VOD for the Little Guys

How operators approach VOD and even their strategic goals are dependent upon system size. One initiative announced late last month and another set to roll out in the near future highlight how small – and very small – systems can leverage VOD. The commonality between the platforms is the desire to provide operators with a weapon against DBS players who often target smaller systems.

On July 31, C-Cor announced that it and the Comcast Media Center will provide Houston-area operator Phonoscope Cable with the companies’ VOD In a BOX (related story), a platform that is optimized for systems with a minimum of 5,000 subscribers.

That means that there are many systems that aren’t big enough to be good candidates for VOD In a BOX. These very small operators soon will have an option, however. A system being developed by an entrepreneur in Nebraska will be optimized for systems with a mere handful of subscribers. Live from Colorado While the Comcast/C-Cor product initially is being marketed as a VOD platform (related story), it also can support time-shifting programming, SDV and targeted, linear, and on-demand advertising, said Basil Badawiyeh, C-Cor’s vice president for On Demand Strategy. In general, VOD is first on operators’ wish lists, however. "From an advanced services perspective, VOD really is a powerful differentiator from the satellite guys," Badawiyeh says. "VOD is a natural first service migration."

The key is to reduce costs to the point that a two-year ROI is possible. There are two main ways in which costs are cut, says Mitch Weinraub, the executive director of products and services for the CMC: Content is delivered in a single stream, and a limited – but, in the eyes of C-Cor and Comcast, sufficient – amount of material is stored.

Weinraub says that about 1,200 hours of VOD programming are available at one time. This, he says, compares with as much as 6,000 hours for larger systems. Most folks will be satisfied, Weinraub says. Perhaps folks who want Fellini-On-Demand might move to L.A. or New York. "We believe that we are delivering 80 to 90 percent of the views that exist in larger systems," Weinraub says. "What we are leaving is the ‘long tail’ content. We are delivering what most people want to watch."

In a traditional VOD arrangement, operators would need to add links to programmers from whom they don’t already get programming. In the CMC/C-Cor plan, content is aggregated and sent to the participants from the HITS Quantum facility in Littleton, CO. Companies with existing arrangements with particular programmers can opt not to use the feed from HITS Quantum, but still have the VOD programming managed by the CMC.

Other deals are expected in the near future, according to Badawiyeh, and Weinraub says that the approach is viable for larger systems – at least a couple of which are talking to Comcast and C-Cor. Let’s get small Bauer is the president and CEO of both WinDBreak Cable, a two-system MSO in Nebraska, and InterTECH, a company that provides back-office help for MSOs acting as ISPs.

His as-yet unnamed approach likely will be released during the first quarter of next year. The rationale is that traditional per-stream cost models – the way in which operators generally gauge the efficacy of VOD – fall apart when the number of customers is exceedingly small. Bauer is taking it the other way: He simply says that the system must be built for $10,000 and works back from there.

Along with the more realistic expenditures, Bauer is positioning VOD more as a way to hold onto customers. "We are doing it a little differently," he says. "We are not necessarily looking at VOD as (only) a revenue generator. That’s a strange thing to say because you always have to make money at what you are doing. We are coupling it with customer retention. If a system has a VOD solution, that will that keep customers. If they couple it with (services such as) GoBack TV, that is something that gives them an edge against the competition."

He is working with a large technology vendor on a system that will use Beyond Broadband Technology set-top boxes (related story). The set-tops, Bauer says, will support dynamic channel mapping and MPEG-4. – Carl Weinschenk