Memory Lane - Spotting an Opportunity
It started with local ad operations.
Video-on-demand over cable plays out on a big stage these days. Since launching its on-demand service in 2003, Comcast alone has served more than 20 billion program streams, thanks to an underlying technology platform that marries digital video encoding, storage and delivery.
But cable’s original embrace of digital video technology wasn’t related to video-on-demand. It sprang, instead, from a confounding and continuing problem: getting local cable TV commercials to play correctly.
Since the start of the local cable advertising business in the early 1980s, cable operators relied on banks of videotape players to store 30-second commercials that had been produced for their clients – the auto dealerships, restaurants and retailers that purchased local commercial time within national cable networks like ESPN and CNN. The tape players were triggered by audible cue tones – electronic chirps within cable network program streams that signaled transitions to local ad breaks. Upon detecting a cue tone, the electronics that commanded the tape players instructed the machines to play the next available commercial, which was mapped to an assigned channel.
It worked beautifully, except when it didn’t. Which was frequently. And not only were tape players susceptible to mechanical breakdowns, but they proved to be increasingly cumbersome as the demands of cable’s local ad business progressed.
For example, cable advertising organizations discovered they could charge higher rates for assigned placement of commercials in desirable time slots, such as a heralded college football matchup or a popular evening sitcom. The program-specific insertion strategy was a departure from random, run-of-schedule approaches that preceded it. But lining up spots in an exacting fashion using tape decks required a painstaking manual process. Technicians had to ensure the commercials assigned to a particular network’s tape deck were arranged in a specific order so that the linear arrangement would match the schedule of local commercial breaks. If one spot failed to play as assigned, it would ruin the progression from that point forward until a technician discovered the problem and manually reset the machine.
Competitively, these process flaws set the local cable industry back. Broadcast TV stations, which faced a much easier task of trafficking commercials across only one channel, not eight or more, had trained larger local market advertisers to expect program- and timespecific insertion. Cable’s dependence on tape machines to run multichannel advertising operations relegated the nascent industry to a sort of second-class status.
Searching for a better way, the engineers who pioneered the local cable advertising business began to explore a promising but unproven technology set: digital video encoding, storage and playback.
The early efforts, starting around 1990, were challenging. This was before MPEG video, before encoding and transcoding standards, before an ecosystem of storage and control gear was brought to market. But a few pioneering companies persisted. Longtime local cable advertising technology providers like Channelmatic and Texscan-MSI, both since acquired, rigged together systems for converting and playing digitally encoded video files into the analog cable network.
And in Massachusetts, a small group of executives from computing giant Digital Equipment Corp. splintered off to form a start-up dedicated to developing a digital ad insertion system. Their company, Seachange International, would go on to play a prominent role in developing VOD technology and software. But in 1993, when Seachange came into existence, its sights were narrowly trained on the emerging market for cable digital advertising.
As technology from Seachange and others passed early tests and trial deployments, word of the new possibilities of digital video spread quickly through the local cable ad business. Quickly, some of the visible failings of the business began to erode. Not only were digital commercials guarded from the quality degradation caused by making multiple copies on tape, but advertising organizations could move faster to get spots assigned and inserted, allowing them to charge higher rates to late-arriving advertisers.
Digital ad systems also familiarized cable industry engineers and technicians with the possibilities of digital video encoding, storage and playback – attributes that would come to be essential for a new era of on-demand video.
By now, digital video is fully intertwined with cable, deployed on a massive scale. Yet it’s instructive to recall how digital first found its way into the modern cable industry. As a platform that solved a set of basic business needs for cable’s local advertising operations, digital video entered cable through the side door. Well before subscribers became accustomed to ordering up movies and TV shows via VOD, it was the technology on the spot.