PERLMAN TO CABLE OPERATORS: MOXI ISN'T AS PRICEY AS IT LOOKS
Moxi Digital needs to upsell thrifty cable operators from set-top boxes to hardware with company’s home-entertainment gateway software at hundreds of dollars per subscription, and founder Steve Perlman outlined to MIT-Stanford Venture Lab panel in San Jose Tues. marketing arithmetic he hoped would do it. Perlman’s strategy: Dangling opportunities to capture much- larger chunk of consumers’ entertainment and e-commerce dollar, without significantly boosting upfront costs.
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Moxi’s centerpiece media server is intended to go beyond existing PVR/set-top combos by replacing CD, DVD and other media hardware. “Something like this is going to succeed,” Forrester Research analyst Josh Bernoff said. His biggest concern: “There is just about nothing slower to move on a technology opportunity than a cable operator -- unless it’s a phone company.” MSOs are deep in debt, short on cash and historically notorious for going slow, Bernoff said, adding that among few incentives to change is satellite competition.
Chief Technology Officer Ken Morse of Scientific-Atlanta’s PowerTV said cable providers “don’t like to go for the big expenditure unless they're going to get a big revenue pop.” He said keys to landing big payoff were “selling the value proposition and creating the demand out there.” More adventurous operators should be approached first, he said. PowerTV has orders for 100,000 Scientific-Atlanta 8000 boxes comparable with Moxi device that will be available in next quarter at lower price than Moxi is quoting, Morse said.
Average satellite and digital-cable installation is for 2 TV sets, Perlman said. He said 2 cable set-top boxes, about $225 each, cost almost as much as Moxi equipment, at $425 per server for cable ($350 for satellite) plus $40 for extension box to serve 2nd room. On revenue side, cable operators could anticipate new streams including music subscriptions, video-on- demand and interactive ads, Bernoff said.
Perlman stepped down as Moxi’s CEO last month but remains vice chmn. and is active on technology matters, including advanced automated animation at affiliated Rearden Studios. He said Moxi was “very close” to Jan. 2003 CES timetable of producing beta software in April, final version by year-end and starting distribution through Echostar in 2003. Perlman declined to comment on Business Week report that Paul Allen’s Vulcan Ventures, which owns Charter Cable, was negotiating to buy Moxi. Perlman suggested reports that said Moxi was in financial trouble were false and said he personally was wealthy enough to finance company again himself if necessary. However, he said it always was on lookout for new capital and aligning with cable operator would make sense.