As video-on-demand and high-definition television have become the cable industry's two hippest must-have products, it was inevitable that people would think about putting these two video lovebirds together.
It seems a strong product-marriage proposal — VOD product in HDTV format would not only appeal to the coveted high-end video customer now able to afford an HD set, but it also would be a significant advantage over more limited bandwidth offerings from satellite competitors.
But to get these two down the aisle, operators are going to have agree to a dowry that includes bandwidth, storage and most importantly, a solid business case based on real consumer demand — and that may take a while.
The fact HD is being murmured within the same sentence with VOD at all has to do with rising consumer demand. While they still make up just a fraction of the overall TV audience, HD viewers are increasing in number — and they represent a highly valuable upper-end consumer.
"Certainly, the operators when they started offering their (HD) service last year — I think they initially expected a fairly minimal response and I think they were surprised," said Bernadette Vernon, director of strategic marketing for digital set-top box supplier Motorola Inc. "I think our view is, as you look at more and more of the HDTV sets getting closer to that $1,000 price point, it is our opinion that this is going to become more of a mass product for more and more people.
"And then as you start talking about HD VOD content, I would imagine you probably will have more of that, once HD becomes more prevalent."
VOD deployment leader Time Warner Cable sees that same trend. The MSO has about 50,000 to 60,000 HD-enabled set-top boxes, and it has started to look at combining HD and VOD, albeit cautiously, said executive vice president for advanced technology Mike LaJoie.
"We've done the analysis of it," he said. "We've checked to make sure that it works, and we've done some modeling on it.
"But we don't actually have firm marketing plans or product plans as to when we will start putting high-def product on. But it will happen. Certainly, as more demand for high-def content comes out, I think the VOD platform is really well-suited for it."
Time Warner apparently isn't alone. Charter Communications Inc. also is looking at HD content for its VOD platform, although it also has no immediate plans for rollout, according to spokesman Andy Morgan.
So far, VOD server provider Concurrent Computer Corp. has fielded questions from four unnamed operators about the possibility of HD on VOD. But Steve Necessary, president of Concurrent's Xtreme Networks division, is quick to point out things are still in the "what if" stage.
"Let's not get the cart before the horse," he said. "But the reality is that those high-end consumers who are buying HD sets are probably going to be the ones buying more VOD content and higher-end digital tiers, so it is pretty predictable that if you have that HD set — and you are a VOD user — you'd probably like to start seeing some HD VOD content being made available.
"I think the industry is absolutely right by beginning to take looks at this, and that is why we are already on it and already starting to demonstrate it."
If market demand is encouraging operators to look at high-definition VOD, what would it take technologically?
First, more bandwidth. HD streams are hefty, requiring 19.2 megabits per second compared with a standard-definition stream's 3.75 mbps. So while 10 standard-definition streams can fit in a 6-megahertz channel, it would support just two HD signals.
That might eat into the number of streams a VOD system could support, if it wasn't for cable's ability to increase capacity.
"The way that the HFC [hybrid fiber coaxial] architecture works, we never run out of bandwidth," LaJoie said. "We can always split or do other things that will give us the bandwidth that we want, so it really ends up being a desire to provide the best and highest experience for our customers."
And technical minds are already working to lighten HD's bandwidth load, according to Concurrent chief technology officer Bob Chism.
"My real expectation is that you will see advancements in encoding algorithms and advancements in the decoders in the set-top boxes that gives you that high-def fidelity, maybe at a lower bit rate," Chism said. "Maybe a high-def is run at 12 megabits per second or something, and maybe that is economically a better model."
Cable systems could also use statistical multiplexing technology to mesh more HD streams into the same channel. Time Warner has a plan to add such a system to its VOD delivery in the next two years, but such a move would up the HD hardware ante, LaJoie noted.
"Multiplexing them into the stream is an interesting opportunity, but the problem is you end up having to do it in a number of places in the network," LaJoie said. "Having more aggressive compression is probably better.
"You have to have a different set-top box anyway for the HD. So it would be only on new set-top boxes that went out there specifically for HD customers, and so I think that it might be more appropriate to do it through encoding and decoding, rather than stat muxing."
Storage and delivery
On the storage side, HD also would require five times as much disk space. The good news there is storage costs have dropped steadily, according to Concurrent's Necessary.
"There are lots of drivers for increased storage and a lot of responses, and we've clearly been accommodating that for quite some time," he said. "The beauty of it is that storage technology continues to become more and more economical. We factor it into our systems in what I would characterize as an increasingly elegant manner."
Likewise, the servers would require five times as much output to fire off the streams. There, improvements in VOD-server technology would help solve the processing-capacity problem likely to develop as rollouts continue.
"I continually see improvement on the various techniques for propagating, loading content and so forth," Chism said. "We are continually getting faster network equipment; we are continually using different techniques propagating on GigE now, versus ATM [asynchronous transfer mode].
"The propagation medium will come along, I think. What I think still poses the challenge ultimately will be the transport costs. Will the cable operator spend that kind of bandwidth to allow the consumer to view high-def?"
For VOD transport provider N2Broadband Corp., bandwidth is also the deciding factor.
"I think there has been a lot more discussion as of late around HDTV and what it will take for the VOD servers to stream at that rate, but from a content-delivery standpoint, we can fill the servers," said N2 senior director of business development Raj Amin.
"It really comes down to how much storage are the MSOs going to allocate for HDTV content in their overall storage network on the storage servers?, and it really becomes a resource-allocation question: Do I choose greater quality of content or do I choose more breadth of content?"
What naysayers say
The technology may be willing, but there are those that argue the business case is decidedly weak. They include premium movie-channel programmer Starz Encore Group LLC.
"It takes a lot of bandwidth, fairly low penetration now — not a good business and until it is a good business, we are really not going to get into it," said Starz vice president of technology John Beyler. "We have enough opportunity in the standard-definition side of the world with the SuperPak channels and with Starz on Demand, that that's where we see the benefit to the subscribers and the business opportunity — not so much on the high-definition side."
With so much of VOD's success dependent on the volume and quality of movie titles offered, the economic tradeoffs just aren't there, added Starz vice president of subscription VOD Greg DePrez.
"HD basically chops that down by about a factor of five," he said. "So whereas today we can offer 100 movies per month on a VOD system, if nothing else were changed, we would be down to offering 20 titles in the same storage environment, unless the operator would beef up their storage."
With that, "We don't think it would be nearly as compelling as it is today with what we are offering," DePrez said.
Starz Encore is confident the picture quality for its existing offerings is more than adequate for most viewers, and there are other upgrades that could be more meaningful to the majority of videophiles. That includes adding Dolby 5.1 surround-sound capabilities to the video, and adding extra video outtakes and information such as what's supplied in DVDs.
Nevertheless, "we are ready to move," DePrez added. "If the business model changes and the economic opportunity is there, we can move on it in a heartbeat.
"Our facility here is fully equipped to distribute multiple HD channels, so we are technically proficient. But on the other side, it is just prudence as far as the business opportunity."
Business case will tell
The business case will indeed be the deciding factor for rolling out any kind of HD VOD product. HD may get a big retail boost during the holiday season, but that won't translate into an immediate HD VOD rollout.
"My guess would be that perhaps even as early as next summer, we could start see some folks saying, 'Ah, let's start getting some of that content and let's start trying it,'" Concurrent's Necessary predicted.
Concluded LaJoie: "It is a business issue; it is not a technology issue. There are no technical hurdles to doing that.
"Now, whether or not we decide to offer HD products on demand — I think it is certainly an eventuality. It's not currently something scheduled on the horizon. I don't know exactly when we are going to do it, but we certainly will."
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