There is nothing like home cooking, and now cable operators are finding out that is true for their video-on-demand service offerings.

Time Warner's
Time Warner Cable San Antonio's
local origination unit provided video of
the annual Fiesta Battle of Flowers
Marching Band Festival for its San
Antonio On Demand channel.
A new strategy in cable's battle with satellite competitors is to go local with VOD content. While supplying this home-grown, community-generated content on VOD servers does mean retooling local origination operations and some equipment purchases, the systems that have tried this new on-demand variant say they are getting strong response from their communities—strong enough in some cases to consider expanding the operation to include more content and perhaps advertising support.

One of the first systems to venture into local on-demand content is Time Warner Cable's Southeastern Wisconsin system. The brainchild of then-division President Carol Hevey, the free Wisconsin On Demand service launched to digital subs in fall 2003.

The Wisconsin On Demand channel was placed within its 26 other free on-demand channels from cable programmers such as Oxygen, Court TV and the Cartoon Network. It started with about 90 hours of content, and has grown to about 105 hours.

If there were such a thing as ratings for the free on-demand content, the local channel would be a big winner. As of late November, the local on-demand channel had attracted about 400,000 hits in 2004.

"We have been number one or number two for most of the year—which is remarkable," says Bev Greenberg, vice president of public affairs for Time Warner Cable of Southeastern Wisconsin.

The local programming content ranges from a lineup of high-school sports to a rock talent contest Time Warner Southeastern Wisconsin developed. A second channel offers local education on-demand content, including video classes offered by Milwaukee Technical College.

Similarly, Time Warner's San Antonio system started delving into local on-demand content under its movies-on-demand banner about a year and a half ago, according to Jon Gary Herrera, the division's director of government and public affairs. At first, it consisted of video of local events such as high-school football games and local parades, but it has now grown to encompass local talent shows, and next spring, a series of city council election debates.

"We clearly started identifying initiatives that were not typically covered by big broadcasters or big production companies, but it was absolutely a need, and the demand was there from the public," Herrera says. "So it kind of grew up from there."

Time Warner's Mobile Production Facility
Time Warner Cable San Antonio Local
Origination Supervisor David Przybylski
directs video feeds from the unit's
mobile production facility.
In September, the local content had grown enough that it was put on its own channel in the on-demand lineup. Although there was some concern the local content would suffer if moved away from the popular movie content, the San Antonio On Demand channel has steadily built viewership, which is approaching 20,000 viewers monthly.

A strong argument for local VOD programming is the fact that satellite competitors can't easily duplicate it because of limited spot-beam satellite capacity, but in addition, "it's a great fit for public affairs," Herrera adds. "Those are the kinds of things that this type of initiative and this type of technology then brings and expands your public affairs repertoire."

Time Warner is far from the only cable operator to see good response from launching local VOD content. After buying and testing the N2Broadband Xport VOD production system this summer, Cox Omaha debuted its local entertainment-on-demand content in September to coincide with the fall high-school football season.

With a lineup of about 10 hours of local content weekly, the channel is part of an umbrella VOD channel along with paid offerings, including movies-on-demand, HBO, Cinemax and Starz.

Cox's Entertainment On Demand
Cox's Omaha system now offers
customers local content as part of its
Entertainment on Demand service.
Viewership numbers have been encouraging. Since the local content channel launched, Cox Omaha has seen a 4 percent increase in digital TV subscriptions and a 9 percent increase overall in Entertainment On Demand order activity, according to Mike Kohler, Cox Omaha's vice president of public and governmental affairs. The local content averages 5,300 orders per month, representing about 2 percent of Cox Omaha's total VOD orders "which is kind of what we were shooting for," he says.

"We are encouraged if people just do the activity because, frankly, we just like them in the neighborhood," Kohler says. "We're not trying to win any ratings race or anything like that. The idea of having our free content located in close proximity to the pay options is we want people to feel like they can just go to this area, explore, and there are some free options available. We just want people comfortable with doing the ordering activity."

Buckeye CableSystem has also pushed the local needle by producing high school football games and other events and then making them available on-demand. Joe Jensen, Buckeye's CTO, discussed that effort on a panel during last month's Cable Television & Broadband Expo 2004 online tradeshow (for coverage, please see our roundup of the confab on p. 50).

Local origination steps in

With local VOD content largely offered for free, cable operators are looking to keep costs down, largely by tapping their existing local origination units. For Cox Omaha that made sense, since its local origination unit already had a mobile truck and video equipment. But it did require the division to rethink its local origination strategy.

"It doesn't change the equipment we have or the franchise obligation. What it changes is our programming philosophy, because now, to be really honest, we're only going to do programming that serves our competitive needs," Kohler notes. "If there's not something that distinguishes us from our wire-based or satellite competitors, then we are not going to bother doing it."

Similarly, Time Warner San Antonio also has added local VOD to its local origination unit, and that has benefited the system by increasing the amount of local programming overall.

"It really hasn't been a cost increase for us," Herrera says. "It's just a matter of us putting priorities on certain productions versus others that we have done in the past, really to help drive viewership and be more diverse in our coverage."

Still, local VOD does require some outside help. For multiple camera shoots such as football games, Time Warner San Antonio hires local contract camera crews.

"But if it's something like the mayor's address to the chamber of commerce on the state of the city—that's a two-camera (production), so we can do that all in-house," Herrera says. "So there is that balance of what we continue to explore, trying to keep it as efficient as possible."

Time Warner's Southeastern Wisconsin division, meanwhile, also is keeping production costs low by banking heavily on contributions from the community. In fact, 80 percent of the video content is contributed free from outside sources, with 20 percent produced by the MSO.

"The only thing we needed to buy was the N2 Broadband equipment," Greenberg says. She won't release the actual cost paid for its N2 Xport Digital Media Producer encoder, but "it was an initial cost and that was it. That was all that we really invested," she notes.

The trend toward local VOD content has in fact been a boon for N2 Broadband and its Xport VOD production suite of products. N2 so far has sold elements of that product line—which includes a built-in encoder or interfaces to link to an existing encoder, an editing suite and VOD metadata coding tools—to 25 local cable systems.

Raj Amin
"Local content for on-demand is just a really natural fit, and I think operators have gotten more and more comfortable with the basic operation of VOD which began with just getting the movies and getting the movies deployed and getting the premium SVOD services," says Raj Amin, N2 Broadband's vice president of content and advertising markets. "It's something satellite can't do, and [cable operators] find a lot of value in providing this local content."

The fact that local cable divisions are buying into Xport has in turn influenced the product line. Based on customer feedback, N2 added the Xport editing suite features to provide simple cutting, splicing and content creation tools.

"What we saw from the local systems was they needed a really easy way to do that, that they could teach to pretty much anyone with basic technical background," Amin says.

Going forward, N2 Broadband anticipates local on-demand content will evolve to include ad spots. So it is providing its AdPoint on-demand advertising system, which can process, insert and swap ad spots, as a module to the Xport platform, Amin says.

Adding the ads

Indeed, the local systems are already mulling the possibility of mixing advertising into their local VOD content offerings.

"We've had a dialogue with our local ad sales group, and that is something that we would consider depending on the content, obviously," Herrera says. "Would more high-school football games get covered if there was an underwriter helping with the hard costs? Absolutely."

Likewise, it's in the future if Cox Omaha finds major advertising accounts willing to cut a deal to support the local on-demand programming "and that a differentiating factor for us can be the promise to do infomercial programming and put it on our EOD menu, we'll do that deal," Kohler adds. "So that's where the demand will come from."

It also is mulling the possibility of adding advertising spots to the free local content channel.

"We are working right now with our commercial side and with Cox Media on either augmenting sales proposals that they are making to major clients, or in the case of Cox Media, straight-out sales of advertorial-type content locally," Kohler says.

Nor is the channel going to be limited to just local content. Starting this month, the channel also will offer customer care, cable service information and troubleshooting tips, as well as employee communications available via a password.

"We want it to be a support mechanism for our customer care people," Kohler says.

A good picture

Time Warner's Southeastern Wisconsin division also is looking to expand its local VOD efforts, possibly growing it to include multiple channels, Greenberg says. The growing content will probably mean adding more VOD servers "and so we're going to look for greater capacity so we can offer more programming," she says.

For Time Warner San Antonio, future expansion may include updated encoders. At present, its local on-demand programs have a maximum length of about 90 minutes because of limitations to its existing encoder—so in the case of football games that means splitting the video into two segments. Encoding equipment that can support longer video files is on Herrera's wish list, and "it's actually something we are already discussing with our engineering department, saying 'hey, for next year's capital, keep us in mind'."

Also on that wish list is the ability to encode local content in HD. That would mean increased costs in production and higher bandwidth, but so far, the response and strategic advantage would argue well for such an expense, Herrera says.

"When we first launched it we were at about 12,000 viewers, and now we are approaching 20,000 viewers per month," he notes. "As that continues to grow, in every instance we are absolutely putting an exclamation point on the competitive advantage. And that's where we reasonably think we can look at the future of this type of product and continue to grow it as an investment."