Wave Systems Corp. (fka WAVXQ)

[Whitewash]

TVTonic Turns Internet Video into 'Real' TV Experience
Published: Aug 12, 2006

http://www.onlinereporter.com/site_pages/article.php?article_id=7419


Way back in 2003, before the general public had ever heard the term
"weblog," never mind "blog," Wavexpress launched what was
essentially the first video blog for US presidential candidate
Howard Dean. The company's TVTonic Direct video-caching technology
powered the "Howard Dean TV" section of the former Vermont
governor's Web site, delivering full-screen DVD-quality video over a
broadband connection.

When it first launched TVTonic, Wavexpress used a couple different
business models. It offered its own "channels" of the TVTonic client
software. While some of the channels were free to view with the
$1.95 monthly subscription fee or included in a $2-a-month bundle,
some premium channels were priced on a per-channel basis.

The second business model, the one that led to "Howard Dean TV," was
to license its technology to third-parties wanting to offer high-
quality video on their Web sites. Wavexpress also had hopes of
partnering with cable TV operators to include its services with
their broadband offerings.

Three years later a number of online video providers are still
working on ways to deliver the video quality that TVTonic had back
then.

Despite the technical quality of video over the Internet, one thing
that content providers have learned is that consumers don't want to
be bothered with a bunch of little monthly charges, especially with
the ever-growing amount of free video available on the Web.

Internet Video Goes to the Living Room
So, Wavexpress spent much of 2005 revamping its business model into
one that looks like it will have a bright future. Earlier this year,
it launched an updated version of TVTonic that's tightly integrated
with Microsoft's Windows XP Media Center Edition 2005 to deliver a
"10-foot" experience for Internet video. According to Wavexpress
president and COO Michael Sprague, his company is trying to "turn
Internet video into a 'real' TV experience."

As has been the case since TVTonic first launched, the content is
delivered in the background and cached on the PC's hard drive, so
it's there and ready to watch whenever the user tunes in. It works
like a DVD, with pause, rewind and fast-forwarding through a
program. "We want to take a lot of the work away from a user," said
Sprague. "When one thing ends, the next begins, just like on TV."

Available through Media Center's Online Spotlight feature, TVTonic
lets users select content from an on-screen guide. The TVTonic
program guide lists the company's "featured" channels that offer
high-quality licensed content as well a list of about 150 other
channels comprising RSS feeds that the company provides because they
have content that works well in the Media Center environment,
Sprague said.

The new TVTonic viewing experience was designed to be watched from
the sofa and controlled with a remote and help consumers "get into a
video experience where the content is always fresh," said Sprague.
The channels with content licensed from Wavexpress partners deliver
video in high-definition or DVD-quality and are similar to
traditional television in that they're ad-supported. TVTonic ads
play between videos, just like a TV channel, so there no annoying
pop-ups to remind the user that the video comes from the Internet.
Wavexpress shares the ad revenue with its content partners. Channels
delivered via RSS are ad-free.

Create Your Own Channels
In addition to the feeds that Wavexpress provides, users can
subscribe to their favorite RSS (Really Simple Syndication) video
feeds and add them as channels to create a truly individual TV
experience. Users can assign how much hard drive space they want to
dedicate to their TVTonic channels.

When a user subscribes to video channels, TVTonic will automatically
update the channels whenever new content becomes available. Although
an Internet connection is required to download new content, it's not
necessary to be connected to watch TVTonic channels.

Consumers who don't have a Media Center PC can watch TVTonic within
the Internet Explorer window on a PC.

According to Sprague, the main competition for TVTonic comes from
other RSS video readers, although, he says, most others are "built
around a desktop experience," while TVTonic is designed for more of
a true TV experience. Other competition comes from TV channels like
Comedy Central or MTV, which offer similar content to TVTonic
channels.

It doesn't compete directly with the Akimbo service, Sprague said,
because much of the Akimbo content was originally produced for TV.
AOL's In2TV, iTunes or any of the other sites offering downloads or
streams of television shows don't qualify as direct competition
either. This, according to Sprague, is because rather than bring TV
to the Web, TVTonic focuses on bringing original Internet video
content to the TV.

Sprague also pointed out that TVTonic isn't trying to be another
YouTube with millions of videos. "YouTube is not an experience
you're going to watch in the living room," he said. When folks watch
TV, they expect a continuous stream; they don't want to watch a
three-minute video and then have to search for what to watch next.
"TV has been wildly successful for 50 years largely because there's
no need to search," said Sprague. "There's always something there to
watch."

That's the type of experience Wavexpress hopes to deliver with
TVTonic. In the next few weeks the service will have a new featured
channels section in its programming guide, along with a bunch of new
channels. The company is also working with Microsoft to get TVTonic
integrated with the upcoming Windows Vista operating system.

How will the company know if its new business model is successful?
Well, according to Sprague, "We ask, 'Can I keep someone entertained
in the living room for 15-20 minutes?' If so, then I've done my
job."

Wavexpress Channels
Wavexpress programs a number of channels which provide the best of
the Net in different genres. In some cases content will come from
many different sources, but in all cases, Wavexpress editors pick
the best clips and program the channels to provide a consistent and
reliable entertainment experience.

Rawdio: Rawdio is TVTonic's own alternative music video channel. It
serves the best in indie pop, college rock, electronica and
beyond. Videos are sourced from Warner Bros, Astralwerks, V2
Records, Mute, Sub-Pop, Beggars Group/Matador and others.

GTtv: GTtv is "the" place for hardcore and casual gamers with
reviews, previews, interviews and event coverage - many in HD.
Produced in association with Gametrailers.com.

Toon Hut: Toon Hut is an animation station presenting creative and
off-the-wall animated shorts from around the globe.

TechTonic: TechTonic is a tekkie's paradise featuring the best tech-
related video
podcasts from Microsoft, indie wunderkinds Revision 3 and more.

MoviePick: MoviePick provides instant access to the most up-to-the-
minute trailers
for current/upcoming films and interviews with the stars and
creators. Content is provided by Hollywood.com.

The News: The News delivers the latest stories 24 hours a day as
they unfold
around the world. The channel is produced in affiliation with the
Associated Press.

Cartoon Cow: Toons for the kids featuring new and classic animation
from Warner Bros, Fleischer Studios (Popeye, Betty Boop,
Superman), Art Clokey (Gumby) and more.


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