Orb Networks is throwing its current subscription model out the door to become a free streaming service and software provider, the company said Tuesday.
Currently, the Emeryville, Calif.-based firm offers two months of
trial service free. After that, the service costs $9.99 per month or
$79.99 per year, plus a bit more for additional users.
But now, Orb said it will turn to strategic partnerships with content providers and consumer electronic companies to make its money.
Executives said the revenue will come through a combination of
co-marketing relationships and transactions for music, video, audio and other services. As a goodwill gesture, the company said it would also start to reimburse those who may have originally subscribed to the service.
The Orb service runs on cell phones, PDAs, laptops and televisions
using Windows Media, Real Media, QuickTime, or 3GP. The Orb-enabled
service recognizes analog TV, cable, Windows Media, JPEG, MP3, and MPEG versions 1 through 4. The player also acknowledges universal plug and play, Java based connection technology Jini, Apple’s Rendezvous, and X-10.
In addition to switching to a free service, Orb launched a new
Photo Sharing service so customers can swap with friends and family.
Orb also offers the ability to remotely record TV programs using
Orb’s Digital Video Recorder (DVR) function and then view those recorded
programs at any time on any of their mobile devices. For watching
television, customers can buy tuner cards about a handful of third party
vendors like ADS Tech, Hauppauge, or AVerMedia.
If you’ve recently seen a digital home presentation by Intel , you’ll know Orb. They’re the ones showing off broadcast television, radio and other streaming content on PCs and other Internet-enabled devices.
Joe Harris, vice president of marketing, said the relationship between Orb and Intel is strictly plutonic at this time. “We help show how their high performance CPUs work,” he said. “They provide a great marketing service for us but there is no financial engagement.”
Harris said Phase I of Orb’s shift to free includes using those
strategic partnerships to enable direct marketing to about 10 million to 15 million customers. The company said Phase II will be to get the content on board and Phase III will see Orb adding premium services and enabling e-commerce transactions.
The company said it is close to bringing about 18 different service and content providers under its wing with some 45 active conversations going on with some of the largest national ISPs, movie and recording studios and international media corporations.
In comparison to other services, Orb says not charging customers is actually gives it a competitive edge. By comparison, Orb executives said IP streaming music subscription services like Rhapsody, Napster, or Streamwaves can cost $9.99 a month but actually operate at 35 percent margins of $10.50 per quarter, per subscriber.
Likewise, a mailed DVD movie subscription from Blockbuster or Netflix can run customers as much as $11.99 per month, but all together, Orb estimates they have only accumulated upwards of 3 million subscribers so far.
Orb expects its content revenue model should be less than 10 percent per quarter in the fourth quarter of 2005 and less than 15 percent per quarter in the fourth quarter of 2006.
Launched three years ago, Orb also cites TiVo, Real Networks,
Microsoft Windows Media Player, SmartVideo, Apple Computer, Sling Media, Yahoo, Verizon’s VCast as its competition in either the content delivery or platform player space.
Harris said the first phase of the transition has already taken place with the company now that the service is available for Windows XP operating system and Windows XP Media Center Edition.
“Digital environment technology is a competitive field, and one that is ripe for growth,” said Tim Bajarin, a principal analyst with Creative Strategies. “Vendors need to focus not only on the viability and innovation of their technology, but on fostering a consumer-friendly business model, as well. Companies that can master both worlds stand the greatest chance for early customer growth and long-term success.”
As for digital rights issues, which remains a hot topic
in Congress this week, Orb locks down the content. The company does not
allow content copying for its service. In fact, the company said all
digital rights management (DRM) and access rights verified before
streaming with broadcast flags observed.
On top of securing the rights, Orb only allows one stream allowed per
authenticated user and only one stream for each piece of content at any
time. Customers cannot skip advertisements and Orb can impose additional
content-specific controls on copying, re-broadcasting, streaming, and
device restricted viewing.
“By eliminating subscription fees, Orb eliminates the final barrier between consumers and their digital media,” Jim Behrens, Orb Networks CEO, said in a statement. “In our view, a free Orb service will exponentially increase our value proposition for those customers — and millions of new customers as well.”
