With video-on-demand playing an increasingly important role in the business model for cable operators, a number of innovations advancing the management, distribution and monetization of VOD content will be making their way to cable headends in the year ahead.
These developments include advancements in technologies that allow cable-system operators to expand the scope and depth of their ondemand content offerings.
As an example, Comcast Media Center and other VOD content distributors are sourcing VOD content from mezzanine fi les, allowing the encode of content from very high bitrate sources — as much as 50 Megabits per second — while transcoding to signifi cantly lower bit rates. This approach not only allows more content to be delivered over existing fiber-coax infrastructure without sacrificing video quality, it also reduces the amount of storage capacity that will be required for these digital video assets on content servers.
The importance of quality for video on demand cannot be overstated. As studies by J.D. Power & Associates and others show, viewers gravitate toward a better-looking product.
Advances that allow cable operators to increase their libraries are also important for maintaining a competitive advantage. When the industry launched VOD nearly a decade ago, it represented a digital video offering that was unavailable from satellite-TV carriers. Today, satellite operators offer 1,000 or more VOD titles to their customers not only for parity with cable, but to also address the challenges both groups face from online video service providers.
The competitive landscape is analogous to a quality and quantity arms race between platform videos. Offering a competitive lineup of video content and a superior viewing experience will be critical for retaining digital video customers and increasing pay-per-view and subscription VOD revenues.
Advertising revenue is also an important part of VOD’s contribution to the business models of both cable programming networks and cable MSOs. Rentrak’s 2012 analysis found that viewing of free VOD content experienced 17% growth, with viewers watching an average of five hours and 17 free on-demand (FOD) television shows or videos per month, and representing more than $1 billion of annual advertising revenue.
VOD’s ad revenue potential is the reason BTIG Research analyst Rich Greenfield and others believe TV networks should focus on making more of their programming available on demand. What interests Greenfield about VOD is the industry’s ability to deliver personally relevant ads to digitalvideo households.
These drivers are helping to focus our industry engineers on enhancements to our infrastructure that can be implemented easily, quickly and cost-effectively. They allow cable- system operators to increase their revenues and improve their competitive positioning while making incremental investments in existing equipment.
Jon Shaver is senior director of content development for Comcast Media Center’s Content Solutions unit.