But aside from telcos and cable companies, how many broadband owner/operators are out there? Well, quite a few, according to Optibase president Greg Eisips. In fact, the U.S. residential gateway market will hit $5 billion by 2006, according to industry analysts at In-Stat/MDR. By then there will be a total of 14.7 million households with broadband connections, according to industry analysts at Forrester Research.
But while the residential gateway market is of interest to EnReach, the company has chosen to focus on several smaller niches within that market, along with several other related markets. They are specifically targeting the hospitality market (hotels, motels, resorts, spas, country clubs, casinos), as well as hospitals, universities, and home/housing developers, especially those who are building whole communities or housing developments, which could include either single-family homes or Multiple-Dwelling Units (MDUs)—i.e., townhouses and condo or apartment complexes.
The MDU market is a "slowly growing, but very real market for us," says Eisips, and Eric Li, senior vice president of business development for EnReach concurs. "The reason why the MDU market is more important for us right now," says Li, "is because MDUs are usually wired already for high-speed access, so they are more ready to deliver video services than your average single-family home."
"I know interactive TV sounds a bit futuristic," says Eisips," but the infrastructure is already in place, and now it's just a matter of getting networks set up and managing them." What we are seeing in the marketplace is "convergence in action," according to Eisips. "Instead of installing three separate lines for three separate services, you can do everything on one line when you have an IP network," he says. This allows developers to save money right off the bat, and it also gives them great future earning potential. Now they can take IP networking technology a step further and actually generate additional revenue from their infrastructure investments.
A statement on EnReach's Web site explains the role the company seeks to play in this market: "EnReach's success is built on developing complete broadband-ready entertainment systems than enable operators to deliver revenue-generating services such as: VOD, TV over IP, DVR, Internet and email. EnReach's systems help operators expand in room/residential offerings, create new revenue sources and monetize IP-based broadband connectivity through easy-to-use enhanced television services."
Of course—as Eric Li concedes—"the only thing missing is the content side." For some broadband operators, this isn't such a great problem, but for hospitality industry it is. Individual mom-and-pop hotels or small hotel chains, for example, don't have the clout to negotiate with Hollywood studios for content (i.e., movies). They are, therefore, at the mercy of cable companies or the new breed of content middlemen who have recently cropped up. Two such organizations servicing the hospitality market are OnCommand and LodgeNet. These companies will supply your hotel chain with movies and interactive TV services, but if you make a deal with them, you surrender control over the content and a certain portion of the profits. "Our business model appeals to broadband owners who want greater control over content and who want to keep more of the revenue and not have to share it," says Li. He also notes that although OnCommand and LodgeNet offer a quality service, "their business model doesn't really work for hotels with under 200 units." He says EnReach's model can work for hotels with as few as 100 units. Li says that EnReach hopes to overcome the content (movie) acquisition problem for smaller hotels/motels by forming a content cooperative.
But Li points also out that movies are not the end-all and be-all of interactive TV, especially in certain niches. He points to hospitals as an example of a broadband environment where movies are not necessarily king. Hospitals that install EnReach systems often use them for internal training and for "improving operations," according to Li. A hospital with its own little IP-based broadcasting network can save money by reducing their AV department. With video programs available at any time on the network, AV technicians no longer need to wheel VCR carts to individual rooms and offices to show instructional/educational tapes to staff or patients. Because hospitals usually own and generate their own content, "The hospital market is moving along much better than other markets," says Li.
"The viability of the broadband IP market is a reality and today there are key applications, such as TV-over-IP that will drive market penetration," says Bo Wu, president and CEO of EnReach. "Our partnership with Optibase helps to further propel the TV-over-IP offering by providing operators with the technical tools required to quickly offer advanced digital services over broadband IP infrastructure. The time-to-market for TV-over-IP services will be reduced significantly as a result of the integration. We also believe broadband operators selecting the EnReach-Optibase solution will see a strong return on their investment."