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Archives
February 2003 Issue
INDUSTRY INSIDER
STEVE NECESSARY
The On-Demand Continuum
On-demand content--a pipe dream or pending reality? What would make anyone bullish that we have it right?
Three reasons: First, consumers not only embrace on-demand content, but also will come to demand it. Second, the technology has progressed to the point of economic and operational feasibility. Third, the entire continuum of on-demand video content is in its infancy; in other words, there's a lot of growth ahead.
Getting past MOD
With few exceptions, video-on-demand (VOD) has been limited to movies-on-demand (MOD), or pay-per-view (PPV)-on-demand. But now there's an ever-expanding continuum of on-demand video services.
While these services can be offered in any order, they carry the logic of the continuum illustrated in Figure 1.
Let's start with MOD. Consumers obviously buy and rent movies. The behavior in a cable environment, though, has been less compelling. Why? The relative staleness of movie content is an impediment.
Release windows are improving, however. And studio economics eventually will dictate continued improvement. This flagship service will show exponential improvement in buy rates and consumer satisfaction as the window issue is addressed.
Multiple SVOD channels
Now, let's examine subscription VOD (SVOD). Our HBO On Demand launch in Columbia, S.C., left many stunned by its appeal. Yes, the free "price" was attractive, but results remained strong after the price increased.
Logic dictates multiple channels of SVOD. HBO, Showtime, and Starz Encore all have established market appeal. It is reasonable to believe that those same successful positions will be more attractive on demand.
Another service is free-on-demand (FOD). FOD refers to the expansion of linear digital services, such as HGTV, DIY Network and Food Network, to an on-demand environment. No, these services aren't really free--consumers must subscribe to the digital tier, and operators must allocate capacity to deliver it, but beyond that, there is no incremental consumer cost.
Note that satellite will never do this; and with "free" part of the equation, consumers will become more comfortable with on-demand activity, further ingratiating cable to them.
On-demand advertising
And what about advertising on demand in the form of the long format ad (LFA)? Skeptics may weigh in, but the reality is that LFAs have appeal. As Cox's FreeZone service demonstrates, consumers watch advertisements and respond on-line and in real-time.
Finally, we move into the realm of network personal video recorder (PVR) functionality. I break this offering into two phases: entry and expanded. By entry, I mean the ability to access time-shifted content. Oceanic Cable's innovative deployment of news-on-demand is a great example. By allowing its customers to access the local 6 p.m. news on a delayed basis, Oceanic further solidifies its position as the video-delivery system of choice.
The expanded version of network PVR is typified by the ability to pause live TV. This would either begin real-time encoding and storage of the content for later playback, or it would bookmark the spot in that same content that had been planned for encoding and storage.
This continuum is a far cry from initial MOD services and eventually could lead to the end of linear programming. Less dramatic is the assertion that we can envision a scenario of 250 percent peak usage, as the average of 2.5 televisions in the home all access on-demand content simultaneously.
Yes, I'm an optimist. But the reality is that the evidence is overwhelming that we do, indeed, have it right this time. The time is now!
Steve Necessary is the CEO of Concurrent Computer's Xtreme Division. Email him at .
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