Server Vendors Bask in VOD Glow11/04/2001 7:00 PM Eastern
Concurrent Computer Corp., SeaChange International Inc. and nCUBE Corp. — the three major suppliers of VOD servers to cable operators — believe demand for their products will remain strong into next year, despite an economic slowdown.
And content and hardware provider Diva Systems Corp. is similarly bullish.
"All the leading indicators support very, very strong deployment going into next calendar year," said Concurrent president and CEO Jack Bryant, whose company has deployed 240 servers in more than 20 markets. "Every operator has publicly mentioned that if it's not their No. 1 strategic priority, it is in their top two or three."
Added SeaChange vice president of interactive technologies Yvette Gordon, "There is a general belief there will be less travel and more time spent at home, and that could enhance the potential for on-demand services."
MSOs are continuing to spend their capital-expenditure dollars on VOD systems, she added.
Concurrent recently picked up contracts with midsized operators Blue Ridge Cable Co. and Mediacom Communications Corp. It already has contracts with Cox Communications Inc., Comcast Corp., Time Warner Cable and Canada's Cogeco Cable Inc.
Bryant is pleased with the Blue Ridge and Mediacom deals because they show that smaller operators with smaller systems can make VOD viable.
Mediacom will use Motorola's Headend in the Sky authorization service for its VOD system. The HITS authorization center will handle the operation's billing, interface and control aspects.
The HITS play allows smaller systems — including those owned by the major MSOs — to get into the VOD business, even though they would still have to pony up for streaming and storage. That's important because smaller systems are particularly vulnerable to direct-broadcast satellite competition.
Concurrent, of course, was somewhat in the public eye this summer because it sold servers to Time Warner Cable in Columbia, S.C. — a system that was humbled when a Home Box Office subscription VOD launch proved more popular than the hardware could handle.
The Columbia launch actually straddled three different systems — Myrtle Beach, Summerville and Columbia — Bryant noted. The vendor also handled Time Warner's SVOD test in Cincinnati.
Scientific-Atlanta Inc. upgraded its software in Columbia to increase the number of sessions the system could handle by 309 times. SVOD customers often preview four or five programs in a short period of time before deciding what to watch, Bryant said.
"The [new S-A] firmware in the field is performing extremely well," Bryant said. "It improves efficiency of the stream setup."
Server vendors shoulder a greater software role in Motorola Inc.-based VOD systems.
"We're much more than a server manufacturer," Bryant said. "We handle software, hardware and significant integration systems. In Motorola, we do session setup and QAM [quadrature amplitude modulation] provisioning."
Bryant said Concurrent could add resource-manager software to a Motorola setup if session usage spikes significantly upward. But SVOD tests have left both Motorola- and S-A-based systems with new consumer-usage issues to tackle, Bryant said.
"You need adequate capacity from streaming perspective," Bryant said. "Operators don't want to be upgrading and adding streaming capacity after you roll out the service.
"The question is, 'What's the right business model?' " he added. "You have to look at cost per session and value per session."
If subscribers to HBO's subscription service hog all the sessions on a particular node, for example, that could block or slow other VOD orders.
"Every time you have to tear down a session and create a new one, that's tying up a QAM stream," Bryant said. "Should I charge on a per-session basis after a limit is reached?"
Each time a user activates a session, "it's hitting the DNCS, and my business-management system," added Concurrent vice president of marketing Del Kunert.
In Tampa, Concurrent has deployed 60 servers in a system with two regional headends. The vendor can use its software-management system to dynamically push the more popular content to edge servers, then pull it back once buy-rates drop, Bryant said.
The number of servers that a given operator deploys depends on an individual cable system's optical design. Comcast has deployed dense wave-division multiplexing, Bryant said. So given that MSO's smaller, more centralized markets, Comcast systems don't require many servers.
On the other hand, many of Time Warner Cable's systems are fiber-rich operations with optical backbones. In those operations, "the cost of storage is relatively cheap," Bryant said.
But capital expenditures for VOD are small when compared to cable's total capital costs, in Bryant's estimation.
"Over the last few months, there is a concern over the pace of digital-box deployment and penetration of digital tiers," Bryant said. "Both of those are very strong drivers of VOD going into next year. In the past, people looked at VOD as a stand-alone [product]."
Operators now consider VOD a means to further drive digital penetration. SeaChange works with Time Warner in Austin, Texas; Cablevision Systems Corp. in suburban New York City; and Comcast in several markets. It recently received TV Guide Interactive integration certification through Motorola, Gordon said.
Gordon is a veteran of Time Warner Cable's Full Service Network in Orlando, Fla., the site of cable's first VOD deployment.
"The VOD business model has been so scrutinized and tested that there's a payback that's understood, especially now with readily available content for SVOD," she said.
"You can get a multitude of revenue opportunities," including interactive TV and targeted advertising, said Gordon.
Operators are facing these issues as they work with SeaChange to roll out VOD, Gordon said.
"How do we optimize our bandwidth and automate information to content provider?" she asked. "How do programs come in and out of the server with a hands-off approach? How do you manage all of that and automate the content coming in?"
Added Gordon: "It used to be we all started with servers close to subscribers, and movies were duplicated at each hub location. With increases in storage, how do we optimize storage versus bandwidth?"
Software increasingly plays an important role in answering that question, she said.
"Our software manages by time of day and genre, like kids titles, action titles," she said. It also dynamically moves content toward edge servers as it nears its launch date and automatically ships children's titles during the daytime, for instance, then action titles later at night.
Operators also may integrate advertising into on-demand services. That will require increasingly sophisticated software, Gordon said. Software also may help solve the session headaches associated with SVOD, she added.
Cable systems may want to examine whether certain homes have a direct "live" link, which means that the system is constantly setting up and tearing down sessions for the SVOD user who starts five programs in one hour's time, Gordon said.