The Engadget Interview: Blake Krikorian, CEO of Sling Media

For this week's Engadget Interview, veteran journalist J.D. Lasica spoke with Sling Media CEO Blake Krikorian about the rollout of the Slingbox, its disruptive effects on Hollywood business models, the notions of place-shifting and personal broadcasting, and an announcement he's making right here on Engadget about support for a new operating system.

This week I'll be combining my questions with a few that our readers have posted on the site.

I saw those, and I was like, "Wow! Pretty impressive."

Let's start with the basics. How many employees do you have, where are you located, and when did Sling Media get started?

We have 30 to 40 folks. We're headquartered in San Mateo in the Bay Area, as well as in Bangalore, India. We merged with DiTango a year ago.

How did you get interested in this space personally?

Myself and several other folks on the team have been in this digital convergence space for about 15 years. I started out in this field at a company called General Magic-a spinout from Apple-back in the early 90s. We were out to create an operating system and programming language for a variety of devices as well as a new electronic marketplace. This is before the Web came along.

Where did the idea for the Slingbox come from?

Five years before founding Sling Media, I had a company with my brother Jason called id8 Group Holdings. We were advising many large, established companies in this convergence space: Microsoft, Samsung, Toshiba. We helped them define new products. We were traveling quite a bit in the summer of 2002 and we were pretty diehard San Francisco Giants fans. That was the year they finally wound up going to the Series, before falling apart in the sixth game. We were on the road and just dying to watch the ballgames.

I signed up to hear the Giants on Real before I discovered that the fine print said you couldn't listen to your local teams. Then I was on CNN.com and once again there was a virtual hand reaching out to ask for another $10 a month. Then I got a new mobile phone with video services for another $10 a month. But none of them gave me what I wanted to watch: the Giants, or Comedy Central, or any of my shows.

I said, you know, I'm paying $80 a month for cable, and for high-speed data in and out of my home. I've got a TiVo and all these display devices — laptops, PDAs, cell phones. Why can't I just watch and control my living-room TV wherever I am? So the Slingbox was born out of consumer frustration.

We created Sling Media, and our view is that, with a lot of hard work and a little luck, we will be able to scale the business and create families of products for the digital media lifestyle.

Can you describe what the Slingbox is in 20 words or less?

It's a $249 box sold at retail that lets you place-shift your living-room TV experience to wherever you happen to have a broadband Net connection.

The Slingbox place-shifts that TV experience—whether it's cable TV, a TiVo, satellite receiver, anything. It will redirect your TV signal to a laptop or desktop PC now. Eventually we'll have other handhelds and platforms. You can be halfway across the world in a hotel room in China, or in the backyard in the hottub with a wireless laptop.

What do you need for this to work?

You need a home network—and a lot of consumers say, "I don't have a network but I have a wireless router." So OK, you have a broadband router. You also need a TV signal, and a Windows XP laptop or desktop computer.

So what Tivo did for time-shifting, you hope to do for place shifting?

Exactly right, couldn't have said it better. The DVR, especially pioneered by TiVo and Replay, delivered on the original promise of the VCR, to allow you to time-shift and watch when you want. We're just taking that and extending it to the next level, so you can watch TV wherever you want to be. Importantly, it doesn't have to be pre-recorded, it could be live TV.

Can you explain "personal broadcasting''?

We needed a term to explain this new category. We call it a Slingbox personal broadcaster because it place-shifts your TV experience, but it can also be used for a variety of other forms of redirecting content. Maybe you want to personally broadcast some of your own content. I may want to film my daughter at her swim meet and broadcast it to my parents halfway around the world.

With the notion of place-shifting and the core technologies in the Slingbox, we have visions for where this can go beyond the TV application. But at the start, it's important for us to focus on one or two core scenarios to help people get their arms around it. Given that people absolutely love television and their TiVos, we wanted to focus on that solution first.

Can you sling your personal video to friends or family today?

Technically, it's possible to do that now, but it's a pretty kludgy solution. We've seen people who wanted to immediately use the Slingbox to broadcast a live amateur rock band. You need a video camera, a Slingbox, and you need to configure it manually, but it can be done. But we want that functionality to come with utter simplicity. The people who read Engadget have the sophistication and they'll probably go start using the Slingbox for uses like this now and start demanding that we accelerate some of our development efforts.

How are early sales going?

They've been overwhelmingly brisk, we've been blown away. It's still early, but the sales are bordering on insane. We launched the product on June 30 nationwide at CompUSA's 300 stores. BestBuy just brought it out on July 11. Within the first four or five days, we were sold out.

[Note: The interview was interrupted for a few hours while Krikorian appeared on the TV program "Access Hollywood."]

Welcome back. How did the TV taping go?

Man, it's been insane today. We were taping right next door to Jay Leno's show, with a whole bunch of crazy people running around. The thing that's interesting is how mainstream the interest in our product is. Typically you'd think it would take a long time for the non-geeks to get excited about something like this. But for whatever reason, I think people kind of get it.

With DVRs or TiVo, you're talking about time-shifting, something that's abstract. But people know their TV experience and they can visualize themselves in some place other than their living room. They just go, ah ha!

Who are you targeting at the outset?

Clearly the overall market is large. It's people who just love television and have broadband. Yes, there are the heat seekers who love doing cool stuff with their media, and they'll be there no matter what. There are also the mobile professionals who are on the road frequently and want to watch TV.

But we see two other core groups: There are also people who are TiVo or DVR users who are interested in having that experience in other rooms in the house. There's another set of people who are tethered to their desks at work and they have a keen interest in television, whether it's news junkies who want to be tapped into world or financial news, or avid sports fans at work, or those who want to watch their local team on their laptop while barbecuing in the back yard. We've gotten emails from people who say they love it because they can watch their team in the bathroom. There are also those who may be living abroad for an extended period.

Mike Langberg in the San Jose Mercury News wrote the other day, why wouldn't you just burn your recorded TV shows onto DVD and watch it on your laptop?

Sure, that could be done. The Slingbox isn't the only way of enjoying media. But there's something about having the instant gratification, not having to worry about planning ahead and burning a DVD. People want instant access to stuff, they don't want to have to deal with it.

You mentioned TiVo. Why would TiVoToGo be a better solution than buying a Slingbox?

No. 1, I'm a huge TiVo fan. Unfortunately, TiVoToGo applies only to the Series 2, which is like 15 percent of the TiVo market. Besides that, TiVoToGo is a solution that's good for planning ahead. It takes hours to dump the stuff over. So while it's useful, it doesn't address the kind of instant gratification the Slingbox provides.

But the two are pretty complementary. In the future, you may see TiVoToGo functionality built into the Slingplayer client. We don't have a religious issue about it — we just love TV and we think there's a lot of different ways to watch it.

Let's talk business model briefly. Without subscriptions, are you depending just on sale of the boxes to make money?

That was a major decision for us, and consumers are responding positively to it. There's subscription fatigue out there, and it's a barrier for products to be adopted. When we set out we said, we need to hit a certain price point, and we need to create a business model where we can make money selling a box. That's counterintuitive, especially if talk to the VCs on Sand Hill Road, but we said, "It's time to get back to basics and keep it simple and sell a device."

Over time there could be additional features and applications we could add to a Slingbox for incremental revenue. It's hard to tell. After people start buying our boxes, we'll make a bunch of other products, some hardware, some software, some service.

It sounds like you're willing to take the Slingbox places that TiVo fears to tread, but perhaps not quite as far as ReplayTV. Tell me about that delicate balancing act you're doing with Hollywood.

When we set out to make this product, you can bet we did a whole lot of homework up front to make sure that what we were doing was under the fair use provisions of copyright law. After all our analysis and the functionality we introduced and the limitations, we feel really, really comfortable. Some of those limitations include making sure the Slingbox is not a one-to-many device. Certainly it will stream to multiple devices, but it will only do so one at a time.

The very first fear you heard from the folks in Hollywood was, my God, now J.D. is going to serve up television to 50,000 of his closest friends with one Slingbox in his house. When they started to dig into it, interestingly the discussions we've had have been incredibly positive, and the light starts to go on when people see this is additive and not a cannibalistic application.

Let's take the television networks. We recently had a sit-down with one of the national networks. One of the execs said, "You're tripling the number of television sets on the planet. Look, we've got our decades-old distribution model, where we have the content, it goes through the pipes into people's homes. What you're doing is selling this $250 device to a consumer to let him watch our programming more often than he used to and helping extend our reach. The TV business and ratings have been hemorrhaging for the past 20 years. This is an opportunity for us to regain those eyeballs."

Yet, a recent article in the Hollywood Reporter quotes a CBS executive as saying they see you as a threat.

Historically, when you look at how the television industry came about, the industry was built on a notion of exclusivity for certain geographies. You had these affiliate stations and you had the right to get "Oprah" for this part of the Bay Area while another station aired it in Carmel. But the Internet has changed our notion of geography and boundaries.

Look, any time a new technology comes about, it disrupts old business models. Any time there's a new technology that empowers the consumer, some people in the industry get nervous because it's all about control, and there are a lot of people in the industry who don't want to see the consumer have control. But you gotta deal with this. Let's look at the benefits that come out of this.

In a lot of ways, a DVR is much more disruptive than the Slingbox, because the DVR empowers consumers to skip commercials. That's not really what we're doing.

We hear complaints that it's possible for someone on the West Coast to get a friend on the East Coast to beam them "Desperate Housewives" three hours ahead of time. But you could do that today without the Slingbox. With a DirecTV account, I get a Vonage account with a New York area code and I can watch it early in high definition.

We don't condone piracy, and we're not out to say, "Screw you" to the broadcast community. Our focus is: we know who our customer is—the end user—and we're not going to forget that. We think there are win-win solutions, but we've also seen companies that are more concerned with serving the industry than solving the consumers' problems.

Fred von Lohmann of the EFF fears that after Grokster, companies like Sling Media will begin putting DRM, or "hobble-ware," into your products. Unfounded?

We haven't had any requests by anyone saying, "Please do this or make the product in a different way." Who in their right minds will stand up and say, "You the consumer don't have the right to watch a television program you're paying for"? You ask the man in the street and they'll say yes 100 percent of the time.

I think Fred's right that there's a battle going on and it will only heat up further. It's going to be about control and does the consumer get control, or does the industry get to decide everything? It concerns me. Those are battles that need to be fought. If we start going down the path of hobble-ware, no one knows what implications that has for us in the future. It could start to stifle innovation. We could get surpassed by other countries who start out-executing us. Or new technologies are not going to come to market.

Does the Slingbox have fast-forwarding and skipping-ahead capabilities?

All we want to do is give you the exact TV viewing experience of your living room. If I connect to my TiVo, the Slingbox's virtual remote control comes up on my wireless laptop and the remote looks exactly like my TiVo remote. Our UI is fully skinnable, so you'll see more of these customized UIs that will evolve. We now support 5,000 devices out there — tons of DVD players, set-top boxes, cable and satellite receivers, DVRs, VCRs.

If you happen to have a 30-second skip button on your remote control, we'll give you the same experience. If on your TiVo you've figured out how to create your 30-second easter egg thing, we'll do that. You know, I think DirecTV blows it out every week.

That happens to you, too?

Yeah! They're sending something over the airwaves to delete it. I've been going online and haven't seen anyone report or blog about this. It's weird. Why is this being deleted?

The other thing I've never figured out is, the Microsoft Media Center has a 30-second skip built into it, and why don't they get shit about it? You record shows on your Media Center, those suckers are in the open. You can take those MPEG-2 files and email them to people. Why hasn't there been a big uproar about that?

One of our readers asked how much bandwidth you need for a satisfactory viewing experience with the Slingbox.

You definitely don't need a T1 line, though it would be sweet. One of the core requirements for us was we had to make sure that the product works with the existing infrastructure. To watch TV over the laptop over your home network, all you need is 802.11b. Some people say that's impossible, but we've created some proprietary algorithms and optimization technologies, which we call Slingstream. It dynamically will adjust your video stream to work within whatever bandwidth conditions you have, which change in real time. The same thing applies with your upstream bandwidth outside of the house. It's subjective, but I think you really need a DSL or cable service with a minimum of 256K up, which most people have these days. If you're watching it on a smaller screen, then even 100K looks pretty darn good.

Will you be bringing the Slingbox out in the UK market soon?

Yes. We'll probably have it by the end of the year. We're soliciting feedback from consumers to determine how we want to roll out in that market.

We made our first delivery to a UK customer last week. We had a guy in a forum who was dying for it, and he got some NTSC-to-PAL converter and figured it out. Our VP of operations was flying through Heathrow, so I had him bring a unit and he met the dude in Heathrow and the guy's going crazy on it. We'll have a PAL version in the third quarter. We might just sell it online at first.

When will a Windows Mobile and Palm version come out?

We're looking to have Windows Mobile in the next few months. It'll clearly be there by the end of the year. Palm is an interesting one, I'll be getting together with members of their executive team later this month. The first Treo sucked in terms of video performance, but the new 650 has actually got a lot more horsepower and it's pretty sweet. No date on that yet, but it's looking like we'll support the Palm sooner rather than later.

What about a Mac version?

We don't have any announcement yet. We intend to release it in the next few months. Sometimes working with Apple involves getting our Slingstream technology to fully work on a Mac, which means we might need some cooperation from the company that holds the keys to that. That company is not necessarily the easiest to partner with. But it's great to see the demand from the consumers, because that gives us a lot more ammunition when we approach them. So I actually love the Mac guys complaining and pounding on it, so I urge them to keep it up.

Would Virtual PC be a solution?

I've tried to run Slingstream on my G5 iMac with Virtual PC, and the performance is terrible, but I've heard from others who run it on Powerbook, and they say the performance with Virtual PC is pretty good.

Is there a way to know if someone else is watching the TV while you fiddle with the Internet-connected version of the Slingbox?

What happens is, the N on the front of the Slingbox lights up when it's slinging, so you can look at it and say, "Hey, man, someone's watching my TV, what's going on?"

Can I watch U.S. television when I'm in Europe, or vice-versa?

Today you can be traveling in Europe or anywhere in the world and watch your U.S. programming, no problem. Now, to use the Slingbox in your home in the U.K., if you want to plug it in and use the built-in tuner, you need a PAL tuner. The Slingbox currently uses NTSC only.

If you're in the U.S. and wanted to watch programs from your home in the U.K., there are no requirements on the player side, it's all about that Slingbox back in the U.K. needs to support the PAL video standard, so there's a PAL-to-NTSC converter you can get.

Can one Slingbox stream to multiple desktops in a corporate setting?

Right now, because of the limitations we've imposed, the Slingbox does only one-to-one, but we've gotten a lot of requests, and we're considering building a corporate box that would allow multicasting inside a local area network.

Is it possible for a ground-breaking technology to find acceptance in the U.S. marketplace without a BestBuy distributorship or a name brand like Sony?

We're really proud of the fact that, from day one, we've launched in over 1,000 stores at BestBuy and CompUSA. Companies like BestBuy will typically not take your product if you're a new company and if they do they'll work with you on a trial basis. Here, they've rolled it out nationwide, and that's a pretty rare thing. They're one of the few retailers that do their own user testing before they decide to carry a product.

What about OEM relationships?

In the convergence space, it doesn't make sense to plant a religious flag. One day you're a product, and the next day you're a feature. You can't take a religious stance, you have to embrace where the market goes. Should this technology be a feature that's embedded into a set-top box someday? Sure, why not?

From day one we've basically built it as a core place-shifting engine in the Slingbox and a core set of software that can be applied to a variety of other features and products.

What about the ability to place-shift other media like images, jpegs and music on a home network?

Video, from a technical perspective, is the real hard one. So then if you decide you want to support other forms of media, by all means we can go do that. I want to hear from the users and consumers on whether they want that. When I hear of things like place-shifting your audio or pictures, there are a lot of great ways to do that already. I have all my pictures on my laptop and my music on my MP3 player. I don't want to start supporting all these features that will confuse the heck out of consumers. You want to do one or two things really, really well.

What about supporting high definition?

We have stuff in the labs right now. It's a question of when is the right time to do so and at what price point. It's dangerous for a startup company to make a product that costs $1,000 from the get-go. You might see a hi-def version from us sooner than you might think.

One of your readers asked about connecting 1394 from an HD cable box to the Slingbox. That's really cool, because then you could take the native HD MPEG-2 and the Slingbox can be a real-time transcoding engine. Technically, it's absolutely possible. The question is, what's going to happen with the broadcast flag with copy-once, copy-never content, which is still tied up in the courts.

This is where it gets scary. There is a law out there, the DMCA, that states very clearly that you cannot circumvent encryption schemes, and if you do you've violated federal law. Depending on how some of these battles play out, consumers may not be able to do what they'd like with their media. Today, we're taking in analog video so we're not violating that law.

Why did you decide to use the Windows Media format rather than a video codec like H.264?

That was a funny question. If anything, Windows Media is the most open of those standards—it has the best quality, performance and has the most straightforward licensing. H.264 we might support in the future, but licensing H.264 is kind of a nightmare because there are several patent holders and it's not clear who do you pay.

What's ahead for Sling Media?

First, we'll take direction from our customers and let them know we're responding to their needs. For example, when we initially shipped the product, we were getting tons of requests for Windows 2000. Our VP of software spent a few all-nighters, created a new build, and as of tonight we're going to release a new beta that supports Win2K.

As a company we'll be focusing on better video quality on a Slingbox, some new upgrades coming soon will improve the codec, supporting more clients. But besides that, our vision for Sling Media is we want to become a brand that people expect great products from. We want to create a family of products that address the digital media lifestyle. With a little luck and a lot of hard work, we'll have some other interesting products that could be quite different from the Slingbox, but that will empower the consumer to enjoy that lifestyle.

Any chance you or one of your managers can stop by and post answers to some of the other questions our readers have asked?

Absolutely.

J.D. Lasica's new book about the digital media revolution is Darknet : Hollywood's War Against the Digital Generation (Wiley & Sons).