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Vongo Begins to Bang Drum

With a six-month trial period complete and a few key tweaks made to its storefront Web page, Vongo is ready to go for the gold in the Internet video download competition.

The Starz Entertainment Group LLC-backed video-download service moved from beta test to full “gold” online service last week, even as it expands its 1,600-title video-content library beyond just movies to include sports and music.

With early feedback indicating many customers are watching Vongo content on their TVs, the real work ahead might be convincing cable distributors that Vongo can be an asset, rather than a threat to their video-on-demand offerings.

WHAT IT IS

For $9.99 per month, broadband Internet customers gain access to unlimited video downloads they can view for up to 24 hours, plus a live stream of the Starz movie channel.

Vongo also has a premium pay-per-view option, so a user can buy a first-run movie for $3.99, whether they are a Vongo subscriber or not.

The move from beta to full commercial service has been relatively smooth for Vongo, according to Robert Greene, senior vice president of advanced services. What few changes Starz made to the Vongo’s beta version were driven more by consumer reactions than by technical hiccups.

For example, Vongo has been fielding a lot of requests from customers asking how they can link their PC to a television, indicating that they want to watch the video in the living room, not the home office. So Vongo bumped the bitrate for its video streams to 1.3 Megabits per second to display better on a larger screen.

Linking the computer to the TV is no easy task, though. There are products such as ADS Tech’s Media Link on the market that can link PCs to TVs, but they require the user to do a fair amount of configuration work to make the two devices talk to each other. That is far from ideal for a consumer-centric video-download service like Vongo, so “those are things we are working with technology providers to solve,” Greene said. “We think that within the year there will be solution to that.”

Similarly, the live Starz channel feed might also get a streaming throughput upgrade.

“It wasn’t intended for heavy usage, but we’re actually starting to play around with the encoding for this, because people are watching it,” Greene said.

Such features might actually work against Vongo. A big part of the marketing strategy lies in striking deals to distribute Vongo through cable operators’ high-speed Internet services. Those deals haven’t happened. In fact, Vongo’s first service provider partner is AT&T Inc., which inked a deal earlier this spring to co-market Vongo to its 8 million digital subscriber line customers.

Starz is in talks with Comcast Corp. and Cox Communications Inc., but the negotiations have proceeded more slowly than anticipated, Greene said.

'OVER THE TOP’ REACTION

“The first reaction from the cable industry was that we were going around them,” he said. “Before we could even explain the story to them, the reaction is, 'You are going over the top — how dare you?’ ”

Greene contends the cable industry has done a good job of packaging a lineup of TV content, and customers aren’t likely to dump 200-channel digital cable subscriptions to watch Starz content alone on their computer or TV screens. If some customers are willing to abandon the cable product, a broadband video alternative could be the only way to keep them.

“At the end of the day you are going to lose that customer, because they were already on the cusp,” Greene said. “So would you rather lose them to someone else, or to your own broadband service?”