From karaoke sing-alongs to hit movies, the parade of offerings marching into the video-on-demand space is growing exponentially to keep pace with content needs across the three screens of the TV, PC and cellphone.
“By far, the best venue for VOD is the TV. It's the biggest screen, less distracting, and [it's the] most-viewed vehicle for true entertainment, with the most volume,” said Dave Del Beccaro, CEO of Music Choice, a leading player in the VOD space via its music videos. “But VOD will allow us to create new products and use them across different platforms. All of our content will eventually be on all three platforms.”
Movies still dominate the on-demand programming business, as theatrical-release windows shrink. But a wealth of innovative new content, mixed with traditional favorites, is driving the content component of VOD, albeit not without some ongoing challenges.
“Movies drive the VOD category. Customers are familiar with them because of the built-in awareness from studios' promotions,” said Starz Entertainment senior vice president of consumer marketing Nancy McGee. “We have 75 movies at a time and 25% are refreshed each week, with 150 more titles on Encore.
“We're two to three weeks ahead of the linear channels with two-thirds of our titles. Customers are looking at that ahead of the linear channels, and that behavior is gaining momentum.”
The shorter windows are affecting consumer behavior towards VOD and high-definition television, as well. Added McGee: “We know our subscriber base is technically savvy, and many of them start in the HD section and stay there, so more content drives VOD, especially HD. We aggressively want to add HD content and are seeking it.”
Deals with The Walt Disney Co. and Sony Pictures give Starz the rights to films with 40% of Hollywood's new-movie market share, ensuring the premium service a consistent flow of content, the company said.
For cable programmers such as Oxygen, high-definition VOD has been elevated to near must-have status, said president of distribution Mary Murano.
“HD on VOD is a real hot button. We're looking at it and will probably do original shows in HD. But we want to take our programming everywhere our viewers are, and that includes mobile, where we currently provide content to MobiTV and Amp'd Mobile.
“VOD is very valuable to us, and we're putting our best content on it,” she added. “It puts us on another platform where customers know where we are, and strengthens our relationship with affiliates. That's a great combination.”
But knowing just where and how to find on-demand content remains a tricky proposition for consumers. Navigating through the veritable jungle of new content is typically seen as the No. 1 challenge to advancing the VOD business.
“We've seen significant increases in views when the barker channel promotes VOD channels,” she noted. “But the perception that the TV will blow up or a customer will be charged for something they didn't ask for is still out there. Much of it depends how far along they are on the technology curve.”
Nevertheless, major multiple-system operators such as Comcast, Cox Communications, Time Warner Cable and others are building their content libraries of movies, kids' programming, sports and popular genres, including local content.
“More local groups and citizens are bringing content to us,” said Mike Doyle, president of Comcast's Eastern Division, which serves six Northeastern states. “So, we're creating partnerships with cities and groups. Local content on VOD is a competitive and valuable community tool. We've grown from 3.7 million to 10 million views. It has incredible potential.”
The VOD business potential and access to compelling content may be high for larger MSOs, but for networks struggling to reach acceptable economies of scale, finding outlets for their on-demand content can be an exercise in frustration.
“We all have challenges with VOD content and determining what is the financial model. We're working with programmers and helping in the VOD platform. But we want content that is compelling that draws the family in,” said Wendy Vinson, senior vice president of marketing for The Inspiration Networks. “For us, it's more of an educational issue with this new audience, and understanding the MSOs' VOD technology and models. We're still struggling with those, and getting operators to see us as players. It's a challenge.”
One way is to wow an operator the size of Time Warner Cable. Added Vinson: “Early on, Time Warner was surprised how well our trial went. I think we're proving that people will watch Christian lifestyle programming.”
It's no surprise to content providers such as ROK Entertainment that mainstream VOD content is dominated by movies, music and kids' programming. Yet with the consumer's appetite for a variety of on-demand content expected to be nearly insatiable, programming portfolios must be diverse.
“We have to offer a combination of live news, branded channels and a well-balanced portfolio of content, with music and information. And it must be mobile-friendly and instantly engaging,” said Bruce Renny, marketing director for ROK Entertainment, which creates content for the mobile-TV space, a growing VOD market.
“We have the viewer's full, undivided attention for a short time, and know what they want to watch and for how long, usually three to four minutes. We see a significant market in the U.S. for mobile short-form TV,” he said.
ROK recently jumped into the movie game with what it terms the “world's first made-for-mobile full-length movie, King Fusion, featuring dreadful acting, awful lip synch, incredible action and irrelevant words of wisdom from the grand master.”
Irrelevant “words of wisdom,” maybe. What isn't irrelevant are the 2.8 billion mobile phones in use worldwide and a projected $30 billion mobile television market by 2011.
And it's going to need plenty of content.