ITV Interview: Jim Cantalini, CEO of Gist Communications

Gistjimcantalini2005_1Jim Cantalini is CEO of electronic programming guide (EPG) company, Gist Communications. The company recently announced that it had developed a mobile EPG, called the UGuide, which provides end-users with programming recommendations, and allows them to use their wireless device to schedule recordings of programs remotely. (Note: Gist is, of course, not the only company eyeing the emerging mobile guide space. Last week, EPG giant, Gemstar-TV Guide, unveiled a product called TV Guide Mobile, and stated in a press release that it views mobile products as "a key area for the company," and that it is Gistlogo2005_1 pursuing "several initiatives" in the mobile space.) Cantalini recently spoke to [itvt]'s Tracy Swedlow about the thinking that led to the development of the UGuide; about its plans for marketing the guide; about its feature roadmap for the product; and more.

[itvt]: Could you give us a little background on Gist, and on the various projects you've been involved in over the past few years?

Cantalini: Gist was founded in 1996 to bring TV viewing guides to the Internet. From the beginning, it sought to answer the question for the consumer: "How do I want to use my time to watch TV?" We began doing personal guides for users and giving recommendations. The service also had editorial components with magazine stories, games and fun elements. We served 33 million pages per month to 4.5 million registered subscribers. Our partners included AOL, Yahoo!, HP, ABC, NBC and Microsoft. However, this product was advertising-based, so when the Internet advertising market collapsed in 2000, we de-emphasized the product and gave up market leadership.

In 2000 Gist's board of directors decided to expand the guide business to the cable set-top box space. We became premier application partners for both OpenTV and Liberate Technologies. We deployed a product called TVMag, which used some of our editorial components, to EchoStar and Charter Communications via Digeo. We built an EPG for a French TV product called Tak TV and served that guide via the Internet. We also worked on an EPG for Star Choice in Canada. We have done a lot of work in Europe on DVB-based guides. Our current work there involves us delivering the guide data for the Bluewin IPTV project behind Microsoft. This is our first experience in IPTV. We decided to develop our UGuide mobile phone-based guide product about a year and a half ago, and have been working on it ever since.

[itvt]: How is Gist funded?

Cantalini: From its start nine years ago, it has been funded by a European investment group. We have been fortunate to maintain that group's support.

[itvt]: Could you tell us a little about the thinking that led to the development of your UGuide mobile phone-based guide product?

Cantalini: We basically sat down and said, "OK. Let's look at the guide business. Is this a successful business? Has anyone ever been successful in the guide business?" And we concluded that there really aren't any companies that have ever been successful in the guide business. We felt that we needed to develop another approach.

[itvt]: What about Gemstar-TV Guide? Haven't they been successful in the guide business?

Cantalini: In the electronic guide business, I don't think anyone has made a positive adjusted return on equity or made the consumer very happy.

[itvt]: Are you talking about both the application development side and the data side of the business?

Cantalini: The application side. I think people have made money on the data side of the business, but I don't think that people have had a positive return on the EPG itself. So, basically, we tried to rethink the whole proposition of how you can make money doing guides. We figured that there are a couple of things that really weren't being recognized. We really didn't see advertising being a big driver in the near term, and we didn't think guides will ultimately be sold as a high-priced premium product. We figured that the only way anyone was going to make any money in the guide business would be if they could attract significant numbers of subscribers at a very low price. One would have to have a very low operating cost basis in order to make money.

Another thing that we concluded was that guides should be of limited complexity--otherwise, they're just not usable.

As a matter of overall perspective, we see the UGuide as a product that is centered around individual consumers and that brings them the information that they want to know for making television-viewing decisions. This is broader than telling them what is on the channels. We want to include all the choices that the consumers have: broadcast channels, VOD and, later, videocasts. We want to bring that information to the consumers on any device that they have.

[itvt]: But what was the thinking behind developing an EPG for mobile phones specifically?

Cantalini: We are convinced that mobile phones will be an important platform for EPG's in the future: one reason for this is that guides that are based on the set-top box don't really lend themselves to personalization. You can make it possible for each person in a household to set up their own profile on the box, but I don't think people ever really bother to set them up.

[itvt]: Why do you think personalization is so key to the EPG space?

Cantalini: Choice in a world of infinite content requires personalization. Back in the 1950's, when you had just three networks, choosing what to watch was easy. Today there are already maybe 500 channels, and as video streaming grows, you will be drowning in even more choices, unless you have a means of finding what you want to see.

So we think that consumers are better off when we deliver guides to their mobile phones, which are personal devices, rather than to set-top boxes, which are used by whole households. Mobile phones are devices used by individuals, while set-top boxes are devices used by groups of people. If you design an EPG for a mobile phone, it can then be tailored to the individual who owns that phone. So, in other words, mobile phones lend themselves more readily to personalization.

Now our goal was to make sure that people could not only get the information they needed, but would also have the ability to do something with that information, once they received it. The average cable consumer, for example, gets 100 channels, and if you assume that there are 25 programs on each of those channels every day, that consumer is getting 2,500 programs per day. Now, no-one is going to spend their time searching 2,500 programs. So how are consumers going to find what interests them? We think the answer is twofold: first, we need to provide the consumer with recommendations that reflect the kinds of things they like to watch on TV; and then, we need to ensure that those recommendations are actionable. What we're doing, in effect, is giving the consumer access to all the programming that he is paying for, but not seeing, due to broadcast timing. If a consumer is spending $100 for television service but can't find what he wants, he may give up and stop watching it altogether. Considering the success of TV series on DVD, this could eventually lead to service cancellation: the consumer will instead spend that money on renting programs on DVD's or just buying boxed sets of an entire season's episodes.

[itvt]: You mentioned that one of your goals with the UGuide was to ensure that its recommendations were "actionable." Could you explain that concept?

Cantalini: We want to give consumers the ability to act on the recommendation we've sent to them, so that they can press a button on their wireless device to record the recommended program, and then our service will send a "record" instruction to their recording device. We don't see this model as limited to any specific device at either end. We'll send the recommendations to any wireless product: mobile phones, PDA's or whatever. And we'll send the "record" instruction to any kind of recording device. So the UGuide is made possible by three significant developments in technology: 1) the almost universal possession of a mobile phone; 2) large-scale broadband penetration; and 3) the emergence of PVR's. We think that these three factors have made for a sweet spot in terms of people being able to manage their television viewing.

Our objective is to provide people with a product where all they've got to do is set up a profile, and thereafter, they get their recommendations every day. Then, if they choose to record one of the programs that our product recommends--or any other program they choose--they can do it easily. We manage the product on our servers. We can upgrade as often as we want. We can add new features continuously. We don't have to change the environment in which we operate.

[itvt]: What kind of delay is there between asking the guide to record something and the recording being scheduled on the recording device?

Cantalini: The reaction time depends on the transfer medium to the recording device: broadband, dial-up, cable system or satellite system. It will be between one minute and a couple of hours. But, in most cases, if you were sitting at home, you could use our guide on your mobile as a remote control for your recording device. So the UGuide can be used from 10 feet or 10,000 miles away from your TV. It doesn't matter.

[itvt]: How does the UGuide's recommendation service work: is it based simply on the initial profile the user sets up, or is there some kind of artificial intelligence also at work--so that the recommendations take into account not only the initial profile, but the user's ongoing recording choices?

Cantalini: The UGuide will incorporate both approaches--as well as a few others. Upon the user's initial registration with the UGuide service, the profile information provides the seeds to the recommendation engine, so that it has a baseline of the user's preferences to use in generating program suggestions. As one might expect, that approach yields a fairly limited understanding of the range of programs a given user would actually enjoy. The remote recording functionality allows the system to analyze what the user actually chose to record, in addition to user-provided inputs, so that over time the system can develop a more focused picture of the user's true preferences.

[itvt]: Is the UGuide a finished product?

Cantalini: Yes. We have a commercial version of the product ready with a commercial-quality graphical user interface.

[itvt]: What kinds of companies are you hoping to sell this guide to?

Cantalini: In looking at the marketplace, we think for us the best approach is really to work with people who have product advertising capabilities. We want to work with companies that would like to prominently feature this product as part of their own offering, in one way or another. So that could be the mobile phone companies, the cable operators, the satellite operators, or the makers of recording devices. We see this being sold as a subscription product.

[itvt]: How much would you charge the end-user for it?

Cantalini: Based on our consumer research, we believe that first-mover pricing is in the neighborhood of $3 to $4 per month. It's obviously a product for those people who are interested in knowing what their programming options are and in managing their TV watching. Thereafter, the price will continue to drop as market share grows. This will be a low-priced product for those who chose to buy a premium product.

[itvt]: Will it be a branded product or white-label?

Cantalini: It is a white-label utility service. We envision ourselves providing a service to our partners' customers, not taking them away. Now, ultimately, other people could probably do this, if they wanted to put enough resources into it. But we are already set up and ready to go, and we are prepared to work with everyone. Our partners will be able to brand it any way they want. So it's a question of companies seeing working with us as being cheaper than doing it themselves. That said, however, we have been filing patents for recommendation-based guides since 2000.

[itvt]: Who is providing the data for your guide?

Cantalini: We are running data from several companies for compatibility, and will respond to the requirements of our partners.

[itvt]: Does the development of the UGuide herald an overall shift in Gist's focus away from the set-top box to the mobile phone?

Cantalini: We're not abandoning the set-top, but we're not focusing on it right now, either: we'll react to opportunities that come up. We've done deployment for a set-top box-based guide for Swisscom. We've worked on their Bluewin IPTV project for integration of the EPG data there. So we do still have our hand in the set-top box space. Ultimately, we're trying to create an environment for the consumer, where we can bring them personalized information across a variety of platforms.

[itvt]: As you're probably aware, Gemstar-TV Guide has just launched a product called TV Guide Mobile. The company's press release announcing the new product quotes its new SVP and general manager of digital media, Richard Cusick, as saying that the product is "one of several initiatives in the mobile space that Gemstar-TV Guide is pursuing," and that "mobile is a key area for the company and one that we are prioritizing across all of our products, services and partnerships." How does Gist plan to compete against Gemstar in the mobile guide space?

Cantalini: Of course we would be happy to provide the service to them if they thought that buying it from us would be more cost-effective than building and servicing it themselves. At any rate, Gist's approach to the market is very different in key respects. Whereas Gemstar-TV Guide is attempting to leverage their traditional brand, the UGuide is a white-label service that will enable mobile carriers and TV service providers to offer their customers robust features under their own brand umbrellas. Also, the TV Guide Mobile product is more content-driven, presenting reviews and other canned material. The UGuide is primarily a utility product, much more focused on delivering highly relevant, personalized recommendations and program information that are more attuned to the individual user. Finally, the UGuide already offers users remote DVR recording capabilities, which is a significant differentiator for Gist.

[itvt]: Could you talk about your product roadmap for the next 12 months or--if your efforts are going to be taken up almost entirely by the UGuide--could you talk about the work Gist will be doing on that product in that timeframe?

Cantalini: Our plan is to continually add features to the UGuide every quarter. This is possible, due to the fact that all the processing of information is on our servers. In the short run, we are concentrating on broadcast television. Beyond that, we have been thinking about podcasting for the past year and the emergence of video podcasting. Creation of amateur video product also opens windows that will be significant in the future. That said, we are staying focused on answering our prime question--"How do I want to use my time to watch TV?"--regardless of whether I'm watching it on a TV set or an iPod.

But I do think that when we talk about watching TV, we need to redefine this to include video viewing from any source. For example, my wife is Danish, so she subscribes to a Danish television service over the Internet and watches programs on her computer. These days, watching television is a much broader experience than turning on the TV. By the way, I'm getting my wife a video iPod for Christmas this year, because I love her--and so that I can watch her usage patterns!

[itvt]: Do you have any plans to adapt the UGuide--perhaps via a partnership with a video search engine company--to enable end-users to find broadband video and download it to their DVR's or computer hard drives?

Cantalini: Yes. The best thing about the UGuide is its adaptability. Our mission is to develop a complete media guide--one which would enable users to find relevant content from any available source. That would definitely include broadband video and VOD, at the very least. Users might want to download video to a DVR or computer, or view it directly on their handsets. How they ultimately view the content is up to them, and helping them navigate all the available choices is where the UGuide comes in. As Gist provides the entire UGuide service, it can stand alone or be part of a larger package of services. Everything is on the table.


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