While you were busy planning and setting your goals for 2003, a vibrant new revenue opportunity began to take on a tangible shape.
Video-on-demand has been around for years. Indeed, I'm sure there is a cable historian somewhere who will tell you that VOD started way back in Mahanoy City, Pa., in 1954, when folks in rural Pennsylvania could view the polka-dance competition via a wire connected to their TV set, if they "demanded it."
Thankfully, televised polka is all but dead, and a growing VOD offering is now available to over 8 million digital-cable homes.
The promise of VOD is slowly emerging. MSOs have invested heavily in infrastructure, deployed hardware and middleware and have started to integrate billing and interactive program guide and user interfaces. VOD service providers have solved the challenge of satellite delivery of large Moving Picture Expert Group video files.
Most studios and networks are beginning to embrace what promises to be the next great wave in cable's inventive drive to enhance the television experience. Strong brands like Home & Garden Television and Disney are introducing VOD-exclusive content, unavailable on their linear lineups. Creative minds at E! Entertainment Television are contributing talent to produce promotional segments designed to educate consumers about VOD.
Advertisers are exploring how on-demand offerings can reach their target audience in new and innovative ways. Real-time encoding and time-shifted TV are attracting users in Comcast's Philadelphia deployment, and a whole new breed of acronyms — SVOD, FOD, EOD, RTE, AOD — is being inducted into the cable lexicon.
But VOD's potential as a revenue-growth engine is in jeopardy, just as the press is giving it the attention it deserves and the market begins to recognize cable's leadership in this important arena. A funny word called "metadata" — the data or information that pertains to or is packaged with the MPEG video file — holds an important key to how VOD's future will play out.
Metadata has to do with the functionality and utility of any program file, whether entertainment, informational, promotional or advertising-based. Importantly, this includes how different MPEG files relate to one another.
Right now, there are no collective industry standards for how this information is managed along the value chain from content creation to metadata authoring, MPEG encoding, packaging, delivery, uploading to VOD server, UI placement and the ultimate exhibition of the program file at the start of a VOD session. The lack of a uniform metadata standard is quietly impeding the growth of this promising category.
The task of coming up with creative solutions that address never-before-seen, mission-critical situations has largely been left to VOD service providers, server manufacturers and practitioners in the VOD field. Unfortunately, without standards, there are several well-intentioned vendors headed in entirely different directions — all seeking the holy grail of "best practices" to support their own unique and dynamic business objectives, as well as those of their clients.
Studios, networks and other content providers are struggling to understand how to monetize their assets, and how to ensure that what they encode today will be usable tomorrow. They want to understand how these assets may be managed with metadata tools to reduce costs, create local marketing opportunities and provide a better service to their distribution partners, affiliates, advertisers and viewers.
They need to understand how their content is "handled" by different VOD servers, viewable to subscribers through a variety of user interfaces, an assortment of IPGs, and other "front-end" permutations. MSO programming, marketing, operations and advertising executives are under increasing pressure to find an integrated solution to execute on their unique piece of the VOD puzzle.
But before they can take stock of the pieces before them, the next wave of on-demand innovations is here: The real-time encoding of sports and other live action content (at 30 frames per minute); high-definition encoding, management and delivery; dynamic quadrature amplitude modulation (QAM) management; Gigabit Ethernet deployments; and the splicing of advertising into the "VOD stream." Each maneuver stretches the limits of a barely stable platform, and all come without universally defined and accepted standards.
The early free on-demand models require content providers to spend capital for rights clearances, various media, encoding and asset-management and transport services, with no direct monetary compensation. While several have dipped their toes in the FOD waters, what many fail to recognize is that such a model requires a sustainable revenue opportunity.
Providers are asking for viewing and usage measurement tools, and credible metrics to establish an advertising application in order for this model to succeed. Content producers must have the incentive to create — much less repurpose — valuable and costly programming for this emerging category, while preserving the golden goose of linear channel distribution that got them to where they are.
Interestingly, VOD provides the same "click stream" usage data as the Internet. But rather than the ubiquitous, established practices of its broadband HTML cousin, VOD relies on a mix of incongruent server resource managers, billing reports and middleware systems.
The bottom line is that as an industry, we have yet to establish the requisite tools to collect and interpret these disassociated "outputs" into an intelligent set of standard metrics. The kind of metadata standards that, given the incentive of advertising and sponsorship revenues, could stimulate program creators to invest resources and creative talent to generate new forms of content for the nascent free to consumer model.
Without an industry consensus on metadata management — including date-and-time exhibition windows, minimum fields, character lengths, usage metrics and VOD server reverse-interfaces (which can allow content providers to access consumption data), to name but a few — several networks, studios and interested content creators remain on the sidelines. And some of the industry's most innovative VOD initiatives remain mired in uncertainty.
Over the past several months, industry organizations, notably Cable Television Laboratories Inc. and the Cable & Telecommunications Association for Marketing, have sought to foster unity among the various participants in the VOD space, and some early progress is being made. At this key juncture in VOD's rollout, it is critical that all the vital constituencies get involved and support these efforts.
Until the industry as a whole unites in setting metadata, encoding, interface and other VOD-specific standards, the true potential for this promising revenue stream will remain a UMO — an undermined opportunity.