• by Scott Brown , Op-Ed Contributor, July 10, 2006

Good question and one that has more unpopped kernels (read as dependencies) than simple timing or technology rollout woes might suggest.  It certainly has not been for lack of effort on the part of the cable Multiple System Operators, who have aggressively promoted the virtues of the digital tier and feverishly deployed video-on-demand capability.   So why is VOD taking so long to take hold?  Maybe it's because VOD already has an identity crisis and the average Joe doesn't quite get it.

Not enough popcorn?  At one time it appeared that lack of content for VOD was a major blockbuster factor (excuse the pun, I can't resist).  ABC, CBS, and NBC began careful licensing deals to test the tepid waters of VOD, using cable, DBS and video iPods. Of course each of these deals have a very temporary flavor to allow content provider and distributor to feel out the business relationship and the viability of the product.  That's perhaps one issue; the major deals are short- term, temporary in nature and evaluative. 

What about free popcorn (read as free VOD)? Is the pricing of VOD a deterrent to subscriber uptake of the VOD product? Well, perhaps, as we see Comcast pursuing the decidedly free VOD plan and doing well in terms of streams served to subscribers. The other MSOs have a potpourri and 'fess that VOD isn't so compelling. The truth is that everyone is cutting deals with different terms.

Buttery, Extra Butter, Cheese-Flavored Popcorn. Baskin Robbins has been booking 32 flavors for an awfully long time.  Is there any chance that the MSOs are confusing their subscribers?  Comcast is heavily pursuing the free VOD model.  Time Warner Cable is offering traditional VOD movies for a fee, but long after the Hollywood release windows to DVD. Then we have TWC offering "Start Over" in Columbia, S.C., which is a cool way of allowing subscribers to catch live shows in progress and start them over with their remote--for free. So there are a number of flavors and probably no major disconnect per se. My bet, there will be no less than five flavors of VOD moving forward as the MSOs culture the virtues of VOD.

How much popcorn? The measurement issue surfaced last year, and the fundamental question of how VOD is being used came to the forefront. Nielsen Media Research responded with a plan, and Rentrak pushed its suite of transaction based products ahead as well-- hence measurement is in the mix.  In many ways, it was once said that without measurement of the VOD eyeballs, the product could not be successful. Starting about now, there is plenty of measurement availability and more to come.

Hey, my popcorn, my popper, my terms! I grew up in a generation equipped with VCRs, and more recently, DVRs, that could record and playback VOD--at the time of purchase. That meant a copy for my home for future viewing use, for my library if I chose to keep it, and it fit well within the Fair Use provisions of the Betamax ruling--sort of. But this seems short-lived as the MSOs, DBS, and the studios aren't wild about me recording VOD content--at least not the pay stuff. But the mindset is changing. There is serious talk of video sell-through--meaning the users keep a copy of the movie, the concert or whatever. Now this begins to have some real appeal and value. I am starting to sense some sizzle!

My popcorn now! One of the keys to VOD is immediacy--the ability to access good stuff right away. Most Hollywood content falls within established rules for release. Once a movie premieres, Hollywood wants gate receipts and the lucrative DVD sales business together. Any release to the MSOs has to be balanced against cannibalizing those current revenue streams. But VOD, being an immediacy product, needs to release earlier than 30 days for the real success to sink in. What to do?  Well, Steve Jobs is talking to the studios about movies released to the iPod at $9.99 a pop. He thinks that the iPod doesn't threaten those precious Hollywood revenue streams, and maybe he is right.

Money for popcorn. In the end, this whole thing boils down to money. VOD provides a new outlet to consumers, buttressed by the MSOs' ability to interact with purchasers of content. Once that ability matures and Hollywood sees the lucrative secondary market for products opening up, a real bonanza of opportunity will prevail. Apart from the money game, this is all about making entertainment seamless to the user... not hard work or value judgments, or balancing how to best consume. When you have subscribers stuck with those decisions, you have slow growth. When you address those issues and create an environment of effortless consumer decisions, then the product works, the money flows and the popcorn tastes well worth it!