VOD set to surge, despite obstacles
Video-on-demand (VOD) will be in 65.9 million homes by 2016, in spite of myriad road blocks that could hinder growth in the sector, according to a new report from Kagan Research.
Through the first half of 2006, Kagan estimates that VOD-capable homes reached 26.2 million, or about 86 percent of the 30.4 million digital cable homes in the U.S.
Kagan notes that VOD is poised to create a revenue stream even when confronted with several issues, including the presence and impact of digital video recorders, digital rights management, revenue models and bandwidth constraints.
Revenue models, meanwhile, appear to be coming into focus, particularly when it comes to applying advertising support to "free" on-demand content (please see the two top stories in the "Fast Forward" section for more).
Still, VOD revenues are not moving in lock-step with the growth of VOD-capable homes. Revenues generated from VOD "remain minimal," Kagan said.
Kagan estimates the number of cable VOD homes will continue to grow
as more systems come online, and, by 2016, there could be 65.9 million VOD homes.
VOD growth, particularly in the cable sector, will be attributed to higher penetrations of digital subscribers rather than from systems that add on-demand services.
On the content side, an "essential segment" is coming from subscription-VOD services offered by premium programmers such as HBO, Showtime and Starz. Kagan estimates that there were 10.5 million SVOD homes in 2005, a figure that is expected to reach 16.3 million by the end of 2006.
According to Kagan, $757 million was spent on VOD programming in 2005, and will surpass $1.1 billion in 2006.
"Multichannel services are undergoing a fundamental transformation, and the mainstreaming of on-demand delivery is a core component of the change," said Kagan Senior Analyst Ian Olgeirson, in a statement.
—Jeff Baumgartner, Editor in Chief, CED magazine and xOD Capsule
Charter test makes ads dynamic, on-demand
Charter Communications Inc.'s hometown of St. Louis is the site of a pilot that will test the mettle of dynamic, on-demand advertising.
The field test, which follows the completion of a lab trial, is tapping the help of several vendors in the VOD and advertising food chain, including Atlas On Demand, C-COR Inc., Harmonic Inc., and TVN Entertainment Corp.
(Editor's note: Much more about the nuts and bolts of this field trial will appear in next week's edition of xOD Capsule)
Thanks to a recently launched field trial
by Charter Communications, St. Louis
is positioned to be not only the
'Gateway to the West,' but the gateway
to ad-supported VOD, as well.
The field test, launched in late October, also includes participation by Ogilvy North America and Mediaedge:cia.
In the trial, commercial content is being placed in pre- and post-roll positions around "free" on-demand content supplied by Hollywood.com Television and Vehix.com.
Sessions are also created as customers order them, but allow for ad copy updates without the need for costly re-encoding and re-distribution, according to the parties involved.
Before this more flexible method, spots tied to VOD content were spliced in ahead of time, forcing advertisers to commit several weeks in advance and to run more generic messages.
"Charter is now taking dynamic ad insertion to the next phase, which means deploying it as a field pilot focusing on delivering dynamic on-demand advertising built instantly in response to viewers' desires, all based on play lists by viewer sessions," said Todd A. Stewart, Charter's corporate VP of national advertising sales and development, calling the pilot "a breakthrough that entirely changes the landscape of on-demand television advertising."
The companies involved claim the trial marks the largest media market so far to deploy such a service.
Of recent note, Sunflower Broadband of Lawrence, Kan., announced an on-demand ad campaign in partnership with MTV Networks, Atlas On Demand, and the MSO's primary VOD server and software supplier, SeaChange International, in September. Mediaedge:cia also participated in the Sunflower Broadband campaign.
Nielsen to launch VOD measurement service
In yet another move that could help cable operators pay the freight of "free" video-on-demand content, Nielsen Media Research said it will launch a new VOD measurement service on Dec. 11, 2006.
Nielsen said it will offer the new service by leveraging the same National People Meter sample it uses to provide TV ratings to national programmers. Like current rating methods, Nielsen's VOD clients will receive household and demographic ratings for VOD content alongside with other detailed audience information.
VOD titles prepped for audience measurement will use Nielsen-supplied "watermarking" audio codes, which will be applied to content with special encoding tools. Nielsen's new Active/Passive meters will use those watermarks to then identify on-demand viewing sessions.
Cable operators are already inserting ads into free VOD, and doing so dynamically in a few cases, but this new capability should also give them some important data that advertisers are looking for as they make a decision on whether to leverage the emerging on-demand delivery format.
Nielsen said the VOD measurement service, for the first time, will allow its clients to compare the performance of programs airing on traditional linear channels with the performance of those same programs offered via VOD.
Nielsen noted that the new measurements can be applied to older, library content as well as shows that have been recently broadcast.
"Because video-on-demand is a growing business and a potentially valuable new revenue stream for programmers, it is increasingly important for them to understand who is watching their shows and to be able to compare the viewing that is being done via traditional television and VOD," said Nielsen SVP Scott L Brown, in a statement.
RCN invites general public to tap music, game services
In an exercise to increase brand identity and tap into a wider revenue stream, RCN Corp. is opening its RCN Music and RCN Games services beyond its subscriber base. Previously, the company marketed exclusively to subscribers within its service areas. Now anyone can access the two services via RCN's Web site.
Availability of RCN's subscription portable music download service, RCN MusicToGo, enables downloads to MP3 players or other portable devices that support Windows Media Player 10 for $13.95 per month.
RCN Games includes free games, like Sudoku, Quest and Gutterball, Chess, Star Hockey and Texas Hold 'em Poker. A large selection of games are also available for purchase by download, all including a 60-minute free trial, such as Cake Mania, Big Kahuna Reef, Poppit! Show, Hidden Expedition Titanic, and Chicktionary, many of which are widely available from other sources.
By leveraging the Ethernet ports
of Series 2 and 3 DVRs, TiVo is looking
to take its tagline to the next level.
TiVo unleashes broader
broadband video strategy
TiVo Inc. has expanded its Internet-delivered video strategy with a string of announcements that include everything from a new, unified broadband video interface to a method that allows users to ship and share their home movies privately to other TiVo customers.
TiVo, which will push a strategy that takes advantage of Ethernet ports in its Series 2 and new HD-capable Series 3 DVRs, made a handful of announcements related to its broadband video plans:
- Unified Search: Starting next year, TiVo users will be able to conduct searches of content available via broadcast, cable and the Internet. No matter where that content originates from, what is found will show up on the TiVo "Now Playing" list.
- Home Movies: In partnership with One True Media, TiVo will enable users to set up their own "private channel" to share home videos with other TiVo customers. After uploading a video to One True Media, TiVo users can then edit it and receive a "personal TiVo channel code" that can be used to distribute the video to other TiVo subscribers (likely those in the "friends and family" category). TiVo said it will add this feature in Q1 2007. Receiving movies will be free, but customers who want to distribute their videos will have to pay a monthly subscription fee of $3.99.
- Autotranscode: This PC app enables customers to browse, transfer and watch Web-based video on the television screen. The transcoding element ensures that material can be displayed on TV even if the source file is not in a format that televisions can traditionally display. The new TiVo Desktop Plus 2.4 software will support formats such as QuickTime, Windows Media Video and MPEG-4. TiVo customers will have to pay a one-time fee of $24.95 for the new software. The 2.4 version will be free to subs who already purchased the earlier version.
- New TiVoCast partners: TiVo added CBS Interactive, Forbes, Reuters, dLife, Plum TV and Nano to TiVoCast, a service that delivers video to the TiVo player via its broadband connection. The deal with CBS marks the first network deal for the TiVoCast service.
USDTV under new ownership
USDTV may have new owners,
but Steve Lindsley will remain as
CEO of the budding, but struggling,
over-the-air digital television service.
NexGen Telecom LLC has swooped in to pick up the assets of U.S. Digital Television LLC, a struggling provider of low-cost, over-the-air digital television services that also had "push DVR" plans on its technology and services agenda.
Utah-based USDTV was formed in 2003 and has signed on about 16,000 customers so far. It filed for Chapter 7 bankruptcy in July. Its claim to fame is a no-frills, trimmed down channel lineup of digital television services for $19.95 per month.
Targeting so called "cable nevers" (i.e. people who have not subscribed to cable), USDTV delivers its programming by piggybacking on the digital signals of local TV station partners in markets such as Dallas/Fort Worth, Salt Lake City, Albuquerque and Las Vegas. Financial terms of the deal were not disclosed, but Steve Lindsley will remain with USDTV as CEO.
NexGen Telecom is a division of Denver-based NexGen Resources Corp. It was founded in 1993 by Charles S. McNeil.
Vidiom taps cable vet
Charter vet David Housman
has joined Vidiom Systems.
to lead strategic efforts
David Housman has joined OCAP and iTV specialist Vidiom Systems as vice president of strategic initiatives. Housman has 25 years of technology and business development experience in the communications industry, the last 10 at Charter Communications.
At Charter, Housman provided strategic guidance over new business opportunities as well as oversight for the development and deployment of Charter's high-speed data services and advanced set-top boxes including DVRs.
Everstream seeks expansion
Everstream, a data collection and reporting company purchased by Concurrent Computer Corp. for $15 million, said it expects to increase its Cleveland, Ohio-based staff by 50 percent to keep up with customer wins in 2005 and 2006, and to expand into new markets.
Everstream presently has 45 employees, and expects to ramp up to 65 or 70 within the next six months. The company noted that it is looking to hire database administrators, business analysts, project managers, quality assurance specialists and account managers.
The company said it presently collects data from over 18 million digital subs in 180 markets with customers such as Comcast, Time Warner Cable, Cox Communications, EchoStar Communications and J:COM of Japan.
For New Product Information, visit CED’s Product Showcase Today!
We are making changes and additions (including international deployments) to our
Web-based "living" deployment chart. If you have a new deployment to report for the VOD Scorecard and the Web-based deployment chart, please contact CED Editor Jeff Baumgartner.