|
|
|
about video on demand
Test subscription service is swamped by orders
By David Everitt
After all the talk about video-on-demand being a "killer app," it’d be nice to hear of some genuine, real-world progress for this digital service.
Last week, something came up that just might qualify.
Time Warner recently began a test in South Carolina of an HBO subscription-video-on-demand, or SVOD, product.
Last week it was reported that the cable operator had to slow down the rollout because the demand was too great. The system didn’t have the capacity to deliver the service to all the SVOD customers at once.
"Everybody here is pleasantly surprised by the volume generated by this offer," says Time Warner spokesman Mike Luftman. "It caused us to move toward a more carefully managed rollout so people could get the service without delay."
SVOD allows viewers to receive movies and programs when they want them from the libraries of participating premium services. It’s HBO in this case, but Showtime and other channels may offer this option as well.
Originally, SVOD was characterized as a way for premium channels to keep up in the coming digital-TV age. But now the enthusiastic response in South Carolina suggests that SVOD might become the trailblazer, the product that triggers a breakthrough in on-demand services.
One observer who believes this is Howard Horowitz, president of media research firm Horowitz Associates.
"This test is an excellent example of a service that directly addresses what people are already doing. They’re already watching premium programming and now they’re given a better way to watch. They can watch any movies and original programming on a premium channel when they want to. It’s a very focused approach."
According to Luftman, the introduction of SVOD in its test market has already reaped some benefits.
"It has already driven new subscriptions for HBO to a level we had not seen before. This could benefit both HBO and the cable companies that carry it."
Currently, Time Warner is offering the service for free to HBO subscribers with a digital-cable hookup, which probably accounts for at least some of the consumer interest. After 30 days, though, consumers will have to pay. But the SVOD fee will only be $3.95 a month.
In addition to accelerating HBO subscriptions, SVOD may produce another benefit, according to Adi Kishore, an analyst at the Yankee Group. "I think you’ll see more people signing up for digital cable as a result of this service," he says.
While using the technology in a focused, practical way may be one attraction for SVOD, Kishore believes there is another key factor that accounts for the test market’s response.
Some of the major studios are not willing to license their movies for standard VOD distribution, creating a content scarcity for those outlets. "But the premium channels," Kishore says, "have the appropriate rights to their movie titles sewn up.
"They can go to an MSO and say, ‘You want content? We can roll it out tomorrow.’" Hit HBO series like "The Sopranos" and "Sex in the City" are another selling point for the service.
But what of the limits of Time Warner’s South Carolina system that caused the company to slow down its SVOD offers? The consumer demand might be an indication of future interest, but are the technical limitations an indication of future technical problems?
Time Warner’s Luftman says, "This is not a glitch at all. It’s simply a question of capacity." He says that the capacity could be increased by installing new servers. For the time being, he says, Time Warner has not added the servers because it is concerned about keeping prices down.
Kishore doesn’t believe that servers are the real issue. Instead it is "network throughput," meaning the capacity of the cable line to carry all the digital information required for on-demand service.
"VOD is a real bandwidth hog," he says. Significant, expensive upgrades still need to be made across the country, he adds, but he believes cable operators are committed to making this investment.
Premium channels other than HBO are sure to follow along the SVOD route. Kishore also believes that cable operators will use this technology to offer other packages, such as kids' programming or exercise shows. He says that non-premium, basic-cable channels might also utilize SVOD.
Horowitz, though, isn’t so sure. "I doubt that fits the advertising model for basic cable," he says. "But then a lot of things may change. They might see a profitable tradeoff. They wouldn’t be getting people to watch ads across the network, but they’ll get devoted eyeballs for certain shows that people call up."
The key, he emphasizes, is tailoring the technology to the real world.
"People are not looking for technology to let them do things that they’re not doing now. They’re looking for technology to provide a better way to something they are already interested in."
July 12, 2001 © 2001 Media Life
-David Everitt covers television and technology for Media Life, writing from Huntington, New York.
Printer-Friendly
Version | Send
to a Friend
Cover Page | Contact
Us
