InvestorsHub Logo
Post# of 434
Next 10
Followers 19
Posts 4455
Boards Moderated 0
Alias Born 03/27/2001

Re: cksla post# 207

Saturday, 07/05/2003 4:04:55 PM

Saturday, July 05, 2003 4:04:55 PM

Post# of 434
SeaChange looks at the American and Global VOD market

By Noel Meyer
--------------------------------------------------------------------------------



In the United States, Video on Demand is becoming a reality. According to Forrester research, there were 400,000 VOD enabled households in America last Spring.

The company predicts that by the end of 2002, out of 23 million American digital cable subs, six million will be enjoying on-demand content. Ovum Research has predicted that by 2006 there will be 112 million VOD subs in North America.

AOL Time Warner has 60,000 VOD subs in Austin Texas. Programmers like HBO are introducing Subscription VOD, SVOD, for hit programming like The Sopranos and Sex In The City. On Friday September 28, Cablevision in Long Island threw the switch and launched VOD and ITV as part of their digital launch creating a potential market of 500,000 VOD subs, with that figure rising to over three million, by the time the deployment is over and done with. And Comcast has announced that 25 per cent of its 8.4 million subscribers will have access to VOD by the end of the year.



"The North American market has really come out in terms of making VOD a first priority in the ITV analysis of different applications," says Yvette Gordon, vice-president of interactive technologies, SeaChange International (pictured above). "We used to have to talk about whether or not it was seriously a business. You donÌt hear that anymore."

Gordon has been at the forefront of VOD and ITV for a long time, she was the chief engineer on Time Warner's Full Service Network ITV trials in the mid-90s.

Building on their digital ad-insertion expertise, SeaChange has been a leader in developing and deploying VOD systems. Putting aside North America, Gordon sees the international VOD market as three separate categories: Europe, Latin America and Asia Pacific.

She characterises the European market as having gone through a roiling consolidation and positioning phase with the Liberty Media and Callahan acquisitions. "The next big step will be for these systems to integrate into a network structure that makes sense and then they are going to go upscale digital as well as VOD and probably an Internet service at the same time."

In Latin America Gordon says that the MSOs are very focused on getting out low-end two way digital boxes. "VOD will have a play but getting out the set top boxes is the first order of business."

Asia Pacific, however, appears to be the most appealing market. "I think there is a real awesome potential in that area in general. The region is trying to figure out what they want their infrastructure to look like. A lot of the people are still juggling between DSL and HFC, looking at set top boxes and standards. The potential overseas is far greater but the US is providing us with revenue."

Gordon breaks down the plethora of new services that will eventually come our way into two. First there are the VOD services and SVOD services. SVOD services where content holders have second markets for their titles were created she says, to avoid the bottlenecks some studios built to VOD by refusing to release their libraries for VOD distribution.

The second category she describes under the umbrella of middleware and what middleware allows to happen. Within that basket she puts email, chat and other web based activity. "A lot of applications will launch out of that middleware. A lot of people are looking at news, weather and other types of revenue opportunities as being dependent on middleware launches."

One of the developments Gordon finds interesting is that in the United States companies like TVGuide that were previously program guide providers are now writing software to launch directly from the program guide, thus eliminating middleware. "It will be interesting to see where the industry will be in a year. Will they still be waiting for the middleware or will they do it directly on the existing platform?"

SeaChange's architecture is based on open standards which helps to make it platform agnostic in some senses. When it comes to using MPEG II or MHP for example, either will do just fine. "Keep in mind our headend side, our video server and our management software don't care at all. We will work with platforms that are MPEG compliant and platforms that aren't compliant as well."

As for encryption, SeaChange is partnered with Motorola for DigiCypher, Nagra, and NDS, depending on the deployment and the box being used.

As to how the market for VOD distribution platforms breaks down Gordon gives the nod to cable and its HFC networks to take the lion's share of the market initially.

"The DSL market is still very small. We are seeing DSL interest significantly in Asia, Australia and some in Europe but the key that we see is that people still justify DSL purchase based on Internet to the home as opposed to broadband services so the modelling of how VOD will fit in is still somewhat unknown. In the short term it will be cable. But I won't kill off DSL. In the long term as we get cheaper network infrastructures and as people build their DSL networks there is a great business potential for us there."

Scalability will always be an issue. Theoretically VOD systems can be expanded limitlessly by adding on servers. The initial deployment at Cablevision's Long Island systems has started with 500,000 new potential VOD subscribers and that eventually will rise to three million.

"At SeaChange we have looked at how you scale the software, not just your video servers. That's a real competitive advantage. Our software scales in terms of hardware and software and processes in order to be able to handle those really large systems and we use clustering technology even on our software, the hardware that our automation software runs on, so we have a lot of emphasis placed on scaling at all those different levels."

Cablevision's digital rollout will significantly advance the American iTV experience. Along with on-demand programming, personalised programming including sports scores, local news weather and traffic, the service will offer a suite of Internet functions. Cablevision is charging $9.95 a month for the ondemand services and $9.95 a month for email and Internet access. Along with the first rollout of the Sony STB, the deployment will help sooth studio fears about content highjacking because it will be the first deployment of session based encryption where the stream will be decoded by a unique set of keys.

VOD is coming.

Join the InvestorsHub Community

Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.