Video on demand (VOD) is undeniably evolving, and it's interesting to watch it happen and speculate about where it may be headed.
Initially, VOD evolved from the old "call the cable operator" pay-per-view model to instant on-screen selections, from "here's when the show's playing" to a true "what I want, when I want it" experience. The evolution continues today, with the advent of online video and multiscreen offerings making it harder to distinguish between traditional VOD and the growing "everything on demand" model.
But even though the lines are blurring, traditional VOD is still alive and well. For cable operators, it's table stakes -- a must-have item. It appears in pretty much every video deployment announcement, and it brings in a substantial chunk of revenue for cable operators. For example, according to a recent announcement from research house the NPD Group, pay TV (telco and satellite, as well as cable) revenue from VOD movie rentals alone totaled $1.3 billion in the United States last year. NPD says 15% of U.S. consumers ages 13 and older used pay-TV VOD movie services from a cable, satellite, or fiber-optic provider in the 12 months ending August 2011, which translates to 40 million users.
Future directions for VOD seem to be following the intertwined tracks of increased interactivity and advanced advertising models intended to monetize VOD better.
CableLabs and a number of vendors have been working on the ad piece. CableLabs held an interop in January to test advanced ads in VOD, specifically dynamic ad insertion into VOD content using SCTE 130 interface standards. Participants -- including Avail-TVN, BlackArrow, Canoe Ventures, Harris, Nagra-OpenTV, SeaChange International and This Technology -- contributed infrastructure such as ad decision managers (ADMs) and ad decision servers (ADSs), as well as encoding and metadata preparation using web-based software for an inventory of entertainment content and ad spots.
Some of those players -- particularly Canoe and BlackArrow -- are also working with national advertising groups to study the effectiveness of interactive ads, with BlackArrow specifically looking into the efficacy of targeted advertising within free VOD content. The results so far are encouraging.
So traditional VOD still has legs and can be expected to continue evolving to fit changing business models. And while it may not be as sexy as the newer services such as streaming and multiscreen video, it could fairly be called their father.
Ron Hendrickson is BTR's managing editor. Reach him at firstname.lastname@example.org.