Cox Communications Inc. planned to send video-on-demand
vendors a request for proposals last Friday, hoping to launch its first VOD trial by the
end of the second quarter.
While Cox has been a leader among MSOs deploying
digital-cable, telephony and cable-modem services, the company has never tested a VOD
product. "We have been staffing up to make sure we can adequately support the
analysis and deployment of VOD," interactive-services product manager Braxton Jarratt
Cox plans to select one VOD vendor for a trial by February,
pegged to Scientific-Atlanta Inc. hardware, a spokeswoman said. Another source familiar
with the company's plans said the MSO will likely conduct the trial in Las Vegas, San
Diego or Phoenix.
VOD vendors interviewed last week welcomed news of the RFP.
Naturally, each vendor said it thinks it has the best product to offer Cox. Diva Systems
Corp. and nCUBE boasted that they have the most VOD deployments; SeaChange International
Inc. noted that it's been selling hardware to MSOs since its inception; and Unisys Corp.,
while new to the cable industry, emphasized its financial wherewithal.
Cox's priority with the RFP is to study the technology
first, and each company's business model second, Braxton said. "The key is technology
-- is it reliable, is it scalable, is it provable? And from there, the next important
thing is how the economics work, which is tied into reliability and scalability," he
The MSO plans to use Viewer's Choice (which will be renamed
In Demand in January) to supply VOD content, and it will only buy VOD hardware and
software from a vendor, Braxton said.
That should suit the VOD vendors, most of which offer to
sell only the hardware and software to MSOs that want to gather their own content, while
also offering to provide VOD content to MSOs in exchange for a cut of VOD revenue.
Diva has the most U.S. deployments to date, with launches
by Lenfest Communications Inc.'s Suburban Cable near Philadelphia; Adelphia Communications
Corp. in Lansdale, Pa.; R&A Management LP in Roswell, Ga.; and Chambers Communications
Corp. in Edmonds, Wash., among others.
The company also has launch commitments from MediaOne Group
Inc. and the United Kingdom's Telewest Communications plc.
Launched in 1997, Diva's original model didn't offer MSOs
the option to buy only the hardware or software -- the company insisted on providing VOD
content in exchange for a revenue share. Earlier this year, the company changed its
strategy to offer MSOs the option to buy just its technology, saying it was difficult to
attract larger MSOs if it insisted on revenue splits.
Paul Kagan Associates Inc. senior analyst Leslie Ellis said
she expects most MSOs to pursue VOD deployments by buying the technology from vendors and
gathering the content themselves.
"In almost every case in the past where someone has
come up with a turnkey offering, the model eventually goes away," Ellis said.
"The trend of no middleman is one that will continue to strengthen, especially in
Part of SeaChange's pitch is that the company -- which was
spun off from Digital Equipment Corp. in 1993, and which originally focused on digital
ad-insertion products -- knows the operations side of the business better than its
competition, vice president of interactive technologies Yvette Gordon said.
"We've been in the cable business from the inception
of our company. That's something we've had as a value-add -- understanding the operations
of cable and what it can do," she added.
SeaChange has installed its VOD systems for Time Warner
Cable in Austin, Texas; Rogers Cablesystems Ltd. in Canada; Guandong Cable Television in
China; and Telewest in the United Kingdom. In addition, SeaChange has "several
nonpublic deployments," Gordon said.
Two computer manufacturers -- Unisys and Concurrent
Computer Corp. -- have also been making some noise in the VOD market.
Concurrent -- which recently acquired VOD-hardware vendor
Vivid Technology for $25 million -- is on the short list of vendors Charter Communications
plans to select from for its VOD rollout, a source said. SeaChange and nCUBE are also on
the list of final candidates, the source added.
Meanwhile, Unisys -- which quietly made its entrance into
the cable industry at this past June's National Show -- plans to beat its drum louder at
the Western Show.
Strategic-program-marketing manager Phil Bench said Unisys
has agreed to conduct VOD trials for three top 10 MSOs, which will likely be identified at
the Western Show. The first trial will launch during the second quarter, followed by two
additional trials during the second and third quarters, he added.
The only U.S. deployments by nCUBE to date are with GTE
Corp. and Ameritech New Media, but the company -- which agreed to buy SkyConnect Inc.
earlier this year -- boasts installed systems supporting 17,000 VOD streams worldwide.
The vendor was included in Time Warner's
"Pegasus" tests, and it said it exceeded all requirements.