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May 8, 2007 No. 18 Vol. 6 Home | Morning BRIDGE | The Evening BRIDGE | SkyREPORT | The Retail BRIDGE | DataBRIDGE VOD: The Must-Have Killer App V VOD Mainstreaming VOD 2 ideo-on-demand has become such an integral part of the multiplatform VOD On The Rise 2 business that programmers, technology vendors and video distributors all Catching On 4 see it as a “must-have” product offering. Industry analysts have pegged annual revenue in the United States generated from movie VOD purchases at DBS On Demand nearly $1 billion. And that only scratches the surface, given that TV shows Bulks Up 6 from broadcasters and basic networks, premium VOD titles and adult fare have become part of the on-demand mix. Map Data: More content providers are embracing the video “killer application.” So far, Cable VOD & DVRs 7 cable has successfully exploited on-demand, yet telco companies and satellite TV are doing their best to replicate the video incumbent's successes with VOD. Under the BRIDGE This issue of The BRIDGE is dedicated to VOD, its successes so far and Everything Old what small dish companies are doing to bring on-demand content to their cus- is New Again 8 tomers. Heads Up Day & Date: Driving VOD Revenue A NCTA holds its annual Cable fter years of Video-on-Demand Revenue Projections Show this week in Las Vegas. disappointing 4000 It's not the biggest gig this PPV/VOD revenue week in Sin City, given that due to both lack Cable $3,651 the National Kitchen and 3500 of high quality Bath Association also is in films (i.e. Studios 3000 town with its convention. delayed windows) 2500 $2,887 Both associations are provid- and depth of (In Millions) product (relative- 2000 $2,519 ing their respective attendees ly few products courtesy, reciprocal admission $2,144 offered by cable 1500 $1,963 to both shows, being held operators), concurrently in separate parts $1,454 Merrill Lynch $1,437 of town. Scripps Networks, analysts are say- 1000 which works with both associ- ing the market $906 $887 ations, proposed the partner- $640 dynamics are 500 $498 $320 ship between the about to change. Studios are test- 0 organizations. 2006 2007 2008 2009 2010 2011 ing better win- Source: Merrill Lynch Research (1/07) Click Here for a FREE dows (day-and- The BRIDGE 2007 date releases for VOD), cable ops' improved infrastructure allows them to Subscription to The carry huge libraries, and digital cable penetration is booming nationwide. BRIDGE "With these changes, growth in VOD could be the next driver of profitability for major studios and could help bridge the growth gap," the firm says.• VOD - May 8, 2007 Mainstreaming Video-On-Demand I How Providers, Studios and Consumers Benefit from VOD VOD On The Rise by Matthew Colella ing in the broadband t’s been a long time department, booming coming, but it seems broadband popularity that after years of Video-on-Demand Household Projections and rising digital cable speculation about its use- 50 penetration are two of fulness, its scope, and its 45.6 the top reasons why prospects – video-on- 40.5 VOD has such a prom- demand is finally coming of 40 ising future. Add in age. Now that the pay-TV 34.7 growing consumer industry is embracing the acceptance and usage 28.9 watch-it-when-you-want-it 30 of on-demand video (In Millions) technology, the question 23.9 delivery (via both TV on many minds is which 19.5 and PC); declining DVD VOD HHs platform will capitalize on 20 sales and sagging box the service, and which office numbers; and ones could drop the ball. plus the increase in Industry analysts have 10 usage of next-genera- pegged annual revenue in tion content sources, the U.S. generated from it’s no surprise the movie VOD purchases at 0 experts are saying VOD nearly $1 billion – so the 2004 2005 2006 2007 2008 2009 is on the verge of going stakes are high, to say the supernova. Source: SeaChange 2007 least. But considering Day-and-Date I that figure represents less The BRIDGE 2007 than 4 percent of the n spite of the challenges video-on-demand has faced in Trials $27.2 billion overall home recent years including the impact of DVRs, and band- entertainment market of width constraints, VOD services still offer the potential to Pay-per-view movies purchases and rentals in be a major revenue source for distributors. According to sold on-demand are 2006, the dynamics of Kagan Research's recent video-on-demand analysis, already growing into a VOD become more capti- growth in cable VOD homes going forward will primarily formidable source of vating. result from growth in digital subscribers rather than from revenue for cable oper- We know what you’re new cable systems adding the VOD feature. "Multichannel ators across the board. thinking ... $1 billion ain’t services are undergoing a fundamental transformation," However, as more chopped liver. Even more says Kagan analyst Ian Olgeirson, "and the mainstreaming movie studios and serv- compelling is how some of on-demand delivery is a core component of that ice providers increas- content owners and dis- change." Here, SeaChange data reflects the growing ingly implement debut tributors have embraced importance of on-demand delivery as VOD households con- dates that correspond VOD’s potential more than tinue to rise nationwide.• with the release of others. But during the DVDs, many within the next few years, industry tors have long dreamt of, and telco industry are predicting observers are predicting the conver- TV providers are adopting on the fly. big things for the technology. gence of several factors that will Despite the recent Federal A recent report from Bernstein make video-on-demand the killer Communications Commission Research’s pay-TV guru Craig application cable and satellite opera- study that suggests America is slack- >See VOD 3 2 VOD - May 8, 2007 <2 VOD Warner began testing the same across the nation with 84 percent of Moffett suggests that as on-demand VOD day-and-date release strategy those households having access to release dates for popular movies in Greensboro, N.C. along with a VOD (up from less than 20 percent inch closer to the same dates as new “virtual video store” of an addi- just 5 years ago). In December retail distribution, sales and profits tional 2,000 VOD titles. The offering alone, Comcast said it delivered 180 for video-on-demand could shoot was about the equivalent of a typical million streams of VOD programming through the roof. The analyst esti- brick-and-mortar Blockbuster across its footprint with nearly 70 mates that the $1 billion generated Video store, and noticeably larger percent of its digital subs using the last year via on-demand movie pur- than most libraries on rival VOD technology. According to the cable- chases could surge to $4.1 billion platforms. co, digital cable subscribers viewed per year if the current gap between At the end of calendar year 2006, some video-on-demand stream on home rentals and on-demand release industry numbers estimated digital an average of 27 times per month - dates continue to erode. cable penetration to be 50 percent >See VOD 4 Toward the end of last year, Comcast launched a potentially rev- olutionary initiative in Denver and To Our Research Sources ... Thank You: Pittsburgh by offering newer movie CentrisBRIDGE Bernstein Research titles on-demand on the same day http://www.thebridgedata- http://www.bernsteinre- they are released on DVD. The group.com search.com cable giant’s deep pockets brought a Merrill Lynch Kagan Research lot of street cred to the project, and http://www.ml.com http://www.kagan.com soon major companies signed on – including Disney, Lionsgate, NBC eMarketer DIRECTV Universal, Paramount, Warner http://www.emarketer.com http://www.directv.com Bros. and 20th Century Fox – to SeaChange DISH offer several popular titles. http://www.schange.com http://www.dishnetwork.com At about the same time, Time 3 VOD - May 8, 2007 <3 VOD almost $300 million in 2006, almost once per day. Catching On: More VOD Access a jump from roughly $225 In addition, Comcast million the year before. Not delivered 1.9 billion VOD U.S. VOD Household Penetration including the highly-popular 40% XXX fare being purchased at streams during the entire 2006 – a 70 percent 34.8% home and in hotel rooms, increase year-over-year, the Moffett says that non-adult 30.5% company says. The 30% titles could garner nearly Philadelphia-based cable 26.1% $434 million in revenue by company now offers view- the end of 2007. ers more than 8,000 pro- 21.5% The Bernstein researcher 20% says that with Comcast and gramming choices, includ- VOD 15.9% ing 800-plus movie titles, Time Warner Cable combining for an estimated 37.6 million Penetration 300 of which are free. Comcast said about 95 per- 10% subscribers, the country’s top cent of its total on-demand two cable operators would content is available at no stand to benefit the most cost to digital cable sub- from dwindling release win- 0% dows. Around $3.2 billion of scribers, and around 11 2005 2006 2007 2008 2009 2010 the nation’s annual DVD percent of its VOD streams (20 million) were movies in Source: eMarketer (11/06) rental revenue is generated across Comcast’s footprint A December. The BRIDGE 2007 It’s estimated that alone – with Moffett estimat- recent study from eMarketer suggests while TV ing more than half of those Comcast amassed about distribution and access may be changing, more rental purchases being carried $480 million in on-demand people will be watching more video content in the out by existing Comcast digi- movie revenue in 2005. future, not less. They'll just be doing it in different tal cable subscribers. According to Moffett, that ways ... like VOD. The research firm says content But maybe cable’s biggest number could basically dou- owners may lose some control of how, when and advantage when it comes to ble to more than $800 mil- where their content is accessed, but what they forgo delivering movies on-demand lion by the end of this year in control, they can make up for in reach and addi- could be selling high-demand, with the help of shrinking tional touch-points.• high-definition films. The release windows and more day-and-date trials. entire entertainment food $863 million from adult VOD and chain – from manufacturers Content-on-Demand PPV in 2005 and another $916 mil- to distributors to studios – is still lion last year. In reality, these fig- struggling to determine which high- Most on-demand revenue and prof- ures wouldn’t be affected by the def format to adopt for HD movies. it cable operators take home come recent push toward day-and-date As the industry awaits a clear-cut from sales of adult entertainment. releases, but the impact on overall winner between Blu-ray and HD In fact, according to recent Kagan VOD movie buys remains significant. DVD, cable operators have a clear- numbers published in The BRIDGE, Comcast said its non-adult video- cut lane to the consumer by deliver- satellite and cable operators raked in on-demand movie revenue totaled >See VOD 5 Freelance Editor: Cody Maxwell Editor-in-Chief: firstname.lastname@example.org A Service of Media Business Corp Evie Haskell Retailer Editor: 165 S. Union Boulevard, Suite 280 email@example.com Timothy Sprinkle Lakewood, Colorado 80228 firstname.lastname@example.org 303.271.9960 (T) 303.271.9965 (F) ISSN # 1550-1779 Senior Editor: Michael Hopkins CIO: Chairman: VP Sales/New Business: Ryan Livingston email@example.com Paul S. Maxwell James Donnellan firstname.lastname@example.org email@example.com firstname.lastname@example.org President: Chief Financial Officer: News Editor: Production Manager: Robert Lehmann Gina Rayne Matthew Colella Cheryl Hoeppner email@example.com firstname.lastname@example.org email@example.com firstname.lastname@example.org 4 VOD - May 8, 2007 <4 VOD goal of netting 100,000 DVD and HD the New York Times last week ing HD on-demand directly to the quality movies with a lineup of offering yet one more STB that con- living room. around 1,000 channels. nects to a living room TV for movies- Similar to video products from on-demand. The service is called VOD Via STB AT&T and Verizon, MatrixStream Vudu. It’s going to cost customers operates off an IPTV platform and $300 just for the box (not including Just in case you thought there customers have to buy the compa- service charges), and according to weren’t enough options for program- ny’s new set-top, IMX 1020 HD, to several industry observers, has ming on TV in today’s multiplatform get the high-quality vids. about the same chance of success as world, think again. There’s a new This month Akimbo launched a PC Don Imus getting his job back. wave of dedicated set-top boxes version of its TV and movie-on-demand Vudu does have a few things on its soon to be hitting shelves that offer service which is now offered primarily side: the company inked deals with the latest video-on-demand libraries through Akimbo RCA set-tops that con- many major film studios and the box to videophiles across the country. nect directly to the TV. Akimbo also uses some P2P technology that will Earlier this year television tech recently announced that its service is help conserve bandwidth costs mak- company MatrixStream offered through AT&T’s HomeZone ing it possible for users to start Technologies launched its long- satellite and internet service. watching a film basically as soon as anticipated video-on-demand service The new PC version will reach more they’ve selected it. (As opposed to – MyTVPal.com – using the internet viewers and offer a wider range of other services where users have to to deliver DVD and high-def-quality Akimbo’s content, including TV wait for the video to download.) video content. The company says its shows, movies and extreme sports. Some strikes against the service? As version of the video-to-consumer However not all of the programming we’ve noted, many cable subs can system is superior to others on the available through the Akimbo set-top already get movies-on-demand, and market because other movie down- will be available online. Movielink, it’s possible to get paid movie down- load companies provide sub-DVD which offers major studio movie loads via Xbox 360, AppleTV, TiVo quality content. According to downloads, will not be available on (via Amazon’s Unbox service), and MatrixStream, consumers will get Akimbo’s PC version. Akimbo ... to name a few. Also, indus- MyTVPal as a monthly subscription Lastly, there’s another startup ven- try press have reported that Vudu may service – sans advertising – with the ture that received rave reviews in not have any HD content ... Ouch.• 5 VOD - May 8, 2007 DBS On-Demand Bulks Up Is It “True”? Does It Matter? W by Evie Haskell We can pull in video from hen EchoStar's other sources. So it's really DISH Network a building block of DIRECTV launched the first as the key to entertainment ads for its video on demand in the home.” E service, the cable crowd While DIRECTV tests its howled in protest. xisting DIRECTV customers can upgrade to the hybrid VOD offering, DISH “But,” they sputtered, “it's HD20 box with HD, DVR and (soon) VOD capabili- continues to tout on- not true VOD!” ties for $299 under the lease option.• demand via its web site but Without getting into a is otherwise mostly quiet on debate over the meaning of ing programming in real time or the subject. “true” (true to who?), we must note faster than real time. But this,” he The company declined an invitation that the DISH service comes adds, “is a lot of what the beta test to participate in this article, so we nowhere close to the robust offerings will tell us.” scoured the web to see what's up. of the typical cable VOD selection. Assuming the testing works as As of Saturday, May 5, the DISH Lacking a two-way pipe, the satellite anticipated, DIRECTV could start website listed exactly eight network version of on-demand has been lim- rolling the service out to customers shows (four from the Food Network ited by the storage space of the digi- by mid-summer. The service, by all and four from HGTV) plus 22 tal video recorder. And if you do a reports, will be equally robust to movies. count of the actual on-demand pro- cable offerings: Movies, network In an emailed statement, however, gramming available on DISH (which programming, and a host of special DISH said, "We are delivering con- we do, later in this article) you'll see services would fill the on-demand tent via our Dish On-Demand plat- that DBS VOD weighs in like a jock- menu. form from a number of providers ey to cable's linebacker. In addition, Shanks notes, including (but not limited to) At least so far. DIRECTV will be able to “regionalize Disney, New Line, Lions Gate, Now the nation's numero uno DBS and localize” the programming to Warner Brothers, Paramount, provider, DIRECTV, hopes to change offer crowd-pleasing programming Dreamworks, Universal, Scripps, that equation. FOX Cable Networks, Showtime, such as dating services or real estate NFL Network and A&E." specials. Going Hybrid Banking on Moore's Law Starting late last month, DIRECTV A Retention Plan began the first beta testing of its In future efforts, DISH, DIRECTV planned full – or “true” if you adhere In the beginning, at least, and other DBS players might score to the cable crowd – VOD service. DIRECTV does not plan to use its better on non-hybrid VOD efforts as Not surprisingly, this is a hybrid VOD offerings to lure in masses of DVR memory continues to rise. As offering: The satellite broadcasts new subscribers. per Moore's Law, which essentially are delivered “on demand” to homes Sticking with the company's long- states that storage capacities will having both DIRECTV's high-defini- announced plans to focus on high- double every 24 months, techno tion DVR and a high speed internet end keepers, Shanks notes, “This is companies are pushing hard to make modem (DSL or cable or what have more of a retention tool than an DVR/VOD a top quality service. you). acquisition thing. We want to make Earlier this year, for example, From the satellite viewpoint, says sure that our existing customers Harmonic unveiled its StreamLiner DIRECTV EVP of entertainment Eric have the best experience possible.” 2000 product line designed specifi- Shanks, “We have no issues deliver- In addition, he notes, the VOD cally to offer “tens of thousands of offering will “really start to position hours” of programming via down- DIRECTV as the cornerstone for loadable capacity. (home) entertainment in the future.” Could such services take off as 618,000 ... Thanks to last January's introduc- viable alternatives to terrestrial two- tion of the DIRECTV–Intel Viiv way VOD? Or will hybrid technolo- hook-up, the DBS co now offers gies be the answer for DBS on home networking for music, photos demand? We suspect the answer and, of course, video. will be a bit of both. And how fast “Once (the VOD service) is turned will that come? on,” Shanks says, “we will not only Ah, wait for summer. If ads for be able to deliver the best HD con- DIRECTV VOD blossom in the August ... in low hanging fruit? That was tent to the home, we can also talk heat, you'll know the first “true” DBS the number of DIRECTV/Verizon music and photos around the house. on-demand service is on its way.• subs at the end of 2006.• 6 VOD - May 8, 2007 Cable VOD & DVRs How Big A Base? Source: CentrisBRIDGE (05/07) The BRIDGE 2007 VOD Penetration by Occupied Households O f the estimated 111 million occupied households in the U.S., more than one in 10, or about 11.5 million, have access to video-on-demand services via their cable subscriptions. The highest VOD penetrations in the nation all come in the state of New York, where the Rochester, New York and Syracuse DMAs all boast VOD penetrations of greater than 18 percent. Households with cable-provided DVRs run far behind the national VOD counts. Only around 5.6 percent of U.S. households, or 6.2 million, receive DVR services via their cable provider. For cable-DVR usage, the San Francisco- Oakland-San Jose DMA is the run-away winner with more than 11 percent of all households boasting digital video recorders from their cable systems.• Source: CentrisBRIDGE (05/07) The BRIDGE 2007 DVR Penetration by Occupied Households 7 Annual: Cable - May 1, 2007 n der 1/2 U he (approximate) percent of folks in the UK, France, Germany and Spain who T say they watch TV over the internet. This from a study conducted by StrategyOne for Motorola. Of the heavy web TV users, France scores No. 1 with 59 percent saying they watch previews and full episodes of shows over the 'net. The Germans bring up the rear: Just 33 percent say they watch TV online. (A tip of the hat to BroadbandTV News for unearthing the study.) urprise, surprise! Early adopters of new technologies ... speciﬁcally male early adopters of new tech- S nologies ... are the most likely to be interested in mobile TV! What a stunner. More seriously, a recently released study from comScore says 46 percent of those who currently subscribe to mobile TV are below the age of 35 and 65 percent of those are male. (Though in defense of older demo- graphics, we also note that 11 percent of those who subscribe to mobile TV are between the ages of 55 and 64. Not bad for geezers.) In another study stunner, the “cost of service” ranked No. 1 when selecting mobile TV services (71 percent chose this option) although 67 percent also say they'll watch ads in return for free subscriptions. ust how much credence should you give to those rumors about J Microsoft and Yahoo? Consider this: Yahoo does not use Microsoft technology. (Hardly any web cos do; they like to devel- op their own stuff.) But talk about techno trauma ... s OTA the next big thing? Could be as the I “what's old is new again” wave washes over the radical idea of FREE TV, delivered via over-the-air antennas. After the AP ran a story on the swell HDTV signals available via OTA antennas, a CEA website providing info on the rabbit-ear gizmos (AntennaWeb.org) reportedly jammed up with 86,000 inquiries in one day. According to CEA spokes-folks that's about as much as the site usually gets in one 309 month. Think it could be a trend? (Thanks to B&C for the info.) olks who sat down in front of TVs and shown HD programming from F DIRECTV, DISH and Comcast. Who won the best quality vote? Comcast did. Who paid for the study? Comcast did. Golly gosh.• 8 Annual: Cable - May 1, 2007 Upcoming Events May 15-16 June 28-29 October 15-17 IPTV World Forum – Eastern 2007 C-COR Global IP Summit CEA Industry Forum European Cannes, France San Diego, Calif. Prague, Czech Republic http://www.c-cor.com http://www.ce.org/Events/default.asp http://www.iptv-easterneurope.com July 23-25 October 23 CTAM Summit CTHRA Achieving Excellence May 22-24 Washington, DC Symposium 2007 BCFM/BCCA Conference http://www.ctam.com/conferences/s Atlanta Las Vegas ummit http://www.cthra.com http://www.bcfm.com August 19-21 October 30-November 2 June 6-9 2007 Aspen Summit – Progress CASBAA Convention 2007 CEDIA CU on the Road & Freedom Foundation Hong Kong Savage, MN Aspen, Colo. http://www.casbaa.com http://www.cedia.org http://www.pff.org/aspensummit/asp en2007/index.html November 6-9 June 18-21 EHX Fall 2007 NXTcomm, Chicago September 5-9 CEDIA EXPO Long Beach, Calif. http://www.tiaonline.org http://www.ce.org/Events/default.asp http://ustelecom.org Denver http://www.cedia.net/expo/ November 29 June 19-22 September 16-18 NAMIC Foundation Holiday SCTE Cable-Tec Expo Annual NAMIC Conference Benefit Gala Orlando, Fla. New York City New York City http://www.scte.org http://www.namic.com/events/ http://www.namic.com/events/ Upcoming Issues of The BRIDGE May 15 July 17 U.K. Multiplatform Developments Latest and Best Research May 22 July 24 Small Business Services Digital Rights Management May 29 July 31 Mobile Video Sports Programming August 7 June 5 International Issues Race of the Giants August 14 June 12 Broadband Technologies Telcos & the Competition August 21 June 19 Advertising Q1 07 Wrap-Up August 28 June 26 Q2 07 Wrap-Up The Top 10 New Technologies July 3 September 4 Serving Rural America Media Ownership July 10 September 11 What’s New in Programming Diversity 10
"VOD The Must-Have Killer App"