The availability of video on-demand (VOD) services on cable television platforms is rapidly increasing in the US, with around 40% of operators already offering some VOD content, according to new research from InStat/MDR.
The report says that as of mid-2003, almost 4 million cable TV subscribers were regularly using the service to watch films, packaged premium programming and even ‘free’ shows and events. This trend is good news for operators already providing VOD, as well as for those considering launching these services.
The financial viability of VOD still hangs in the balance, with many cable companies reluctant to shoulder the high costs of providing the infrastructure and securing the content to make these services attractive to consumers. The difficulty for operators is that the costs will far outweigh the revenues until VOD is adopted by a large consumer base. However, in order to attract a large user base in the first instance, the service has to be attractive.
This situation has resulted in stagnation in the roll-out of VOD services both in the US and the UK, as discussed in INSIGHTanalysis: Video On-Demand Remains On Hold. In the UK, the VOD sector is essentially yet to get off the ground.
The current average ‘cost-per-stream’ for VOD has dropped to under $400, but a few operators remain concerned that the economics of providing the services are still unfavourable, according to InStat.
“However, the majority of cable operators are less concerned about the short-term economics of VOD and are treating the service as a key differentiator in the continuing battle between digital cable TV services and satellite TV services,” says senior analyst Mike Paxton.
Forecasts InStat/MDR predicts that the number of subscribers to cable VOD services will rise from 5 million worldwide by the end of 2003, to almost 14 million by 2007.
However, there is currently competition for the VOD sector from video ‘playback’ recorder products, such as personal video recorders (PVRs), DVD players and general VCRs, according to the report.
