DirecTV Inc. will stage a six-month test of premium programmer Starz Encore Group LLC's subscription video-on-demand service, the direct broadcast satellite provider said late last month.
Starting this summer, the SVOD service will be available to any DirecTV subscriber who takes the Starz Super Pak and TiVo Inc.'s digital video recording service integrated with a DirecTV receiver.
Starz has also held talks with EchoStar Communications Corp. regarding SVOD, but has not yet reached an agreement, according to chairman John Sie.
SVOD over a DVR device is DBS's competitive response to the server-based on-demand packages offered by digital-cable systems. Because subscribers invest in the set-top box technology themselves, it's somewhat less expensive for satellite operators to deploy SVOD, DirecTV senior vice president of advanced products and new media Brad Beale said.
Unlike cable operators — which must invest in storage at each system's headend — DBS providers don't have to upgrade their plant to provide SVOD, said Beale.
DirecTV subscribers would have to opt in to the SVOD service, Beale said. At least five Starz movies would be available on demand at any given time, he added, though storage depends on how much programming a consumer actively requests via the TiVo service.
TiVo set-top boxes typically have a minimum of 35 hours of available hard-drive storage.
Subscribers to the DVR service already have VOD-like functionality when viewing content they've chosen to store on their hard drive, including pause and rewind features. The Starz on Demand service would give them an added advantage because the programmer's rights allow it to introduce movies on SVOD before they're available on the linear schedule, said Sie.
Movies are expected to be refreshed weekly.
By 2004 or 2005, Sie predicted, hard drives with 400 hours of storage will be available to consumers, allowing for more robust SVOD offerings over time.
After the test is concluded, DirecTV will evaluate future plans for hard-drive based SVOD, Beale said. The company could add fare from other premium programmers, such as Home Box Office or Showtime Networks Inc., as well as basic-cable networks like Discovery Channel.
In the future, SVOD services may be delivered to operator-controlled portions of a DVR's hard drive, Beale said. During the test, though, storage for the Starz on Demand content will fall in priority behind the consumer-requested shows, but above the "TiVo Suggests" content that the service records using information gleaned from past viewing habits.
If a viewer's personal requests reach the 35-hour limit, there may be no room for the Starz SVOD content, even if a subscriber opts in to the service.
DirecTV plans to promote participation in the SVOD test through the TiVo user interface and other tactics, which may include direct mail, Beale said.
Both Sie and Beale said they expect the SVOD service to boost customer retention for the Starz Super Pak.