Video on Demand

Video on Demand

10 May 2004

1 Overview

Video on Demand (VOD) enables subscribers to choose from a library of recorded films and TV programming, and watch them immediately on their TV set, usually via a set-top box. It is analogous to having an �online video or DVD store’. Most versions allow the user to pause, rewind or fast forward the programme. The customer pays a small fee to watch each programme, and has access for a limited time period, often 24 hours. Unlike conventional broadcast TV, content is requested by the viewer, hence the service is �on demand’.

This profile focuses on VOD over DSL or fibre networks, although some examples of VOD over cable are included. After several damaging false starts, VOD over DSL is beginning to look like a viable proposition, at least where market conditions are favourable. Point Topic estimates that as of May 2004 there were at least 230,000 DSL and fibre subscribers worldwide with access to true VOD. Many operators are now pushing forward with ambitious rollout plans which should take subscriber numbers over 1 million within 12 months.

Reasons for the improving outlook include:

• Sharp falls in the initial capex per end-user required to set up VOD service

• Improved DSLAM and network technology allowing more efficient and cost-effective distribution of video content

• Lower backhaul bandwidth costs

• Greater willingness by the film studios to agree content deals

• Positive feedback from the users of existing services, who prove to like VOD, are tending to increase their use of it, and are les likely to churn to other service providers when they already have VOD.

Taking these factors into account, business plans for VOD can expect reasonably early break-even rather than a long period of heavy losses. Operators are starting to consider the possibility that a VOD offering might become an essential part of every broadband portfolio rather than an expensive luxury.

VOD over cable raises different issues, both because the cable industry is already built upon video entertainment and because of the different technical characteristics of broadband distribution over cable networks. True VOD or high-performance near-VOD over digital cable is beginning to see a large scale commercial service on a district by district basis. Many cable companies already offer near video on demand, but widespread true VOD will require major network investment. It will therefore happen as an evolutionary rather than revolutionary development of existing services.

2 Key features

2.1 Typical experience

When a TV customer selects the video on demand service from their TV service (usually from an on-screen Electronic Program Guide), the first thing that happens is the On Demand Application (ODA) client program is started. This program is either stored on the hard drive of the set top box (STB), or is downloaded to the STB when the ODA is launched.

The ODA presents the customer with a menu of movies and other content available on-demand (an electronic programme guide or EPG). Customers can use the menu to navigate around this range of content, sorting by title, genre, actor or any other metadata category defined by the VOD service provider.

Each title usually has additional information, for example pricing or images, which the customer can look at before deciding to purchase. When the customer decides to buy, the ODA communicates a session setup request to the VOD system.

VOD providers can regulate access to titles by ratings (U, PG, 18 etc) or by PIN number. Different members of a household can have different PIN numbers allowing them to view content of a specified rating, for example. Access can be denied if the PIN is wrong or does not cover a particular rating.

The session setup request tells the VOD server that a particular video file must be streamed to a specific set top box that is connected to a particular hub, connector and video card in the distribution network (whether cable, Gigabit Ethernet or DSL).

The video server controller uses an algorithm such as dynamic channel allocation (DCA) to create a unique video session, by identifying a complete path through the network, and allocating bandwidth to the session. The controller then assigns an MPEG program number to the video stream, and instructs the video server to start streaming the video.

The video server finds the required file, usually stored on a low-cost high-capacity disk farm. It also sends a session setup confirmation message to the client ODA, which tells the set top box what tuning settings it needs. The streaming can then begin, and the subscriber can watch the video.

During the streaming, the customer can usually pause, rewind or fast forward the video. The ODA communicates a pause request, for example, directly to the video server, which can then change the video stream as required.

The charge for the video is then added to the subscriber’s monthly bill by the �back office’ subscriber management system.

2.2 Customer appeal

вЂ?Watch whatever you want вЂ" now’

The key selling points of video on demand services are convenience and choice. The viewer is able to access what they want, when they want it, without having to move from their armchair.

In theory, VOD makes it possible to deliver tailored, niche content, for example giving access to an online archive of films and programming. Ultimately, this �video dialtone’ would enable the viewer to find quickly any piece of recorded video, TV or film, in any language, on any subject. In practice, this will take years to achieve. Current deployments typically offer several hundred hours of programming or movies per year.

2.3 Variations

Near VOD (NVOD) is a simpler offering, where the subscriber has a more limited choice of programming, and where programme start times are fixed. For example, the top 20 movies might be available starting every 15 minutes throughout the day. This method is used because of limitations in server or network performance in streaming multiple simultaneous streams of the same content. Many cable TV companies that advertise VOD services are in fact using NVOD. This is a natural extension of their established