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October 2006 Archives

For viewers who long for full control over their viewing experience, Video On Demand (or VOD) may mean just that. It may also mean the death of the Personal Video Recorders (or PVR). PVRs, a powerful replacement for VCRs in the home, have seen slow consumer adoption (about 6% in Canada and about 12% in the U.S.) and, when the consumer has access to a robust VOD offering, they may find their expensive PVRs unnecessary. Time-shifting and convenience are the big advantages of the PVR - and VOD offers all of that... and more. DVD rentals continue to be popular because they give the consumer greater content choice, but VOD may make that a thing of the past soon, too.

The term VOD is used in many ways. VOD is sometimes used to refer to Pay-Per-View offerings (PPV), but this is a weak positioning of VOD given that most PPV is limited to a small set of programs that start at pre-determined times (usually on the half hour). Another way the VOD term is used is with Near Video On Demand (or NVOD). With NVOD, a program will have multiple staggered start times, perhaps every 10 or 15 minutes. Although with NVOD the consumer doesn't have to wait too long, it's still not truly an on-demand experience, and the choice of content is still quite limited. But true VOD is just that: video that begins, on demand, within a matter of seconds of the request from the viewer. Doing true on-demand requires a dedicated video stream for each consumer of the content - and that takes a lot of bandwidth. Both NVOD and PPV allow multiple viewers to share the same stream and therefore reduce the bandwidth requirement considerably.

VOD will change the way we think of the familiar program schedule. No longer is it just the case that Survivor is on a specific day and time - rather, we'll think in terms of a new episode of Survivor becoming available at that time. Broadband-based TV networks offer the VOD experience, too. The big Canadian networks all have broadband sites carrying recent content and the CBC has also made a vast amount of their archival material available online.

Cable operators are announcing new on-demand deals all the time, and while their technologies are sometimes a bit lacking, improvements are on the horizon. And telco-TV (TV service delivered over traditional telephone lines) offers on-demand content, too. But you won't get anything close to full-blown VOD from a satellite dish due to signal capacity limits. And while VOD will increasingly be a strong differentiator for cable and telco-TV, in areas where digital cable doesn't go, or where the phone network isn't up to snuff to carry IPTV, viewers will continue to turn to satellite for the foreseeable future. For the demanding consumer, though, who does have the choice, the rich offerings of the on-demand world may provide a strong temptation to "ditch the dish".

As more and more content becomes available at the click of a mouse or the touch of a remote-control button, viewers will enjoy a virtually unlimited choice of what to watch at any time. But VOD isn't just good for the consumer. It's also the Holy Grail for cable and IPTV distributors - and advertisers. VOD presents new ways for operators to make money by charging for the content (either a la carte or subscription-based), selling advertising to accompany the content, or both. As well, with an individual stream for the viewer, the operator can tailor advertising to that viewer. Before that happens, there's still a big hurdle to overcome. The CRTC severely restricts VOD advertising today, but this may change as a result of the upcoming TV review the commission is undertaking. Content owners, too, stand to benefit in the on-demand world. Consumers can (re-)discover old programs or watch episodes of current programs that they've missed, leading to additional revenue. Over the next couple of years, the evolution of VOD will lead to a revolution in how we watch TV.