Digital video products aren't new anymore. Now, instead of creating innovative digital products, the industry is using well-established standards and off-the-shelf components to make low-cost devices that fill the mass-market pipeline.
From low-featured DVD players and digital terrestrial TV set-top boxes (STBs) to digital picture/video frames, the race to the bottom is on. And, in short order, there will be new products to add to that list as today's innovative technologies mature into potential mass-market items.
Of course, the common thread for all these products is the ability to build them cheaply. And this is where technology standards—and what it costs to implement those standards—play a significant role.
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A recent cost analysis of U.S. Advanced Television Systems Committee (ATSC) digital-to-analog converter boxes, which retail for $40 to $70, illustrates the distribution of costs between parts and intellectual property (IP). When factoring in major component costs (demodulator/decoder chip, power supply, casing, remote control and input/output panel) and royalty costs, Digital Tech Consulting estimates total costs are $28 to $32, excluding assembly, shipping and tariffs.
That estimate is for devices that include only the mandatory features as specified by the U.S. National Telecommunications and Information Agency. Additional features not included in the cost analysis—such as a programmable function on the remote control, analog pass-through technology and a smart antenna interface connector—are classified as "permitted" but not mandatory. Each of these would add an incremental cost to our analysis.
