Toronto start-up seeks licensing deals for virtual environment technology

A Toronto start-up company is hoping to strike deals with cablecos and oth-ers to rapidly move its interactive set-top box into North American homes. Following a trial with a Virginia-based wireless cableco, SBS Interactive Inc. is pursuing a dual licensing/retail strategy for its Duo technology – hardware and application software that put users into virtual environments. The system is touted as having extensive educational and entertainment potential, and SBS executives are now trying to put the product into enough homes to make it worthwhile for third parties to create compelling content. The Duo is a set-top box that connects to television sets via a single cable. Pre-packaged content is shot against blue screens, such as an actor demonstrating products or exercises. Played on a DVD, and working with a camera built into the box, the Duo fills in the remaining screen with the user and his environment to do such things as demonstrate sports techniques. For example, a customer could stand side-by-side with a golf pro to practice a swing. To date, SBS has partnered with Vibe Fitness Studios in the Toronto area to carry the box, along with a selection of other titles produced by the company. The Virginia cableco, Digital Broadcast Corp., ordered 1,000 units to test in its customers’ homes. Eventually, SBS hopes larger television distribution companies and electronics manufacturers will be convinced to integrate the technology into their own devices, thus paving the way for large content creators to begin developing titles. Though the company is producing its own titles, such as for the golf and hockey educational markets, it sees its best strategy in becoming a licencing company. SBS president Todd Gotleib tells Canadian NEW MEDIA that if left to his own druthers, he’d be happy to manufacture the equipment for mass distribution, but the reality is that the company will have to partner to make the company viable – despite greater customer acceptance of unfamiliar electronics brands. "When you walk into Future Shop now, you’re going to see four or five brands you’ve never even heard of, because price has become the issue. If you’re going to buy a $45 DVD player, do you really care if it came from Sony? No. Because it almost becomes disposable. In an ideal world, would we like to (be the main manufacturers)? Yes. But, the marketing dollars and the length of time it would take to penetrate with an unknown brand is too onerous. So, our model is to become a licensing company where the major electronic firms already have the shelf space, already have the relationships and the marketing dollars and the infrastructure to handle such a big volume." SBS has recently brought Bernie Luskin, former head of Philips Interactive Media, which created the CDEye technology, on board to accelerate the licensing process. "Once we start aligning ourselves with major electronics firms, some of the biggest content makers in the entertainment industry have seen and endorsed the product, but have said, ‘show us a solid hardware base, and we’ll start making content.’ So, it’s all happening simultaneously." Forging those large manufacturer relationships will be Luskin’s main task. Gotlieb cites the new Comcast cable box, which includes an integrated camera for video conferencing, as encouraging news. SBS technology, he says, would be a fraction of the cost to build into an existing device such as that and would help it gain immediate consumer traction. In Virginia, where the company is testing the equipment with Digital Broadcasting, he says SBS is eyeing several potential revenue models. The company will offer the equipment on an inexpensive monthly rental basis, then hope the customers will buy available DVD titles. If that proves successful, the cableco might eventually offer titles on pay-per-view channels, or even devote a full channel to Duo content if the demand becomes significant.

Toronto start-up seeks licensing deals for virtual environment technology

News | 02/17/2005 5:00 am EST

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