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Karen Brown
After gingerly dipping its toes into the video on demand (VOD) market through its now-defunct Full Service Network, Time Warner Cable is jumping in with both feet with tests in Austin, Texas, and the Tampa/St. Petersburg, Fla. area.
If preliminary engineering tests prove correct, it will be the first full-scale test of the technology by a cable operator in an industry that could attract up to 12 million subscribers by 2005, according to a recent Forrester Research Inc. study.
Time Warner spokesman Mike Luftman said the tests are based on the experiences with the Full Service Network offered in Orlando, Fla. up until 1997. Operating costs for the prototype VOD system were high, but Time Warner was more than encouraged by the response it got from customers.
Now, with better technology that would dramatically decrease operating costs, MSO execs are predicting it will be a viable and popular product.
"There was a very strong demand for true video on demand movies," he said. "We think it is going to be a very attractive layer on top of our other digital product offerings."
Up to now, the bulk of VOD products have actually been near video on demand, a format similar to pay-per view in which customers tune in at specific times to view videos. The Time Warner test will involve full VOD, giving digital customers the ability to order and start a movie at their convenience and pause or rewind during the transmission.
Time Warner will be using Concurrent Computer Corp. equipment for the Tampa/St. Petersburg test and SeaChange International gear in the Austin test. Preliminary engineering tests should begin later this summer with service offerings possible in late 1999 or early 2000.
For SeaChange's Yvette Gordon, the Austin test represents "a milestone for us to hit." The director of interactive technology said going to full VOD requires a real time, two-way network that can manage each user's movie request, allocate bandwidth and coordinate the transmission to digital set-top boxes.
And scaling full VOD from 50,000 in previous tests to 2 million potential subscribers will be an important gauge. Full Service Network's VOD was costly and labor intensive, but with new advances much of the system has become easier to administer, she said.
"The difference in what we have today is all of it is highly automated, so it is basically headend gear," she said.
From a marketing standpoint, people may find it more convenient than going to the local video store and hunting for a specific video. What remains to be tested is how much they will be willing to pay for that convenience to support the service, so operations and maintenance costs must be kept down, Gordon added.
"This is very significant for the industry as a whole and I definitely think there will be many cable companies that will be watching this closely," she said.
The VOD test is made possible in part by the next generation of digital set-top boxes capable of two-way communication. In fact, Time Warner's current box orders with Scientific Atlanta Inc., and Phillips Electronics specifically requires them to be capable of VOD, thus paving the way for full-scale rollouts, Luftman pointed out.
In a related item, digital set-top box partner SA last week announced the MSO has launched digital service in 18 of its systems using SA's Explorer 2000 box. The two-way set-top boxes are among a new generation of boxes capable of interactive services including Internet access. Time Warner has committed to buying 1.1 million Explorer 2000 boxes with an option for an additional 500,000 units.
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