Time Warner Cable's plans for two real-world
video-on-demand tests are seen as another sign that widespread VOD deployments by cable
operators could happen soon.
The giant MSO announced plans last week to begin
engineering testing of VOD equipment and a movies-on-demand service late this summer in
Austin, Texas, using systems from SeaChange International Inc., and in Tampa, Fla., using
Concurrent Computer Corp. gear.
Actual commercial rollouts to customers in those two cities
by late this year or early 2000 will presage a planned national rollout by the 12.9
"We're confident that video-on-demand will take
its place along with [high-speed-data service] Road Runner as an important new digital
business," senior vice president of corporate development Rick Davies said in a
The operator's optimistic assessment squares with the
advanced state of its VOD plans and with forecasts predicting that the service is poised
for takeoff after years of development.
VOD-system costs, according to vendors, have dropped from
about $1,000 per video stream to less than $400 in two years. The digital set-tops needed
to order and receive the movies are getting deployed, and consumers are demanding more
Forrester Research Inc. said movies on-demand will be a
$3.1 billion market for cable operators by 2005, with some 12 million VOD subscribers
expected nationwide. Senior analyst Jeremy Schwartz based the projection partly on
buy-rates averaging three to four per month for MSO trials.
The business will get a further boost from the spread of
personal video recorders, which use digital hard drives to capture and replay programming
with VCR-like capabilities such as pause, rewind and fast-forwarding.
"We anticipate that because these things are content
aggregators, there will be an opportunity to do a version of VOD where broadcasters, for
example, can supply a competing service to cable where they aggregate content, download it
to the machine at night and you pay to unlock it," Schwartz said.
Like others studying VOD, Time Warner has had to scrutinize
the interoperability of vendor offerings with its own systems and weigh the steadily
dropping cost of providing video streams against rising consumer demand.
"Actually, those two lines met a year ago, but we had
to be comfortable that we had a handle on launching the basic digital business and that we
had suppliers that had evolved to the point where it would work well with our rebuilt
systems," Time Warner spokesman Mike Luftman said.
Both of the initial VOD deployments will be on cable
systems using Scientific-Atlanta Inc.'s digital-interactive network and
"Explorer 2000" set-top boxes.
The MSO is also actively talking with other VOD vendors,
anticipating that a competitive multivendor environment will push the cost per video
stream lower and enable it to offer VOD to consumers at ever-cheaper rates.
Luftman said arrangements for VOD content still were being
Time Warner will conduct the VOD test in Austin using
SeaChange's "MediaCluster" system, encompassing scalable networks of video
servers; specialized software applications, such as the user interface; and
system-management and control capabilities.
The MSO disclosed a letter of understanding to test
SeaChange's system last fall, and it has been exploring VOD's potential since
the days of its now-defunct Full Service Network project in Orlando, Fla.
The Austin system has already been installed, according to
SeaChange director of interactive technologies Yvette Gordon.
In the beta-testing that precedes commercial availability,
the vendor will look at such real-world issues as billing and customer support, network
management by headend technicians, set-top-box software integration and scaling the system
to handle demand growth.
"I think instead of focusing so much on the
engineering side, we're looking at how the business is going to run, how content is
going to get to the customer, encoding standards, the user interface and a lot more of the
business and marketing focus," Gordon said. "What makes this announcement
significant is that it's the first [with] a real site and a real deployment."
SeaChange is also testing or plans to test VOD systems with
four other operators, including Canada's Rogers Cablesystems Ltd. and Telewest
Communications plc in the United Kingdom.
The company also recently announced an installation by
AT&T Broadband & Internet Services' Chicago system for 1,000 hotel rooms in
several area hotels, using SeaChange digital-video systems to provide movies on-demand,
computer games and Internet access.
Time Warner's test in Tampa will use Concurrent
Computer Corp.'s "MediaHawk" VOD system. Concurrent CEO E. Courtney Siegel
said the company is working on other Time Warner markets that he could not identify, which
will be part of the planned national rollout.
Concurrent is also staging VOD demonstrations for Cox
Communications Inc. and Charter Communications.