Video-on-demand (VOD) no longer faces lingering questions about its value proposition. Worldwide, it is part and parcel of digital TV networks, with subscribers expecting an increasing variety of VOD content as part of their subscription packages. And it is much more than just movies on demand. Operators are looking to leverage their VOD and network infrastructures to launch new and compelling business-building services that will allow them to attract new customers while minimising churn. What follows is a glimpse into some of the applications that are promising to take VOD to the next level, touching everything from video games and network-based personal video recorders to dynamic advertising insertion and user-generated content.
The video game industry represents approximately US $30 billion in revenue worldwide. For network operators, thanks to their existing VOD systems, high-speed networks and direct two-way connections with consumer homes, they are well-positioned to offer a new generation of gaming platform. VOD could compete with traditional game consoles, freeing consumers from the content restrictions that come with owning a single unit such as an Xbox 360 or PS3.
Instead, subscribers will be able to pick and choose from libraries of video games that reside on VOD systems in the operators' headend and stream to the set-top box just as a VOD stream does. This will let operators offer high-end games on legacy set-top boxes. Gamers will be able to play alone or peer-to-peer across different networks and even among different client devices.
Games-on-demand signify new revenue opportunities through subscription-based and pay-per-play models, as well as in-game advertising. Much like advertisements can be placed into VOD programmes and movies, they can also be inserted in and around games on demand and even targeted toward particular demographics.
The next one is Network DVR. As viewers become more accustomed to watching their programmes when they want, operators are planning services that make all programming available on demand through VOD systems. Often called network DVR (nDVR), one of the broadest applications of the technology is one in which the operator is actually recording programmes without direction from the subscriber. This means all or selected programmes are readily available for on-demand viewing. In essence, subscribers will be able to scroll back in time on their interactive programme guides and watch programmes that have already aired at their convenience.
To the operator, nDVR provides greater control over monitoring and management while saving a great deal of capital because lower-cost set-top boxes can be used. What's more, the nDVR allows for easy upgrades in a central location, meaning that the technology is consistent and up-to-date across the network rather than a mix of outdated hardware throughout the customer base. Several versions of nDVR are currently in trial phases or limited release in the United States.
One of the most powerful and promising applications that operators are examining to leverage existing VOD platforms is dynamic ad insertion. This enables operators to seamlessly insert advertisements into on-demand video streams, allowing advertisers to rotate different ads within the same VOD asset. The technology increases the value of the ad purchase by allowing advertisers to keep their ads 'fresh', providing a point-to-point connection with the viewer and monitoring exact ad viewing numbers.
Operators, advertisers and content providers are still working to identify the best business models on which to support dynamic VOD advertising, but the technology is available and results of early launches have been positive.
Another important one is user-generated content. The rapid rise in popularity of viewing online user-generated content (UGC) represents a genuine threat to television by drawing viewers away from TV sets to their computers. The key to taking UGC from the web and distributing it to television viewers is a platform that seamlessly brings the two networks together.
Already in development and ready for trials, these platforms will allow operators to utilise their VOD systems to offer subscribers access to unlimited amounts of web content without the need for unlimited storage for that content. Not only will subscribers be able to view and distribute UGC on their TVs, the platforms will also support the growth of social networks; allow for place shifting by which content can consumed on any device (mobile, TV, PC, etc.); and open the door for operators to develop new revenue streams and reduce subscriber churn.
With much of the Middle East still getting its television from satellite and terrestrial sources, VOD and its many associated applications have been slow to develop. But as broadband infrastructures continue to grow, it is likely only a matter of time until operators begin to launch digital network-based television services and VOD starts to take hold in the region.
As operators begin to build out digital television networks in the Middle East, they are sure to benefit from observing many of the trials and early deployments of next-generation VOD applications that are currently taking place in other parts of the world.
Phil Simpson is director of On-Demand Solutions at SeaChange International.