THE QUINTESSENTIAL HOLLYWOOD DEAL

As had been rumored, Time Warner, one of the last large film companies without a Japanese connection, has signed an agreement with Toshiba and C.Itoh. This deal, we believe, has more to do with repairing Time Warner’s credit than with technology synergies.

Time Warner CEO Steven Ross, is the consummate deal-maker in an industry where deal-making is considered the highest form of art. The Toshiba/C.Itoh deal is the work of Ross at his best: a deal so complicated that few people (other than Ross) completely understand it, but a truly elegant piece of work nonetheless.

In essence, Time Warner is transferring its movie, television and cable businesses (along with $7 billion of TW’s $8.9 billion debt) into a new limited partnership to be called Time Warner Entertainment. Toshiba and C. Itoh will each put up $500 million in cash in exchange for one-sixteenth shares in Entertainment. Time Warner, Toshiba and C.Itoh will also form Time Warner Entertainment Japan (owned 50 percent by TW and 25 percent by each of the Japanese partners). Time Warner keeps its publishing and record businesses, and (via additional preferred stock in Entertainment) gets preferential payout of earnings from Entertainment.

Toshiba and C.Itoh get an American movie/television connection without the costs and headaches of acquiring and running an American company. Time Warner magically repairs its balance sheet, increases the paper value of its company by billions of dollars, retains control of its movie/TV/cable operations, and gets preferential claim on the earnings of Time Warner Entertainment.

The Time Warner flacks would have you believe that this represents a major step towards realizing Ross’s vision of an integrated global entertainment giant. Such a deal!

WORLD’S FIRST VOICE MICROPROCESSOR

Last week, National Semiconductor Corp. introduced the world’s first dedicated voice chip. It believes that products such as answering machines and telephones will soon “go digital,” and that the chip will be the seed for a whole new generation of voice-based digital products.

Other “voice” markets the company sees as emerging are intelligent voice systems for computer transactions, such as electronic banking; voice dictation machines to replace microcassettes; voice annunciators and annotators for speech synthesis applications such as cars, toys and appliances (and even voice annotation on fax messages!); and speech recognition for voice response and automation applications.

Priced at $18 in 10,000-unit quantities, the chip is a 32-bit, one-micron CMOS device with on-board digital signal processing. It offers real-time voice compression and decompression and touch-tone signal detection, as well as a low-power mode for use in cordless and portable phone applications.

INTEL ON THE MOVE WITH DVI

Intel Corp. won the Comdex “best of show” award with upgrades to its Digital Video Interactive (dvi) video products last month. New versions include Action Media II video capture and playback boards as well as upgrades to both of DVI’s compression algorithms. Intel also announced a new software audio-video kernel (AVK) designed to allow easy use of DVI hardware with a variety of system software platforms.

Intel made noticeable progress toward high-quality decompressed digital video with new versions of its RTV 2.0 and PLV 2.0 (Real Time Video and Production Level Video) algorithms. PLV, which requires significant processing power to compress but decompresses easily, is approaching VCR quality, a level that MPEG cannot and probably will never achieve in its current form.

Equally significant is the new AVK, a low-level programming interface designed for compatibility with system-level interfaces such as Microsoft’s Media Control Interface and Apple’s QuickTime. It allows data files created under OS/2, for example, to be played back on a Windows or Macintosh platform, making cross-platform application development vastly simpler. Intel’s DVI partner, IBM Corp., wrote the AVK code, and both companies are selling plug-in boards for at and PS/2 computers.

Intel clearly wants DVI to be everywhere — the first evidence is a company called New Video, now shipping a DVI board for the Macintosh — and it has told some developers that it believes DVI could be its highest market share chip in the PC business by 1996. Part of that plan hinges on continued economies of scale. DVI started as a seven-board set; it’s down to two, and Intel is adamant that it will be a single chip.

VIRTUAL OS CLOSE TO BETA RELEASE

After more than two years of banging on the industry to support its work, the Virtual Worlds Consortium, a voluntary association that supports the work of the Seattle-based Human Interface Technology (HIT) Laboratory, has added some industry heavy hitters to its line-up. Microsoft, Fujitsu, Sharp and InSite have joined, and, as a result of contributions of cash or equipment, will benefit from the Lab’s research.

One such benefit is the “V-OS,” an operating system for virtual reality designed by former Autodesk researcher William Bricken, which is ready for beta release under the auspices of the HIT Lab. Although V-OS will first be released in the public domain, a Seattle company called Oz has been formed to market and support a later, commercial version. V-OS was demonstrated at the recent Hackers Conference in Tahoe.

Lab director Thomas Furness, the virtual reality pioneer who introduced the “SuperCockpit” to the U.S. Air Force, is guiding the development of VR technology and applications for design and manufacturing, education, biomedical research and practice, and telecommunications. The HIT Lab, the only nonprofit virtual reality research laboratory in North America, is a unit of the state-chartered Washington Technology Center.

Other members include Alias Research, Boeing, Digital Equipment, Sun Microsystems, U.S. West and VPL Research. The addition of companies such as Microsoft and Fujitsu signals that mainstream computing and telecommunications companies are starting to consider future VR applications.

MARTIANS, AND DUPES, AT SMPTE

The central theme of a recent SMPTE (Society of Motion Picture and Television Engineers) tutorial in Los Angeles was that digital technologies are making the impossible possible, and the possible easier. Speakers, including Terminator 2 director James Cameron and Pixar animator John Lassetter, demonstrated that the film and video worlds are using digital technologies for a wide variety of tasks — from “invisible” special effects such as fixing scratched negatives to the lauded effects in Terminator 2.

The hot item was digital compositing, or the layering of numerous levels of video into a single shot. Digital compositing also allows the mixing of computer-generated characters with live action, as shown by Carl Rosendahl of Pacific Data Images (PDI). PDI is creating composited effects for a Hanna-Barbera special about Martians –actually computer-generated animations — who land on Earth and interact with the live actors on screen.

Kodak announced a high-resolution electronic intermediate system (for second-generation film duplicates) at the conference. It allows a filmmaker to digitize the film, process and manipulate the images, and put it back out to film without any loss of resolution or color. It could also be used to help restore old or damaged film. The system uses a Sun Sparcstation as a host computer and adds a high-powered parallel processor from Kodak to crunch the data. Though not yet released, it was shown for the first time at the SMPTE show.

The movie industry is convinced that digital tools can do almost any task necessary for video production, and film production is not far behind. Even having “peeked under the bedsheets” at how some of these effects were created, the magic of Hollywood is still becoming more magical.

IBM AND ROGERS STUDY INFO SERVICES

IBM Corp. and Rogers Communications, Canada’s largest cable operator, have teamed up to study how to increase the efficiency of the copper-based cable and telephone infrastructures in order to develop new services that could be carried over those lines.

The companies will be working with businesses to test which services, such as video teleconferencing, it may be possible to implement without waiting for fiber optics to be widely deployed. One IBM-developed technology being tested makes use of “packet switching,” the sending of discrete packets of information, over a line that is already in use. A packet-switched teleconference transmission could be broken into tiny bits and sent down the phone wire in the pauses between a simultaneous voice conversation.

IBM is also pursuing communications research with BellSouth Corp. In addition to Big Blue, most other major computer companies, including Apple, Microsoft and Digital Equipment, are in discussions with cable and telephone companies about future communications and information delivery technologies.

DATA DISCMAN — AND TITLES — IN NOVEMBER

Sony’s Data Discman is being released to worldwide retail channels this month. Sony says there will be 42 titles on the small (8cm) CD-ROMs that the unit uses. Several of these were shown at last month’s CD-ROM Expo in Washington, DC.

The titles were mostly consumer-oriented references: travel books, a dictionary, an encyclopedia, dictionaries of foreign languages, etc. The Data Discman’s small LCD screen limits the kinds of graphics that can be displayed. The keyboard is too small for real typing, but for its primary purpose (two-finger entry of words to be looked up), it is adequate.

Sony Electronic Publishing, a U.S. subsidiary, has made it easy for publishers to get into the act by providing software for conversion of tagged text files and graphics (in Vista, PCX and PICT formats) into premastering format. Retrieval software is provided too. In addition to text and graphics, CD-quality audio is supposed to be supported, but we saw no applications that used it.