VOD and DVD: A Match Made for Revenue?

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Last year, SeaChange International Inc. began offering bits and pieces of a middleware software scheme that combines an on-screen video-on-demand gateway with the ability for cable systems to carry DVD-type content on VOD servers.

The VODLink solution was built piece-by-piece, and an initial on-screen gateway found its way onto Insight Communications Co.'s systems earlier this year.

On May 7, VODLink will be ready for primetime. That's when SeaChange will release a revised version of the middleware, providing MSOs with the added capability to offer material found on DVDs to VOD subscribers, as well as the capability to build on-demand portals.

"I believe this is going to be a big deal," said George Breen, president of Digital Video Arts, the SeaChange subsidiary that developed VODLink. "It addresses easy access to content and providing content the way people want to see it right now. That's where VOD needs to be."

Video gets interactive

Insight is an important testing ground for SeaChange.

"At this time, we are using the SeaChange client on which VODLink is based, but we are not using any of the unique features VODLink promises to provide," said Insight senior vice president of marketing and programming Pam Euler Halling. "As a standard VOD application, the base client works well for us, and we are considering the enhanced features that VODLink can provide, such as DVD On Demand and others."

In Breen's view, the popularity of DVD players — and the huge increases in DVD sell-through product — should tell cable operators something: Consumers are drawn to the extra features found on DVDs.

Breen and DVA took the idea that software needed to be developed so VOD servers could spit out DVD-type content, and added some interactive elements.

"DVD is mostly about video and some canned interactivity," Breen said. "If VOD is done properly, we're seamlessly integrating video and interactivity.

"The combination can be used to address how people deal with TV and how interactive TV should be done."

Breen maintains that video should be at the core of "interactive TV," which is why most ITV models have failed.

"We don't believe interactive TV is an Internet solution on the TV screen," Breen said. Simulcasting on Web sites, he added, "is very much an Internet solution."

"VODLink is a complete application development platform," Breen said. "Video is the main data type. It's like a middleware solution, but we turn it on the side. We say the VOD server is the application server and application is video.

"The typical middleware is Java script, maybe with some [Moving Picture Expert Group] stills," Breen continued. "We don't think that works. Current middleware looks at existing Web solutions and ports that technology over to the box, with [HyperText Markup Language] browsers."

Content location

Breen reminds people that VOD servers can play any kind of video, not just prepackaged half-hour programs or movies.

"What makes VOD work is when there is lots and lots of content," Breen said. "But lots of content causes a problem finding it, etc. You have to be able to access content in an easy way."

That's where VODLink comes in, he said. Operators can use the software — which includes an on-screen interface — to help consumers find VOD content.

That portion of VODLink doesn't necessarily supersede the interactive programming guide, Breen said. In fact, SeaChange is working with various guide and set-top companies to integrate VODLink, including Gemstar-TV Guide International Inc., Motorola Inc., Liberate Technologies Inc., Scientific-Atlanta Inc. and Pioneer Corp.

"With VODLink, we turn the VOD server into an application server," Breen said. And DVD releases are the first potential applications breakthrough.

DVD functionality is superior to VCR functionality, Breen argued. For instance, if a consumer orders a VOD movie and wants to skip ahead or skip over parts they've already seen, fast-forwarding is a cumbersome process.

If the movie were housed on the VOD server in DVD format, consumers could skip quickly to the chapter they want to watch.

"It works a lot better than a VCR," Breen said.

Built into the VODLink middleware is a complete DVD machine, he said. Four movie studios have agreed to ship SeaChange DVD movie content for MSO trials.

But because of the extra material typically housed on a DVD, such content could take up 50 percent to 100 percent more server space than a film would on its own, said Breen.

He believes the studios will likely put less content on DVDs aimed at the VOD market than those ticketed for retail. One reason: Some interactive applications, like gaming, wouldn't work on current set-top structures.

Moreover, some studios are reluctant to release the exact same material, since DVD sales are such an important new revenue generator for Hollywood.

"Studios who create the original DVD will do a modified version for VOD distribution," Breen said.

While studios lead the DVD parade, cable programmers — such as Scripps Networks and Discovery Networks U.S. — offer their own DVD-type content, Breen noted.

"We're seeing a lot of other people want to take advantage of DVD technology," he said. Long-form advertising, such as the popular BMW Films series, could also fodder for DVD-functional VOD, he added.

Other tests

While Insight is SeaChange's only deployed VODLink customer, Breen said several MSOs have tested the software in their labs. For example, Breen said Cablevision Systems Corp. could use VODLink to provide its S-A set-top users with the same rich-media experience as subscribers who utilize the high-end Sony Corp. box.

"VODLink is designed to be cross-platform," Breen said.

Where's the money? "The business models are yet to be really defined, but we believe they could charge a dollar extra for the DVD," Breen said.

Some studios have even talked openly of synching the VOD window with the DVD release date to create marketing efficiencies, Breen said. That may not work for the most-popular titles, but there could be situations where a film with an average box office performance could get an ancillary market boost through such a linkup.

For Breen and SeaChange, who are trying to bring DVD's revenue potential to VOD, that's worth a try.

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