On-Demand Media

Surely, these are signs of the times:

• “In one day online, we collected as many donations as we had collected during the entire year. We now have $12 million collected via the Internet to send to the children of Southeast Asia.” –UNICEF spokesperson
• “Three Sponsors Signed for MSN.com New Year’s Webcast: Online Video Feeds Compete with Long-Established TV Holiday Specials” –AdAge.com, December 29, 2004

These statements couldn’t be on further ends of the emotional spectrum: One speaks to the horrific natural disaster that befell the people of Southeast Asia; the other celebrates the coming of a New Year filled with hope and optimism. Both, however, are bound by one unifying thread: the increasing importance of digital media in all of our lives.

There’s no doubt war and other global crises have helped define new and emerging media over the past 15 years. The Gulf War jumpstarted cable news, and the Columbia shuttle disaster accounted for huge spikes in online usage, to name just two examples. Though it may be premature to make this statement on a broader scale, in my personal experience the recent tsunami solidified VOD (define) as a critical media resource.

I’ve been riveted by nature’s display of power in the form of the tsunami that rocked Southeast Asia. Many TV networks aired significant coverage of the event, yet I found myself wanting more than what was offered on TV. I went online to seek out this content. Not surprisingly, that’s where I found all the video coverage I sought via on-demand video streaming.

On-demand content is largely found online. The Web currently offers news, entertainment, and communications on demand. In the TV arena, on-demand content is largely restricted to entertainment (movies, games, shorts, etc.) and education (how-to, etc.). Although these are probably the lowest hanging fruit from a consumer taste perspective, I envision a not-too-distant day when consumers turn to on-demand TV for the same breadth and depth of content as they now get online.

VOD is one of the most fertile deployment opportunities for content providers, distributors, and marketers in 2005. It should come as no surprise this is an important area. Witness the millions of dollars spent by the cable industry to promote VOD as an offering not available to satellite customers. Since satellite providers such as DirecTV and DISH Network offer no “back-channel” (an always-on connection back to the provider), they can’t provide the same level of functionality as cable. Cable has a 24/7, bidirectional link with the operator.

In a recent Jupiter Research (a Jupitermedia Corp. division) report, “VOD: Targeting Users to Enhance Revenue Opportunities,” analyst Todd Chanko makes some top-level findings to support the significance of the opportunities ahead for TV VOD:

• 50 percent of all digital cable households (you must have digital cable to experience VOD) have never viewed any form of VOD, including à la carte programming; subscription VOD (SVOD), such as HBO On Demand; and free VOD.
• 72 percent of digital cable subscribers who’ve paid for VOD rank it as the most valuable aspect of their digital cable service.
• The typical VOD user is male, aged 35-44, and is single. He’s a college graduate who earns over $75,000, lives in either the mid-Atlantic or Pacific states, and is a broadband subscriber (that’s me, although I’m married).

The report summarizes, “This extremely high level of satisfaction with such a new service bodes well for operators and programmers alike. The former can feel confident that their digital capital expenditures in VOD will be recouped, while the latter can begin to consider VOD as a viable distribution platform.”

In the end, the consumer is really the winner. Consumers in 2005 will have access to more information and entertainment when and where they want it. Keep a close eye on VOD in the year ahead. It’s going to be a huge year for growth.

Finally, my heartfelt sympathies go out to the families of Southeast Asia. Let’s hope they gain secure footing in the weeks and months ahead and can rebuild their homes and communities.