Is the success of VOD also responsible for holding it back?

Something has shifted in the positioning of VOD in Europe. You could tell as much from the apparent change in attitude of cable executives during the Spring conference season. When on-demand services were first launched in the UK, for example, the talk was of increased revenues as people turned to the new means of program delivery in ever increasing numbers. But now, the PowerPoint presentations seem to talk much more often about churn reduction.

You can always tell how well an operator is doing based on the amount of information that is publically released over and above what is required by the financial regulators.

Operators will speak of how many thousands of VOD views have taken place on their systems. The trouble is that at this early stage of the evolution of VOD, with consumers still navigating their way through the new sea of content, there is absolutely nothing that the viewing figures can be compared with in order to assess the success and impact that VOD has had on the TV industry, and on people’s lives.

Is it the same with online services? ITV.com and ITV’s affiliated local websites have increased their video views by 21 percent month by month with 12 million video views recorded in May alone. But these numbers do not indicate that ITV is doing better or worse with its online service than its competitors. All we really know is that all such services are growing in popularity.

Does VOD reduce churn?

The story now emanating from cable is more that VOD is the service that will reduce churn on the operators’ networks rather than being a compelling must-have that will directly result in increased revenues.

The role of the free VOD services must also be examined. Is the BBC iPlayer and its international equivalents elsewhere in Europe - RTL Gemist, and ARD Mediathek - the solution or the problem? In Belgium, Telenet has used its relationship with the public broadcaster VRT to promote the paid-for elements of its TV-theek VOD service. The free content is largely restricted to the evening news. Subscribers have to pay an additional fee to get anything extra.

In fact the VRT offers its whole range of on-demand programming for a flat monthly fee of €5.95, which gives access to all drama, series, entertainment, documentaries and other programming. However, the commercial stations rely more on pay-per-view, with prices ranging from €0.50 for a series to €2.50-3.00 for so-called ‘reviews.’

Not every public broadcaster is permitted to charge for its content. The BBC for one is obliged to make its content available to the widest audience possible free of charge, and somewhere along the line seven days has become the window during which content is made available to all before BBC Worldwide is allowed to explore its commercial possibilities.

Time-shifted vs. on demand

In an attempt to stay ahead of the game, US cable operators have begun to replace some of the time-shifted channels associated with their premium brands in favor of on-demand services.

In a revenue-sensitive move, this only applies to channels that are not supported by advertising and there is no suggestion that any operator is about to embark on a mass switch-off of popular services.

However, it is the logical move for any operator to remove under-performing services from its portfolio of offerings. Therefore, a reliable indicator for VOD has to emerge, be it a reduction in churn – and a decline in churn of two percentage points seems to be the most cited statistic among cable operators – or higher revenues.

Innovative possibilities

There are other techniques that are being tried out to drive VOD forward. “Startover TV” or “Replay TV” allow subscribers to watch a program from the beginning if they happen to arrive home from work late. Effectively, this is taking the buffering seen on digital video recorders and extending it across the channel portfolio, at least in cases where there is an agreement with the broadcaster in place that allows this.

Broadcasters are happy because this arrangement ensures there is no fast-forwarding through the commercials. Some operators are looking at selling the breaks a second time.

Day & Date, where movie content is released to operators at the same time that the DVD is made available in retail stores, is seen to be a good way to drive revenues. In tests carried out in the Netherlands, movies with this feature generated cable sales more than three times higher than those of similar titles in the library without Day & Date release.

But they would wouldn’t they? In the grand scheme of things, 500 or even 1,000 movie titles isn’t that great a number. Think of the lack of historical depth to iTunes, which will bring you most tracks from the last five years. But if you want to relive the ’80s, let alone the Swinging Sixties, then you’re in trouble.

The catch-up TV services are constantly being refreshed with new content, often on a near-hourly basis. More to the point, the ability of broadcasters to highlight their own VOD services on the air often deafens some operators’ promotions for their own premium content.

By their very nature the content for catch-up TV features characters and storylines with which the public will already be familiar. For this reason they need little promotion other than the words “New Episode.” Contrast that with older movie titles that cannot claim to be blockbusters, and consequently need to be introduced to their audience by way of a trailer, not to mention the need to quote the required payment. This challenges the digital platforms to come up with a proposition that is more than simply slicing another piece from the same cake.

Julian Clover, based in the UK, is Editorial Director and European Digital Analyst for Broadband TV News.