Video on Demand (VoD) Reinventing Itself
How technology and competitive shifts within VoD are defining next generation solutions.

By: Bruce Bahlmann - Contributing Author (your feedback is important to us!)

Created: October 7, 2007

Who will win the next round of VoD deployments? Answering the question is not just a matter of reviewing a dozen different vendors, their products, and their customers as it was back in 2000. Today, the marketplace has changed, consolidation has taken place, new requirements have surfaced, and competition is using a different playbook and completely different technology. This article takes a look at how VoD is changing and how service providers can leverage these changes.

VoD landscape is changing

VoD has come along way since the early attempts by John Hendrick's Your Choice TV (YCTV) in 1992 or the US West Omaha trials in 1994. Today, watching television is increasingly becoming an on-demand type of activity that requires numerous precisely orchestrated technologies to deliver a quality user experience to television programming subscribers to the point where nearly everything one could watch on TV may appear as though it is on-demand.

Among these orchestrated technologies are the emerging next generation systems from VoD vendors who after the glory days of 2000 through 2002 have fallen on tough times. SeaChange International (SEAC) and Concurrent Computer (CCUR), who represent the two most prolifically deployed platforms, are lingering at or near their 52 week lows on the stock market while their main competitors have been scooped up by larger cable equipment manufacturers. Fortunately, VoD service providers are starting to replace these systems, some already 7 years old, such that within the next 2 to 3 years a majority of the top VoD service providers will have replaced or upgraded their VoD systems in all their key serving markets.

While the advent of a widespread equipment swap under way is great news for VoD equipment vendors, three evolving technology shifts are slowing the roll out as VoD service providers look to capitalize on certain commoditized aspects of the system (e.g. video pumps) and possible reuse of resources (e.g. universal edge QAMs). The most important of these shifts involve the separation of hardware and software such that VoD vendors are moving off their proprietary hardware and file systems to focus on becoming "pure" software companies relying on Commercial Off-The-Shelf (COTS) hardware and open API software to maintain some reasonable portion of their previous margins. Achieving pure software solutions will increasingly become important as more frequently installed/upgraded VoD components become commoditized, thus requiring cheaper hardware along with Linux in order to remain competitive. Use of telecom's advanced TCA hardware platform would also drive costs down.

The second major shift is the migration from proprietary bundled content management to stand alone content delivery network (CDN) type of VoD content propagation. CDN based content management systems for VoD will enable more rapid ingest and content propagation to any device from any location - preferably the nearest source and transcode as required by the defined capabilities of the endpoint.

The last major shift is the increasing importance of the VoD back office to support not only VoD session management but also other similar sessions such as switched digital video (SDV) and wireless device on demand content. Expanding the back office to manage these other sessions is creating a very lucrative upgrade path for back office vendors to the point where VoD back office systems could very well become the most expensive part of any VoD system.

Some examples of emerging technology shifts in VoD already taking place are:

VoD's change in focus from specialty hardware provider to pure software vendor is readily apparent in the latest video pump product offered from CCUR. CCUR's MediaHawk 4500 features are their own real-time variant of a Linux operating system along with its video pump software that runs on a short list of approved COTS hardware platforms.

The importance of CDN based content management systems for VoD becoming a stand alone product rather than a feature of back office software is evident from recent work taking place at Harmonic (HLIT). HLIT, whose acquisition of VoD server assets of Internet protocol television (IPTV) set top vendor Entone has given them access to one of the most interesting content management systems available. The process of pulling out its CDN content management system creates a stand alone solution which will be trialed at a customer site beginning Q4 of 2007.

Strong evidence of the VoD back office gaining value is evident from SEAC's recent overhaul of its Axiom platform. SEAC Axiom is one of the most widely deployed VoD back office systems which now supports video pumps from multiple VoD vendors as well as managing streams to mobile devices.

New VoD systems emerging

Just as these new products become available, new methods of VoD delivery (primarily download) are emerging such as Amazon/TiVo, Blockbuster/Movielink, Netflix, and Satellite/DVR solutions that are challenging previously accepted delivery models. These emerging solutions combine access to extensive libraries of content with broad appeal of an extensive online marketplace and appear only to be limited with respect to their last mile connection to the living room. However as interesting as these solutions appear, they pale in comparison to more mature living room VoD threats from those listed in Table 1.0 that provide HDTV quality VoD titles on state of the art hardware platforms plugged directly into the television with back office distribution systems which are built for low-latency real-time interactivity.

All downloadable VoD solutions have one thing in common - they are not really on demand, rather they are "near" on demand solutions dependent on the speed of their subscriber?s Internet connection. What makes them a threat is the increasing ubiquity of faster Internet connections along with their connectivity to the television in the living room.

VoD requirements are changing

Increased competition for VoD is driving new functional requirements. Next generation VoD systems attempt to solve problems such as:

• Further marketing or promoting deeper libraries of content (see October 2007 CED article for more details) - essentially a need exists to expose all titles within the VoD library so that users are aware of all available titles, able to easily find them, and rent them.
• Addressing delays in propagation of content throughout the network - current VoD systems require 1-3 hours to ingest and 11-15 hours to propagate content to make it available for users. New VoD systems need to shorten this delay to enable real-time ingest and propagation of content to for example allow viewers to watch a football game in its entirety that just concluded without being dependent on having first recorded it on their DVR.
• Subscription VoD and electronic program guide (EPG) not integrated - current systems require tuning to channel 1 to access VoD but next generation VoD needs to be more thoroughly integrated into the EPG such that navigating through available video programming and selection of VoD titles represents a seamless experience.
• Encryption of VoD streams is currently program based rather than session based. As a result, SVoD offerings can only be sold as a bundle rather than tiered. Next generation systems will require bulk encrypters to allow expanded VoD offerings.
• No business rules on stream availability such that the availability of VoD streams cannot differentiate between someone wanting free content and someone wanting paid content. Since the build out of VoD does not allow everyone on any given segment of the network to watch VoD, the availability of VoD titles needs to be cognizant of the availably of resources such that if a certain threshold is met, only paid VoD content is available.

Conclusions

The Achilles heel of even the most serious VoD threat is download delays or in the case of Netflix, round trip mailings. However since these threats are banking on the continued fierce competition among service providers offering high speed Internet; the actual delay is becoming increasingly mute. As bandwidth wars continue resulting in increasingly faster connections, the opportunities available to mature threats to expand their delivery near real time services could catapult them into becoming legitimate video service providers. While this may be, more experienced providers of video content know that providing quality video entertainment is not all science - there is also a certain degree of art to it and it is this degree of art which separates IPTV and download VoD solutions from the real deal - namely high quality streaming MPEG video.

Expect to see IPTV and traditional VoD merge into a hybrid that combines their respective benefits rather than the two solutions remaining and evolving independently. As this plays out, the infrastructure components that differentiate VoD from other video programming will be increasingly hard to discern to the point where offering VoD above and beyond other video programming will be a relatively small incremental cost over what today's solutions fetch. VoD service providers who can keep their existing VoD deployments on life support for at least another year will benefit most from these developments as current next generation VoD solutions aren't quite there yet.

Check out these other Birds-Eye.Net papers/products regarding Video on Demand (VoD):

• Brushing the Dust Off Long Tail Video on Demand (VoD) Titles - Addressing the problem of accessibility in ever growing VoD libraries
• Consumer Appetite for High Tech Television - From HDTV, to Video on Demand (VoD), and perhaps to a la carte
• Video on Demand (VoD) Reinventing Itself - How technology and competitive shifts within VoD are defining next generation solutions
• VoD Market Research - VoD market research provides guidance for operators and opportunities for hardware, software, and content vendors
• VoD No Match for DVD Portability and Standardization - Predicting the outcome of competition between VoD and packaged media

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