VOD’s Secret Sauce, and Inertia’s Power

ALWAYS ON
By Gary Arlen, Contributing Curmudgeon
From The May 20, 2002 Edition Of Broadband Week

BBC America hastens to point out that its video-on-demand concept — which offers “unedited versions” of TV programmes — doesn’t necessarily mean the reinstatement of saucy sex scenes on snooker tables.

Yet the network’s move to hype uncut VOD simulcasts is a reminder that we’re still in the tentative, “try anything” phase of on-demand television. There’s no firm consensus on what will appeal to viewers.

Of course, that doesn’t stop promoters

from embracing upbeat forecasts such as the Allied Business Intelligence prediction of 4.8 million “VOD-capable” homes in North America by year-end — whatever that means.

“Capable” is a far cry from actual, ongoing, revenue-generating usage. And if the confusing array of VOD promises peddled at the recent National Show in New Orleans is any indicator, consumers will hit “pause” often before they embrace this new VOD opportunity.

Maybe that’s why a separate study this month suggests that VOD profitability is at least six years away.

For example, let’s look at that BBC America vision for VOD. It starts with cable’s favorite restriction: the “walled garden.” A subscriber starts to watch a conventional BBCA show, and is advised that a full-length version of the program is available for a small pay-per-view fee.

‘RANDOM’ FACTOR
An enthusiastic technocrat at the BBC America booth hinted that the paid version might include three or four minutes of saucy material (expurgated language or nudity, perhaps), stuff that’s more common on the European telly than in the U.S.

But a BBCA functionary quickly dissuaded me, pointing out that U.K. shows — which aren’t subjected to the structure imposed by U.S. block scheduling — sometimes run for 40 or 75 minutes, or some other random length. The VOD option would allow viewers to see the entire show in its original form, rather than a version cut to fit into stateside time slots.

The seamless on-demand connection uses “Channel Link” software from Digital Video Arts, a company recently acquired by SeaChange International Inc. This “hot-tune” feature moves a viewer over to a VOD feed of the show, while keeping him in the BBC America fold.

Of course, it also tinkers with the flow of programming, presumably removing the VOD viewers from the sequential process when the next scheduled program begins.

While giving viewers incredible control — at a price — such options will dictate a revision of the traditional programming processes. The bypass capability, offered in the name of channel branding, also makes it attractive for a viewer to abandon the channel altogether when it’s time to flip to the next show.

Discovery Networks U.S., which distributes BBC America, is thinking much bigger than this single function when it comes to VOD. Its Sponsor Cinema initiative, with on-demand ads and other features, represents vastly different approaches to the use of VOD technology.

MAG RACK: CHALLENGES LOOM
Meanwhile, the undisputed VOD star of the cable convention — Mag Rack, which actually proposes delivery of new, not recycled, programs — offers further proof of the challenge ahead. At this early stage, the offering from Rainbow Media Group and a handful of specialty publishers has way too few segments to sustain avid viewership.

On the other hand, the shelf life of its programs and the ability to introduce new segments augurs well — if it can find distribution.

Then there are the Games on Demand offerings from Static and Buzztime, as well as the visions proffered by Home & Garden Television and other networks about how to leverage existing brands and content into the on-demand arena.

It adds up to a daunting challenge for VOD: How does one introduce a lineup of content that truly adds value without confusing viewers into dismay and avoidance?

One of the most compelling sessions during the New Orleans week was a private seminar hosted by Accenture Ltd. and IDG, the Silicon Valley research firm.

Under the umbrella of “Networked Personal Video Recording” — nPVR, an incomprehensible sobriquet sure to confuse both operators and consumers, if they ever get wind of it — the roundtable tried to examine VOD alternatives. Presumably, nPVR will give viewers almost unlimited access to programming without the expense of a set-top digital media recorder.

Since set-top makers and operators are still haggling over the value of putting a big hard drive into the box, and since independent sales of TiVo Inc.’s digital video recorders and similar products have (temporarily) stalled, nPVR seems like an attractive solution. But as the seminar discussion emphasized, “inertia” is a remarkable force of nature — at least the nature of TV viewing habits. And programming habits too.

The challenge to program scheduling is obvious. But the barriers ripple through the industry.

For example, though advertising visionaries may salivate over the targeting opportunities of such technology, front-line media buyers and planners know the formula for buying conventional media. That means a lot of work ahead in creating ad models for a VOD world.

And of course, the poor consumer, confronting a new array of VOD options — not just movies-on-demand, but a range of content and viewing alternatives — will face too many choices and the threat of video sticker-shock.
That’s why the inertia of “the old way” may linger longer.

Contributing curmudgeon Gary Arlen
regularly mans the I-Way Patrol for Broadband Week.

Published by Reed Business Information © Copyright 2002. All rights reserved.