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The future in VOD by the St. Petersburg Times in today's paper.

http://www.sptimes.com/2006/04/02/Business/Power_to_the_people.shtml

Power to the people
Niche channels. Video-on-demand. Movies, music and classic shows. All on your TV or computer. And cheaper than cable and satellite services.
By DAVE GUSSOW, Times Staff Writer
Published April 2, 2006

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Lacrosse TV, anyone?

The sport doesn't have the mass appeal of football, baseball or basketball, so no network or cable channel features it. But to Charles Prast, it's perfect for Internet TV.

Lacrosse has 150,000 passionate fans in the United States, says Prast, chief executive of ITVN, an Internet television service. And many of those fans are willing to pay $9.95 a month to watch their favorite matches.

"It's inexpensive to develop a network in conjunction with the National Lacrosse League," Prast said. "It's not too expensive to market. I know which Web sites they go to, which magazines they read."

If a couple hundred channels on cable or satellite aren't enough, consider that Internet TV could provide thousands covering every niche imaginable, from lacrosse and sailing to cooking, street racing and music.

Technically known as Internet protocol TV, or IPTV, it's much more than a tiny window on a computer screen showing a grainy, herky-jerky video. It goes far beyond networks offering popular shows for downloading.

In the last year or so and picking up speed in recent months, companies have begun offering specialized programming that would never compete for a channel on cable or satellite. But, experts say, Internet TV could end up competing with cable and satellite providers for viewers because of its potentially expansive offerings and low prices.

Lacrosse isn't ITVN's only offering. It has thousands of old movies (think black and white and stars such as Douglas Fairbanks Jr. and Charlie Chaplin), hundreds of music choices and, being the Internet, adult content (think XXX and parental controls).

Companies wouldn't give out details on the number of subscribers. Prast says ITVN's main audience is men 20-45 years old, and his main focus is signing up more content providers.

It's using the Internet as a TV network, or more precisely networks. And, in cases such as ITVN, it doesn't even require a computer, just a high-speed Internet connection and a home network to stream the video directly to a TV.

For ITVN, for example, people have to buy a set-top box for $99.95. It connects to a router used for a high-speed home network and a TV. When they sign up for the service, they can choose to subscribe to channel "bundles." A basic package for $4.95 a month includes classic movies, a selection of live channels and radio. Premium channels are lacrosse ($9.95) and XTV (adult, $29.95).

When they turn on their TV and the ITVN set-top box, they will see buttons for the channels they pay for, and a remote control with the system makes it work.

"If you're going to distribute entertainment to people, you should distribute it on a platform that they are comfortable with in the simplest fashion possible," Prast said.

DAVE.TV uses its own media center software, which users have to download. Once the programming is on the computer, it can be viewed on the computer monitor or streamed over a home network to a TV set. It also plans a set-top box and a mobile device. Some programming is free and supported by ads, while other programming is offered on a pay-per-view model.

A growing number of companies such as ITVN, DAVE.TV and others hope that what the Internet did for access to information, it also will do for TV. Instead of networks setting the schedule, viewers could choose what they watch, when they watch and even the device they use to watch.

"The Internet has finally proved itself as a reliable medium for providing high-quality entertainment," said Colin Dixon, senior analyst at the Diffusion Group research firm in Dallas. "I think that point is a very important one for content providers because they finally see a way to get a one-on-one relationship with their viewers."

And people are interested, even if they don't have a lot of information about Internet TV services, which in many cases are only months old, according to a recent Harris Interactive survey.

About a quarter of the respondents expressed interest for IPTV on their TV and 19 percent would use it on their computers. The reasons for the interest ranged from saving money because it's less expensive than cable and satellite (42 percent), on-demand viewing (33 percent) and broader variety of programming (24 percent).

Seventeen percent say they would cancel cable and satellite subscriptions, while two-thirds say they would keep their service and try IPTV.

"Internet protocol TV, in general, will present a degree of competition initially for satellite-delivered TV," Prast said, because it provides video-on-demand and satellite doesn't.

Prices vary from service to service, but some offer bundles of channels for as little as $4.95 a month, with premium channels, including some adult content, at $9.95. Pay-per-view options are available.

DAVE.TV calls itself a content portal. People who want to offer video or music can sign on as partners under a revenue sharing agreement. They control the content, not DAVE.TV, and the portal sells advertising.

In DAVE.TV's case, programming is managed through a software media center. But with home networks, that can mean streaming video from the computer to a TV. And some can be accessed free.

"DAVE.TV is next-generation TV," said company founder Ken Lipscomb. "By being on the Internet, we can have millions of customers."

The idea of combining TV and the Internet is not new, but the technology wasn't ready. More homes now use high-speed cable or DSL Internet access, and faster home networks can handle quality video transmissions, said Eric Deming, in charge of wireless products for Linksys, which provides products and support for sharing information via the Internet. "People do want to stream video from a PC to a TV," Deming said. "Either content they've created or content they've downloaded."

Yet technical hurdles remain, and some are skeptical about how quickly video will become part of what is referred to as convergence, where devices work together so consumers can easily move data and entertainment around.

"I can tell you from experience that video is a huge problem for PCs," Citigroup analyst Tom Berquist said in a recent article. "It's very, very large in terms of bandwidth requirements, and it's huge in terms of storage requirements."

In addition to startups like ITVN, Microsoft, Intel, Yahoo, Google and others are working on various ways to turn the Internet into a distribution point for video.

That will challenge cable, satellite and increasingly phone companies. And it is setting up a potential fight. Companies such as AT&T and Verizon have said they should be able to charge an extra fee to Web sites that use a lot of bandwidth.

Prast of ITVN isn't worried about such threats. For one thing, Prast said, competition between providers will give consumers a choice. He thinks his costs will remain low.

"We don't have to pay for satellites in the air," Prast said. "We don't have to pay for cable in the ground."

As for the viewer experience, Prast thinks services that cut through the clutter will win. The potential for confusion with virtually unlimited channel choices is substantial.

Diffusion analyst Dixon thinks major potential exists for some company to develop an online, searchable TV guide.

"The one piece you need is a unified guide," Dixon said, "that helps you find everything in this tidal wave of content that's coming."