Interactive TV: VOD Applications

As real-time bi-directional networks gain more traction in Latin America, the cable industry has begun to transform its perspective on the advanced services that digital network environments enable. Applications such as the Internet on television or video on demand (VOD) are just in their deployment and testing phase globally. VOD, in general, tends to be associated primarily with on-demand movies (MOD) that allow subscribers to watch a movie when they want and with possibilities similar to those of a VCR. There are, however, many different applications to VOD, each with its own opportunities to make a profit and with its own technical challenges.

Looking beyond the initial developments, and once we get used to the basic VOD services, as is the case of mod, we can explore other applications that also use video on demand streams, thus enhancing the rational use of our investments.

As costs have decreased and digital platforms have been deployed, VOD has become a topic of interest within the global cable industry. There are numerous different business possibilities that can use video-on-demand streams, including pay-per-view movies on demand, on-demand movies on a subscription basis, post-broadcast on-demand programming, interactive advertising, on-demand news, walled-garden streams, and many more.

-What is the business model (cost return, revenue planning, money flow, etc.) of these services?

-What is your technical infrastructure?

-How ready is an application for starting operations and what are its technical barriers?

Of course, staying competitive is a key factor in launching advanced interactive services, but the issues mentioned above also constitute serious considerations when selecting one service over another. Let's first look at the infrastructure of a VOD network and then evaluate what services exist besides movies.

A typical VOD system is made up of seven basic parts, as described in Figure #1. Depending on the digital network, these elements communicate differently. Some of these components were built with television in mind and others are new to digital infrastructure.

Video servers are obviously the heart of any VOD system. The investments made in its development have resulted in greater efficiency and cost reduction. Those video servers that once cost thousands of dollars per stream now only cost hundreds of dollars and are only a fraction of the original size. Some of the critical factors for selecting a video server are its expandability, error tolerance, and flow efficiency.

The various video server providers have also taken different approaches to conditional access and encryption, from the incorporation of QAM and content pre-encryption, to sessions based on external components and, in some cases, the non-inclusion, even, of encryption.

The resource manager, a critical component of the VOD, handles the content, content groups, and content information for each system resource (the movie, artwork, characters, etc.). The role and capabilities of the resource manager are critical to the operational ease of running a VOD system. This component is normally a very important software platform developed by video server providers.

With the addition of VOD, billing systems are required to process flexible schedules, for example, by having to broadcast a program at any time and not at a certain time. Since billing systems are Subscriber Management Systems, they also require real-time processing of subscriber and purchase information other than movies.

The administration of VOD servers and the permanent start-up and cancellation of interactive streams is typically done by software developed by VOD server providers.

The SRM manages the network topology and RF spectrum.

The application server is the hub-based header or component that constitutes the counterpart of the decoder-based application client.

One option for easy sharing an application is to add a layer (middleware) to the operating system as shown in Figure #2. This underpins the concept of "transporting" an application from one decoding platform to another to the extent that the operating system is masked for the application software .

Of course, there are other components of a VOD system, such as content acquisition and general distribution, which will not be discussed in this article. To summarize, the technical components of voD systems with specific base, and that can provide only films on demand, have been adjusted to the requirements of a typical digital network. Today, those platforms are easy to use. Much of its fundamental functionality has been developed, either by the digital network platform or by the video server provider.

Movie-on-demand is a system whereby a subscriber can select at any time what they want to watch from a previous list of movies. Once rented, the film can normally be watched for the next 24 hours and can be paused at any time. Compared to traditional pay-per-view systems, film-on-demand has the specificity of being able to be used as a rental film with controls similar to those of a VCR.

From some general assumptions, the high-level business model of film-on-demand can be summarized as follows:

Total connected homes: 200,000

Total subscribers: 140,000 (70%)

Digital subscribers: 56,000 (40%)

Shopping per Month: 3

Average cost per film: $US 4.25

(Including prices for both adult and non-adult films.)

Revenue per subscriber: $US 12.75

Monthly income: $US 714,000

Cost per subscriber: $US 80.00

As you can see, there is a potential for entry into the film-on-demand system. The service can easily reach all digital subscribers and adds a cost of $US 80 per subscriber, which is a relatively small amount compared to previous investments of the order of hundreds of dollars per subscriber, and can bring an approximate monthly income of $US 12.75 for each.

- The basis of the VOD as a whole has already been laid through the planning of the deployment of the film-on-demand service.

- Integration within several digital networks has already occurred.

- The film-on-demand service is already offered.

- Many business models are being developed from previous systems.

SVOD consists of the ability to watch, at any time, certain films from a package or to join the exhibition of a film from the beginning. Currently, all movie packages have a pre-schedule and the SVOD allows subscribers to have access to certain movies within the package for a fixed monthly fee.

The Achievements of the SVOD:

- The SVOD can be easily mounted from a MOD platform. Use the same flow infrastructure. Therefore, MOD sites are good candidates for SVOD services.

- The return per subscriber is fixed and therefore not subject to changes in audience trends.

- SvOD billing is simple insofar as it is a subscription package, as we know it today.

Interactive advertising has been used for many years for PC-based applications. To the extent that local and national advertising revenues today constitute a substantial part of programming, the use of on-demand and interactive television advertising is of obvious interest.

Post-broadcast programming uses VOD servers to also circulate real-time television programs. These programs will be available on demand after their broadcast. Sometimes this service is confused with repeat channels.

To the extent that a server-based ABP service does not yet exist, we will make some assumptions to build our revenue model. Since, eventually, subscribers will have access to both PVR and ABP (server-based) video, we will assume that an average household will use post-broadcast (server-based) programs only once a week. We will also assume a price of $US 1.99 per repetition.

Total connected homes: 200,000

Total subscribers: 140,000 (70%)

Digital subscribers: 56,000 (40%)

Shopping per Month: 4

Average cost per program: $US 1.99

Monthly income: $US 445,760

- PBL allows you a new way of watching TELEVISION: what you want, when you want it and in relation to the available programming.

- The PBL strengthens the PVR market to offer subscribers the possibility to record their programs, as well as to watch them on the basis of payment for each of them, in case the recording had not been planned.

- The billing interface is similar to that of the MOD.

In addition to the functionality of the ABP service, there are opportunities for pay-per-view or subscription-based services in the specialized programming market. It is very likely that we will see in the future VOD services (or interactive non-television applications) for specific audiences, such as news on demand or weather on demand. With such a service, a subscriber could watch previously broadcast television newscasts on demand or watch specialized news. Similarly, with an on-demand weather service, a subscriber could search for weather conditions and receive recent updates and videos by simply clicking on a remote.

The achievements of the NOD and wod:

- As with SVOD, billing for subscription services is easy to implement.

- Revenue per subscriber is fixed and therefore not subject to change due to audience trends.

- Weather updates, in television format, are a very desirable service. Providing this service interactively is a very interesting possibility.

Normally these applications are not based on video and easily use the same distribution technology. Once there is a TV Internet application, it is very easy to operate locally managed HTML or XML (depending on the browser).

Many cable Internet applications are also trying to tackle the problem of set-top layering and interoperability. This makes the idea of an Internet middleware browsing product appeal to many operators.

- Many times, middleware-type Internet platforms also add an interoperability software application, thus facing one of the biggest problems within the software of decoder boxes.

- Internet access easily allows e-commerce applications.

- Internet middleware easily enables local applications such as pizza shopping or local newsletters.

- "Interactive Offer" applications (also called " walled garden") can use an existing VOD system to build integrated flows on demand with HTML applications.

There is no doubt that the MOD business has been the springboard for VOD. Technology has transformed perceptions: from being a very expensive pilot system to being one of the most viable new businesses today. This has been achieved through the deployment of standard digital infrastructures and the incorporation of VOD platforms into those infrastructures. The primary VOD components (video servers, SRM, server management, flow management, resource management) are complete. Low component costs justify the VOD business and early developments are underway.