Cable Put VOD, HD, DVR in the 2003 Mix

Dec 22, 2003  •  Post A Comment

The biggest advances in television technology in 2003 came in the form of cable operators’ mix of new services-video-on-demand, high-definition TV and digital video recorders.
VOD made the transition from a visionary technology to a bona fide business; the burst of new HDTV services from cable operators heralded the real beginning of the HD revolution; and DVR began the march into cable set-top boxes and homes.
By by the end of 2003 about 12.3 million households will be able to receive VOD, up from 7.7 million households at the end of 2002, according to Leichtman Research Group. Digital video recorders will be in 3.2 million homes, more than double the count at the end of 2002. Cable will have tacked on 500,000 of those new customers. Time Warner added 100,000 DVR customers in the third quarter and reaches 30 of 31 markets with the service. Comcast, Adelphia and Cox all initiated aggressive DVR rollouts this year, and Cablevision plans to follow suit in April 2004.
In early December the National Cable & Telecommunications Association said high-definition programming from cable operators is offered in all of the top 30 markets and reaches 70 million homes, up 90 percent from 37 million at the beginning of the year. In addition, 2003 saw the launch of Bravo HD+, ESPN HD and two linear HD channels from iN Demand as well as the expansion of HD output from Showtime to nearly 80 percent of its prime-time lineup from 50 percent a year ago and the quadrupling of content from Discovery HD Theater. At the start of 2003 about 4 million households had HD-capable TV sets, a number that should hit 7.5 million to 8 million by the end of the year, Leichtman Research Group said.
Set prices plummeted this year, dropping below $1,000 for some sets with screen sizes under 30 inches. “The market forces are all working to make this a real service,” said Richard Green, CEO and president of CableLabs.
Cable smoothed out operating issues with VOD last year and began to focus on marketing and driving buy rates higher this year.
“This was the year of execution. We went out and got [VOD] to our customers,” Mr. Green said.
Customers responded. Comcast launched in late September an advertising campaign promoting the VOD service to its 2 million customers in New England and has seen a 400 percent increase in VOD usage. In Philadelphia, 45 percent of Comcast’s digital cable customers use VOD each month and the operator generated 4.1 million orders in October.
Advancements in VOD, DVR and HD were made possible in part because multiple system operators have largely completed their two-way network upgrades.
With a high-capacity two-way network and the cash cow of high-speed modems serving as the backbone, operators could move aggressively in developing and marketing new businesses, said Bob Davis, managing director at Dove Consulting, which works with cable operators, telecom firms, programmers, studios and equipment providers to define strategic positioning.
An emerging technology story for 2004 will likely be the long-awaited growth of the Internet Protocol telephony business, punctuated by Time Warner’s Dec. 8 announcement that it would partner with MCI and Sprint to sell IP phone service starting next year.
Next year should also yield a two-way plug-and-play agreement between cable and the consumer electronics industry that will give consumers the ability to purchase cable-ready digital TVs that can handle two-way signals.