will even get the billion dollars that they are asking for, but it’s still fun to spend imaginary money.

SecuriTiVo – For years TiVo has been dragged into a bare knuckle brawl with cable and satellite companies, just for the right to offer their DVR to their customers. Meanwhile, they are ignoring an important untapped stand alone market that their invention created. The home security business might not be as sexy as HBO, but the DVR has had just as big of an impact on the security industry as it’s had on Hollywood’s outdated business model.

Instead of fooling around with a couple hundred of gigabytes, TiVo should be building multi-terrabyte DVRs that can record several weeks worth of high quality footage. TiVo could also sell a consumer version of the system that connects to the DVR in your living room and allows you to see live security video from your couch.

Not only would a security DVR give TiVo a commercial product to sell, but it would also add important reoccurable monthly revenue from on going security contracts. It would also create an opportunity to add an additional revenue stream from high quality video cameras.

Potential Target = The Brink’s Company (Ticker: BCO) – With a current market cap of $1.36 billion, this top notch security outfit may be a little out of TiVo’s reach, but they could certainly consider a joint venture or pounce on them, if the market starts to get cheap. Either way, a free TiVo with your home security system sounds like a great promotion just waiting to happen.

TiVo Charge Card – In 1939, the US was reeling from an economic depression so Fred Lazarus Jr., the CEO of Federated Dept. stores did two important things for his business. First, he convinced President Roosevelt to change Thanksgiving to the last Thursday of November so that it would extend the Christmas shopping season and then he started offering store credit to anyone who would purchase through him. By giving cash starved consumers access to credit during a tough economic climate, Federated Department stores was seen as a friend and patriot during a dark economic period. The impact from these two decisions helped take the company from a struggling retailer to the Goliath that it is today.

When it comes to couch commerce, TiVo faces a similar opportunity. Currently, when you purchase something through your DVR, TiVo stays out of the transaction. Even if you want to order a pizza with a credit card, you’re not able to, TiVo makes you pay cash This is probably a good thing for home shopping addicts, but works against’s TiVo’s goal of revolutionizing the advertising business. If they want couch commerce to actually succeed, they must make it easier for consumers to make an actual purchase.

The beauty of a TiVo charge card is that it could be linked directly to your TiVo account once and then capture every purchase after that. If you wanted to rent a movie from Jaman or buy a pair of flip flops from Amazon, it would be the same process and simply require password authorization.

TiVo could also offer discounts on DVR service for balance transfers or for customers who carry larger balances. Extending credit during tough economic times might seem risky, but TiVo needs a better payment solution sooner than later. By putting themselves in a position to become the paypal of television, TiVo could lower the barriers of entry for advertisers, in exchange for a cut of every transaction.

Potential Target = Bank of the Internet (Ticker: BOFI) With a current market cap of $50 million, TiVo could easily acquire this sleepy little bank from San Diego, CA and immediately serve a national audience. Not only would they have the infrastructure in place to start offering credit card services, but TiVo would be picking up a high quality loan portfolio in the process. BOFI’s conservative approach to lending may have hurt investors during the boom years, but when the credit bust hit, it proved that there was wisdom in their prudence.

SlingTiVo – When Sling first introduced place shifting to the DVR community, TiVo choose not to implement the functionality directly into their software. My guess is that they were concerned that a feature enjoyed by the fringe, could spark a lawsuit with the media giants, who’ve had their business model disrupted by TiVo’s fast fowarding powers.

Holding off on introducing place shifting may have been the right choice when the technology was still young, but internet video has changed a lot since Sling was founded. While the legality of placeshifting still hasn’t been affirmed by the courts, even Sony is selling a placeshifting device to their customers. With placeshifting starting to reach a more mainstream audience, now is the time for TiVo to introduce this capability to their customers.

Potential Target = Echostar (Ticker: SATS) – Without the ability to manufactuer DVRs for Dish customers, Echostar may find that their business isn’t worth all that much. With a market cap of $1.31 billion, TiVo could offer an olive branch to Dish, in exchange for the Echostar/DVR side of the business. Frankly, I’d rather see them bankrupt Dish and buyout the satellite business in a vulture sale, but the poetic justice alone makes this one worth consideration.

TiVoPages – One of the problems with TiVo’s current advertising setup is that they are kind of taking a walled garden approach to selling the ads. There are strict requirements on the content allowed on the service and only certain agencies are really given access to the inventory. This may be necessary to butter the toast of their Stop Watch customers, but it also limits what TiVo can become.

Why not make it so that anyone can upload a video ad to TiVo and inexpensively reach the TiVo audience based on screening criteria similar to Google’s Adsense program? I may be a small business, but if the costs are low and I can target local viewers or people who fit a certain demographic profile, I’d advertise through TiVo in a heartbeat. TiVo should play to their strengths and become a video Craigslist for the time shifted generation.

Potential Target = Razorfish – Two years ago, Microsoft paid $6 billion for the company. Today they are rumored to be looking for $600 – $700 million to spin off the ad agency. Owning an agency might ruffle some feathers with some StopWatch customers, but Razorfish would give TiVo the infrastructure they need to their take their advertising program, beyond major, one time, national partnerships. By better implementing their advertising programs, TiVo could create a platform where local businesses could reach local viewers in their markets.

DigiTiVo – TiVo may be one of a handful of solutions for letting consumers watch digital video on their televisions, but they could go a long way towards improving their current implementation. One of the problems with trying to watch various internet video types on your TiVo is that TiVo needs to transcode the video before it will play on your screen.

Currently, customers can either hack their machines for free access or they can pay $25 for a copy of TiVo Desktop plus. While I don’t expect TiVo to support every flavor of codec out there, it would be nice if they threw their support behind a standard and tried to come up with a more seemless experience for their customers. It may be too late for them to get a piece of Adobe or to crack their way into Quicktime or Silverlight, but there are still smaller codec companies that could help.

Potential Target = DivX – (Ticker: DIVX) with a market cap of $175 million, TiVo could easily afford to buy the digital video company and use their contacts to adopt more of a licensing approach to the DVR business. By taking advantage of the profits from the codec business, TiVo could help to subsidize more robust codec support for their subscribers.

HuluTiVo – One of TiVo’s advantages is that they’ve managed to remain neutral despite competing in some pretty tough battlegrounds. In the past, TiVo has taken on the media giants, but now may be the time for them to lay down their arms and secure a stake in the next generation of television.

Love it or hate it, the Hulu cartel has been able to establish themselves as a major broadcaster in the narrowcast world. To date, other media companies have been reluctant to share Hulu on the television, but with TiVo’s relatively small subscriber base, they could be seen as a safe testing ground for experimentation. By implementing direct response ads into the actual programming, TiVo and the major media companies could finally benefit from working together instead of against each other.

A Hulu ownership position might make it harder for TiVo to sign more deals like UnBox and WatchNow, but I think if they stayed focused on advertising supported programming, they could still attract plenty of premium and subscription based partners.

Potential Target = Hulu – The company has raised $130 million to date at a billion dollar valuation, but with the market being down its hard to know what it would be valued at now. Given the “digital dimes” that Hulu is producing, one could argue that the weak market should offer new investors a discount, but one could also argue that given Hulu’s growth, a billion may be cheap. It’d be hard to convince Hulu’s current owners to sell or even innovate to the television, but I know more than a few TiVo customers who would love to see Hulu show up on their Now Playing lists.

NinTiVo – Even with TiVo’s new found purchasing power, buying out one of the three video game companies simply isn’t going to happen, so TiVo would either need to invest in building out their own billion dollar console or license one from Nintendo, Sony or Microsoft to create a killer DVR/PC/Console compatible platform. With three major companies fighting for a highly competitive industry, a partnership with TiVo would be highly sought after and could at least give them a seat at the negotiation table.

Potential Target = Take Two Interactive (Ticker: TTWO) – Take Two’s bad boy Grand Theft image wouldn’t compliment TiVo’s KidZone initiatives, but it would give them access to an instant powerhouse in the video game industry. With a market cap at $690 million, TiVo could easily acquire the company for a billion and tone down the bad boy image. With an exclusive on several of the hottest games out there, a partnership with a major console manufactuerer and a beefed up TiVo that acts more like a high end gaming PC/DVR combo then a VCR, TiVo could create a big splash with the gaming crowd.

Hotel TiVofornia – One of the biggest reasons why TiVo isn’t more popular with consumers is because it’s hard to know how much you’re missing until you’re actually a customer. Getting someone to buy a DVR in the first place is tough, but getting them to give it up is even tougher. What TiVo needs is an easy and cost effective way to introduce their DVR to the masses.

Whenever I stay at a hotel, the television is awful. If a national hotel chain were to partner with TiVo to let me schedule programing while I’m there, I know that they would become my default choice when I traveled. To date, TiVo has dabbled with these types of programs, but with the extra money they could kick this program into hyperdrive. By building out more support for hotel rooms, TiVo could secretly expose millions of travelers to a commercial for their DVR without travelers ever realizing that it could be the last ad that they’d ever have to tune into.

Potential Target = Boyd’s (Ticker: BYD) – With the Vegas economy still dealing with the after shocks of the credit crisis, Boyd’s market cap has fallen to $760 million. With a little bit of elbow grease and some slick marketing, TiVo could buy the hotel and pick up a casino as a bonus. With a Vegas style monument to the DVR, TiVo could let you gamble from your hotel DVR. You can check out anytime you like, but you can never leave.

TiVoTube – Over the last few years, a lot of people have mocked Google for their $1.6 billion acquisition of YouTube, but in retrospect, it’s starting to look like a brilliant acquisition by the search giant. Not only did Google continue to expand their dominance on the web, but they picked up a major future broadcaster in the process.

It’s too late for TiVo to get their slice of YouTube, but it doens’t mean that other video sites wouldn’t be a good fit for them.

Potential Target = Dailymotion.com – With TiVo looking to expand DVR service into Europe and Asia, Dailymotion could very well be the beachhead they need with international audiences. This one would probably have the biggest risk associated with it because of the hosting costs and potential copyright headaches, but with Dailymotion having only raised $43 million so far, TiVo could probably offer $300 million and set aside the other $700 million to figure out the business model.

1-800-TiVo-Fon – I wish that I could take credit for this idea, but I originally found out about TiVo-Fon two years when a research report surfaced online by two teams of University students studying the idea. Unfortunately, I lost track of the link so it will have to remain internet legend for the time being, but the system they described worked similar to the Movie-Fon hotline that you can buy theater tickets with.

To use the service, you would link your DVR to your cell phone number so that you could call 1-800-TiVo-Fon and immediately go into the main menu choices. Currently, TiVo does have a cell phone app, but it costs money to use and doesn’t allow you to schedule things at the last minute. With TiVo-Fon any cell phone could call and a voice recognition system could be set up to take you to the program you want to schedule. This way if you’re at dinner and someone mentions that there is something good on at home, you could order your recording and have it pushed into your box, so that you can watch it when you get home.

Potential Target = Fandango – Fandango is a fellow .com mania survivor who managed to scrape together an impressive business by being early and disruptive. Early on, TiVo and Fandango partnered to offer movie ticket reservations through the DVR and may even represent their first couch commerce transaction. Two years ago Comcast paid close to $200 million for the ticket company, but I think TiVo could buy them for less than $150 million. With the right budget and some slick marketing, TiVo could use Fandango to take on TicketMaster and StubHub.

TiVo Video Conferencing – It’s 2009 already, but where are all of the video phones. Making it easy to attach a camera and Microphone to your TiVo would really change what it means to reach out and touch somebody. By adding VOIP and business support, TiVo could expand their services into the commercial marketplace.

Potential Target = Skype – When you consider that Ebay paid $2.6 billion for Skype in 2005, this one may seem like a longshot, but telecommunications has only gotten more competitive since then and Ebay’s already signaled their intention to exit the business. By picking up the popular program and making a subsequent acquisition for a small relationship management company like Zoho, TiVo could build a multimedia telecommunications solution that would rival Salesforce.com

TiVo Networking – One of the biggest challenges that TiVo faced early on was trying to convince consumers of the benefit to plugging your DVR into the internet. Owning a networking company wouldn’t necessarily make this any easier, but it would help to further wedge TiVo into the center of the digital media experience. If there were enough synergies for it to make sense for Cisco to buy Scientific Atlantic, then it makes just as much sense for TiVo to acquire a networking company.

Potential Target = Netgear (symbol: NTGR) – A few years ago Netgear had a market cap that was almost four times larger then TiVo’s but today they weigh in at $540 million. With a profitable business model and revenue that is nearly three times what TiVo is currently bringing in, a $700 million bid wouldn’t be ridiculous.

TiVo Extender – Over the years, TiVo customers have loved the service so much that many of them have purchased multiple units. TiVo charges an extra fee to add an additional DVR, but doesn’t really make much of a profit because they are forced to subsidize the hardware purchase with smaller multi-room viewing fees.

Instead of trying to get their customers to buy multiple DVRs, TiVo should instead allow the first DVR to act like a server and then have extender devices inexpensively tap into the main DVR signal. This would allow TiVo to sell hardware at a profit and give away multi-room viewing to their customers. With companies like AT&T making a big deal about their muti-room capabilities, TiVo could use an extender strategy to undercut them in pricing.

Potential Target = Roku – Netflix may have put Roku on the map, but the company is headed for greatness on their own. We don’t know a lot about their valuation, but if you consider that they’ve only raised $6 million in VC backing, I think that it’d be easy for TiVo to pick them up for less than $50 million. Not only would the other TiVo video services compliment Roku subscribers, but it would be an easy and cost effective way to solve the multi-room limitations.

Some of these ideas are admittedly a bit far fetched, but you have to admit that they would make interesting mergers. While I don’t expect that we’ll see TiVo go on any big shopping sprees soon, as their cash bulks up and their legal victory pulls through, expect to see more people asking what they plan to do with the money.

What do you think, if FakeTomRogers stepped aside and you were hired you as the new CEO of TiVo, what would you do with a billion dollar jackpot?

The entire rental process was very easy and only reinforced my belief that Redbox will be wildly successful with their business model. In fact, just this morning I noticed that 7-11 has even begun testing Redbox at their stores. I’m not sure if it was the convenience of using a machine instead of dealing with long lines and surly video store clerks or the convenience of being able to make a rental as I was finishing up my grocery shopping, but now that I’ve gotten a taste, I’m sure that I’ll be back.

While it would be hard to improve on the kiosk experience, in thinking about my own entertainment needs, I realized that there is one area of the kiosk market that is still being ignored. When it comes to DVDs, there have been a number of firms who’ve thrown their hat into the kiosk ring, but so far we haven’t seen anyone introduce a kiosk system that dispenses video games.

As a casual gamer, I tend to prefer purchasing my games over renting, but every now and then I end up buying a bomb and get upset that I’m out $60 for a weak title. When it comes to movies, I have no interest in watching the same one over and over again, but I could play a video game for a year and still get just as much enjoyment as the first time I picked it up. While the cost of video games would be higher, I have to imagine that there would be a lot of people like myself who would love to be able to rent a game and keep it, if it happens to rock. In fact, if Redbox (or Gamefly, Gamestop or even [shudder ] Blockbuster) introduced a rent to own kiosk system, I’d probably start buying 100% of my games from them.

Because video games tend to appeal to a more niche audience, it would be harder to introduce these kiosks in places like grocery stores of coffee shops, but I do think that companies like Burger King would love to have junk food loving adolescent males visiting their stores on a regular basis, so that they can check out (and return) the latest gaming titles. The extra cost of the video games would mean that they’d probably need to be charging closer to $3 a rental vs. the $1 bargain that Redbox offers for movies, so it’s possible that kiosk operators would see less demand for this type of service, but I would have to imagine that the sell through rate would be significantly higher, which could go a long ways towards making this idea economically viable.

Another issue that a video game kiosk would face, would be having to stock multiple versions of a game. When it comes to DVDs, a single standard allows you to play your movies whether your DVD player happens to be made by LG or Toshiba, but with video games, you’ve got Sony, Nintendo and Microsoft all battling for the living room, which would mean that you’d have to carry less titles to handle more formats or you’d need to have a company like Sony build kiosks that would exclusively support just PS3 games, even if it meant reducing the pool of potential customers.

While a video game kiosk would have some challenges, I think that most of these could be easily solved. I’m not sure why we haven’t seen anyone come out with a product like this yet, but I believe that there is a great market opportunity for the first one to make a move. Currently, it takes about 9 months for a Redbox kiosk to completely pay for itself. Even if it took twice as long for a video game kiosk to pay off, it’d still make an incredible investment for most businesses, even before you consider some of the extra benefits like driving more traffic to the retailer. I’m not sure whether or not someone will seize on this opportunity, but if they do, you can bet that I’ll be a customer. While I may have more then enough solutions when it comes to getting movies, getting a video game can still be a hassle.

What do you think, if someone allowed you to rent video games from a kiosk for $3 a day (or buy them for $50 – $60), would you be interested or is this just a niche market for people too lazy to drive to Gamespot?

Over the last year, I’ve been drooling over the new GTA and with less then a week before the launch, I’m starting to really get fired up. I’ve been playing GTA since it was a PC download only and with every new release the game gets better and better. When Rockstar ran their first trailer for the game, I immediately went to their site to reserve a copy. When I saw that overnight shipping was an extra $20! I canceled the order and decided to go the retail route instead.

I don’t buy a ton of games, but when I do it’s almost exclusively from Gamestop. Normally, I care more about price then brand recognition, but over the years certain brands have won my loyalty and Gamestop is one of them. Whenever I visit their stores, the employees are always really friendly and give great advice on which games to buy. Gamestop is one of those rare places where an employee will actually try to talk you out of a sale, if you try to buy a game that blows.

Since getting to Gamestop can be a bit of a hassle for me, I wanted to reserve a copy over the internet and then pick it up at a local store on the street date. Unfortunately, when I visited the Gamestop website, they were happy to let me pre-order the game, but only if I wanted it shipped to me. When I called my local Gamestop, they told me that I had to physically visit the store if I wanted to reserve a local copy.

Given that Gamestop’s core demographic is hyper connected to the web, I’m surprised that they would be so technologically backwards. It could be that they sell more games when they make people visit the store twice, but it’s not a very customer friendly strategy, especially with gas prices being what they are. Since I’m not willing to take two trips to a store (even for a brand I like), I ended up going to Best Buy’s website instead. From there I was not only able to pre-order the game, but I was also able to find a store near my home where I can pick it up. All without having to unplug from the internet.

Shopping at Best Buy always makes me feel scuzzy because they treat me like a shoplifter when I try to buy video games there, but in this digital age, I’m willing to give up brand loyalty for the convenience of the web. Losing my transaction won’t hurt GameStop, but I can’t help but wonder how many other people choose a competitor over a separate trip to Gamespot.

Gamestop told me that they have their in store pre-order policy in place for “security reasons”, but that doesn’t really make any sense. They allow you to purchase things with a credit card off of the internet, but they won’t allow you to put down a $5 deposit for pre-orders? If Best Buy can offer this type of convenience then GameStop should be able to come up with a better solution too. I still plan on stopping into GameStop when I’m itching for a new game, but they’ll miss out on the games that I know I’m going to buy, long before they even come out.

Luckily, I was rewarded when midway through the Q&A session, JP Morgan analyst Paul Coster, coyly probed Kevin Hell about whether or not we were about to see DivX support on the Xbox 360. The question seemed to catch Hell off guard and while his initial reaction was enthusiasm, there was something about his tone, that suggested that Coster might be onto something.

Here is the exchange verbatim, but in order to appreciate the awkwardness of the exchange, you should really listen to the quote at the 24 minute mark of the presentation and make your own decision as to whether or not you hear a sense of urgency in Hell’s response.

Coster – “Just a minor point here, but there was a recent Microsoft conference where I believe their media extender now incorporates the DivX codec on it, is that correct? Can you confirm that and does that mean we’re soon going to see Xboxes with DivX on them?

Hell – “Yes! that, uh, we’re in discussions with Microsoft on that at this point in time, so I can’t go into any great detail on that. Um that is not a certified, that is not a certified or licensed product at this time.”

At that point DivX CFO Dan Halvorson jumped in and quickly changed the subject.

It was only a brief exchange, but after pretty much giving up all hope of seeing DivX on the Xbox, I found the news to be very encouraging. When I originally saw that Microsoft was going to support DivX on their media extenders, but not on the 360, I took this as a sign that negotiations were over and that Microsoft didn’t want to pay for their entire Xbox360 population. In retrospect, Microsoft may have really been engaging in the subtle art of negotiation.

In thinking about some of the leaked XviD/360 rumors over the past summer, I can’t help but wonder if Microsoft could have intended to leak this information, in order to gain leverage in their discussions. An Xbox that supports XviD, but not DivX, is a less then optimal experience for consumers, but the downside would be far worse for DivX then Microsoft. Could Microsoft have been flexing their muscles in an attempt to get a better licensing deal with DivX? I don’t have the answers to these questions, but I do have advice for both companies.

DivX – I know that you have responsibilities to your shareholders, but as a fan, I urge you to engage in some fiscal irresponsibility and give in to whatever Microsoft is demanding. DivX support on the Xbox is one of the top requests from your community and would make a killer extension for your codec. Don’t make us hack into our Xbox to get at the DivX love. The platform would give you instant access to millions of television sets and would energize your entire community.

Microsoft – Have you looked at how much cash you have in your bank account? Why are you even playing this game of chicken? We should have had DivX support years ago. Offering XviD, but not DivX would be a huge hassle for your customers and isn’t worth the money you would save on royalties. The publicity from adopting an open strategy would more then pay for your investment. Your strategy to treat media extenders differently from the 360 is an obstacle to mainstream adoption and one that should be abandoned. You should listen to consumers, even if it means overpaying DivX for their certification. With a consistent extender strategy and DivX support on the Xbox 360, you could crush the PS3 and create a more compelling reason for people to adopt your Media Center technology.

It’s hard to say how negotiations will turn out, but I have a feeling that it won’t take long to find out. The “fall” update is rumored to be taking place sometime in December and if it doesn’t include DivX support, it will likely mean that these discussions broke down. If it does include DivX support, it will be a huge win for DivX, for Microsoft and most important, for their customers.

It’s probably still too early to be thinking about winter, but I couldn’t resist posting a link to this strange little bunny game that I found online. The game play is pretty minimalistic, but I found its soothing music to be a nice alternative over most of the shoot em up games that I find. The goal of the game is to see how many bells you can get the rabbit to jump on without falling back to the ground. I couldn’t get all of the bells in order, but think that it might play a song if you can. My best score was 3800, but that was using a touch pad instead of a mouse. My only complaint was that I couldn’t find a mute key or a way to change the song after a while. Still, it’s a good stress reliever for when you want to waste time online.

It’s been a long time since I’ve had a new computer, so I was a little surprised at how long it took me to recreate my unique PC experience. Getting the right mix of bookmarks and software is key to taking full advantage of the horsepower that your computer has. At first, I thought that setting up my new laptop would be quick and painless, but I misjudged the sheer number of programs that I would need and forgot about the pesky bloatware to deal with.

Even after an aggressive campaign, I am still finding things that I need to uninstall. I did manage to get rid of the McAfee pop up that warned of my computer being comprised because I wasn’t paying them money but I’m still trying to remove the Vongo free trial offer that shows up in what seems like every menu.

Since I know that I’m not the only one to experience some frustration in setting up a new PC, I decided to keep a list of all the programs that are helpful, when you are doing a fresh install.

Web Browsing

Firefox – I’ve tried the new internet explorer browser, but it still can’t beat this open source underdog. Step #1 – fire up IE, so you can download Firefox, then delete all IE shortcuts, so you never accidentally launch the software again.

IE Firefox Plugin – As much as I try to avoid IE, sometimes there are services that are only supported by Microsoft’s browser. In order to avoid having to fire up IE, I install a firefox plugin, that allows me to use IE, in my preferred browser.

Email

Thunderbird – I normally use web based email, but still like having Thunderbird, in case I need to archive my emails. I actually prefer Microsoft’s Outlook, but am not willing to spend the money when there is such a great open source product available.

Communication

Skype – I don’t use Skype as much as I should, but think that it’s a great alternative to cable telephone or Vonage. I’m still looking for a good program that can record my Skype calls, but this is still a pretty robust service.

Trillian – Thomas Hawk turned me onto this one. Why run separate Yahoo!, MSN and AOL instant messaging software, when one program can handle all three? Instead of being forced to choose your friends, you can show up on all three major networks easily.

System Resources

AdAware – This one isn’t fun to play with, but it’s important to have on your system. It can’t stop a full blown virus from invading, but it can help you find programs that are trying to sneak their way on board.

Spy-bot Search & Destroy – Spy-bot is a lot like AdAware, but I like to keep both programs available. One time I came across a download that blocked AdAware from starting, but was no match for Spy-bot. These services can’t replace the paid ones, but they go a long way towards helping to improve the security on your computer.

Google Desktop – I’ve had mixed feelings about Google Desktop from the get go, but still continue to use it. On one hand, it’s really helpful to be able to search my hard drive easily, but on the other hand, I also feel a little weird about Google desktop tracking me. I figure that the functionality is worth it, as long as I make sure that I’ve got a strong password for my login.

Java – I’m not even sure that I can tell you what Java does, but I do know that it is at the heart of some pretty cool applications. I’ve used the technology to play games, watch videos and watch live streaming content online and I don’t think that I’ve even scratched the surface of what it’s capable of.

Greasemonkey – GreaseMonkey allows you to mash up different parts of the web inside of your browser. It’s a very powerful plugin and is worth downloading, even if you’re not sure how you’ll end up using it. My favorite GreaseMonkey script is a plugin that allows you to see which movies in your Netflix queue, will be airing on TiVo soon.

Social Web

Commentful – This software will change the way you interact online. It allows you to leave comments on web entries and then notifies you when someone has added something to the conversation. In the past, I would comment, but would never follow up to see if there is a response, now I use Commentful to help me continue dialogues that would have normally fizzled out.

WordPress – There are lots of blogging packages out there, but I use WordPress. I like it because it has great fan support and offers a lot of functionality, that I can’t find in other blog packages. My favorite part is having the ability to completely change the appearance of the site, with a simple click of a button. With plenty of WordPress widgets, it’s easy to customize templates, to fit any personality.

Del.icio.us – There are many different bookmarking sites, but I primarily use Del.icio.us. By downloading their firefox plugin, all you have to do is right click and you can clip articles. This is a great resource for archiving things that you want to view later.

Google RSS – A good RSS reader can help you keep track of your favorite sites. Without it, I wouldn’t see a tenth of the content that I track. In the past I’ve used Bloglines, but when Google introduced RSS search capabilities, they won me over. This feature alone, allows me to track 1,000 times more content, then what I could handle in a more basic RSS program.

Photography

Picasa – Photoshop is great, but there are still free alternatives, if you don’t want to spend the cash. Picassa not only has a decent photo editing feature, but also allows you to post your photos online.

Zooomr – I visit Zooomr several times a day, in order to check my Zipline. I also use Zooomr to host my photos for this blog and play web games in their forums. There isn’t any software to download, but if you drag and click on the Zooomr link, you can add a bookmark to your toolbar.

Flickr – Flickr is another great photo sharing site. They are one of the largest photo sharing sites, so they have an even better selection of images. There isn’t anything to download, but they do have a bulk uploader, if you plan on hosting a lot of images.

Remote Computing

Orb – You need a TV tuner and media center software for this one, but if you have these components, then Orb is a no brainer to install. It allows you to placeshift your content, anywhere you can get a broadband connection.

UltraVNC – Even though, I upload a lot of things online, there are still times where I need access to my home computer. UltraVNC allows you to log into your system remotely, so that you can access your files, even if you happen to be on the go.

Digital Video

Adobe Flash – YouTube is one of my favorite sites and in order to see their videos, you’ll need the flash codec. Because of the sheer amount of content encoded in flash, this one of the most essential downloads on the list.

DivX – Flash is great because it has broad support, but I prefer DivX because it offers a high quality experience that you can take with you. You can download support for just the codec, but I prefer to download the DivX web player, so that I can watch Stage6 content as well.

Quicktime – I’ve never spent a lot of time using iTunes, but I do come across a lot of Quicktime movies on the net. If you already have iTunes, you won’t need this one, but if not, then this is a helpful plugin.

Real Player – I’ve had so many problems with Real Player, that I almost hate to download it, but there are too many interesting things in Real format, to completely ignore this format.

Music

Pandora – This is one of my favorite places to find new music. Over time, Pandora will start to figure out your interests and will suggest a lot of things that you don’t hear on commercial radio.

Foxy Tunes – This is a great program for finding and sharing music on the web. It not only allows you to search for cool music, but you can also insert FoxyTunes links into emails that you send to friends

Last FM – I prefer Pandora, but use Last FM because it is supported on my TiVo. I’m not sure how to describe a technology whose roots are based in scrobbling, but once you get the hang of it, you can start to find some really cool music.

Word Processing

OpenOffice – This open source software package contains all the features that you would expect to find in a high priced business software package. It works transparently with Microsoft files and is a great alternative for those on a budget.

Google Docs – I don’t think that it can replace Microsoft in the business world, but Google docs is a free alternative for home users. It allows you to create and share documents, spreadsheets and presentations.

Foxit Reader – Most people use the Adobe reader, but I only turn to it as a last resort. Adobe’s reader is an important program to have too, but it always takes too long to load and asks me if I want to update way too often. Instead I stick to Foxit and no longer have to wonder if my system will crash when I’m closing a .pdf file.

Calendar

Yahoo! Calendar – When choosing a calendar system it’s important to choose carefully, because the more time that goes by, the more you will be locked into that system. At this point, I have most of my important dates scheduled on Yahoo!, but still yearn for a better solution that offers me true data portability.

30 Boxes – If you love Ajax, you’ll be a fan of 30 boxes. The site allows you to open up your calendar to the social web. This is helpful for planning and sharing events. It’s an interesting concept, even if I’m still not ready to turn over my schedule to bill collectors and ex-girlfriends.

Games

TripleA – I highly recommend downloading this one, but don’t blame me if you drop out of society from playing it. TripleA is an Axis & Allies emulator that replicates the original game to perfection. It’s entirely fan built and is a great resource for playing out your own World War II fantasies.

FreeCiv – Sid Meier’s Civilization game had a huge impact on video gaming and this program validates it’s place in the pantheon of PC based programs. The program is a Civilization emulator where you can raise and develop your own society. I always try to be nice, but invariably, I end up attacking my neighbors.

ZSNES – This is a great open source emulator for replicating old arcade games. It won’t come in handy, if you want the modern day gaming experience, but it is useful if you ever wish that you could go back and play games from your childhood. Finding the games can be a little tough, but reuniting with an old friend, can make the journey worth it.

Peer 2 Peer

Limewire – If you don’t want to spring for the pro version, Limewire can be a little spammy, but it’s still a good resource, for those interesting in taking a bite of the forbidden fruit.

Emule – Another powerful P2P client. It doesn’t have access to the largest number of files, but it does offer a clean interface and is a good resource for when you can’t find things on the other P2P networks.

Bit Torrent – It’s one of the most popular programs on Download.com for a reason. This robust p2p system allows you to download and share tiny bits of content from multiple users at once. This helps to speed up the download times and helps to get around some of the uploading restrictions.

Fox Torrent – Fox Torrent isn’t as fast as the original Bit Torrent software, but it’s easy to use and makes downloading a breeze, when you don’t mind waiting for the content. The software integrates nicely into the Firefox browser and adds bit torrent capabilities to an already powerful internet browser.

Entertainment

Stumble Upon – I’m not a huge fan of the toolbar plugins, but I make an exception for this one. You can find some amazing stuff on StumbleUpon. It’s a great time killer, if you are ever bored and still have access to the internet.

Search

Wikipedia Firefox Plugin – I like to use the search bar that is built directly into the Firefox browser. The default supports Google, but there are a lot of other sites that will let you install plugins on your browser. It’s probably a good idea to double check the facts that you find on Wikipedia, but this plugin, makes easy to search the site, without having to go directly to their home page.

Stage6 Search – DivX Labs has built a plugin for Firefox and IE browsers, that allows you to search the Stage6 website, directly from your browser. I’ve found that this plugin comes is especially helpful, when I know that I’m looking for video content.

Del.icio.us – Most of the time, I prefer to use Google, but Del.icio.us can help you find articles that wouldn’t show up in simple keyword searches. I never know quite what to expect, but Del.icio.us search results tend to focus less on style and more on function.

Technorati – I love Technorati, even though the site only seems to work part of the time. I’d like to find another blog search plugin, but this is the only one that I know about.

MusicPortl – This search plugin allows you to enter the name of just about any artist and you can instantly find a wealth of information on your favorite band. MusicPortl aggregates their information so that you can see the latest YouTube clips, blog entries and Wikipedia information. This is a must, if you enjoy researching music.

Spout – If you love movies, you’ll love Spout. The site is a great resource for finding out information about your favorite films and for connecting with other film fans. This firefox plugin makes it remarkably easy to focus exclusively on movies, with your search results.

There are a lot of programs on this list, but I’m sure that I’m still missing some of the most important ones. f you know of any other services that should be included on this list, feel free to contact me or leave a comment and I’ll keep this post updated with other helpful programs that people suggest.

After proving that checkers could be perfected, the team behind the software set their eyes on the high stakes world of Poker and in late July they entered their Polaris poker software into the Advancement of Artificial Intelligence Computer Poker Competition in Alberta, Canada.

The highlight of the event turned out to be a Polaris rematch against celebrity poker player Phil “the Unabomber” Laak. Laak previously had beaten the Polaris software, but not without quite a bit of difficulty.

For the rematch, the AAAI paired up Laak with fellow poker pro Ali Eslami and the two did battle against a number of different poker programs. The end result of the event proved that the pros can still beat the best software out there, although even the pros admit that the poker bots are getting better.

“And so it seemed a solid victory for team humanity. Was this more proof that the complexity of poker was still currently too much, even for a program that had been in the works for 16 years?

Both players also agreed that they had played their absolute best poker and if there had been a time limit on the hands, they would not have been able to beat Polaris.”

As it turns out, the Polaris software wasn’t even the best bot to play in the tournaments. A piece of software called Bluffbot 2.0 couldn’t beat the pros, but was able to edge out the other robots in a tournament that pitted a number of different bots against each other.

The Bluffbot was built by a couple of software developers Teppo Salonen in Claremont CA. The duo that created the software hasn’t released the Bluffbot 2.0 on their website, but they do have an earlier limit version, that is available for download. They also promise that they’ll have an online version of 2.0 up soon, so that internet surfers can test their own skills against the machine.

A lot of people find the idea of poker robots somewhat distasteful, but I’m fascinated by the technology. Trying to create the perfect chess or checker games is tough, but because there are only so many mathematical possibilities, it’s something that is at least possible.

When it comes to poker though, there are so many variables involved that I’m still not convinced it can be done. You can certainly analyze other players patterns for tells, but sometimes, it’s the little things that give away someone’s hand. I used to play online poker quite a bit, but after finding that I couldn’t win online, I stopped playing in the real money tournaments.

I’m not sure if people are gaming the system online or if I just can’t do well at poker in an online environment, but when I play live, it’s a very different game for me. Just being able to look for subtle tells like which card someone is eyeballing, can give you a real advantage in real life, but when you play online, there isn’t nearly as much info to go on.

Eventually, someone will come up with a piece of software that will be able to consistently beat real life players and when they do, it will make online gambling even less attractive. There have already been attempts to deploy this technology on real money sites, but there isn’t any good data on how effective these programs really are.

At the end of the day, I enjoy online games as much as the next person, but part of what makes internet gaming so appealing is that people actually make mistakes while playing it. It’s fun to be challenged, but it’s even more fun to win and when your opponent is a cold calculating machine, it takes random mistakes out of the equation.

Given their footprint, Sony should have had an easy time convincing their customer base to upgrade, but as the latest generation of consoles have launched, Sony has lost their control over the market, after trying to force users to buy a Blu-Ray drive, along with the console. The inclusion of the drive has resulted in high prices, product delays, and limited supply during the launch. Even after Sony has agreed to sell the console at a loss, they still have not been able to get the device down to an acceptable price level for consumers.

As the latest generation of consoles have been hitting the market, Sony’s PS3 sales reflect some pretty troubling numbers. They may have recently celebrated their 1 millionth sale in Japan, but overall they’ve actually performed pretty miserably. According to the latest data from the NPD group, Sony sold a pitiful 98,500 PS3 consoles for the month of June.

Sony is quick to point out that these figures represent a 21% increase over their May sales, but even with the gain, if they continue at this pace, it will take them 83 years to hit 100 million console sales. If Sony was hoping to sell 100 million consoles over the next 5 and a half years, they would need to increase their sales from 98,000 units a month to 1.625 million.

Now to be fair, Sony’s latest price cut on the PS3, has improved sales. The company reports that they’ve seen a jump of 135% since lowering the price by $100. The problem is though, that the price cut is really only temporary and perhaps even worse, it may have prompted Microsoft to consider slashing $50 off of the price of their own consoles.

With the Wii taking half of the market and Sony and Microsoft fighting for the rest, Nintendo has put themselves in an enviable position in the console wars. They’ve not only been able to draw in non-core gamers without sacrificing profits, but they’ve also been able to convince consumers that the Wii can compliment an existing console system. With their innovative game play and their low price margins, they’ve been able to turn single platform households into dual console living rooms.

The addition of the Wii as a 2nd option creates big problems for Microsoft and Sony, because it eats into the profit centers of the video game industry. Because so much of the money on gaming is made on the software, having another competitor in the living room, can have a significant impact on the profit margins for that customer. Nintendo’s ability to not only capture market share, but to also siphon off video game sales from the incumbents, will change the dynamics of the third stage in this battle.

Given Sony’s prices, it’s a lot harder for them to convince a Wii family to compliment their console by adding on a PS3 system. While the graphics are much nicer than what the Wii offers, the extra entertainment benefit isn’t worth the additional cost attached to their super computer.

When Sony could control the video game market, they were able to negotiate gaming exclusives, but now it’s Nintendo that has the pipeline of exclusive titles. There will be those who argue that less price sensitive customers would buy a PS3 over a Wii in a heartbeat, but if you look at the most recent Nielsen’s survey, high end households are actually more likely to choose Nintendo over the PS3.

If Sony is failing to sell their Blu-Ray infested video game console to the least price sensitive customers, it doesn’t make me very optimistic that price cuts will be a very good long term solution for competing against the Wii and the Xbox. While there is still plenty of time for Sony to retake their lead in this latest incarnation of the console wars, I believe that their missteps at the starting blocks have all but assured, that they’ll never be able to outsell their PS2 console.

I usually buy my video games from whatever store is closest to me, but Gamespot is one of those rare stores, where I actually enjoy shopping. Normally, when I go shopping, I just want the employees to leave me alone and let me get in and out with the product I’m interested in, but at Gamespot, the employees are the best part of the store. I don’t go there to buy things, I go there to graze. Unlike the employees at Best Buy or CompUSA, Gamespot employees are usually working there because they love video games.

I’m not sure if they get free rentals or discounts or if it’s just that Gamespot attracts employees who like playing every game that comes out, but every time I go in their store, the employees give me customized game reviews on any title that I’m interested in.

Because these employees tend to be hardcore gamers, I have to be careful to not always pick the games that they are fanatical about, but I still listen to what they have to say and more than once, they’ve saved me from buying a bad game.

When I dropped into Gamespot this weekend, I wasn’t planning on buying anything. I just wanted to know if there were any new games coming out. Once I started to talk with the clerks though, one of them pulled me off to one side and in hushed tones, told me that they had one more Wii tucked away in the back of the store.

By the way they told me about the Wii, you would have thought that they were selling illegal fireworks left over from the Fourth of July, but when a console has been this hot, for this long, I can understand why they would speak about it with a strange sort of reverence.

Apparently they had gotten a shipment just the day before, and the Wii they had in stock, was the last one left from the batch. Even before I went into Gamestop, I had toyed with the idea of buying a Wii, but had not made a decision about whether or not I really wanted one. Since I knew that the Wii’s were still pretty hard to come by and because they told me, it was the last one, I made a quick decision to buy it and figured I could always flip it on Ebay, if it didn’t live up to the hype.

When I took the console home, I was eager to try it out. I had read a lot of the reviews on the Wii, but nothing had prepared me for what the experience would really be like.

When I was a kid, my parents used to take me to Zuma beach in Southern California. Even though, I didn’t know how to surf at the time, I must have been born with a pair of extra flippers or something, because they could not keep me out of the the water. From the moment we would arrive until the moment we left, I would spend the day splashing about the water, just about as happy as I could be. Whether it was body surfing through the waves or just swimming along the coast, no matter how cold and shriveled I was, I never wanted to get out.

After I would go home for the day, I would be dog tired, but when I would lay down, I could still feel the up and down motion of the tide. I’m not sure what the medical name for this effect is, but the sensation would stick with me for a night and would go away until my next trip to the Pacific Ocean.

Since moving to San Francisco, I haven’t spent anytime in the ocean and had almost forgotten about this sensation, but after spending all day Saturday playing the Wii, I was surprised when I closed my eyes and felt the same sensation creep over me.

Instead of an up and down tide motion though, I felt like I could fly. Something about the visual aspects of playing the game, combined with the physical exertion required to control the characters had burned the experience into my sub-conscious and made it feel like I was still playing, even after the console had been shut off.

The one big downside (or upside, depending on how you look at it) of the Wii, is that because it’s such a physical process to play, you can’t play for 12 hours straight like you can other consoles.

When I was a kid, I would have friends over and we would play the Nintendo all night. Eventually, someone would pass out from too much caffeine or red vines. If I try to play the Wii all night though, it’s not a caffeine overdose that makes me stop, my body eventually goes kaput and my muscles say no more.

While I’m sure that owning the Wii will help to improve my conditioning, when you can barely lift your arms over your head, it makes the thought of playing another quick game less appealing, than some of the less active forms of gaming.

Overall though, I’m really pleased with my new console. My only legitimate complaint, is that the graphics aren’t very impressive. Of course, I knew that this was the case going in, but I still expected them to be a little bit better than what they really are.

It could just be that the Wii isn’t designed to be played on a big screen TV, but when you play the console on a big screen, you can really see how rough the pixels look. It’s still way better than the original Nintendo, but the graphics do make me feel like I’ve taken a step back in the evolution of my video gaming.

When the Xbox 360 came out, they made a big deal about the HD graphics that they had, but I never realized how important this was, until I saw the quality of the Wii. What the games lack in graphics though, they make up for it with the fun factor.

When playing Zelda, instead of mashing buttons to make your way through the fighting scenes, you use the joystick like a sword. I can’t over-emphasize how much fun this is. All of a sudden, out of nowhere, a monster will jump at you and you have to dodge, twist, turn and slash, all in real life, in order to dice your way through each level. This adds a dimension to gaming that is way beyond 3D. It’s like you are out there by yourself, fighting to save the princess.

While I’ve only been playing for two days and I haven’t gotten to try out many games yet, I can already tell that this will be my new #1 console. As much as I like the Wii though, it still won’t be able to replace my Xbox 360.

If a game is especially dependent on graphics or if it’s exclusive to Microsoft, I still plan on buying it for the Xbox, but if a game involves a lot of physical characteristics, than I’m likely to buy the Wii version instead. I am especially excited about trying out John Madden’s football game on the console. It’s been a long time, since I’ve seen any real improvements to this title, but Madden on the Wii, will be like a whole new game. I just hope I don’t get so excited, that I end up breaking my TV, throwing touchdown bombs to Randy Moss.

Basically, you control a cat with a bow and arrow. The goal of the game is to hit a target with your arrow. The only catch is that the cat is connected to the arrow, so everytime you shoot at the target, you also go flying across the screen. As you are flying, you can fire a second shot and it will change your trajectory.

The levels in the game are a lot like the courses you’ll find at your local miniature golf course. There are obstacles that you have to go above or below and there are times where you need to think beyond just one shot.

The further you get in the game, the harder the levels get. I played the game a lot over the last week, but as hard as I tried, I couldn’t finished the game with a par score or better. For every Eagle my cat caught on early levels, I had plenty of triple bogeys at the later levels.

Overall, Cat Golf won’t make your internet surfing any more efficient, it won’t give you access to special information or provide any unique insights into technology. It’s not the type of site that will save you money or provide a tangible benefit from using it, in fact, if you go to the site, it will probably be a waste of time, but from an entertainment standpoint, it’s a great way to waste time.

I’m not sure what is is about the game makes it so playable, but there is something about the Cat Golf that makes it easy for one quick game to turn into a marathon gaming session. While the graphics aren’t going to compete with Halo, the combination of the easy rules with it’s unique game play, makes Cat Golf a lot of fun.

Congratulations to Cat with Bow Golf on winning this week’s site of the week award. The nominations for next week’s site are listed below, you may vote in the sidebar. If you know of a good site that should be considered, feel free to send it to me and I’ll be happy to consider it for a nomination.

Desktop Blues

Save The Bunny

Podcast Alley

I’m not sure why I feel so compelled to upgrade each year, but for the last decade, I’ve purchased an EA title at least, once every three months. A few of these have been new games that EA has come out with, but by and large I’ve mostly stuck with the tried, but true sport franchises.

I like the sports games the best because they allow me to play a quick game without having to keep track of what’s going on. I’ll usually start with a season mode and by the end of the real life season, I am wrapping up the playoffs. When the online capabilities started to come out, I was pretty fired up about being able to skool other gamers with my mad John Madden skillz, but as a casual gamer, I quickly found out the hard way, that I was no match for the caliber players, who have the time to play online.

Right now my lifetime winning record for all Xbox Live games is under 10%. These days, I tend to stick to playing the computer, but every now and then, I’ll still log in, just so that I remember what it’s like to take a beating.

EA knows that they make their bread and butter on customers like myself. Most of their titles are franchise oriented, which allows them to have a neverending game pipeline in the works. In the past, I thought it was silly to upgrade from one title to another, just for the updated player stats, but each year the subtle differences in the gameplay was enough to convince me to keep upgrading.

Normally, overpaying for a game that I won’t play very long, isn’t really all that big of a deal, but over the last few years, I’ve noticed a disturbing trend at EA and after continuing to be disappointed with their products, I’ve finally decided that enough is enough.

Every since I first bought my Xbox 360, I’ve noticed that EA sports has been building in planned obsolescence into their franchise titles.

My first disappointment came when I purchased Fifa: Road To The World Cup. This game was one of the first few titles that came out for the Xbox 360 and as a huge World Cup fan, it was immedietely on my must have list. After getting the game, I quickly set up my franchise and ended up picking Sweden to try and take to the World Cup. For the next few months, I played my season diligently and finally made it to the end of the qualifiers. I had a lot of tied games, but was able to successfully make it into the World Cup tournament.

It was then that I found out, that my game wasn’t FIFA World Cup it was only “the road to the World Cup.” If I wanted to actually play in the tournament, it meant that I had to pay another $60 to EA, just so that I could get the follow up title that was released shortly thereafter. I did end up trying out the real World Cup game and other than the tournament, it was exactly the same game.

As a customer, this is really frustrating because it would have been easy enough for them to include a playoff round in the game, but instead they wanted to resell the same game to me a second time. Had I known about the subtlety, I probably wouldn’t have bought the game, but you never really know what a game will be like until you’ve already purchased it and it’s sitting in your console.

After being disappointed with the FIFA game, I decided to try out NBA Live 2006. At the time, the basketball season had already started, but I was eager to see how far Kobe could take the Lakers without the help of Shaq.

After buying the game, I loaded it up and was excited to try it out, but quickly found out too late, that EA had removed the franchise option from the game. The franchise has always been my favorite part of any sports title and often times, I would build up a promising, but young team, only to sim 3 or 4 years, so that I could play my players in their prime.

While I enjoy the actual gameplay of NBA 2006, trading players and adjusting the starting lineup can be even more fun for me. Even though this feature has been included in every NBA game that I can remember, for some reason EA left it out. Given their history, it makes me suspect that the reason why they did this was so that customers would have an added incentive to upgrade in 2007.

With both of these games, I was willing to cut EA a little bit of slack. When the Xbox 360 came out, there was a rush to get the games out. I could see Microsoft making them release a stripped down version of their games just for the launch. I kept buying titles hoping they would get better, but finally, my patience wore down. The straw that broke the camel’s back was the ultimate EA franchise game of all time, John Madden’s football.

I’ve been playing this franchise longer than any game I own today and every year I’ve felt really good about making the upgrades. There were some years that they would tweak the controls a bit and it would drive me nuts, but year after year, I’d see little improvements and the game only got better. Then all of a sudden, EA decided that they needed to take away past functionality that their customers had gotten used to. In this case, they decided to kill the ability to do a fantasy draft at the start of your franchise.

The fantasy draft was my favorite way to run a franchise. Not only could I make sure that my favorite players ended up on my team, but it also introduce parity into the league. When you combined the initial fantasy draft, with the college draft at the end of each season, it allowed a user to take over the general manager position and try their hand at managing a team from the executive level. Now it could be that I’m misinterpreting EA’s intentions, but given how popular this feature has been with players, the most logical reason to take the feature out would be if they wanted to build in an automatic reason to upgrade, for the next year’s game.

I don’t mind when EA adds new features that don’t turn out to be so great. I also don’t mind, if they kill features because they are terrible or because of outside legal considerations, but when they make their games intentionally defective, it doesn’t make me very happy about upgrading year after year. It would be one thing, if I had the option to take a bad game back, but most retailers have strict rules about returning lame games, after you’ve opened up the package.

Because I’ve become convinced that EA is intentionally making their games bad, I have stopped purchasing their titles unless someone makes a personal reccomendation. The strategy may ensure that more people upgrade each year, but by watering down their games, they’ve lost at least one important customer from being so short sighted.

At first I figured the best way to try out a bunch of new games would be to reactivate my Gamefly account, but everytime I went to their site, I just couldn’t hit the submit button to actually sign up. It wasn’t that I didn’t want to join, but rather that everytime I went to the site, I froze up when I was faced with the decision over whether I wanted ten days free or a discounted first month. This sounds really stupid because the difference in price was only a few dollars, but having had a negative experience with Gamefly in the past, I liked the idea of trying to see if they’ve improved and being able to quit without a hassle, in case they haven’t. At the same time, before signing up, I was about 75% certain that I’d be a member for at least the first month, so the part of me that loves a good deal, didn’t want to give up the lower promotional rate. The positives and negatives of this trade off were so evenly balanced in my mind, that for the last three months, I’ve been spending way too much money buying video games when I could have been renting them from Gamefly instead.

I probably would have just kept buying games, but over the weekend I came across a story on Digg, that helped to motivate me to become a member again.

I haven’t found a lot of details on the program, but Gamefly has put into place a new shipping program which they are calling FastReturn. The program utilizes a partnership with the USPS and is set up so that the post office will actually notify Gamefly as soon as your video game arrives at the post office. This allows Gamefly to immedietely ship your next game to you, instead of having to wait until the disc actually arrives at their distribution center. Because the system relies on getting it’s notifications from the USPS barcode system, not every postal location will be able to participate, but even without every postal office participating, this is still a big improvement for Gamefly.

Because of their limited number of distribution centers, long wait times have been one of Gamefly’s glaring weaknesses from the get go. Even though I live on the West Coast, it still takes a day longer then it should, for me to receive games in the mail from Gamefly. While a two day wait for a game isn’t unreasonable, if I was living on the East coast and had to wait 4 or 5 days to get a video game, it would certainly diminish the appeal of the service.

So far I haven’t shipped any games back, so I can’t comment first hand on how good the service is, but the early reviews seem to suggest that FastReturn has been a hit with customers.

Ironically, after all of the agonizing that I did over which discount to take, it turns out that because I was a former member, I wasn’t even eligible for the discount to begin with. While I ended up having to pay full price to reactivate my membership, I’m pretty sure that by reactivating my account, Gamefly must have added me to their preferential treatment list, because not only did they immedietely ship out the top two picks from my Queue, but one of those picks was NCAA March Madness 2007. Considering that March Madness in full swing, you can bet that Gamefly won’t be getting that game back from me, for at least the next few weeks.

This week’s winner of the site of the week contest was the Falling Sand website. I first came across the site about a year ago when someone submitted it to Digg and it immedietely raced to the front page. At the time, the traffic to the site was so heavy that I couldn’t even access it for a couple of days. By the time I was able to play around with the game, I was instantly hooked.

I’m not sure why I found the Falling Sands game so appealing, but there is something about watching little grains of water, plants, salt and oil fall and mix (sometimes with explosive consequences 8)), that is absolutely mesmerizing. It’s almost Zen like to see the various elements slowly build up and evolve. On one level the game is very simple and has limited rules and functionality, but on another level, it also allows users to create some pretty complex designs.

The game was originally developed, by a Japanese blogger and while I don’t understand Japanese, I’m still thankful that he took the time to build such a cool program. While searching on the web, I found a number of people who have created some really impressive structures; Wohba.com took advantage of one of the many mods for the game and planted seeds to create a virtual plant, a reader from Gamerswithjobs took the time to recreate Edward Munch’s masterpiece the Scream and it turned out very nicely, I’m not exactly sure how to describe the ecosystem that So Many Schemes developed, but I still found it’s use of blues and sharp angles very appealing.

The only downside I found to the game is how easily it is to spend way too much time distracted by it. I can’t tell you how many times I’ve gone to the site for just a minute and then ended up spending way too much playing around. Congratulations to Falling Sand for winning this week’s site of the week contest.

Next week’s nominations are listed below. You can vote in the sidebar. It’s Ok to send this to your friends to vote, but please only vote once. If you know of a good site that should be considered for the site of the week, please feel free to nominate it by sending me an email at Davis :AT: DavisFreeberg.com

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What I like about the game is that it is simple and yet it is still highly entertaining. There are no nuclear bomb buttons, no super power moves, no vertical jumping, just the ability to roll back and forth like an old tire. Trying to figure out the optimum speed to jump off the ramps could be tough, but once you hit it just right there is a great feeling of satisfaction from making your way through this virtual garage. Congratulations to Wone for winning this week’s site of the week contest.

You can see the nominations for next week’s site of the week listed below and can vote in the sidebar. If you’d like to nominate your own site for site of the week, feel free to send me an email at davis [at] davisfreeberg dot com and I’ll be happy to add your site to the pool of nominations.

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People have been talking about it for weeks and finally CES has arrived. It’s the blogosphere’s equivalent of a Star Trek convention. Between the booth babes and Sharp’s 108″ HDTV, geeks have plenty to drool over. With so much hot technology being released at once, it’s hard to cover it all, but here are a few of the highlights from the first day of CES.

IPTV support for Xbox 360 – Microsoft’s has spent billions of dollars and years of research trying to break into the living room, but so far has had limited success. With Microsoft Vista offering media center functionality and with the Xbox 360 set to take on a new role as a set top box for IPTV clients, Microsoft is in a strong position to make a play for the digital living room in 2007. As Microsoft’s IPTV plans continue to develop, it will be facinating to see if they use the Xbox 360 as a way to differentiate IPTV from cable. Is it possible that we could one day see Bellsouth renting the Xbox 360 as part of a triple play package? Given how lucrative video game sales actually are, I can see a powerful business model developing here.

Sling Proves They Aren’t One Trick Pony – Sling Media unveiled new hardware called the SlingCatcher. It’s a device that not only allows you to move television from one TV to another, but it also gives you the capability to plug into a laptop or PC and then sling the internet content directly to the TV. This a great move on Sling Media’s part and could be a promising bridge between the PC and the TV. Instead of trying to create their own IPTV service, they’ve instead remained content agnostic. Because consumers are allowed to access any web page or video, Sling has put themselves into a position where they end up offering more internet video content than any other VOD service (whether or not Hollywood agrees ). By focusing on the delivery of video instead of controling the content, it places Sling at an advantage over those who are pursuing closed systems. Not only should this device speed up the convergence of internet and the TV, but it will open up new markets for Sling as they extend their appeal beyond just the busy traveller.

Moxi Shows Off Prototypes Of 2 HDTV DVRs – Digeo may be locked in the battle of their lives with Gemstar TV Guide right now, but that hasn’t stopped them from innovating. At CES, the company unveiled two prototype HDTV DVRs that they expect to have out before the end of 2007. The company is going the stand alone route and will offer the boxes with cable card support. With as terrible as the cable DVRs have turned out to be, there is plenty of room for Digeo to carve out a niche in the stand alone DVR market. Given that TiVo’s series 3 is priced at a cool $800, it will be interesting to watch, if Digeo’s HDTV DVRs add some competition.

Netgear Introduces Super Charged HDTV DVR – Netgear made their splash into the DVR market in a big way by introducing their EVA8000 Digital Entertainer HD. What this unit lacks in it’s name, it makes up for with it’s capability. Not only does it offer full HDTV DVR capabiities, but it also allows you to stream music, photos and video on the net directly to your television. It supports nearly every codec including WMV, DivX and iTunes and even allows you to watch YouTube on your TV. It can upscale or downscale video to the optimum resolution for your set. It retails at a slim $349 and debuts in early 2007.

You’d think with all that buzz and a lower price point to begin with, that Nintendo would be happy to enjoy the lead they’ve taken on the PS3, but if you believe the rumors circulating amoung the blogosphere, Nintendo has more heartburn in store for the other consoles. In a move that neither the Xbox 360, nor the PS3 could match, Nintendo is rumored to be considering a price decrease on their Nintendo Wii starting in spring 2007. They are also expected to unveil Wii’s in various colors as well.

If this turns out to be true, it’d be terrible news for the PS3. At $600 a pop, the PS3 is the most expensive console ever launched and while it’s already proven to be popular with the hardcore gamers, it doesn’t offer much appeal to the non-core gamer who wants a more interactive experience. To make matters worse, if you compare the graphics on the PS3, you’ll find that it doesn’t offer a significant advantage over the Xbox 360, which has already been out for a year. Between the Wii’s early buzz and the expecatations that the Xbox 360 will hit 10 million consoles by the end of the year, Sony already has quite a bit of catching up to do. If it turns out that Nintendo isn’t afraid to engage in a console price war, Sony will face a tough challenge in maintaining the lead they built with their PS2.

Over the last few months, DivX has undergone a pretty dramatic shift. After years of being a closely held private company known more by the underground P2P community then, by the business suits on Wall St., they thrust the company into a wider spotlight by opening up their books and their business to greater scrutiny when they took the company public in a late summer IPO. With the YouTube craze at a fevered pitch and a mainstream audience beginning to seriously think about video downloading for the first time, DivX’s timing was impeccable and as a result, they’ve seen their stock rise by approximately 70% since their debut. While the company was able to raise $145 million in cash from the proceeds of their IPO, it wasn’t without a cost. Because they agreed to take cash from the public markets, it means that they now have to publicly update investors on their performance and disclose details that many public companies would be more then happy to keep as trade secrets. When I saw that the company was going public, I siezed on this opportunity to take a look inside a company that I’ve known about for a long time. As a technology enthusiast and a huge video fan, I’ve used their codec for years and was eager to delve into all of the details that leak out during the very public IPO process.

Over the last few months I’ve documented the company’s progress and have helped to outline some of the strategies that DivX is employing in their quest to make the DivX codec a defacto standard in the digital home. As a result of my coverage, Divx’s CEO Jordan Greenhall reached out to me and granted an interview to someone outside of the traditional press where I could ask some of the questions that I felt the business analysts and mainstream media were missing. As a result, I an excellent conversation with Greenhall, where we discussed DivX strategy with their Stage6 video sharing site, the status on their talks with Microsoft, Sony and Nintendo over bringing support for DivX movies to the video game consoles and the reputation that the company has been labeled with by the open source community over the years. Rather then choosing to provide commentary on the interview or release select quotes, I’ve decided to publish a complete transcription of the interview and the following is the conversation that took place.

If you could tell me about the history of DivX, how it got started, what the birth of this whole thing was up until the point of where we are today?

There are actually two entirely different threads that combine to create DivX. Which are you most interested in?

Mostly the start of the codec itself and how it turned into a business?

Ok, That’s actually two threads, so the one thread is largely mine, the other is Jerome’s, (Gej) Gej was the individual who actually created the technology. He was in Southern France at the time. He was working as a professional video creator and he needed to be able to solve a practical problem in being able to send video that he was creating to a remote location. In order to do it he needed to be able to compress it and he wasn’t satisfied with the tools that were available at the time, so he started looking for better tools and some people on IRC recommended that he take a look at some of the few things that were being done on the intertag standards reports on mpeg4 and he started working with that and he created an idea that he later called DivX. He started calling it DivX by version 2 or so, I’m not sure what package that was. Particularly it just happened to be a very early version of a Mpeg4 asp technology that had to be able to create and maintain DVD level quality, it was really well optimized for D1 resolution and he got it down to a size that could reasonably fit on a DSL line, 784kbs. It was built in an open environment and it included all kinds of technologies to make it happen. He used the .avi platform because there wasn’t a good file format available at the time, and released it out to his various friends on IRC and they sent it to their friends and they handed it to their friends and rather rapidly people started using it a lot. It just happened to hit at roughly the same time frame as Napster, maybe 6 months after Napster hit, it really became known as a phenomenon about a year and a half after the real pickup of mp3. This was largely the community of individuals who had really taken to the mp3 scene. They just took the technology that they were using for audio and took this technology and used it for video.

I actually had a completely different path and intercepted Gej’s path when I was specifically looking for a technology that handled exactly like this. I had a strategic plan in place talking about the convergence and what the new media lens would look like after convergence and an expectation of what would be required to happen for convergence to happen and as it turns out one of the elements that I thought would be needed for this, was a piece of video compression software that allowed you to put images, video and audio that allowed for the reduction in size to the level where traditional mass market pipes, broadband pipes that would be in existence in a reasonable time frame. Even if you had broadband and there were relatively few at the time, we knew that this would be a catalyst, but we also knew we wouldn’t have 10MBs pipes anytime soon.

When you went to look for the DivX codec were you specifically looking for video or for all three formats?

Video, I had worked at mp3 and I saw where audio went and had a good sense that there wasn’t going to be a whole lot of innovation on the technical level, so audio was going to start maturing on the latter side of the convergence arc. Having to do with first the physics of the size and then the transformation of the actual music industry and I was actually spending time with Intervu, which later got bought out by Akamai, and Intervu was the company that built the first distributed network specifically focused on media. At the company I had a lot of insight into what the state of the art was for moving media bits around the internet and when it goes straight to the internet it’s difficult to stretch over the size that pipes had on the overall internet so as a consequence I believed that you needed to have another compression level come in and software is a better solution then hardware, because if you didn’t solve the software problem it could be five or ten years before the hardware and pipe connection could meet the needs of convergence. So that was clearly what I was looking for, so I sent that out to a lot of friends that I knew from prior to it’s inception and a friend of mine said hey there’s this thing going on right now on some of the alternative p2p networks that’s springing up around post Napster, called DivX which is being used for video, so I went and found one called Cutemx, I’m not sure if it still exists, and logged onto a variety of chat networks to check out how this subculture works, got the nomenclature, found somebody who actually had some videos and downloaded a video which was exactly what I had hoped for.

It was not DVD level quality, there was certainly degradation, but it was roughly equivalent to where mp3 was with the audio degradation from CD, circa 97′. There was degradation, but it was eminently watchable and the size was a lot smaller then an original DVD. It was small enough that over the net I could grab it in like 35 minutes, which is very reasonable and at that point everything falls from that.

So at that point I started to go out and try to find this guy, but to a certain extent he’s a little bit like yourself, he was acting under a noms de plume, Gej. I didn’t know who he was so I had to track him down, but I was able to track him down and chat with him on where I thought this thing should ought to go, what kind of system could be built and he agreed and we got together and started working on the project, which we called project Mayo.

How did you pick that name for it?

Initially that was a name that was meaningless, the domain wasn’t owned, and it appealed to his aesthetic sensibilities. We tried lots of code names, but it turns out that those three things are hard to get. Then we recruited these other guys to start the organization up and then about three months later Lee Gomes from the Wall Street Journal had followed exactly the same path to track this guy down and I got an email from Gej saying, uh oh and then an email from Lee Gomes saying we’re writing this story about this new phenomenon of online video sharing around DivX and I’d like to interview you for it, but if you don’t want to interview for it I’m still going to write the story, so we did the story and a lot of things happened after that.

One of the more recent innovations that you’ve been working on has been the launch of your web video site Stage6, can you tell me how that fits into your longer term strategies and what piece of the puzzle that falls into as far as DivX goes?

Let me start at the top with our long term strategy and you’ll see how easily it fits. DivX the company has three beginnings, it’s literally why I was looking for this when I was looking at what does the new media landscape look like post convergence? More significantly there, we have to make convergence happen, so we have two missions, one mission is to understand a better media future, and to do that, on the one hand we are building what we are calling a common media language. Which we believe is the underlying technology layer necessary to enable convergence to happen and you can see that in the codec, in the DRM, things like DivX connect, going into cameras, going into set top boxes, etc.

The other mission is called the new new network, which is building the specific infrastructure that is appropriate to the functions of what media looks like post convergence. We have 20 year plan and we’ve gone through 6 years of it and we’re more or less on track. If you assume and if you are positive that convergence will happen, and by convergence I mean literally the combination of all networks into some form of the internet, mobile, cable etc., some form of open network typology where all devices communicate with that network in a functional way. That is, they’re not tied through medium, through the kinds of content they can consume, rather then a physical typology of their use case, so the cell phone is mobile and small and it fits into certain uses that it satisfies, portable devices, which are mobile and larger have another function it can satisfy. Then you have a very large screen TV in your living room, which is fixed and therefore has limited functions it can satisfy, but they’re not tied to any particular medium so it’s just like broadcast television having immediate control over your TV set.

So thats how I define convergence at large. So a large part of what we’ve been doing over the past six years has been ramping up the infrastructure for this to happen and having a common media language. A set of protocols really that all being complete, can cut across all devices over an open network typology is required for that to happen and that’s a role that we can play. Other requirements of course are the rollout of broadband, the rollout of 3rd generation wireless, affiliated co-married networks and things like that where we really don’t have any synergistic role, so we’re assuming that the market will take care of that on it’s own and we’ll take care of the rest.

A large part of the infrastructure that’s developed around DivX has been from pirated material, do you have any numbers as to what percentage of DivX content today represents pirated material?

I don’t, one of the features of pirated material is that they don’t accurately report pirated numbers. If you take a look at the external numbers of the volume of pirated material over the world, it’s certainly a very large number. I can’t remember what the last report was, but in the music world it still dwarfs the amount of content sold in all collective commercial institutions. I think in the video world, it would be an even larger fraction because online commercial video is still very much emerging whereas grey market online video is rather mature.

Have you talked with any of the major media companies about putting their content on Stage6 and has this issue with piracy complicated those talks at all?

It’s actually kind of a funny story, the very first phone call we got when we started up our office, we had a phone on a box plugged into the wall, was from the MPAA. The second was actually from Disney, so yes we’ve talked with the major media companies for quite some time, in fact the way we first set it up, in an early conversation with one of the CEOs from a major media companies, he said look I think what you guys are doing is great and it needs to happen, but I hope that you understand that there is no way that we’ll be doing any business with you for six years. I said that I completely understand and know the time frame around what was happening, so here’s what I propose we do, what I’ll do is, I’ll say here’s what I’m going to do over the next six months and then six months later I’ll come back and say here’s what I said I’d do, here’s what I actually did and here’s what I’m going to do over the next six months and then just keep doing it. Sometimes what you ask me to do, I’ll do and sometimes what you ask me to do I won’t do, but over a period of three or four or five or six years, you’ll start getting a sense of what we’re about.

When we first said that, we knew that we would be in a position to make a realistic play and that’s more or less how it’s played out. We’ve been involved in all kinds of interesting things with the media companies, we were part of the original high definition standard DVD forum. We were specifically focused on the use of red laser for high definition that took advantage of compression instead of advantage of storage for high definition. That particular initiative didn’t make it off the DVD forum world, so we spun it off ourselves and we’re now promoting red laser high definition in an open market as opposed to a consortium approach.

If someone downloads one of your high definition files from Stage6 and burns it to a DVD, will they be able to get high definition on their traditional DVD player from the HDTV video they download off your site?

If you put it into a traditional DVD player you’re not going to get anything, so at the very minimum it will need to be a DivX certified DVD player, but it would actually need to be an HD certified DivX DVD player to be able to handle high definition files.

How many HD DivX certified players are out there right now?

I believe we have 4 – 6 OEMs who provide these products right now. They are available, they’re not particularly expensive and if you look at the way cycles work in CE, you always go through a cycle where you have relatively high end CE chips which are thick DSP’s on the order of $50 – $60 bucks, which could get you traction to a final cost of $150 – $300 bucks, so you start at $300 and move down to $150, which if you are successfully you can then move into lower cost silicon, which is also a more mass market product. We are now pricing our DivX DVD standard issue with lower cost silicon, particularly with lower cost products, so right now I think the cheapest DivX HD certified device you can buy is somewhere on the order of $150 bucks, but we expect to be able to get that price point below a $100 bucks when the next generation comes out with a lower cost mass market use silicon. Then when you start getting into our approach to high def, we believe that high def is really really cool and great, but it shouldn’t be a whole new product category you have to buy $1,000 worth of hardware, it should be a feature, existing on a product category that you already had that’s relatively already a commodity.

Do you ever see DivX HD Certified competing with HD-DVD or Blu-Ray or do you think it’s designed to do a different thing?

I think we’re competing with Blu-Ray/HD-DVD in terms of content, but I don’t see us competing with those discs in terms of storage. I can imagine and expect to see DivX content, internet and high def on top of Blu-Ray/HD-DVD players, typically because you can fit 10 DivX HD titles on a single Blu-Ray disc just like you can put 10 standard definition movies on a single DVD, but DivX is a global company so we think on a global basis so we are already seeing significant interest in our user base for DivX discs to be sold in retail in high definition in markets where HD-DVD and Blu-Ray don’t even exist at all, especially in regions where it’s just too expensive.

How large is a DivX HD file for a 2 hour movie? Will that fit on a traditional DVD at all?

Yeah, it’s exactly that we can fit a regular 2 hour movie on a single DVD file. It’s exactly targeted for that and at a quality level where you’re probably going to see your Blu-Ray and your HD-DVD. It’s just using better compression.

Can you talk a little bit about some of the recent partnerships that you’ve announced with Canon and Pentax? What’s the strategy there and how does it fit into your overall business plan?

It’s all part of the same strategy for a common media language, so the way we see it is there are two interlocking ecosystems, one ecosystem is unified by the individual consumer’s home. Deal with all the content that they ever play with. The other ecosystem has to do with interlocking between content creators and consumers, so the DVD player for example is in both ecosystems. The consumer will use that DVD player to consume content that you’re ingesting from external parties, from online, retailers, whatever it may be and then you also use that DVD player to ingest content that your getting from people in your relationship circle. Now when you’ve got DivX on your PC and DVD player, if your a consumer who’s going to be getting a camera that will be used to create video, whether it’s a digital video camera or a digital still camera, you as a consumer have a very good reason for wanting that camera to be producing DivX anyway, so that they’ll play in your personal ecosystem. That’s really the beginning and the end of it. We believe what comes with the DivX brand is associated with creating a higher quality media experience, so where a consumer has a reason for consuming a high quality video experience with video cameras, our role is to make sure that if you buy a digital cameras to make video, if it has the DivX logo on it, you’re gonna know that you can create high quality video that’s going to look good and that it’s interoperable, that you’ll be able to play it in all the different environments that play the DivX language.

That’s a broad value proposition that we bring with our brand. You’ll notice that what we’re not doing is a whole lot in the digital video camera space, the DV camera space, we’re really focused on the still camera space. The reason for that is because we took a look at the marketplace and we actually believe that the highest quality user experience is being able to record on the fixed media card, in which we keep all together. It’s very rapid, it’s very easy to use, it’s very easy to store, it’s very easy to load into your hard drive and move around your home, and we’ll be focused on high definition for straight video cameras for the next DivX period.

When your talking about bringing DivX to the mass markets, your talking more about SLR than the traditional video cameras that most of us think about then?

Yeah we’ll hit both categories. We’ll hit still cameras that have video as a mode and then we’ll hit high definition cameras that are standalone video cameras that will preferably and will always shoot to hard drives.

As far as the compact cards go, how many hours of DivX content will you be able to fit onto a 1GB flash card?

You can fit 90 minutes on a 1GB flash card. It is in fact DivX quality so were able to get a lot of content on that card in high quality and interoperable, so you can see how the common media theme runs through everything that we do and it enriches and makes a better media experience, so we can do both simultaneously and make it fit and I think in the future you’ll see that across the board.

One of the things that’s clear from watching DivX’s popularity online is that a lot of people want to know how to get DivX on their Xbox 360, the PS3, even this weekend some industrious hackers figured out a way to bring their DivX movies to the Wii, have you talked to the console companies about officially supporting DivX and how have those talks gone?

We actually talked to those companies back in the PS2 and the Xbox days and back then things didn’t go particularly well. As a company we always have a basic launch where we start with the consumer and work our way back and as a consequence we tend to be more successful in marketplaces that are more influenced by market forces then top down strategies. Which is to say we do better in open vs. closed, so if it’s more open like a DVD player as opposed to closed, like a cable set top box or a cable provider, our systems will have more traction. We found that the second generation game consoles (or technically the fourth depending how far you go back), the PS2 and Xbox and before the gamecube, were still very closed in their way at looking at the world. Increasingly, for a variety of reasons, many which are random as happens to be the cases, we are seeing these next generation game consoles are taking a more open approach the way they are looking at the marketplace and so I have more optimism about our ability to get DivX to those clients, mostly because the consumer is being more vocal in demanding DivX for those clients. We haven’t gotten any concrete announcements about to happen yet, but I do tell people it’s important and I do spend time focusing on it and certainly you can put me on the record as somebody who would be delighted to see DivX in all those media consoles. Also you can put me on the record as someone who recommends that if you don’t currently have a Wii, that you buy one.

As far as the console strategy goes do you think that if Microsoft were to license DivX for the Xbox 360 that Sony would be under a lot of pressure to license the codec as well or do you see an opportunity where Microsoft could differentiate themselves there?

The pressure would certainly be on and then it’s a matter of the politics of each organization. I would argue that on a pure market competitive basis, if Microsoft stepped up and put DivX on the Xbox, they would have a significant competitive advantage and the onus would be on to reduce that advantage by licensing DivX as well, but that doesn’t imply however the Sony would have the forethought to do it.

One of the things that we’ve seen is that people are creating step by step instructions for getting DivX content to the consoles and are utilizing software tools that allow consumers to transcode their codecs in real time. What are your thoughts about these software tools and is this a threat to your business model?

Under the big picture heading of what we do, it may strike you as a little odd, but DivX is actually codec agnostic. I’m as likely to promote using flash as I am for promoting DivX technology. It’s about the appropriate technology for the need that you have and the key is to provide the highest quality consumer experience. My criticisms for these particular transcoder’s approach is that really, what they are is a stop gap. At the end of the day, it’s a low quality experience. It’s not that different from the approach taken in the DV camera market, so it’s clearly a lower entry solution if you were in a more stable system. If you could maintain both the quality, as well as ease of use for whatever the format is in all the way through the channels, but if you’re somebody who wants to watch your DivX content on your TV and you’ve got an Xbox and Xbox has DivX in it, it’s the second best scenario. In any event, I would not vigorously endorse it, but I’m also not completely antithetical because at the end of the day it’s about providing the best quality experience to consumers.

By the way, this is a great segue back to your Stage6 question, Stage6 is our first significant toe in the water on what we call the new new network, the post convergence environment. In our business plan, in our 20 year plan back in 2000, we predicted that you’d see a significant amount of user generated content around the time of 2005. I think YouTube bore that out, although it was a little later then we expected, at the same time it was a little bit bigger then we expected. We specifically predicted that because it would be at the PC, it would be what at the time we called lean forward content, which I think is actually still a useful term. The way we look at DivX the company is that we’re focused almost exclusively on lean back content. These are media experiences where as a consumer you want to become disembodied behind the medium. You sit in the theater and your movie starts and you don’t want to be interrupted by the growling in your stomach until the movie is stopped. That’s the part that we focus on and that’s the part that we think is important and by the way that can be entertainment content, it could be news content, it could be personal content, but it’s lean back content, each one of those segments have different feelings associated with that environment.

The PC is really not the optimum lean back screen. It’s a lean forward screen. It’s spectacularly short content, it’s interactive, your multi-tasking, your checking your blog, your checking your MySpace page, you hit a link, you go to YouTube, you watch a clip, your out, you’re very much involved in that environment, your not hitting play to sit back.

We look at it and say, YouTube is improving the use case and people are aware of it, the time is now ready for us to start sowing the seeds for what this environment looks like in a post convergence environment. Still, we’re a couple of years away from convergence being a true case, but the content language part of our business is now ramping now that you can say with confidence, that enough consumers can consume content from the internet on their television and that there is a materially reasonable marketplace. In the arc of that curve, as the ball is beginning to roll downhill, is that somewhere between now and 2010, convergence will happen and you’ll be able to see a post convergence environment.

Stage6 is specifically focused on creating an environment for people who want to create engaged communities around a content brand for lean back content on the internet using a distribution medium. And that’s what it is, so if you go to Stage6 what you’ll find is that we’re really serious about content. It’s not populated by short form clips, etc., it’s populated by people who regardless of their particular content level are trying to create some form of expression. That may be very very short form or an expression could be done in a second if you do it right or it could be long form and all of it is very high quality, so DVD level quality and high def quality is where things settle out for Stage6, but it’s a different kind of community, kind of culture that is being built there.

Stage6 is actually an exemplar of behavior that we expect to see happening on a much more global basis. The strategy for Stage6 is to not Stage6 be a vertical portal for all people and all content. Rather we want to use Stage6 as a way of showing, anybody who wants to be engaged in a lean back content environment, how they can do it and build an audience and build a marketplace and build other platform technology to make that possible more broadly speaking. So in terms of an open or closed environment, we definitely don’t want Stage6 to be a closed environment, we want Stage6 to be one of many open typologies to turn the entire internet into creating brands and to consume that content.

Community has always been important to DivX and Stage6 is clearly an expression of this strategy, but at the same time, the creation of the DivX codec was also very much a community driven process. What do you say to critics who feel like DivX turned their back on them in terms of taking the company private and not keeping this as an open source product and when people say that DivX took advantage of them, how do you answer that?

Well the first is that we never took advantage of the open source community whatsoever. There is a very interesting set of mythology in that environment. The fact of the matter was DivX, as an original codec that Jerome created, was not open source. When we created the DivX company we very specifically looked at it and made the tactical decision that open source made sense for us to launch the original DivX codec, because we believed that to do it would create a more energetic and healthier environment. When we launched DivX as an open source project, on the one hand, while we did get some contributions from the open source community, it was relatively small in coded content. By far the most significant contributor was a guy named Eugene Kuznetsov, code name Sparky, who we essentially brought into the company on a full time basis, hired him out of the community into what we do, but we ran into an interesting problem which is that a lot of the companies, particularly the electronic companies who we were very interested in having DivX be a part of their environment, would not actually use DivX if it was an open source codec. So as a consequence we created a closed source version of it, which we launched on the DivX website. It became an open source version, you could access the code page on the project Mayo website, so that we could provide the code out to particularly the consumer electronic manufacturers and to a lesser extent, third party software manufacturers like Sonic and Pinnacle and guys like that, who wanted to use the technology, but wouldn’t use an open source technology for a lot of reasons some of which were not rationale, nonetheless were mandated by what we call their GC group.

What we found was that, then the consumer would invariably go to DivX.com where they could download the codec and nobody would actually use Project Mayo in the first place, so we’re working in a fraction of an open source environment, so we just sort of let it die. Actually, we had already disclosed the source vis-a-via the open source project and at that point it sort of just ran out of steam. Then a couple of the guys from the open source community who really wanted to be part of the final project, they said we’re going to keep a copy of the final project and they went out and did it under the heading of XviD. We said, great run with it and in fact they ran into a situation where they had a hardware company that ripped off their codec and tried to close source their codec. We supported them throughout pretty strongly. It’s kind of interesting that there is this sort of mythology of tension between DivX and the open source community, but actually the people who are really the open source guys behind the open source codec, we actually have a pretty good relationship with them, we’ve actually worked pretty closely with them.

DivX is a company that is focused on open as a typology. Open source is open, but only when it’s effective, so if you take an open source strategy and by so doing you either A.) Make it so nobody can use it or does use it or B.) Keep yourself completely destroyed by trying to use a closed source strategy in the marketplace, then you actually fail the primary mission which is to actually maintain an open content typology.

When you are looking at an open vs. closed system, this is a pretty critical part of your business strategy and when you look towards things like set top box developers and iPod’s and all of these different gadgets that are out there, do you think that DivX needs to be in a closed system or do you still see DivX as benefiting more from open products?

It’s good that you mention that, one is that I actually have a strong hypothesis on a macroeconomic level that forces that are happening under the heading of convergence will ultimately lead to open networks across the board. So I’m on the record as saying that if you are in the business of owning closed pipes, you better figure out how to get out of that business at some reasonable time frame. The second question is, which because of the way that we actually approach the marketplace, our value proposition is at it’s lowest ebb in the entirely closed environment, so we’re not really, at the end of the day a technology company. We’re not really a codec company. We had conversations with set top box manufacturers and cable guys in 2001 and 2002, but when they’re trying to license your technology, component video technology, that’s commodity pricing. A penny for a million users in an interactive space, there’s no real value proposition. Compare that to the DVD manufacturers where what we really brought was a community of users who are trained to consumer content over the internet and to have some way to do it without having a set top box or computer operate that particular phenomenon. So the fact that DivX technology is associated with that path is a really interesting physical manifestation, but the reality of the value proposition is that the market, the community itself is a value proposition, so what you’ll find is, if you map our progress on a go forward basis, everything that appears in a DivX marketplace, there’s actually strong evidence that the marketplace is becoming more open.

I’ve heard DivX say that there are efficiencies with being able to record DivX directly to TiVo, Media Center, PVRs and Apple’s upcoming iTV, why wouldn’t they be licensing your codec if they could fit that much more content onto their hard drives?

Well there’s a trade off between storage space and computational complexities. That content is a pretty powerful force, if you can buy the hard drive space for less then the cost of a silicon chip at half the size of the hard drive space, you’re more efficient buying your hard drive space and we find that encoding chips have a slower cycle, then decode chips had, so the computational complexity is a lot higher, for encode then it is for decode. It hasn’t been until very very recently until like the last couple of months, that encode chips have become available for things like DVD recorders and DVRS to use with technologies like DivX. Now that these chips are just beginning to rollout, literally we’re just able to sell these now, we’re seeing an opportunity to break those chips into the OEM cycle for CE products, so it was only a matter of time. There will certainly be an opportunity, but you have to be aware of the limitations of the silicon cycle.

As a bonus to my interview I concluded my questions by subjecting Jordan Greenhall to a series of brutal choices in a lightning round session. I asked him to restrict his answers to no more then short sentences during the lightning round. The following were the answers that he gave during this session of the interview.

- PC or a Mac? (not for the office for personal use) – Mac

- Do You Own A TiVo and If So Which Model? A Series 2 TiVo and 2 high def DVRs through the cable company

- Do You Read Slashdot or Digg? Digg

- Engadget or Gizmodo? Engadget

- Netflix or Blockbuster? Netflix

- Do You Have An iPod? Which is Better iPod or Zune? He owns an iPod and describes himself as a “miniman”, but may move to the Zune if the social networking actually works.

- Xbox 360, PS3 or Wii? Wii, although John Madden could tempt him to look at the 360 or PS3

- Pirate Bay or Torrent Spy? He hesitated on this one, but then I told him I was joking because I knew that the big media companies would be listening and he couldn’t really answer. He said both services are a mess right now.

- What’s Your Favorite Gadget Right Now? The Wii

- HD-DVD or Blu-Ray? Blu-Ray because it has better storage

-Zooomr or Flickr? I figured that he wouldn’t know what Zooomr was, Thomas Hawk made me ask this one, but he said Flickr without hesitation.

- Canon or Nikon? Canon

- MMORG or First Person Shooter? MMORG

Not long ago, Sony was one of those brands, but over the last decade their media division has prevented their technology division from taking the necessary steps to protect their brand name in the consumer electronics industry.

When thinking about how to successfully integrate a business as diverse as Sony’s, there are essentially two strategies that they can take. They either want to create a horizontal structure or a vertical one. A horizontal structure tries to dominate a single product or category. Once you achieve critical mass you can save from cost savings and by being in a position to lead pricing.

Sony used to be in that position when it cames to television sets, but over the last decade, they’ve lost their control over pricing and now Sony executives are publically worried that prices on LCDs are dropping so fast that it could have a material impact on the company’s bottom line. Their response has been to threaten no more price cuts even if competitors continue to slash prices and frankly, if they had a premium brand on TV sets, they could get away with this, but consumers are no longer willing to pay premiums for Sony TVs and if Sony insists on not staying competitive, they’ll soon learn the hard way how much value their brand really has.

When it comes to vertical integration, Sony tries to save money by creating products that can compliment and drive demand for other divisions within the company. Their studio division creates music and videos which drives demand for DVD and CD players mp3 players, which ultimately drive demand for televisions, computers and playstation consoles.

While on the surface this strategy seems like a sound approach for Sony to use, I can’t help but wonder if conflicts within the company have prevented an otherwise stellar technology company from better capitalizing on the innovation we’ve seen over the last decade.

Case in point, the Walkman.

It used to be that Sony dominated the portable music industry, yet they were never willing to embrace the mp3 market until Apple put a gun to their head and forced them to innovate beyond those terrible mini discs that they tried to convince consumers to buy. Was this because Sony the technology company didn’t want to sell a new product? Could it have been because they didn’t see the natural benefits of being able to play mp3s or did they really believe that people wanted to buy their media again on a minidisc or carry around bulky CD walkmans that skipped everytime they tried to take a jog?

While I’ve never been privy to the secret Sony executive meetings where they plot their delusions to try and control the media world, my gut tells me that Sony the music studio didn’t want to embrace this crazy mp3 “fad” and was more concerned about protecting CD profits then innovating and bringing an mp3 solution to the market early on. The result of course was that their precious Walkman has very little brand value today and is more recognizable as a footnote of 80′s subculture, then as a portable phone.

In looking at some of the other missteps that Sony has taken, I can’t help but wonder if Sony the technology company would have ever supported rootkit technology if it weren’t for their media division? Somehow I doubt it.

Would Sony’s PS3 divison have given up their lead on Microsoft just so that they could implement Blu-Ray? Who really knows, but Sony’s insistence to include this technology has created a backlash against their PS3, higher prices that are going to be hard for the non-early adopter crowd to justify and delays in the number of units launched.

While it’s possible that even without their media division Sony would have still lost their cool factor long ago, when I see desperate attempts to build buzz by creating flogs for their PSP, it’s clear to me that Sony has lost their premium status in the marketplace. If they can’t get their users to talk about their product on their own, then something is seriously wrong with Sony’s brand. Sony’s sneaky attempt to try and influence the net culture with their fake internet site is a clear sign that the company has jumped the shark.

How devasting this loss of premium status will be to the company’s bottom line is anyone’s guess, but as long as their technology departments continue to answer to their media divisions, Sony will continue to fail when it comes to bringing new innovation to the market.