VOD Comes of Age

May 22, 2006  •  Post A Comment

By Wayne Karrfalt

Special to TelevisionWeek

After experiencing some delays and growing pains often associated with game-changing technologies, video-on-demand is coming into its own this year as cable operators and technology vendors test what the platform can offer consumers.

The advent of the network-based DVR-which makes every linear piece of content a cable operator offers available for download if it’s scheduled as a recording beforehand-and the introduction of enhanced advertising applications are expected to be important evolutionary steps in the quest to achieve the Holy Grail of interactivity in cable, making everything available on-demand.

Changing Needs

Cablevision’s remote-storage digital video recorder service, now undergoing a trial in the company’s Long Island, N.Y., market, and Time Warner’s Start Over service, deployed in more than 60,000 homes in the test market of Columbia, S.C., are seen by technology providers as evolutionary both in the way they broach rights issues associated with time-shifting content and in the way they store and deliver those video streams. If operators are allowed to move further toward an everything-on-demand model, further changes in the server-based architecture now in place to deliver on-demand video may be necessary, and vendors are scrambling to serve these changing needs.

The idea of packaging the RS-DVR as a centralized DVR rather than an on-demand service is in part an attempt to avoid the copyright snafus that plagued Time Warner Cable when it tried to launch its everything-at-any-time Maestro service two years ago. The industry is waiting with baited breath, say technology suppliers, to see whether content providers will accept the new distribution model.

“Everyone is eagerly watching the Long Island deployment and hoping Cablevision can make this work,” said Braxton Jarratt, senior VP of marketing for Tandberg Television, which is working with network software provider Arroyo Video Solutions to enable the trial.

To strengthen its DVR argument, Cablevision aligned the system so each consumer has his own disk space on the ingest server to record a separate copy of each show. The problem with this arrangement is that as the multiple system operator scales up to offer the service to all 2.1 million of its digital customers, the single-copy storage and streaming of popular shows such as “American Idol” become an incredibly inefficient use of bandwidth.

Anticipating that Cablevision and other operators will be able to secure permission from content providers in the future to allow multiple users to access a single stored recording, Arroyo has gone ahead and built in network-oriented architecture that requires far less storage space.

“What we’re able to do is provide the best of both worlds, allowing one copy to serve an entire metro area with streaming done out to the edges yet have it all appear localized from a responsiveness point of view,” said David Yates, VP of marketing and business development for Arroyo.

Boxborough, Mass.-based Broadbus Technologies, which recently completed an installation to serve 1.2 million Southeast division Charter customers, is preparing for what it sees as an inevitable march toward television-on-demand by offering a solid-state chassis-based on-demand platform. Its B-1 Video Server is built to ingest, store and stream up to 1,000 channels of video simultaneously. Comparable server-based live-video recording systems handle only 10 channels at a time.

“In their system, if you want to add storage you can add more disks, and the cost of powering and cooling them grows exponentially. Our system is focused on streaming, which scales much more efficiently,” said Tom Kennedy, senior director of marketing for Broadbus.

Advertising Is Key

Apart from single-episode pay-per-view offerings of popular CBS and NBC shows, broadcasters have been reluctant to make their content available on VOD. Networks and advertisers assume that on-demand, with its ability to fast-forward through commercials, will destroy the effectiveness of the traditional 30-second spot. Time Warner Cable was able to get programmers to agree to participate in its Start Over service only by disabling this feature.

Proponents of VOD say that using the platform to deliver 30-second spots misses the point of the technology: that the power of interactive television is its ability to create an individual connection with the viewer.

But these new models have been slow to develop, a factor that is in turn slowing the advance of an everything-on-demand universe. Furthermore, efforts by companies such as video rental firm Rentrak to quantify VOD usage have been slowed by a lack of standards and the original purchase-oriented architecture of the systems.

This scenario is starting to change as vendors promote new dynamic ad insertion and tracking features and operators redouble their efforts to court on-demand sponsors. A big impetus behind the push seems to be coming from the precedent set by Google in the Internet advertising space, which has taught advertisers the value of targeted, trackable ads.

“Advertisers want to pinpoint the effectiveness of ads, their reach, the rate of people fast-forwarding them, etc.-information that traditional vendors haven’t been able to deliver,” said Arroyo’s Mr. Yates.

Arroyo’s OnDemand VOD system, working in conjunction with Tandberg’s AdPoint platform, allows fresh ads to be inserted on the fly at the local level instead of having to be baked in days or weeks in advance. Comcast Spotlight launched the first phase of a trial of AdPoint across its national footprint earlier this year. The MSO’s spot-advertising arm also introduced two new longer-form VOD sponsorship products to media buyers last month in what was billed as the first upfront presentation to promote VOD.

Acton, Mass.-based SeaChange International earlier this month began shipping its own ad-insertion software, AdPulse, which allows ads to be swapped in and out of any spot in the video stream based on targets drawn by ZIP code or other data provided to its rule engine.

The product is an excellent complement to a network DVR system because it can insert timely ads such as trailers for the most recent week’s new Hollywood releases in a program that was recorded and stored on the network three weeks ago, said Phil Simpson, director of product marketing for SeaChange. And the additional revenue the ads will generate should go a long way toward soothing networks’ concerns about the detrimental effect of the DVR on their 30-second spot business.

“If we can offer targeted advertising that is refreshed every time it is viewed, it can more than adequately compensate for the loss in traditional revenue,” Mr. Simpson said.