VOD Offerings Still Factor Into MSO Plans

Following a flurry of deployments and trials earlier this year that sent the video-on-demand world spinning, the advanced-but-maturing service has seen a downright tranquil summer.

Don't let that fool you, VOD vendors and cable operators said. Despite a dearth of recent announcements, they claimed that the summer swelter hasn't wilted their support for VOD. Apparently, the VOD sales and deployment cycle is an animal all to its own.

The most recent announcement-Time Warner Cable's commercial VOD launch in Tampa using Concurrent Computer Corp. video servers and Scientific-Atlanta Inc. "Explorer 2000" digital boxes-wasn't really new in some respects. That system, home to what Concurrent called cable's largest commercial-VOD deployment to date, went live to paying subscribers on July 5.

The fact that Time Warner Cable moved from VOD trials to commercial availability in Tampa was not a surprise. However, the scale and numbers that surrounded that launch are eye-catching.

When Concurrent and Time Warner made their announcement earlier this month, VOD was available to more than 35,000 digital subscribers, the companies said. Time Warner, which is rolling out VOD in the market hub by hub, expects to make the service available to more than 140,000 subscribers "over the next several months."

Time Warner's Hillsborough County, which represents little more than half of the MSO's Tampa system, should come online within the next six weeks, said Concurrent president and CEO Steve Nussrallah.

To handle that scale, Time Warner's Tampa system has already installed 36 video servers in 34 hubs and two regional headends, enough for 15,500 simultaneous MPEG-2 video streams.

Asked why it seems that VOD deployments have have slowed down, Nussrallah said that if anything, things are starting to speed up-albeit behind the scenes.

"Cable operators are now looking actively at their 2001 budgets," he said. "The good news is that we're seeing a lot of activity at the division level.

"During the budgeting cycle last year, our discussions were almost exclusively at the corporate level in terms of trials and deployments. Now, we're seeing a lot of divisions raising their hands, asking to be part of the next phase of rollouts."

"We're heading into prime time for VOD," said Diva Systems Corp. president and CEO David Zucker. Current deployments with the likes of Insight Communications Co. in Rockford, Ill. are generating in the range of four VOD buys per subscriber each month, he noted.

"We'll see more VOD rollouts next year," Zucker said, unable to be more specific because Diva is currently in a quiet period as it assesses the market for an initial public offering.

"The announcements are one thing," warned Yvette Gordon, vice president of interactive technologies at SeaChange International, which Time Warner selected for its large-scale VOD deployment in Austin, Texas. "We've consistently said that 2000 is going to be a big year for VOD deployments, and there's no question that we're seeing that. 2000 has been a year to start the deployments."

One marked difference between this year and 1999 is the size and scope of recent VOD deployments, she added.

"Last year, deployments were small," Gordon said. "Now, we're seeing true, architectured deployments that deal with all of the issues of scalability and large-scale integration."

Time Warner's Austin system is moving quickly beyond the trial stage, Gordon said, and the MSO is actively marketing VOD to customers there.

Nussrallah dismissed the idea that additional deployments and trials with cable operators are being withheld for December's Western Cable Show.

"The next bombardment could happen before the Western Show," he said. "When you're selling to the cable operator a revenue-impacting product, they want to get it up and running as fast as they can."

By launching VOD this year, cable operators "have a better shot at meeting revenue projections for new products," he added.

Even if that's true, MSOs are still keeping their future plans rather close to the vest.

Time Warner Cable, arguably the most aggressive MSO when it comes to VOD, wouldn't disclose any specific plans for the rest of 2000 and into next year. However, a company official said Time Warner expects to launch VOD in a "substantial number" of markets in 2001.

In addition to Austin and Tampa, Time Warner offers VOD with Concurrent system-wide at Oceanic Cable in Hawaii, and to a number of hotels in Myrtle Beach, S.C. and New York City through a partnership with SeaChange.

AT & T Broadband, the largest U.S. MSO, got into VOD in Atlanta with Diva almost by default, through its acquisition of MediaOne Group Inc. But stay tuned.

Though the company has been much more aggressive with its digital, high-speed-data and telephony plans, one official said AT & T Broadband is "bullish" on VOD, but not prepared to make any additional announcements.

Cox Communications Inc. has earmarked VOD for its crown-jewel systems: Phoenix and San Diego.

In San Diego, Cox is still conducting a VOD trial with Concurrent, but plans to launch commercial service within the next two months, a company spokesperson said. Cox's San Diego system touts 520,000 customers and roughly 730,000 homes passed.

Cox's system in Phoenix-where the MSO is being pushed by Qwest Communications Corp.'s competitive VDSL (very-high-speed digital-subscriber-line) rollout and a fixed-wireless MMDS (multichannel multipoint distribution service) offering from Sprint Corp.-should begin a technical VOD trial this fall with commercial launch slated for next year, the spokesperson said.

Comcast Corp., meanwhile, has embarked on VOD trials in two undisclosed markets with SeaChange and Concurrent.