The Constant Observer

A recent report by media analysts Screen Digest reveals that by 2011, 30% of all European households will have true Video on Demand capabilities.

As stated on Wikipedia, Video on demand (VOD) systems allow users to select and watch video and clip content over a network as part of an interactive television system. VOD systems either "stream" content, allowing viewing in real time, or "download" it in which the program is brought in its entirety to a set-top box before viewing starts. The latter is more appropriately termed "store and forward". The majority of cable and telecommunication based VOD systems use the streaming approach, whereby a user buys or selects a movie or television program and it begins to play on the television set almost instantaneously.

By that definition, one can already observe that approximately 2.5 million households in India already have access to VoD facilities. These are the households that have DTH services installed for their TV’s. A miniscule 2% (India has approximately 110 million TV households) but a number that is definitely slated to grow as costs drop further and the logistical benefits of DTH are more apparent to the masses.

One looks at the history of VoD in Europe, one can see that in the early days 60% of revenues came from blockbuster movies. We expect this to be the scenario in India as well – and this is already being seen with respect to the kind of VoD services such as Tata Sky and Dish TV offer.

In 2006, revenues from blockbusters in Europe dropped to 30% and people were demanding more content related to sports. This may happen in India if people stop buying bouquets and choose to view sport related content match by match. Thus if viewers are not watching Neo Sports all day and they feel that they need it only for the match, they may pay an access fee only to watch the match live and decide to forego the entire month’s payment for Neo Sports. This kind of a strategy has also taken off in the US as well where people have less time and do not necessarily watch all the matches thus they find it useless to pay the monthly fee and it is a better option for them to pay only for the matches they watch.

It may seem that video on demand seems very similar to pay per view. That is because it is. The only difference between VoD and PPV is that in pay per view systems, The event is shown at the same time to everyone ordering it, as opposed to video on demand systems, which allow viewers to see the event at any time.

In the future, VoD services will probably generate more revenues over the internet or they may follow the current television model and be supplemented with ads. The internet though will hold an advantage because ads can be contextually sent to users keeping in mind their IP addresses. This will also gain increased relevance in India as broadband speeds further increase.

Looking at the Indian scenario and India’s changing environment, we have seen that companies are forming alliances and joint ventures e.g. Broadcasters are creating strategic alliances with digital networking companies and teaming up with Internet companies and wireless providers to stream programming, both over the Internet and mobile devices. Technology companies are  also creating alliances to support the expansion of digital and mobile distribution of content.

The future of VoD worldwide certainly seems to be showing promising signs as a result of which people have been talking about the death of cable TV and the like. In India however, the mass proliferation of these services will still take a long time.