Vivendi’s Canal+ is suing News Corp’s NDS over alleged piracy of digital TV smartcards.
Vivendi Universal unit Canal+ has launched a $1 billion dollar against News Corporation’s 80% subsidiary NDS Group, over allegations that NDS helped hackers to pirate smartcard codes from Canal+. Reportedly, NDS arm gave funds to thoic.com, a website that distributed stolen Canal+ smartcard codes.
While comparisons to Bond movie Tomorrow Never Dies may be taking things too far, the battle between Jean-Marie Messier and Rupert Murdoch could be seen as personal. It seems to herald the beginning of a protracted period of commercial combat to win control of digital television distribution.
The prize is the set-top-box industry: Datamonitor estimates the number of set-top boxes installed in Europe will grow from 27.5 million to 72.9 million by the end of 2005. Technology allowing broadcasters to charge for access is critical if they are to make money, either from content or from future services such as interactive and Internet TV.
Currently Canal+ supplies 12.5 million set-top boxes worldwide, while NDS leads with 28 million – so any attempts by NDS to undermine Canal+’s installed base are serious, potentially disrupting the industry as a whole. Few governments want to see a monopoly on pay-TV distribution and many would take anti-competitive action if such a situation arose.
The fight also highlights technological frailties in digital TV. While piracy will always be an issue, technology providers should make it harder, introducing enhanced counterfeit measures in their broadcast signals to make pirated cards less useful – even if this cuts the bandwidth available for programming.
It might also be worth requiring customers to update or sign-on to cards physically. The media industry could learn from the progress being made in security in the mobile media and other IT sectors.
The industry will eagerly watch this legal battle, but without technological progress similar issues could arise in the future. Place your bets now for the winner of the contest – but don’t expect consumers to spend on interactive services unless they trust the system’s security.
