Video on Demand

by Edward B. Driscoll, Jr.
Spring 2001

Video-on-demand is yet another example of the convergence of TV, computers and the Net. It promises to bring a whole new level of consumer choice to television programming. When you sign up for a VOD service, you'll be able to access a listing of movies and TV programs that you can order and play any time you choose. A large, centrally located computer holds the media and the end user accesses it through one of the following ways: either via a two-way cable TV system, a satellite system or through a set-top box with an Internet connection.

Numerous cable companies, such as Time Warner, Charter, Cox and Insight Communications are deploying VOD services in their major markets. However, Blockbuster Video and ICTV have unusual schemes that help to illustrate the challenges of VOD, and they offer creative approaches to overcoming them.

Blockbuster's Approach

It's no secret that Blockbuster Video (www.blockbuster.com) wants to stay on the cutting edge of video distribution as the market turns to alternative distribution sources like pay-per-view and recordable hard drive units like ReplayTV and TiVo.
In January 2000, MGM and Blockbuster issued a joint press release stating that they were planning to "test and develop a business model for Blockbuster to make available selected MGM films for digital streaming and downloading video via the Internet and other home delivery technologies."
This press release was followed by an announcement that Blockbuster and Enron Broadband Services joined in July 2000 to deliver their VOD service to customers over broadband connections. Primarily DSL, but expandable to other types of broadband connections. (Blockbuster has also cut a deal with the DirecTV satellite system, which is why local Blockbuster rental outlets are advertising DirecTV, but currently, the deal only calls for a pay-per-view-channel or two branded with the Blockbuster name.)
To access the new VOD service, customers will need to have a set-top box that Steve Pantelick, Chief Operating Officer of Blockbuster's New Media Division, says will be "able to accept a DSL connection and deliver the requisite quality of transmission."
An alternative approach could use a splitter, with one phone line going to the PC and the other line going to the TV set-top box.
While this service will use Enron's proprietary network, Pantelick, says that it will be based on existing Internet Protocols (IP). "So there's not going to be a competing set of technical standards."
Blockbuster's VOD service will include movies, and classic television programs. But don't expect the initial offerings to have razor-sharp DVD-quality pictures. Pantelick says, "Our minimum benchmark is VHS quality, but obviously, as compression technologies improve, we are going to be looking to improve video quality over time."
Expect to start seeing Blockbuster's VOD service to roll out over 2001. "From a technological development perspective, there are no hurdles", Pantelick says. If by the end of next year, your neighbor's houses are painted blue and yellow, you'll know why.

ICTV: In the Background

Unlike Blockbuster, which is a household word, ICTV (www.ictv.com) prefers to stay behind the scenes. "Our system, done right, is not something the consumer will see," Michael Collette says. "Just the same way that an Internet user today does not really have an experience with a Cisco router.
Collette is ICTV's Senior Vice President in charge of marketing. He says that the "secret sauce" behind ICTV's system is a "combination of centralized computing and shared-use computing." Essentially, it's a very fast allocation of a PC resource to an individual in the home, so that while they're logged on, they have access to a big, fat Pentium located at a cable TV company.
In theory, ICTV's approach should make programming easier, since the programming will only need to be done once in the back office, rather than having to reprogram several hundred thousand set-top boxes. Collette says that ICTV's technology can work with a variety of set-top boxes. "We don't, in fact, supply a portal as a business. We would view that as WebTV, Excite or AOLTV's business."
Collette says ICTV's VOD client is HTML-based, "so all you need is someone who knows how to encode Flash." (Flash is a popular programming language for creating animated Web sites.) "This differs from many proprietary VOD schemes, where it often takes longer and you have to find programmers who know how to do that stuff.
Collette says that the HTML content also allows for a very dynamic user interface, that is "very easy to do, whereas in the set-top environment that's very hard to do."
He sees video-on-demand as spreading out into two extreme categories. On the one hand, "Coming from the pay-per-view view of the world, video-on-demand looks like essentially the same inventory of movies that were available on pay-per-view, and then some months later to HBO, now being available in some window on a demand basis off of a server."
But on the other extreme, Collette says, "What I think you're starting to see are a lot of 'micro-viewings' coming off of the Net that are Windows Media-based or QuickTime-based." He feels that these micro-viewings are something that ICTV's HTML-based platform handles very well.
ICTV has tested an analog version of its system that's been running for about a year and a half in Missouri where there are about 500 homes using the service. The Missouri test markets have allowed ICTV to fine-tune their billing and other systems, which should ideally translate into the finished product fairly seamlessly.
OK, so like that Cisco Router, you won't know it's there. But when will ICTV gear be installed in your local cable company's offices? Collette says, "The digital system is really just coming out of the lab. I would expect that we'll really have it deployed in initial trial locations in the first quarter of 2001."

VOD will be big. Really big.

Video-on-demand is clearly on the way, and with it, the time is coming when getting home late and missing the start of a movie, and having to schlep movies back to the video store on a cold, wintry night will be considered quaint memories of the past.
The fact that the nation's largest video rental house is betting on, and investing in, VOD is proof that (as William Shatner might say) this will be big. Really big.