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Overall Analysis:

Video on Demand (VOD) takes the basic television concept of providing instant entertainment to a level that can cater to the individual selection of the viewer. The following is an introduction to VOD and the market it represents.

Introduction: 

In 1927 an American engineer named Philo T. Farnsworth was the first inventor to transmit a television image comprised of 60 horizontal lines. The image transmitted was a dollar sign. Farnsworth developed a dissector tube, the basis of all current electronic televisions along with many other television components and filed for his first television patent in 1927 (pat#1,773,980.)

Since this time, the television as well as the programming and operational capabilities associated with it have experienced significantly change and unforeseen adoption. Today the average person watches between 15.1 and 21.4 hours of television a week (source Digitrends). This exposure is the result of widespread adoption of the television into consumer homes. While introduction of the Internet has had an impact on the use of the television – and has reduced the amount of television viewing an average of 4.5 hours, the television still consumes a majority of the average person’s attention by a factor of 3 to 4 times that of the Internet. By comparison, the television is easier to operate then the Internet and provides instant entertainment – just turn it on or flip through the channels to find something that is of interest. The television is also normally located in a inviting area/room that offers optimum viewing for one or more individuals with many creature comforts.

Entertainment vs. information quality

To the consumer, the difference between streaming video and the current television signal is quality: streaming video looks and can sound jerky. Digital TV, on the other hand, offers full-screen video with surround sound, or at least stereo. Technically, the difference comes down to bandwidth consumption. A digital TV signal beamed down to a satellite dish or through a cable wire typically takes up about 3.5 MBps. The signals are encoded by the distributor into the MPEG2 standard, sent to the home, and decoded by the set-top box. This process gives the distributors tight control over who gets what content and how much they pay for it.

The cable industry combats the introduction of streaming (Internet video) with the notion of entertainment versus information quality. Information quality is generally lower but intelligible and acceptable quality video/audio for things such as training, news reports, video conference calls, as well as "Internet movies". This content is highly compressed using MPEG4 or higher and probably not suitable to larger screen viewing - but ok for personal computer, PDA, or wireless viewing. Because it is lower quality, the price point for these movies will be lower with cap of $5 (max). Entertainment quality video is much higher quality (typically MPEG2), includes stereo (or possibly even AC3)  sound, and is suitable for large screen viewing. The price point for Entertainment quality video is dependent on the level of convenience it brings with a starting price of $4-6 on up to $9.95 (or more).

VOD Technology

Scientific-Atlanta (NYSE : SFA), one of the two leading set-top box manufacturers in the United States, has the most powerful box headed to market, the Explorer 2010, which carries with it 130 MHz of processing power. That is a pale comparison to even the PlayStation 2, which has processing power of 300 MHz and can handle the transfer of packets into full-motion video. Because of its popularity and devoted viewers, the television has long since been the target for new applications and interactivity. One relatively recent development has been the advent of video on demand or VOD. VOD takes television’s offering of instant entertainment to the next level by providing viewers with a list of video content they might want to watch and then providing a means for them to watch their selection at their convenience. It’s the next best thing to instant entertainment because the viewer has more control over what entertainment content can be viewed and when. The array of selections (or video titles) available to the viewer are limited by the amount of storage maintained by the broadband service provider (BSP) as well as who the BSP partners with to provide the video titles. Video content is delivered to the viewers using something called a digital media server. Digital media servers provide archiving, local storage and playback of media files. A wide variety of applications use digital media servers, ranging from relatively small audio files up to extremely large digital movie files. Two key applications are driving the growth of digital media servers: VOD and Streaming On The Internet (Streaming.)

A word about Content

The ability for a BSP to continue to secure content for distribution over the VOD platform will greatly impact their long term profitability of using such a service. Besides the upfront price for hardware, integration, and installation, comes the costs of the content each BSP must purchase before they can make any money of the service. BSPs know this position well having negotiated content from the likes of entertainment networks. However, there is confusion among the ranks in the movie industry as to who will be distributing this content. Blockbuster and the likes would like to be the middle man between movie studios and BSPs but movie studios have other ideas. This area has yet to play out. If a middle man is successful it may impact the amount BSPs are able to clear from offering such a service. It could also further complicate any one BSP's process of obtaining content for their service as deals with each movie company would have to be made separately.

Billing Obstacle

Numbers - Video-On-Demand Subscribers Expected to Increase (July 06, 2005) Another 3-4mln cable homes will join the VOD universe this year, bringing the count to 24mln homes, according to new Kagan Research forecasts. The group predicts VOD cable homes will rise to 29mln next year and 49-50mln in 2010. Operators will cross the $1bln revenue threshold for the 1st time this year, compared with $670mln in '04. Half of this year's take will come from movie and free content orders. About $300mln will be captured by adult entertainment offerings, with SVOD drawing about $200mln. Total VOD revenue will jump to $1.4bln next year, $3.4bln by 2010 and $5.6bln by 2015. - Simon Applebaum -- Rentrak's "Home Video Essentials" '04 report revealed a 1.7% increase in consumer video rental spending from the prior year.

ADD HOST, SELL VOD (May 9, 2005) Hotel guests who used to change the barker channel as soon as they turned on the TV now spend five to six minutes watching Singer pitch movies — an increase of 400%, according to On Command chief marketing officer Tad Walden. VOD-movie revenue in the hotels using the new barker channel has increased 11% with the addition of Singer, according to Walden, who had first hired her when he worked at the now defunct PrimeStar Inc. for that satellite-TV firm’s pay-per-view channel. Most of the screen on systems run by Time Warner Cable and other operators consists of text menus that list movies by genre, with a window in the corner featuring movie previews that run in a loop. But Comcast Corp. has incorporated an on-air host into its main VOD channel, using talent from E! Entertainment Television to pitch various movies. Comcast often sees a spike in usage from VOD programs pitched by the E! host, compared to other programs in its library, a source said. The Comcast previews run on a 10-to-15-minute loop. Comcast also plans to force-tune customers to a channel that will contain the new version of its interactive program guide — another tactic On Command has used for years.

Broadband at the Tipping Point (April 04, 2005) A Nielsen/NetRatings study that compared the two groups' behavior during November 2004 revealed that broadband users spent 34% more time online and visited 35% more e-tailers than their narrowband counterparts. Some 69% of online sales were from fast-connection consumers, and they spent one-third more than their increasingly antiquated friends. Web users that do the most streaming of videos are dissatisfied with prime-time TV; twice as likely as average to purchase devices that give them more control over TV (like DVRs); and are affluent.

Viewers Get Sold On Video On Demand (April 01, 2005) Sales of video-on-demand in Canada are expected to touch $170 million this year, spiraling from $85 million in 2004. By 2007, the sales are predicted to soar to $ 450 million. Cable companies, including Rogers Communications Inc., Shaw Communications Inc., Cogeco Inc., and Videotron Ltee, which are offering video-on-demand services, are expanding their markets in expectation of rising revenues. The business of conventional video stores has not been affected so far, and two of the biggest stores, Blockbuster Inc. and Rogers Video, state that there is scope for both types of services to exist.

Users Don't Want VOD To Be C.O.D., Want It Free (May 9, 2005) VOD is now available to nearly 19 million homes--or about 75 percent of the U.S. digital cable universe, Forrester's Josh Bernoff notes in his report on the various ad models for VOD. While movie buys and usage of subscription content such as HBO On-Demand are increasing, the model is languishing to some degree, largely because of the reluctance of cable operators to pay for quality programming. "[VOD] experiments have brought in less than $15 million in ad revenues so far," Bernoff said. "Why? Because there's no viable model yet for on-demand advertising." Right now, however, VOD and DVR usage is fairly low, Hoffenberg noted, adding that the study looked at 350 cable-TV VOD users across the country. Also, for VOD, the program offerings are limited, and the technology doesn't inspire much consumer enthusiasm, at least according to some of the respondents, he said. As one survey respondent commented, "VOD is still a work in progress." [must read]

Study: Consumers Want Their Media On Demand And Online (March 23, 2005) Consumers today also are more apt to store digital content so they can access it anytime. For example, the study found that 27 percent of 12- to 17- year-olds own an iPod or other handheld MP3 player, and roughly 43 million Americans record TV programs using a TiVo, another type of DVR or a VCR so they can watch the shows at a different time. Those who use on-demand audio devices and services spend only slightly less time listening to traditional radio. The average consumer spends about 2 hours and 48 minutes daily listening to traditional radio, compared with 2 hours and 33 minutes for those who own iPods or other MP3 players, subscribe to satellite radio or listen to Internet radio. The monthly Internet video audience is estimated at 35 million people, and the weekly online video audience is nearly 20 million. The number of Americans who made a purchase from a Web site in the past week has more than tripled to 14 percent this year from 4 percent in 2001.  Ten percent of Americans with household income of $100,000 or more own a handheld wireless e-mail device, such as a Research In Motion BlackBerry.

CTAM panelists dissect VOD (March 5, 2005) VOD's moment is coming, panelists insisted. Comcast, for example, is projecting three times the VOD activity this year over last year, while the on-demand advertising model is forming, and quality content is growing. "Cable should have made VOD a brand, but content can be the distinguishable difference between cable and satellite. A quality experience and distinguishable content are keys. Customers must covet that space," said Maria Rothschild, director of video product management for Adelphia Communications.

Video-On-Demand Keeps Cable's Digital TV Subscribers (February 12, 2005) Rising video-on-demand (VOD) usage may prevent cable TV subscribers, particularly those that subscribe to the digital version, from canceling, according to a study from Leichtman Research Group. The study found that in four markets where a cable company has offered VOD for more than a year, 56% of digital cable subscribers have used VOD. The percent of digital cable subscribers who have ever used VOD is nearly twice the rate found in a similar study conducted 17 months earlier, and now ranges from 50% to 69% in these four markets. "Consumer Opinions in Four VOD Markets" is Leichtman's third annual study on VOD.

Cable could rule if it plays its cards right (January 23, 2005) The report urges operators to roll out packages of sophisticated video, Internet and phone services before companies such as BellSouth, SBC and Verizon complete a $10 billion investment in fiber-optic lines. Phone companies will begin to take market share from cable and satellite companies in 2007, the firm forecasts. The number of basic cable subscribers, now at 73 million, will fall 3% by 2008. The future of cable is in on-demand services, according to a report on the industry by PricewaterhouseCoopers. Revenue from on-demand will grow by 18.5% a year to $1.7 billion in 2008, according to the report, which will be released today. "TV is moving to an on-demand world, where consumers can pull up the type of content they want rather than having it pushed at them," a PricewaterhouseCoopers executive said.

InDemand Poised For Big '05: VOD Leader Expecting 100% Growth (January 19, 2005) While it is no secret that video-on-demand has grown by leaps and bounds, its growth will continue to skyrocket, according to numbers released Tuesday by distributor InDemand Networks. InDemand said its VOD revenue was more than $200 million last year, up 150% from 2003. On top of that, InDemand expects its revenue to increase this year an additional 100%. The VOD and pay-per-view distributor, by far the largest in the country, forecasts that its revenue will grow about 30% each year in 2006 and 2007.

EchoStar offers on-demand video (January 7, 2005) EchoStar will begin offering the service in March, and movies will cost about $4 each, said spokeswoman Kelley Baca. The company will roll out its service with about 30 first-run movies and plans to eventually expand that to 100 and offer other content. The movies won't take up recording space on the DVR 625, which can record 100 hours of regular programming and store an additional 100 hours of video-on-demand content.

Betting Big: CED's editors place wagers on 2005's technology winners (January 00, 2005) In 2005, video-on-demand will really hit its stride, but we expect most of the gains (and focus) in this category to come from the content side of the house. And that's good news. It means that the sector is finally reaching a level of maturity. Many MSOs have already deployed VOD, and will continue to expand the service into new areas and use standard metadata methods and advanced GigE platforms to ship titles around. But, thanks to growing video competition from DBS and the specter of such from the telcos, content will play a monster role in 2005. Instead of a few thousands of hours of content, MSOs such as Comcast Cable are now discussing VOD vaults in the tens of thousands. We expect other MSOs to follow suit, and offer as much on-demand content as they can.

Free on Demand: Three Beautiful Words to Comcast (July 5, 2004) Page Thompson, Comcast's VP of marketing for new video products, attributes the success of premium programming on demand to the increasing amount of free content on demand the company offers. That trend is evident in Comcast's most mature VOD market, its hometown Philadelphia system. In April, more than 70% of Comcast's set-top boxes had been used for on demand during the previous 90 days, and the usage is growing every month, Thompson says. Comcast already offers exclusive-to-VOD content from Anime Network and short films from AtomFilms, plus movie previews, music videos and concerts—a free-on-demand lineup that Thompson says is "just the tip of the iceberg" as the company prepares to increase its VOD programming from 2,000 to 10,000 hours within two years.

Survey: On-Demand TV Is In Demand (March 22, 2004) A random sample of 1,100 men and women aged 20 and above found that 64% of them ranked on-demand availability of their favorite TV shows as "top items requiring instant gratification." The national online survey -- conducted by Impulse Research Corp. for the Cable & Telecommunications Association for Marketing -- found that on-demand television stacked up well against immediate communication (77%), online banking (64%) and even sex (48%).

On-demand TV picks up steam (March 10, 2004) N2 sells technology that enables programmers like HBO to send video-on-demand content to cable operators, as well as technology for cable operators to capture that content and manage it. Bradford says the company sold three times as many products in the first couple of months of the year as during the same time last year. Comcast offers more than 1,000 hours of programming on video-on-demand. Concurrent, a nearly 40-year-old technology firm, entered the video-on-demand business in 1999. The division has become the company's growth engine --- and its biggest gamble. Last year, revenue in the division fell 20 percent. Steve Necessary, president of video-on-demand, blames the decline on financial problems at some of the country's biggest cable operators, including Adelphia.

VOD: Satellite Killer or Bundle Filler? (March 8, 2004) Satellite distributors soon began hyping DVRs, and cable has, in essence, been playing catch-up with VOD ever since. About half of all respondents in a recent CTAM survey said they were familiar with VOD; and 74% of digital customers said they were familiar with VOD. Only 22% of all cable customers aware of VOD and who reported having it available to them have ever ordered anything. Extrapolating that percentage across the entire VOD-ready universe translates into 2.64 million homes using VOD-not a heartening figure when taking into account the 3 million customers who have DVRs. Charter's VOD service was available in 4.48 million homes at the end of 2003 versus 3.95 million at the end of 2002. However, revenue per digital customer remained essentially flat at $23.11 a month versus $23.41 in 2002. The availability of VOD may have helped Charter add digital customers during the period, but it didn't keep analog customers from defecting. The MSO lost 41,300 customers during the fourth quarter. [Must Read]

Video on Demand Not Yet a Big Movie Player (12/1/2003) On average, titles delayed less than 45 days attracted 50% more on-demand viewings than those delayed more than 45 days. In Demand, said the vast majority of people who rent movies do so within 30 days of their release on disc or tape, when 80% to 90% of the home-video revenue is generated. Video-on-demand services don't receive the average movie until 52 days after the video stores get it, Kuharsky said. Leichtman said, less than 40% of the people who could order any kind of video on demand, including the free television programs offered in growing quantities by cable operators, have done so. More than 90% of U.S. homes have a VCR or a DVD player, and only about 10% are expected to have cable video-on-demand service by the end of the year. Time Warner Inc.'s Warner Home Video, said his company looked at long-standing on-demand services from a pair of unnamed cable operators. In two communities, Warner found that half the subscribers were unaware of video on demand. In a third area, most customers knew that video on demand was available, but they didn't know how to use it. Typically, on-demand services give 60% of their rental fees to the studios, while the video stores pay less than 50%. [Must Read]

Cable Fights For Its Movie Rights (October 20, 2003) That's because cable's video-on-demand (VOD) services are far down the line and typically don't get the hot movies for six weeks after video stores get them. In the case of the California governor-elect's sequel, cable can't cash in until well after the Arnold craze is likely to have cooled off. The problem is, even as they see a future gain from VOD, the last thing Hollywood wants to do is mess with its current bonanza in home video. Sales and rentals of VHS tapes and DVDs will hit nearly $24 billion this year, vs. $10 billion in box office revenues, estimates PricewaterhouseCoopers. Says Blockbuster CEO John F. Antioco: "At no time has it ever been more profitable and in [the studios'] best interest to protect that revenue stream than now. They would be trading a $15 margin [on a DVD sale] for a $2-to-$3 margin [on a VOD purchase]. But for now VOD is at a huge disadvantage, given that demand for a film is greatest in the first 35 days after it's released on video. "When people go to the TV screen and look for a movie, they usually say, 'I already went to the video store to get that one,"' says Stephen Brenner, CEO of inDemand, a VOD service owned by cable operators.

VOD Findings Defy Pay TV Model, Prove Consumers Opt For Ad-Supported Content (October 14, 2003) While VOD is being pushed by cable operators, much of it has been of the pay- to-play or subscription variety that doesn't include commercials or any other kind of ad support. Cox's FreeZone test in San Diego involved putting ad content front and center, giving companies like Coca-Cola, Kraft and Volvo a chance to use long-form content to directly market to consumers without the clutter of 30-second spots crammed into commercial television. Two million pieces of ad-supported content were accessed over the past year by 50 percent of Cox's digital cable subscribers. The average viewer watched about 25.5 minutes of ad-supported content a week. And Cox said usage has remained steady for about a year with an average of 3.76 ad-supported content accessed per viewer per week. That's well above data by Kagan World Media that pegs the buy rates among active VOD households at between 0.75 and two movies a month. He isn't sure what form of VOD will survive, either a network-branded type arrangement that features content from strong TV brands like ESPN or Discovery or HGTV, or one dominated by MSOs like Comcast, Cox and Time Warner Cable that features a variety of content segregated by topic (sports, teen, etc.) from different providers.

Little Demand for Video on Demand (August 25, 2003) An estimated 40 percent of the roughly 70 million cable households in the United States had access to video on demand this month, up from 3 percent in January 2002, according to surveys by In-Stat/MDR, a research firm. And yet, only about one-quarter of the households with access to video on demand have actually bought programs using the service, the surveys indicate. (Of those, though, more than half — or almost four million — count themselves as regular video-on-demand users.) The relatively low purchase rate suggests that video on demand, while making significant advances in availability, is still hindered by cost and content issues, said Mike Paxton, senior analyst for In-Stat. “It is more of a niche service,” he said. “And I don’t see it changing in the near term.”

Net video to become a staple for cable? (August 19, 2003) Video on demand is a growing business for cable companies, according to a new study that predicts that 15 million cable subscribers worldwide will be paying for the feature by 2007. About 40 percent of all cable subscribers have VOD access. There are currently 5 million cable VOD subscribers worldwide, according to the study.

How Scripps Got A Jump On VoD (July 21, 2003) five months after launching its “three bucket” expanded VOD model of free video-on-demand content, movies-on-demand and subscription VOD in Philadelphia, Comcast was faring pretty well with what was internally dubbed its Phillyvision model for the VOD future. Philly's expanded VOD content was seeing 35% of enabled homes using VOD and a 9% take rate for its content, with 60,000 takes in the first month for Scripps programming. a Comcast spokesperson says the entire VOD category in that market currently sees 35% of customers using VOD each month, while 50% have used it in the last 90 days.

Comcast, Rivals Leaning on Video on Demand (July 21, 2003) Interestingly, about 26% of the buys for pay-per-view VOD at Insight are for adult movies. "It's much less important to us that we drive incremental pay-per-view buys of $4 here, $4 there." What's more interesting to the company is driving subscribers who generate $15 a month in digital service revenue, or basic subscribers who generate an average of $60 a month. The company found that after four months, 86% of customers who had never used VOD in any form remained as Comcast subscribers. But 96% of people who had used VOD at least once remained. A Comcast telephone survey of 800 satellite customers, not necessarily in Comcast's market, found that the percentage of people willing to drop DBS service through a traditional "dish buyback" program increased "very significantly" when the salesperson explained that VOD would be part of the cable package.

Video on demand's high anticipation factor (July 14, 2003) VOD is one that consumers are looking forward to well before it is widely available. That's according to a Beta Research study released last week that finds that a majority of people are interested in VOD. A few more than half those surveyed say they are interested in VOD, while nearly one-third say they are very interested. The way it works is that digital cable TV subscribers can order a video by pressing a button on the remote control and agreeing to pay a fee, typically about $3.99 per movie. Monthly subscriptions are becoming more common. The movie can then be watched like a DVD, meaning it can be paused, moved backwards or forwards and stopped to continue watching at a later time. When we can get down to pricing that is a buck or two, I think you will hit a bigger sweet spot than you are today. Heavy movie viewers are willing to pay $4 a title, but you have a large audience out there that feels $4 is too much. While VOD is growing, it was only in 2 million homes at the end of last year, according to PricewaterhouseCoopers, but is conservatively forecast to be available in 8.5 million homes by the end of 2003. But behind that is we don’t know what happens when VOD tries to be deployed in rural or suburban areas, where the take-rate has not been very high and where cable has not had a success story. When we try to scale it out nationally, the economics do not favor the VOD model, at least not today.

Will DVRs Bruise the VOD Fruit? And, Vice Versa? (June 2003) According to Jupiter Research, the VOD market will grow from $293 million in 2003 to $1.4 billion in 2007. And, the research firm suggests that subscription-based video-on-demand (SVOD) will top $800 million in 2007, up from $56 million in 2003. "Collectively, this market will grow 58 percent annually, from $349 million in 2003 to $2.2 billion in 2007," says the research firm. "Consumers are still driven toward programming first and foremost on the television platform," says Lydia Loizides, senior analyst with Jupiter Research. "On-demand technology is not reason enough to purchase more content." For the DBS industry, DVRs are the best route to video-on-demand. By caching programming, they offer many of the same on-demand features. In fact, DBS made one of the very first SVOD offerings via programming downloaded to the DVR. Jupiter Research believes SVOD to be a more effective revenue generator than a-la-carte VOD for both cable operators and programmers. "On average, Starz On Demand subscribers used the service about 3.9 times per month in December 2002, compared to 2.6 times per month in October 2002, an approximate 50 percent increase, with 75 percent attributing the service with increasing their satisfaction with DIRECTV," In a study from the Leichtman Research Group, 42 percent of cable subscribers report that they are willing to pay $4.95 per month for an SVOD service, and 29 percent are willing to pay $9.95 per month. Given the option, 62 percent of consumers would pay more than $10 and 35 percent would pay more than $20 per month. The optimal flat fee per month is $20.

Unintended Consequences (June, 2003) A decade or so ago, a technology debate raged through the cable industry. It centered on "thick" or "thin" clients, the crux of which was whether the new digital set-top boxes should contain massive computing power themselves (the thick client) or whether the computing prowess should be limited primarily to head-ends (the thin client). Yankee Group, "The cable operators see VOD as a killer app: Satellite can't do it and it will change everything. I agree that VOD is important but I don't think any single application will completely change the DBS/cable rivalry." "six of seven major movie studios have signed on to VOD." Unfortunately for VOD (and all pay-per-view) purveyors, the studios continue to offer a far more favorable window (the time when a movie is released after its theater run) to video rental stores, leaving both VOD and DVRs at a disadvantage. And the powerful rental outfits will fight tooth and nail to keep it this way. At the end of 2002 approximately 7 million digital cable households had access to video-on-demand programming. Of that 7 million, only one in five actually tested the service. By 2006, suggests the Yankee Group's Kishore, "VOD will be available to 37 million digital homes." Of these, he suggests, about 10 to 15 million households will use the services, generating VOD revenues of $2.8 billion. Of cable subscribers who have expressed an interest in on demand services, well over half (58 percent) say that such services are more likely to keep them with their cable provider. Of satellite subscribers with an interest in VOD, however, only 28 percent say the services would be enough to make them switch from satellite to cable, while nearly a quarter say the on-demand offerings would make no difference to them.

The Guts of VoD (June 2003) VOD has grown from a paltry 100 to 200 hours in 1997 to some of the most recent systems designed for more than 3000 hours of programming. The Yankee Group the capex cost per video stream declined from more than $650 in 2001 to less than $500 toward the end of 2002.

PC gaining in entertainment value (May 22, 2003) The survey, which polled more than 2,000 computer users over age 13, found that the computer is redefining how people are entertaining themselves at home. The results revealed that 61 percent view the PC as more important than the home stereo while 43 percent see it as more important than the television. Not surprisingly, teenagers age 13 to 17 were more interested in using the PC for a whole-house experience than respondents age 18 and older. Among teenagers, 73 percent said they want to access music files on their PC from anywhere in the home, compared with 35 percent of the adult respondents. Likewise, 52 percent of teens are interested in having a home network to connect multiple devices in the home -- such as televisions and stereos -- to the PC, compared with 35 percent of the adults. 21 percent of adults are uploading digital photos to a PC, compared with 20 percent of teenagers.

PPV and VOD to Lead Consumer Spending on Electronic Media and Entertainment (May 1, 2003) Informa projects that electronic media and entertainment spending will rise to $102.8 billion by the end of this year, led by television subscription spending, which will total $53.5 billion. comScore Media Metrix determined in Q1 2002 that 63% of US Internet users subscribed to cable television, and 22% subscribed to satellite TV services. [Editor's NOTE: they lumped cable revenues into this study which hypes the true revenue potential of ppv and vod]

Jupiter Research Reports that Video On Demand (VoD) ia a growing Market for Cable Operators, with subscription VoD providing the Best Short term Opportunity for Profitability (March 5, 2003) The Impact of On-Demand Content on Cable Revenues in the U.S.", the Video On Demand (VoD) market will grow from $293 million in 2003 to $1.4 billion in 2007, and that of SVoD will top $800 million, up from $56 million in 2003. Collectively, this market will grow 58% annually, from $349 million in 2003 to $2.2 billion in 2007. Subscription VoD services are predictable both in price and content and are marketed in a way that the consumer understands. On-demand technology is not reason enough to purchase more content. Consumers are still driven toward programming first and foremost on the television platform, regardless of whether or not that platform is analog or digital

Making Money with VOD (January 27, 2003) Largest VOD commercial deployment. KIT is a range of iTV services available in Hull and parts of East Yorkshire, UK. 2 years old; 10,000 subscribers. [Must Read]

VOD: On Demand at Hand (October 28, 2002) TWC's EVP and chief marketing officer, expects the MSO's digital penetration to plateau in the low 40% range, but that means there is still plenty of room for growth. Cablevision's buy rate was 77% in August, the latest month for which statistics are available. The rollout was a hit. Buy rates of around 200%, or about two movies per digital subscriber per month, were not uncommon. Churn plummeted to less than 1% in some markets, and average revenue per sub increased as much as 83%. Our VOD usage base was up close to 40% without doing a lot of marketing. But that figure started slipping over time, and our subscribers wanted something new. The other ways to make money hinge on VOD as a tool to reduce churn and attract customers. Cox estimates its digital churn at 1% to 2% per month.In Demand, which has signed VOD distribution deals with seven Hollywood studios in the past year (New Line, Artisan, DreamWorks, MGM, Sony Columbia TriStar, Twentieth Century Fox, and Universal) in addition to already delivering VOD titles from Warner Bros. Disney and Paramount are the only holdouts. Boyle says the company's VOD deals with studios give it 75% of Hollywood's recent releases in addition to library titles

Customer Satisfaction with Pay-Per-View Will Drive Video-On-Demand Revenue (08/01/2002) New research on pay-per-view (PPV) customer satisfaction by Innovista Research reveals that satisfied customers are willing to pay up to 35% more than dissatisfied customers for a subscription video-on-demand (VOD) service. Satisfaction is also directly related to PPV revenue. Nearly one-third of subscribers are dissatisfied with the cost of PPV programs, and only 20% of these subscribers order PPV at least once per month (while 48% of satisfied subscribers order at least once per month).

To Gig-E or Not to Gig-E - Part 2 (07/08/2002) Most common VoD (i.e. movies-on-demand) models assume that at any given time, the network must be ready to support 10 percent of the people in that hub (1,000) to request the same video stream, at the same time. They call this the “peak simultaneous” usage rate.

Movies on Demand to be Coming Attraction for Broadband (06/05/2002) The North American market has the lion's share of consumer broadband connections deployed, and, by 2006, will represent over 7.6 million VoD users, generating over $820 million in revenues. Asia, especially South Korea, Taiwan, Singapore, and others, will represent about 37% of worldwide VoD-over-IP subscribers by 2006, producing over $700 million for movie studios. Europe will provide about 15% of worldwide VOD-over-IP revenues in 2006, and the Rest-of-the-World will bring in about 4.7%.

VOD Numbers, Opportunities Start to Add Up (06/05/2002) Cable providers are hedging their technology investments by going with more than one VOD provider. Even estimates on the VoD installed base are reaching a kind of consensus after years of widely divergent numbers from researchers. Brean Murray's Backer estimates that VOD technology is available to about 25 percent of the nation's 80 million cable subscribers. Television industry publication http://www.TVPredictions.com, meanwhile, estimates seven million US homes as VOD-ready, and expects that number to pass the 10 million mark by year's end.

Video On Demand (VOD) Market Showing Impressive Growth (05/31/2002) The global equipment market is projected to grow from $108 million in 2001 to $186 million in 2002. Leading vendors such as SeaChange, Concurrent, Diva and nCube will face increased competition from Sun and SGI, and other computer industry players. SeaChange and Concurrent led the market in 2001 with market shares of 40% and 28% respectively. By year end 2002 Allied Business Intelligence (ABI) estimates that 4.8 million North American households will be VOD-capable.

Consumer Oriented Video-On-Demand Via IP Networks (05/2002) Four major efforts are underway by the movie industry: CinemaNOW, Intertainer, MovieLink, and Movies.COM. These efforts will be used to help the major Hollywood studios figure out what the market is for "on demand" content, as well as help engineers and software programmers develop efficient delivery systems and workable Digital Rights Management solutions. Consumers accessing "on demand" movie sites usually are doing so over high-speed, or broadband, connections, such as through Cable Modem services, or Digital Subscriber Loops. Therefore, the growth of Consumer Oriented VOD services over IP Networks is closely tied to the deployments of Cable Modems and DSL services throughout the world. By 2006, we expect that about 40% of consumers who have high-speed Internet connections to their residences will be participating in an "on demand" service. The Adult Content industry has already developed a robust set of services, delivered via Cable Modem and DSL service, which provide a market model. We believe that the number of users of Family oriented consumer VOD services will overtake the Adult market near the end of 2005, and become the mainstream "on demand" category by 2006. We expect that the entire market will have more than 17 million users, and generate more than $1.8 Billion (US) in subscription and Pay-Per-View revenue during 2006.

Sun, SGI Step Up Server Efforts (04/15/2002) Sun plans to partner with Sony Corp.’s Systems Solutions Division to offer VOD and streaming solutions for cable companies, telcos and broadcasters. SGI — which was involved in Time Warner Cable’s first VOD deployment in Orlando, Fla., eight years ago — said it’s going after nCUBE Corp. and SeaChange International Inc. with its SGI Origin 300 server and Total Performance TP 900 storage platform. The products can deliver up to 600 video streams for $255 per stream.

VOD Still Years Away (02/22/2002) According to research by GartnerG2, substantial Internet video-on-demand services will not roll out in the United States until 2005, and even then, only 2 percent of movie distribution revenue will come through Internet video-on-demand. GartnerG2 says that 10 percent of the 106 million U.S. households have broadband access, which is essential to transporting the data involved. But a GartnerG2 survey done in June 2001 found that only 2 percent of U.S. Internet-using adults had purchased a digital movie or video download in the three months prior to the survey.According to research by Jupiter Media Metrix, the market for video-on-demand (VOD) will grow to $641.9 million by 2006, but it must focus on the TV as its delivery platform, not the PC.

The Battle of the Boxes: the PC vs. the TV (02/13/2002) We think consumers will use their TVs like a server to download and manage most of their entertainment audio and video content, because TVs will always serve the captive audience. Only 3 percent of U.S. households have an Internet-connected PC, a digital camera, and a handheld computer.It's very likely that the PC and TV will not only continue to coexist, but they will enhance each other's capabilities.

Movies on Demand vs. Pay-Per-View (12/26/2001) ...movie studios should cut deals with operators and other distribution partners, such as HBO and Blockbuster, and become their own distributors. The greatest value lies in shifting the pay-per-view audience to VoD and generating incremental revenues. Studios, operators, cable networks, and the rental market must prepare to counter the effects, both positive and negative, of VoD on their businesses. Failure to do this will result in another blow to the advancement of interactive television."

Movies-On-Demand Will Threaten Pay-Per-View Services, Not Video Rental Or Box Office Businesses (12/20/2001) Twenty-eight percent of online consumers in the US are interested in ordering video-on-demand services. First-run movies-on-demand market to exceed $640 million in 2006. - source Jupiter Media Metrix

Waiting for Demand (10/15/2001) Comparison of two publicly traded VOD companies: Concurrent Computer, with a market capitalization of $642 million (Nasdaq: CCUR) and SeaChange is publicly traded (Nasdaq: SEAC), with a market capitalization of $540 million.

Video on Demand: on the Brink of Television Evolution? (10/2001) Cable is likely to emerge as the dominant VoD platform - 90% of all current commercial VoD deployments are on cable and cable operators around the world have been upgrading their networks for some years now. According to Screen Digest, the technical limitations of the satellite companies make them unable to offer VoD although they could offer a temporary set-top box solution with PVR (personal video recorder) technology. DSL (technology which enables much more information to be transmitted over standard telephone networks) is some years away from being able to challenge the pay TV market.

Its Alive! (06/01/2001) MPEG-4 is recognized as the next-generation video format for IP-network-based broadcasting. It enables broadcasters, motion-picture studios, and other content owners to author rich media with audio, video, text, graphics, and viewer interactivity, all within an orderly, object-oriented environment. Envivio has announced a strategic alliance with Sigma Designs, a provider of decoder chips and streaming-video software. Another MPEG-4 content-delivery platform comes from iVAST. The company has announced strategic partnerships with FOXSports.com, HSI Productions, and Mandalay E-Media to stream sports and entertainment content to broadband audiences using its MPEG-4 platform.

Big Billing Companys Grow, Smaller Players Suffer (05/21/2001) One of the hot issues is around the ability to bill and provision for content-based services. That still represents a challenge. GREAT source of information on market share among majory broadband billing vendors!

VOD & Streaming Drive Growth For Digital Media Servers (05/2001) Digital Media Servers provide archiving, local storage and playback of digital media files. A wide variety of applications use Digital Media Servers, ranging from relatively small audio files up to extremely large digital movie files. Two key applications are driving the growth of Digital Media Servers: Video-on-Demand (VOD) and Streaming On The Internet (Streaming.) While each application area is growing independently, Cahners In-Stat Group's analysis shows that the Broadcast-related Digital Media Server solutions have a significant long-term growth advantage over the streaming media products. During the next few years, we expect to see the Broadcast-related companies extend their reach and begin to dominate the market for all Digital Media Server applications. Worldwide annual dollar value of Digital Media Servers to top $1.2 Billion(US) during 2001, and expand to surpass $4.4 Billion (US) during 2005. Internet Streaming solutions represent the lion's share of the market, but by 2005, the Video-on-Demand server segment will be on a strong growth trend and will surpass Internet Streaming sometime very soon after 2005. The "other" segments of the Digital Media Server market will grow gradually from about $750 million (US) in 2001, up to about $1.7 Billion (US) in 2005.

The longest last mile (01/08/2001) The most immediate hope of support comes from telephone companies, which themselves are struggling to crack the $70 billion TV distribution market.Mr. Taplin wants cable TV companies, which control access to more than 70 percent of the TV households in the United States, and to a lesser extent satellite companies, which handle 15 percent, to invest more heavily in streaming-media equipment.By 2005, Merrill expects to see 39 million digital-cable subscribers, compared to 24 million broadband subscribers. As digital cable becomes more popular -- and as VOD services are installed as part of cable -- there will be less opportunity for companies hoping to turn the Internet into the distribution medium of choice. The window of opportunity envisioned by Mr. Taplin could be slammed shut.

Home Gateway Report: Worldwide Digital Settop, Service & Server Analysis & Forecast - 2001-2004 (01/2001) Worldwide growth of digital STBs (Settop Boxes) should exceed $11.5 billion in annual sales in 2004, and growth of related digital services should exceed $11 billion (annually), resulting in aggregated new revenues exceeding $54 billion by 2004. Most of the services revenues will come from advanced versions of Electronic Program Guides (EPG), Video-on-Demand (VOD), Interactive TV (ITV), and Enhanced TV (ETV), based on numerous Return-on-Investment analyses conducted.

Hype on demand (08/01/2000) Cable operators, like the movie studios, want to keep as much consumer cash as they can, preferring to maintain the customer interface and not give up customer branding to a middleman. The equipment needed to provide the service would cost about $500 per node. Diva estimates that at an average cost of $35 per subscriber to install, the physical costs can be recouped in less than two years. But that ignores acquisition costs and marketing expenses that will be acked onto the installation bill, especially when the companies are fighting the continued encroachment of digital satellite services. Chances are it will take a lot longer for cable operators to earn that investment back. Blockbuster, meanwhile, has internal studies which reveal that when movie fans purchase a satellite system, with its several-hundred-channel options, their movie viewing decreases from six rented movies per month to three, which might be pay per view or rentals.  

VOD Begins Infiltration (?) Leichtman Research Group, Inc. survey of 1,200 households throughout the U.S., along with 600 additional households in markets with availability, 42 percent indicated that they would pay $4.95 per month for SVOD of premium movie services, and 29 percent are willing to pay $9.95 per month.

Video on Demand - Coming soon to a home near you (?) Obstacles and Issues that will negatively impact the deployment of VOD include: Confusion over VOD and SVOD, Sufficient content, Digital penetration, Thin vs. thick clients, Cost of VOD Equipment.

BellSouth Takes Baby Steps Into Entertainment Market (August 18, 2003) BellSouth is determined not to become a dumb pipe. Through a deal with Movielink, the carrier will now offer on-demand downloadable movie “rentals” out of its DSL portal, BellSouth.net.

Movielink Updates Service, Plans New Ad Campaign (September 3, 2003) While Ramo declined to offer exact user figures, he said the site was adding new customers at a rate of between 10 percent and 20 percent a month. The bulk of users remain predominantly male and between 25 and 49 years old. The upgrade, known as Movielink 2.0, has several features Ramo said customers have told the company they would like. New software allows users to view the movie while it is still being downloaded so that a user can begin watching a film within two to 10 minutes of starting a download. Movielink is a venture of Metro-Goldwyn-Mayer Inc., Viacom Inc.'s Paramount Pictures, AOL Time Warner's Warner Bros., Sony Corp (news - web sites)'s Sony Pictures Entertainment and Vivendi Universal's Universal Pictures.

Movielink co-stars on Hollywood.com (April 16, 2003) Video-on-demand site Movielink said Wednesday that it will distribute its downloadable feature films via Hollywood.com, giving Web surfers yet another new legal avenue for viewing digital entertainment. The move comes a week after one major Movielink holdout, Walt Disney, said it planned to begin testing its own video-on-demand film service later this year. Other major media companies are joining the fray, too. America Online recently said that it has licensed MovieFlix.com's library of digital films for use by its AOL Broadband members.  Hollywood.com, a wholly owned subsidiary of Hollywood Media, will offer a selection of new releases and classic films from Movielink, ranging in price from $2.95 and $4.99. The service is only available to people who have high-speed Internet access.

MovieLink (11/11/2002) Five major film studios yesterday launched Movielink, a fee-based online movie rental service. The venture is targeted at America's estimated 25 million broadband users.

Movielink, IBM Hook Up on Site Hosting (9/9/2002) Big Blue will provide Movielink with managed hosting services, including systems operations and network management. IBM will also lend technical counsel and deliver computing resources on-demand from its U.S. data centers to support Movielink's operations. The service, slated to make its debut in the next few months after much fanfare, will digitally deliver motion pictures from the studios to broadband Internet users in the U.S. "People don't think of the PC as an entertainment tool," Vonder Haar told internetnews.com. "It's a productivity tool."