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Cable’s Secret Weapon: VOD

Cable execs will be searching for effective ways to stave off satellite’s threat at the NCTA’s national show in San Francisco next week. And one of their top weapons is improved video-on-demand services.

“Cable is being driven by the move to everything on-demand,” says Teri Richardson, VP of product and market management at C-COR Solutions Group. Meeting that mantra means more VOD servers and increased sophistication in VOD software.

Some cable operators offer free VOD, giving consumers video-on-demand of content from basic or digital cable network channels, in order to build subscriber loyalty and brand recognition. For example, Time Warner’s system in New York offers about a dozen free VOD channels.

Nationwide, however, only about a third of all cable subscribers have digital boxes capable of providing VOD. So this is still a market to be exploited, and some analysts believe consumers have yet to fully embrace it.

Many cable operators don’t break out VOD figures, but when pay-per-view (a close cousin to VOD) movies and sports are added to the mix, PricewaterhouseCoopers projects 15 million cable subscribers will spend $1.35 billion on pay products this year.

Joseph Ambeault, SeaChange director, IP video systems, says his company will present a new suite of software and hardware products at NCTA for next-generation TV services. The focus, he says, is on standards-based Internet Protocol (IP) video implementations that allow consumers to sample a wide array of on-demand applications beyond movies—such as videogames, hospitality services, scheduled TV services, VOD ad insertions and network DVR (which moves the DVR functionality out of the set-top box and into the cable plant).

At the same time, IP video allows cable operators to better monetize cable’s broadband investments. “Our new operations auto- mation and server-network software gives operators choice and flexibility,” says Ambeault. That means more ways for cable operators to lure and keep customers.

VOD Ad Inserts

Another company looking to make it easier to expand VOD is Tandberg TV. The division brings together Tandberg’s encoding and decoding products with N2 Broadband’s VOD services. (Tandberg acquired N2 Broadband in February.) Topping the list of new items is Xport Producer, a family of content-production products that adds local content and VOD advertising onto VOD servers.

“It’s an all-purpose production tool that marks spots within the VOD file for ads,” says Braxton Jarratt, Tandberg TV VP of marketing. There is also a global-management system that can look at inventory and handle geographic targeting. The ad insertion is done before the content reaches the VOD server. As part of VOD provider Concurrent’s Interactive Media Solution system, cable operators will have the ability to place targeted advertising, including video, into the barker windows that appear on VOD menus. The procedure can also be done “in band,” meaning it doesn’t require additional bandwidth.

The in-band approach (which is being patented) allows for targeted advertising. For example, if someone wants to watch a food-related VOD service, a preview of the content can be run in the barker window—or ads selling cutlery or kitchen gadgets can appear. Look for Concurrent to demonstrate VOD server-automation tools that scale the video to the appropriate size and send it to the barker window at NCTA. “It’s extremely important to make use of bandwidth that is not being used and doesn’t require additional channels,” says Gary Trimm, Concurrent president and CEO. “It also speeds up the amount of time it takes to get content in the system.”

VOD Storage Challenge

One challenge for vendors and operators is that VOD can become a victim of its own success. For example, with operators like Comcast offering local news and sports on a VOD basis, while increasing the number of hours of VOD content, the need for storage is pressing. After all, an estimated 20 million homes have access to VOD. Richardson says the average share of cable subs using VOD at any one time ranges from 6% to 10%. As VOD gains in popularity, that rate will rise to more than 20%—if cable systems have room to support them.

Ambeault says SeaChange’s operations-automation software can answer that storage need, making the VOD system “self-regulating” and capable of managing server resources. That means subscribers can access desired content. He says the top 10-15 titles on most systems account for 50% of all VOD requests.

“As a title’s popularity increases, the operations software automatically [makes enough copies of it to] guarantee accessibility. When those titles are no longer popular, the software automatically removes the replicas from the system,” Ambeault says. “And while it does that, it prepares to handle the next wave of subscriber requests.”

Also new from SeaChange will be a system designed to take advantage of IP technologies. It includes a new software suite called Axiom, and hybrid media-cluster servers. “By being very IP-focused, we can get the economics of IT construction and get a lot more integration opportunities,” says Ambeault. That means it will be easier to deploy HD VOD, DVD-style menus, time-shifting, videogames and targeted commercials. The goal is to offer software that takes full advantage of cable-networking infrastructure.

“The industry is moving to point-to-point networks rather than unicast networks,” says Yvette Gordon-Kanouff, SeaChange corporate VP of strategic planning. “That will let people play games with each other, send videos, phone calls—anything point-to-point.”

Gotuit Media, meanwhile, will head to NCTA with two new products: Gotuit News On Demand and Gotuit Sports On Demand. The news-on-demand service provides one hour of indexed news content from Reuters, the Associated Press and local sources every day. Gotuit Sports On Demand offers a suite of indexed sports programming from providers like the Resort Sports Network, Classic Superstars of Wrestling and the NHL. Gotuit says viewers can choose to watch an entire game, a 20-minute condensed version or just highlights.

“Cable has succeeded in using VOD to improve the digital-value proposition and reduce churn,” says Mark Pascarella, president of Gotuit Media. “Now it’s time to turn VOD into a differentiated, revenue-generating product.”

Ambeault says another way to drive successful VOD usage is to embrace an interface style users are familiar with: the DVD. “With DVD-on-demand, video-rich menus can seamlessly integrate featured content, extra scenes, chapter navigation, multiple languages, audio and video options, games and multi-camera angles into sophisticated VOD experiences.”