Rim Semiconductor Company (fka RSMI)

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VOD is Coming to a PC and TV Near You

It’s been a long time coming, but video-on-demand will soon start appearing on both TVs and PCs. That much is certain, but there are still a lot of gray areas in the development of on-demand video, according to a group of top executives assembled to talk about the subject at a Thomas Weisel Partners conference in Napa Valley on 3/22.

Cable operators are in the best position to jump start the VOD market, according to Cox’s Lynne Elander, because they’ve got both the TV and PC platforms covered. “We believe that the robust nature of the two-way plant is absolutely the best platform to deliver and consume on-demand entertainment. We have a way of playing in the VOD to PC space as well,” she said.

Even though Cox is putting most of its VOD eggs in the TV delivery basket, with 40% of all Cox homes capable of getting VOD-to-the-TV this year, the company also has its eye on how to deliver on-demand video via its broadband Internet connections. “There are some consumers for whom it is appropriate to consume video on the PC that are not mass market. We do have a way of participating in that market through our high-speed Internet product,” she said.

Jim Ramo, CEO of studio-backed web-based VOD company Movielink said that although Movielink is working out the kinks in delivering VOD on the Internet, his company won’t turn down other methods of distribution. “We have two jobs. The first is to be a VOD provider for any platform and the second is to open up the Internet as a medium of distribution for this high value content,” he said.

At this stage, the VOD market still faces a lot of unknowns. For one thing, it’s unclear whether increasingly popular personal video recording technologies can peacefully coexist with cable and satellite operator dreams of charging per-view fees. TiVo’s Michael Ramsay thinks PVR and VOD are complementary, not competitive, but did concede that “time shifting does converge on VOD” and that some cable operators view TiVo as a threat.

“TiVo is perceived as not serving the cable industry. We preempt the front screen and we take over television. Cable companies talk about the last mile, but we talk about the last six feet. It’s a barrier to them adopting the technology from us,” he said.

Still, PVR technology can help cable operators grow other revenue streams, such as premium channels, and even boost per-viewing buy rates, he said. “The premium channel subscription rates for people who have TiVo are 50% higher. The PPV buy rates are going up by a factor of two. I’m excited about the idea about getting access to programming across multiple fronts,” Ramsay said.

For their part, cable operators aren’t sure what to make of TiV specifically and PVR technology more generally. “We have an investment in TiVo and we believe in TiVo, Cox’s Elander said. But, she admitted that “there is concern in the industry that the TiVo unit in the home taking the place of the standard interface. We have to figure the business model.”

Also unclear is whether streaming VOD is viable in the near-term. Most Internet-based VOD providers will focus on shipping product that can be downloaded onto hard drives, at least initially, according to the execs. Movielink’s Ramo” “The Internet is just not quite ready for a reliable quality streaming service at this stage. Downloading does give you that reliability and quality. If you’re trying to push piracy back in the corner, that’s one of the advantages of downloading.”

TiVo’s Ramsay: “We believe that download is the only way to get high quality content over broadband Internet. You don’t have a predictable Internet. With DSL, the Internet starts and stops all the time.”

Still dangling is digital rights management for VOD. “VOD opens up a whole field of Internet rights questions,” Movielink’s Ramo said. “There are so many DRM approaches floating around, all of which want to be standards, that will require us to launch with a proprietary standard this year.”