Audio Video News

One of the hottest buzz phases in telecommunications is "video-on-demand," a service that allows customers to plug into the universal content library and watch anything they wish whenever they wish. VOD and interactive television (ITV) are the twin holy grails of cable companies and Internet service providers.

Experiments with VOD and ITV have been uneven, despite consistent efforts reaching back to the early 1980s. ITV, in particular, hasn't been well-received by consumers, despite excessive hype from information technologists and marketing specialists. VOD, on the other hand, could be a winner—if the broadband problem is solved and Hollywood unlocks its vaults.

VOD took a few baby steps forward in mid-April, with an announcement by SBC Communications and direct broadcast satellite service EchoStar Communications Corporation that they would join forces to develop a marketing plan for video-on-demand services. Almost simultaneously with the SBC/EchoStar announcement came one from Cox Communications heralding the debut of a VOD service in San Diego County.

SBC, parent of Pacific Bell and other telecommunications companies, wants to push digital subscriber line (DSL)-based VOD; EchoStar would like to push satellite-based VOD. The two companies believe that a joint marketing synergy will be more effective than anything they could accomplish individually. The initial plan calls for pushing a bundled-satellite-TV-and-DSL package with a total discount of about $10 a month, with a long-term plan to enhance the combined system with VOD offerings.

A "convergence set-top box" that would provide both DSL and DBS may result, according to SBC spokesman Jason Hillery. The device could incorporate some aspects of the personal video recorder, as made by TiVo, Inc., with a hard-disk drive at its heart. Hillery said it's too early to say whether the partners will develop the software to operate the STB or manufacture it in its entirety. Such a product would "open up potential for video downloads and other entertainment information that would be downloaded through the DSL lines, stored on the hard drives, and displayed on the TV," he stated. SBC's network extends from the Midwest to both coasts.

Cox Communications is also making an effort with VOD in San Diego County. Cox's 170,000 subscribers there will be the first in the nation to sample the company's video-on-demand service. Cox is offering approximately 200 movies on a pay-per-day basis of $3.95 for each film ordered. For a 24-hour period, a VOD customer can watch the film of his choice as often as he wishes, even pausing, rewinding, and fast-forwarding via Cox's set-top box.

Initial program offerings include box-office successes like the comedy Caddy Shack, but many of the available films are almost unknown. The lack of depth is because film studios are still cautious about potential piracy. VOD, a feature possible with digital cable services, is a moneymaker for the cable industry. Cox claims that 31% of its customers have upgraded to digital cable from the basic package. The company's VOD launch came a few weeks after Comcast Corporation began a similar program to 222,000 customers in southern New Jersey.

Many industry observers believe video-on-demand will eventually spell the demise of the concept of prime-time television. VOD will almost certainly put a dent in the bottom line for video rental businesses, but not until Hollywood releases thousands of titles for use on cable. That day is still in the distant future.