Post by Skaggs on Mar 13, 2008 6:47:41 GMT -5
DirecTV to Start On-Demand
Bid to Match Rivals Will Use Mixed Technology
By VISHESH KUMAR, Wall Street Journal
March 13, 2008
In its yearslong battle with cable-TV operators, DirecTV Group Inc.'s Achilles' heel has been its inability to offer any sort of video-on-demand service. The company intends to change that.
The No. 1 satellite-TV provider by subscribers is testing its own version of an on-demand movies and television service that it plans to launch in the second quarter. If successful, the offering could give DirecTV a weapon to lure customers who want on-demand offerings previously available only on cable or newer phone-company TV services.
DirecTV On Demand uses a combination of digital-video-recorder technology and broadband connections to overcome satellite's technological limitations. Unlike cable and phone companies, satellite TV doesn't use a terrestrial network -- relying instead on a mostly one-way broadcast technology.
DirecTV's satellites will automatically transmit a limited number of popular movie titles to customers' digital video recorders, where they will be stored for viewers to order whenever they want. Viewers will be able to order other titles, including TV programs, by streaming them from the Web through a high-speed Internet connection on the DirecTV set-top box. DirecTV says that about half of its customers currently have high-speed Internet connections.
In some ways, DirecTV's service is similar to a much more limited offering introduced by Dish Network Corp. last fall. That service also uses broadband connections to deliver on demand content, but is limited to pay movies. Dish declined to comment on the performance of the service since its launch.
More than just offering video on demand, this arrangement will let DirecTV tap what some analysts think could be a big growth area for TV providers -- selling highly targeted ads.
With a set-top box connected to the Web, DirecTV will be able to track what programs people order through real-time data about a user's television viewing behavior and allow the company to target ads. Cable operators already have similar plans, using the interactive capability of their set-top boxes.
DirecTV On Demand's arrangement has limitations, according to some analysts. Automatically sending content onto a DVR takes up disk space that viewers hypothetically could have used to store programs of their choice. What's more, streaming content over most broadband connections could involve delays or require the user to wait before watching.
Still, DirecTV has little choice but to try to match its rivals.
"They are just trying to push people with whatever blunt instrument they have to connect their set-top boxes to the Internet and become broadband-connected customers," says James McQuivey, an analyst at Forrester Research. "Without that, they are dead in the water."
Comcast Corp., the biggest cable operator with 24 million subscribers, now offers more than 10,000 pieces of program content on demand, most of it free. Comcast offers recently released movies for a fee of around $5, but its on-demand free offerings include hundreds of older movies as well as programs from most broadcast and cable networks and other content like movie trailers. Comcast's customers are currently ordering a total of 275 million pieces of on-demand content a month, says Derek Harrar, senior vice president and general manager of video for Comcast. Moreover, viewers who use the video-on-demand service are also statistically more likely to remain Comcast customers than those who don't, Mr. Harrar says.
Verizon Communications Inc.'s high-profile FiOS television service also includes a video-on-demand component, although with a smaller amount of free programming. It is growing in popularity with users, says Verizon spokesman Eric Rabe. Verizon has over a million FiOS TV customers, while DirecTV serves 16.8 million households.
"We see people watching more and more television on demand, rather than trying to time their lives to when broadcasts are on," says Mr. Rabe. "All the big providers are seeing this trend, and you must have this element if you are going to be providing subscription television."
DirecTV On Demand will offer about 3,000 titles, mostly through the Web, but the company says it will continue to expand the amount of content available. Only a small portion of the titles will be beamed to viewers' DVRs through a prescheduled broadcast. They will include the most popular films or shows, which will be stored on storage space on the DVR usually not available for subscribers.
Analysts say that using storage space on a viewers' DVR could annoy subscribers. "People are possessive of their DVR space and don't really want stuff pushed on them," says Bruce Leichtman, president of Leichtman Research Group. "High-definition content, in particular, takes up a lot of room."
DirecTV points out that while the content pushed onto the DVR hard drive does eat into the overall space, it does not impede on the space allotted to the user's side of the disk.
The other question is whether the broadband streaming of TV programs and movies will work smoothly. While standard-definition content will usually begin playing without a problem, the high-definition content that has proved to be enormously popular with viewers lately and that DirecTV viewers are used to -- the company offers more HD channels than anyone else -- could pose more problems, because high-definition programs require more broadband capacity.
Viewers using most broadband connections could see the program stop midway through. The alternative is for viewers to download the program ahead of time.
Eric Shanks, executive vice president of DirecTV Entertainment, acknowledges the potential for problems and says users will be offered a variety of ways to begin downloading their selection before they actually want to watch it.
Users also could start downloads to their DVRs from their cellphones or their Internet connections at work, for example, he says. But asking viewers to order a program ahead of time stretches the definition of what on-demand really means, argues Mr. Leichtman.
"If I have to wait 40 minutes to watch an episode of 'The Sopranos,' that is not really on-demand," says Mr. Leichtman. "That takes away from the impulsive nature of on-demand and loses a large purpose of the service."
Bid to Match Rivals Will Use Mixed Technology
By VISHESH KUMAR, Wall Street Journal
March 13, 2008
In its yearslong battle with cable-TV operators, DirecTV Group Inc.'s Achilles' heel has been its inability to offer any sort of video-on-demand service. The company intends to change that.
The No. 1 satellite-TV provider by subscribers is testing its own version of an on-demand movies and television service that it plans to launch in the second quarter. If successful, the offering could give DirecTV a weapon to lure customers who want on-demand offerings previously available only on cable or newer phone-company TV services.
DirecTV On Demand uses a combination of digital-video-recorder technology and broadband connections to overcome satellite's technological limitations. Unlike cable and phone companies, satellite TV doesn't use a terrestrial network -- relying instead on a mostly one-way broadcast technology.
DirecTV's satellites will automatically transmit a limited number of popular movie titles to customers' digital video recorders, where they will be stored for viewers to order whenever they want. Viewers will be able to order other titles, including TV programs, by streaming them from the Web through a high-speed Internet connection on the DirecTV set-top box. DirecTV says that about half of its customers currently have high-speed Internet connections.
In some ways, DirecTV's service is similar to a much more limited offering introduced by Dish Network Corp. last fall. That service also uses broadband connections to deliver on demand content, but is limited to pay movies. Dish declined to comment on the performance of the service since its launch.
More than just offering video on demand, this arrangement will let DirecTV tap what some analysts think could be a big growth area for TV providers -- selling highly targeted ads.
With a set-top box connected to the Web, DirecTV will be able to track what programs people order through real-time data about a user's television viewing behavior and allow the company to target ads. Cable operators already have similar plans, using the interactive capability of their set-top boxes.
DirecTV On Demand's arrangement has limitations, according to some analysts. Automatically sending content onto a DVR takes up disk space that viewers hypothetically could have used to store programs of their choice. What's more, streaming content over most broadband connections could involve delays or require the user to wait before watching.
Still, DirecTV has little choice but to try to match its rivals.
"They are just trying to push people with whatever blunt instrument they have to connect their set-top boxes to the Internet and become broadband-connected customers," says James McQuivey, an analyst at Forrester Research. "Without that, they are dead in the water."
Comcast Corp., the biggest cable operator with 24 million subscribers, now offers more than 10,000 pieces of program content on demand, most of it free. Comcast offers recently released movies for a fee of around $5, but its on-demand free offerings include hundreds of older movies as well as programs from most broadcast and cable networks and other content like movie trailers. Comcast's customers are currently ordering a total of 275 million pieces of on-demand content a month, says Derek Harrar, senior vice president and general manager of video for Comcast. Moreover, viewers who use the video-on-demand service are also statistically more likely to remain Comcast customers than those who don't, Mr. Harrar says.
Verizon Communications Inc.'s high-profile FiOS television service also includes a video-on-demand component, although with a smaller amount of free programming. It is growing in popularity with users, says Verizon spokesman Eric Rabe. Verizon has over a million FiOS TV customers, while DirecTV serves 16.8 million households.
"We see people watching more and more television on demand, rather than trying to time their lives to when broadcasts are on," says Mr. Rabe. "All the big providers are seeing this trend, and you must have this element if you are going to be providing subscription television."
DirecTV On Demand will offer about 3,000 titles, mostly through the Web, but the company says it will continue to expand the amount of content available. Only a small portion of the titles will be beamed to viewers' DVRs through a prescheduled broadcast. They will include the most popular films or shows, which will be stored on storage space on the DVR usually not available for subscribers.
Analysts say that using storage space on a viewers' DVR could annoy subscribers. "People are possessive of their DVR space and don't really want stuff pushed on them," says Bruce Leichtman, president of Leichtman Research Group. "High-definition content, in particular, takes up a lot of room."
DirecTV points out that while the content pushed onto the DVR hard drive does eat into the overall space, it does not impede on the space allotted to the user's side of the disk.
The other question is whether the broadband streaming of TV programs and movies will work smoothly. While standard-definition content will usually begin playing without a problem, the high-definition content that has proved to be enormously popular with viewers lately and that DirecTV viewers are used to -- the company offers more HD channels than anyone else -- could pose more problems, because high-definition programs require more broadband capacity.
Viewers using most broadband connections could see the program stop midway through. The alternative is for viewers to download the program ahead of time.
Eric Shanks, executive vice president of DirecTV Entertainment, acknowledges the potential for problems and says users will be offered a variety of ways to begin downloading their selection before they actually want to watch it.
Users also could start downloads to their DVRs from their cellphones or their Internet connections at work, for example, he says. But asking viewers to order a program ahead of time stretches the definition of what on-demand really means, argues Mr. Leichtman.
"If I have to wait 40 minutes to watch an episode of 'The Sopranos,' that is not really on-demand," says Mr. Leichtman. "That takes away from the impulsive nature of on-demand and loses a large purpose of the service."