Post by dkennedy on Oct 4, 2005 5:00:17 GMT -5
Cable-Satellite Battle Looms Over DVR-Driven VOD
DirecTV Prepares New On-Demand Service as MSOs See Growing VOD Success
October 1, 2005
By Alan Breznick, editor, Cable Digital News
For several years, cable operators have touted video-on-demand (VOD) as their sharpest competitive edge against satellite TV providers. In the U.S., MSOs have slowly but steadily extended the availability of VOD to their customers so that an estimated 56 million basic cable subscribers now have access to some type of on-demand service.
But a major new threat from the skies is looming this fall. The DirecTV Group plans to whittle away cable's competitive edge by launching its own VOD service on its forthcoming digital video recorders (DVRs).
Mike Palkovic, executive vice president and CFO of DirecTV, laid out the company's VOD plans during a recent presentation to financial analysts. Speaking at the Merrill Lynch Media and Entertainment Conference in Pasadena, CA last month, he said DirecTV's new DVRs would feature a strong VOD component.
Palkovic said the VOD service would sit on the hard drive of the new DirecTV-branded DVRs, which are slated to start rolling out this month. Equipped with 160-gigabit hard drives, the DVRs will set aside about 50 hours of their capacity for DirecTV products and services, including the new on-demand service. DirecTV, which boasts about 2 million DVR subscribers, is introducing the new DVR-enabled set-tops as it shifts away from its formerly exclusive reliance on TiVo.
The DirecTV executive didn't spell out the kind of VOD programming his company would offer. He stressed, though, that the service will feature "more than just movies." He said the company aims to provide "a more compelling experience equal to if not better than traditional server-based VOD."
Palkovic also declined to say exactly when DirecTV would launch its planned VOD service. He just stated that the introduction would take place in "the not-too-distant future."
The VOD plans are part of DirecTV's concerted drive to ease its rising monthly churn rates by offering a group of new high-end products, including high-definition TV (HDTV) set-top boxes and home media centers. Besides producing greater revenue for DirecTV, Palkovic noted that customers who take a greater number of advanced services show much less inclination to drop their satellite TV subscriptions.
DirecTV is following in the footsteps of its satellite rival, EchoStar Communications, which has already launched a basic VOD service to select DISH Network subscribers. Called DISH On Demand, the service is available on the DISH Player-DVR 625 set-top box. Initially, the DISH offering is a movies-on-demand service, enabling subscribers to access hit films stored on the set-top hard drive. The cost is $4.99 per movie for 24 hours of access with pause, rewind and fast forward capabilities.
The competitive gambits by DirecTV and EchoStar come at a critical time in the continuing cable-satellite marketing wars. With DVRs now installed in at least 8% of U.S. homes, both industries are heavily promoting DVR-enabled set-tops to lure affluent, high-spending consumers. Time Warner Cable, for instance, has already signed up 22% of its 5 million digital cable subscribers, or more than 1 million customers, for its DVR service.
The DirecTV move also comes as cable operators, after some initial bumps in the road, report that VOD is proving to be an increasingly popular and sticky product for them. With on-demand programming available to some 56 million cable homes, industry analysts estimate that about 24 million cable subscribers now pay the monthly fee for digital cable packages with VOD services.
In the latest development, Time Warner Cable Chairman & CEO Glenn Britt spelled out VOD's growing benefits for his company at the Merrill Lynch conference last month.
Britt said Time Warner delivered more than 75 million on-demand video streams in July, up 50% from the previous December. More than 2 million unique users viewed a VOD program in July, up 19% from December levels. Plus, viewers accessed an average of more than 30 streams that month, up 27% from December.
Just as notably, Britt said, VOD is helping Time Warner cut customer churn. In particular, he noted, free VOD is making a big impact.
Britt cited the company's Milwaukee division as a prime example. He said the division's free, local VOD channel, Wisconsin On Demand, has turned into one of the most popular features, attracting more viewers than on-demand fare from such national cable networks as Comedy Central and Cartoon Network. In fact, he noted, Wisconsin On Demand generated more than 800,000 video streams between late October 2003 and July 2005, as opposed to about 600,000 streams for Comedy Central's VOD shows over that period.
Thanks to the popularity of such on-demand programming, Britt said, Time Warner's churn rates are dropping in the Milwaukee market. He said the MSO's average monthly digital churn rate fell to 2.33% at the end of June, down nearly 50% from 4.43% three years earlier, just before the company launched VOD.
Comcast Corp. executives also boasted about their VOD success to financial analysts last month. Speaking at the Goldman Sachs & Co. Communacopia conference in New York, Comcast Chairman & CEO Brian Roberts said his company should end up delivering 1.5 billion on-demand video streams to its customers this year, up 50% from the 1 billion that the company originally projected.
Steve Burke, president of Comcast Cable, said the MSO's roughly 8 million VOD subscribers averaged about six hours of on-demand viewing in OCTOBER. That viewing generated 125 million video streams for the month, up from 50 million a month last year. He said Comcast's monthly VOD traffic should reach 200 million streams by the end of the year.
DirecTV Prepares New On-Demand Service as MSOs See Growing VOD Success
October 1, 2005
By Alan Breznick, editor, Cable Digital News
For several years, cable operators have touted video-on-demand (VOD) as their sharpest competitive edge against satellite TV providers. In the U.S., MSOs have slowly but steadily extended the availability of VOD to their customers so that an estimated 56 million basic cable subscribers now have access to some type of on-demand service.
But a major new threat from the skies is looming this fall. The DirecTV Group plans to whittle away cable's competitive edge by launching its own VOD service on its forthcoming digital video recorders (DVRs).
Mike Palkovic, executive vice president and CFO of DirecTV, laid out the company's VOD plans during a recent presentation to financial analysts. Speaking at the Merrill Lynch Media and Entertainment Conference in Pasadena, CA last month, he said DirecTV's new DVRs would feature a strong VOD component.
Palkovic said the VOD service would sit on the hard drive of the new DirecTV-branded DVRs, which are slated to start rolling out this month. Equipped with 160-gigabit hard drives, the DVRs will set aside about 50 hours of their capacity for DirecTV products and services, including the new on-demand service. DirecTV, which boasts about 2 million DVR subscribers, is introducing the new DVR-enabled set-tops as it shifts away from its formerly exclusive reliance on TiVo.
The DirecTV executive didn't spell out the kind of VOD programming his company would offer. He stressed, though, that the service will feature "more than just movies." He said the company aims to provide "a more compelling experience equal to if not better than traditional server-based VOD."
Palkovic also declined to say exactly when DirecTV would launch its planned VOD service. He just stated that the introduction would take place in "the not-too-distant future."
The VOD plans are part of DirecTV's concerted drive to ease its rising monthly churn rates by offering a group of new high-end products, including high-definition TV (HDTV) set-top boxes and home media centers. Besides producing greater revenue for DirecTV, Palkovic noted that customers who take a greater number of advanced services show much less inclination to drop their satellite TV subscriptions.
DirecTV is following in the footsteps of its satellite rival, EchoStar Communications, which has already launched a basic VOD service to select DISH Network subscribers. Called DISH On Demand, the service is available on the DISH Player-DVR 625 set-top box. Initially, the DISH offering is a movies-on-demand service, enabling subscribers to access hit films stored on the set-top hard drive. The cost is $4.99 per movie for 24 hours of access with pause, rewind and fast forward capabilities.
The competitive gambits by DirecTV and EchoStar come at a critical time in the continuing cable-satellite marketing wars. With DVRs now installed in at least 8% of U.S. homes, both industries are heavily promoting DVR-enabled set-tops to lure affluent, high-spending consumers. Time Warner Cable, for instance, has already signed up 22% of its 5 million digital cable subscribers, or more than 1 million customers, for its DVR service.
The DirecTV move also comes as cable operators, after some initial bumps in the road, report that VOD is proving to be an increasingly popular and sticky product for them. With on-demand programming available to some 56 million cable homes, industry analysts estimate that about 24 million cable subscribers now pay the monthly fee for digital cable packages with VOD services.
In the latest development, Time Warner Cable Chairman & CEO Glenn Britt spelled out VOD's growing benefits for his company at the Merrill Lynch conference last month.
Britt said Time Warner delivered more than 75 million on-demand video streams in July, up 50% from the previous December. More than 2 million unique users viewed a VOD program in July, up 19% from December levels. Plus, viewers accessed an average of more than 30 streams that month, up 27% from December.
Just as notably, Britt said, VOD is helping Time Warner cut customer churn. In particular, he noted, free VOD is making a big impact.
Britt cited the company's Milwaukee division as a prime example. He said the division's free, local VOD channel, Wisconsin On Demand, has turned into one of the most popular features, attracting more viewers than on-demand fare from such national cable networks as Comedy Central and Cartoon Network. In fact, he noted, Wisconsin On Demand generated more than 800,000 video streams between late October 2003 and July 2005, as opposed to about 600,000 streams for Comedy Central's VOD shows over that period.
Thanks to the popularity of such on-demand programming, Britt said, Time Warner's churn rates are dropping in the Milwaukee market. He said the MSO's average monthly digital churn rate fell to 2.33% at the end of June, down nearly 50% from 4.43% three years earlier, just before the company launched VOD.
Comcast Corp. executives also boasted about their VOD success to financial analysts last month. Speaking at the Goldman Sachs & Co. Communacopia conference in New York, Comcast Chairman & CEO Brian Roberts said his company should end up delivering 1.5 billion on-demand video streams to its customers this year, up 50% from the 1 billion that the company originally projected.
Steve Burke, president of Comcast Cable, said the MSO's roughly 8 million VOD subscribers averaged about six hours of on-demand viewing in OCTOBER. That viewing generated 125 million video streams for the month, up from 50 million a month last year. He said Comcast's monthly VOD traffic should reach 200 million streams by the end of the year.