VoD Has Its Technical Challenges, Too
By Valerie Milano
Traditional
broadcasters are expressing frustration over their inability to implement
VoD as a viable business. “One of the reasons we are struggling
with VoD is because of concerns with cannibalizing our broadcast content,” explained
Fox Sports Network president Bob Thompson. “We need to make VoD
have extra value by offering content you wouldn’t see on the regular
broadcast.” Mark Greenberg, Showtime’s evp for corporate strategy,
added: “Differentiating content is essential for VoD; you need
to give consumers something that’s not available on a linear channel.
Bandwidth issues, he said, “will put a different pressure on us;
we haven’t seen the economies of scale with VoD. But two million subscribers
tells us consumers want control and choice and are willing to pay for
it.” Greenberg also observed that premium services have an advantage
because they are not dependent on advertisers.
Another advantage premium services have with original series is that
there is no issue over rights. Dave Zuylav of NBC Cable Nets said, “NBC doesn’t have
the same flexibility that Showtime has because we don’t own all our own content.
In many cases, it’s not clear who owns what. When we got involved in IT, the
feeling in the room was that it would change the way people watched television.
And then it fell flat. But now, with the technology that’s out there today, for
the first time it seems that it is impacting the way people watch TV,” said
Zuylav. “The biggest difference between VoD and HD is that everything right
now is pushing toward HD. The costs are moving aggressively down, consumers are
embracing it and MSOs are pushing it. The bigger challenge is in the VoD space,
such as getting digital boxes into enough homes. With only 20 percent of homes
equipped, the value package isn’t there for the consumer,” he added. “Plus,
because there’s no business model, there’s very little serious content available.
VoD is up in the air and stymied. We content providers need to wake up to PVRs
and make VoD viable.
“Technology
is moving without us because we don’t have a business model to monetize
the content. The real currency for advertisers is Nielsen and we need
them to step up. Scale matters, but until you get Nielsen to measure
VoD and PVRs, we won’t get that business model,” concluded Zuylav.
Even so, some small cable brands, such as the Animé Network, are now finding
creative ways to implement VoD as a promotional tool. “For us, the economics
in the short-term are not very important,” explained president Kevin Corcoran. “VoD
allows us to compliment our others businesses - DVDs, publishing and the network
itself.”
The big unknown looming over the business is the hotly debated issue
of whether or not there will be enough bandwidth to accommodate all
the major players. “There
is only a finite amount of bandwidth available,” HDNet founder Mark Cuban
said. “A lot of companies are taking a wait and see approach and while they
do, the real estate is going to become more and more valuable. Networks are making
the argument that compression will save the day. I’m going to bet it won’t; compression
is not going to be the answer. The more HD and VoD become successful, the less
room there will be, and some major network is going to find themselves kicked
off the island.”
