| ||
Reality programming is all the rage in American television, but for the better part of a decade there has been more hype than reality when it came to the any-day-now arrival of next-generation technologies such as digital television and video-on-demand.
Two panel discussions at Cyberposium 2003 on the subject of next-gen TV seemed to suggest that while the technology has arrived and prices are dropping, it's not yet at the top of the consumer's wish list.
The first panel considered the topic, "Digital Television, Why Is It Taking So Long?" Moderator Steve Wildstrom, who writes about personal technology for BusinessWeek, noted that digital television—in particular, HDTV—has been caught in a vicious cycle. At $10,000, prices of the sets were too expensive for most consumers to consider. But without a large installed base of television sets, programmers and networks were loath to create specialty programming that could take advantage of the larger screen and vibrant picture offered by the technology.
| The future of video-on-demand is entertainment-on-demand. |
|
— Santo Politi, Charles River Ventures |
But he said a recent visit to the Consumer Electronics Show convinced him that 2003 might actually be the year of DTV. Prices of sets are now as low as $2,000, making them affordable to a much wider group of people.
And slowly, more content is being created, said Alan Yates, general manager of MSTV (Microsoft TV) Marketing. ESPN, HBO, and the big broadcasters have all started to add some HDTV programming. The National Football League's Superbowl, for example, is broadcast in HDTV, noted Wildstrom. He said sports are likely to be one reason people embrace DTV. HDTV is not the same as digital TV, or DTV, Yates noted. DTV is simply digital input to the screen, offering an improved image. HDTV includes digital transport of the signal, offering much better quality and other benefits.
On the air
Another blocking point: Most HDTV programming is available only via terrestrial broadcast; cable operators have been slow to provide HDTV signals to their customers. The Federal Communications Commission has mandated that all American television broadcasters switch to a digital signal by the end of 2006.
Panelists representing the European market said demand for HDTV there is nil. The reason: The PAL broadcast standard used in Europe offers much better picture quality than is available in the United States. But, there is increasing demand for digital TV because of the availability of more channels and interactivity features, said Henrik Werdelin, partner, InnerCircle Networks. Shows like BoogieTV in the Netherlands, where viewers can choose video clips via a PC or phone, are gaining in popularity.
In addition to sports, another content driver for HDTV could be video-on-demand. VOD itself was the topic of another Cyberposium panel, where industry executives looked at the technological and business challenges facing the technology.
Don't think of VOD as just movies-on-demand, warned Santo Politi, a partner at Charles River Ventures. Multiple System Operators have already found that movies-on-demand are not the killer app they hoped for. "The future of video-on-demand is entertainment-on-demand." The ability, for example to see The Sopranos and Sex in the City at any time—so-called time shifting—might be the killer VOD app. "This will be one of the fastest-growing entertainment sectors in the next five years," Politi said.
Jeffrey Binder, CEO of Broadbus Technologies, said only 10 percent of TV-viewing time is devoted to movies, so television programming on demand will be the sweet spot of the market. His company provides cable operators with technology that enhances and manages advanced video services.
Movies-on-demand, however, is itself quite an exciting industry, said Greg DePrez, vice president, subscriptions VOD, for Starz Encore Group. He said 8 million households can access VOD services such as Starz today using two-way networks, with that number expected to hit 25 million on 2005. Growth is coming because cable operators will ride rapid decreases in storage, processing, and distribution costs.
And movies-on-demand will not just be pay-per-view. Cable operators will likely offer a range of offerings including monthly subscriptions, and packages with advertising and without advertising. The challenge facing the MOD industry is to convince users to give it a try; they're hooked once they do.
Cable operators will be further encouraged to offer VOD services because profit pressures continue for the industry. According to In-Stat, the North American cable industry last year added a miniscule 500,000 subscribers, growing to 77.6 million. In-Stat blamed competition from Direct Broadcast Satellite services.
Advertising—a new world
An audience member wondered about the role of advertising in an on-demand, fast forward world. "Advertising will change somewhat," Binder said. Marketers will have to craft messages for more one-to-one marketing, steering away from mass-market advertising.
Advertising technology will evolve to meet the demands of the VOD, panelists agreed. Expect more "barkers," said Jason Patton, Senior Director of business development for iN DEMAND.
And don't be surprised if advertising is developed to overcome fast-forwarding through ads, said Binder, suggesting flashing messages that pop up for only a second.
The digital TV panel discussion was held during the Cyberposium 2003 conference on February 18.