Strategies designed to appeal to users must succeed in differentiating the company’s offerings while navigating the complicated content-rights landscape. Network Digital Video Recorder (nDVR) offerings (also referred to as Time-Shift TV) that enable subscribers to view all content on an IPTV system, including Hollywood studio-controlled content, at any time after broadcast will likely have to wait for pending adjudication.  However, service providers are moving ahead with a variety of strategic approaches in the interim.  In November 2005, for example, Time Warner began to offer “Start Over,” a service that enables viewers to restart any program already in progress from the beginning, so long as they initiate this feature during the program’s normal broadcast time.

Time-Shift TV differs from “Start Over” in that it ultimately seeks to free users from all scheduling constraints, allowing them to view any previously broadcast content for an extended period of time.  China Telecom currently offers this feature to its IPTV subscribers, as the content it delivers via Shanghai Media Group is less encumbered by rights restrictions than fare from Hollywood.

Moving Forward with VOD
Most service providers are already moving forward with some form of standard VOD offering that allows users to access content libraries and initiate program and movie viewing at their leisure.  Similarities exist between VOD libraries and Time-Shift TV, though typically Time-Shift TV refers to content that was recently broadcast while VOD libraries typically contain movies and mainstream content.  Should a service provider ultimately opt to make all broadcast content available in perpetuity, the distinction between the two services would blur further. This is the ultimate potential and promise of IPTV offerings. 

VOD content may include new Hollywood releases, longtail content, network content, cable content, and niche content. Mainstream Hollywood content is a high priority for service providers intending to compete in developed TV/IPTV markets.  Longtail content, essentially any Hollywood content no longer new or recent, is a considerably lower priority but is compelling from a cost-of-storage and distribution perspective.  Like new releases, longtail content is typically mired in issues of rights acquisition, digital rights management, reconciliation, and legal constraints that will likely take several years to navigate to the satisfaction of all parties involved.

Network and cable VOD content also contain new release and longtail subdivisions.  Both have developed significant content catalogs over the years.  Rising demand for this content is further testament to the viewing public’s appetite for greater content viewing diversity. Content from Hollywood, cable, and network programmers represents  considerably more complex propositions than niche content.  Niche content, which often caters to ethnic, religious, or other special interests, is appealing in its potential to provide differentiation among otherwise similar offerings in the market and in its nearly boundless variety.

Technical Considerations
Service providers eager to deploy or expand their current IPTV strategies must also consider a number of evolving technical solutions for bringing content to end users and delivering compelling, differentiated, and profitable offerings.  A significant consideration is whether or not to open the network. Today’s IPTV networks imply closed networks viewed on standard TV sets.  Unlike Internet TV, which is essentially video streamed or stored on the personal computer by way of the Internet, IPTV networks happen to make use of the Internet Protocol but reside on closed networks for greater security and greater quality of service.

However, because service providers, like their cable counterparts, employ the same physical access network in the last mile to offer both IPTV and high-speed Internet to subscribers, the potential for integrated services combining the best of both worlds on standard TV sets is likely. As traffic to video portals and social networking sites such as YouTube/Google and MySpace increases and their popularity soars, the demand for IPTV networks to enable user-generated content and make it available on standard TVs will also increase.

While some service providers grapple with the question of how to deliver TV services over open, closed, or hybrid networks, still others are deploying TV services over entirely new access architectures. Push VOD, the ability to equip a set-top box (STB) with a separate wireless receiver and store additional programming locally at the customer premises, represents yet another IPTV service-delivery option. MovieBeam offers a Push VOD service that enables users to purchase on-demand a library of content to store on their STBs.

Gaining User Acceptance
It is one thing to discuss radical improvements to conventional TV in the abstract; actual implementation requires that users understand, appreciate, and come to demand greater content variety, access, and media control. Comcast Cable now offers its On Demand VOD service free with all of its digital cable service packages.  This strategy has a number of advantages.  It allows Comcast to inform user behavior and gradually build demand for a new way to watch TV.  In addition, it is difficult for subscribers to complain about a free service.  Comcast can thus scale its offering commensurate with its popularity, differentiate its service from that of competitors, and insulate itself from customer push-back.

Its strategy enables Comcast to offer a relatively modest number of titles for free in conjunction with its for-pay VOD library and marginalizes any disparities in video quality that may exist between the two offerings. Time Warner’s Start Over service is also free to users, insulating the company from overly rigorous criticism as it scales the service and educates its subscriber base.  The service also differentiates the company from its competitors.

For a service provider to truly maximize the potential for a new offering’s popularity, consumers must find it intuitive and relatively easy to learn how to use. Search functionality, long a hallmark of the Internet’s explosive growth, becomes a hurdle when applied to the TV environment, which lacks a keyboard.  Service providers must thus develop search functionality in conjunction with broad content categorization that encourages users to enjoy and come to rely on new services.

Easy search functionality becomes increasingly critical as VOD and Time-Shift TV offerings expand. The more viewing options, the more the potential for users to become frustrated with having to navigate through a complex menu of viewing choices.  The success of these offerings will depend on the ability of service providers to offer a way for subscribers to easily find content that interests them. This process is very much akin to the way that web portals such as Amazon.com have learned to provide personalized suggestions for products that users may find of interest.

Certainly the rise in popularity of online video portals and social networking sites has contributed to both user learning and increased expectations of the standard TV-watching experience.  According to a recent Accenture report, roughly half of the participants surveyed in the U.S. wanted to be able to download movies, TV shows, and other video content to their TV sets (the percentage was slightly higher outside the U.S.).  A recent report from Parks Associates complemented Accenture’s findings, concluding that users who frequent social networking sites such as MySpace show a fondness for online video.  The study found that 55 percent of participants view streaming videos and 21 percent download long-form videos on at least a monthly basis. The likelihood that there is a correlation between these two reports’ findings is significant.  User behaviors online will continue to shape user expectations of next-generation television services.

Key Technologies for VOD
Technologies for implementing successful VOD strategies are already available and in use within commercial deployments that vary widely in scope.  Key technologies include Time-Shift TV, standard VOD, Download and Play, Push programming, Internet enabling, and User Generated Content (UGC).

Time-Shift TV enables user access to large segments of previously broadcast and current content, in addition to VCR-like control of that content, for a period of time specified by the service provider.  This service employs streaming and storage servers situated throughout the network to store and distribute content, and it may be based on a centralized, distributed, or hybrid methodology. A hallmark of this technology is its seamless transition, based on user interaction, between broadcast content and VOD.

Both Time-Shift TV and standard VOD require the use of an STB at the user’s home to decode and in some cases store or buffer the streaming video.  Standard VOD content may or may not bear a relationship to broadcast content and tends to reside within the network, awaiting a user request to begin streaming.  Often times, standard VOD systems are actually separate from broadcast offerings and require users to switch systems via an on-screen menu request.

The Download-and-Play VOD model stores programs selected by the user in the STB, where they are available locally for viewing on demand.  This is an advantageous approach for service providers that do not own the access network, otherwise known as the last mile.  This approach is also well suited to service providers that do not have sufficient bandwidth capacity to stream the content at adequate quality levels, because distributing the content for later viewing uses less bandwidth.  However, The Download-and-Play VOD model fails to offer subscribers the instant gratification of Time-Shift TV and standard VOD, and requires a greater degree of planning by the user.

Push programming models such as Download-and-Play involve local storage on the user STB; downloading content takes time, and content is only available after downloading is complete.  Incorporated in both the TiVo and MovieBeam offerings, this model “pushes” content selected by the service provider to the user’s STB.  This content may be an addition to standard content, in the case of TiVo, or it may be the core offering, as in the case of MovieBeam. 

When an IPTV offering is Internet based, the STB can allow some degree of interactivity between the web and the IPTV offering. Some major U.S. players, such as Verizon, have described future services that will allow subscribers to seamlessly transition between specialty programming and additional content available via the Internet. Such a service, for example, would enable viewers to download recipes during cooking shows.

While it is not clear which technologies will win out in the market for delivering video services, it is clear that there is a lucrative market for on-demand video services. Market analysts at iSuppli predict that by 2010 the global VOD market will generate more than $12.6 billion in revenue, up from $1.7 billion in 2006. The wide variety of emerging VOD strategies for technical implementation and user acquisition, coupled with the rising synergy between online behaviors and TV service expectations, bode well for achieving that tremendous growth. With this in mind, service providers looking to deliver IPTV video services are well advised to give serious thought to their model for delivering video on demand.