By Peter J. Brown

Consumers want more control over their time and their content. Broadcasters are responding by making their content available on demand using a variety of distribution channels including DBS and broadband.

While the satellite industry knows the boundaries well and accepts that true on-demand delivery is off limits, at least for now, the direct broadcast satellite players are nonetheless actively pursuing solutions. Direct-to-home operators are refining their near video-on-demand (VOD) technology such as advanced digital video recorders (DVRs) like DirecTV Plus and a portable solution from Echostar Communication Corp.’s Dish Network. Satellite radio also is ramping up its efforts, with both XM Satellite Radio and Sirius Satellite Radio continually expanding the capabilities of their portable players. "Consumers want control over what they hear in the car," says Ted Schadler, vice president and principal analyst at Cambridge, Mass.-based Forrester Research Inc. "… This is a very challenging environment in which to innovate and advance the business model."

At the same time, satellite service providers are trying to determine what broadcasters really expect and how far the broadcasters intend to go. In the first half of this decade, the satellite service providers successfully addressed the dual challenge of digitizing network TV feeds and upgrading their delivery capacity to handle the demands placed on them by the growing number of bandwidth-hungry HDTV channels. Now an uncertain on-demand agenda is emerging, and viable satellite solutions must be ready to serve this market as well.

"For the most part, satellite networks have been the backbone of the content distribution infrastructures for content delivery from content originators to downstream service providers," says John Delay, director of strategic management for networking solutions, Broadcast Communications Division, Harris Corp. "Recently, we have noticed a trend where traditional satellite and fiber operators are offering hybrid services, making it easier for operators to reach networks with a bidirectional network service offering,"

Satellite operators are finding that the highly competitive broadband environment is playing into their hands with respect to enabling a quicker rollout of on-demand services, among other things. "The fast paced growth in bandwidth and reliability, as well as the competition between the various high speed Internet providers, is providing a reliable backbone for satellite operators to offer such services," says Shahar Bar, manager, broadcast & satellite solutions marketing, at Harmonic Inc.

With Internet Protocol-based TV (IPTV) looming larger and larger as an entertainment delivery option, especially outside North America, the U.S. broadcast TV networks are finally realizing that the existing linear television experience is becoming less attractive to a new generation of viewers, says Aditya Kishore, media & entertainment strategies analyst at the Boston-based Yankee Group. "While any transition from the existing TV value chain will be a slow one, they do need to start developing a strategy," he says. "They are starting to experiment with iPod downloads, free VOD on cable and DVR downloads, as well as distribution via their web sites and via aggregators such as Yahoo and AOL. The challenge remains the business model. How do you develop a revenue stream that can support production and distribution costs?"

The broadcast stations are lagging behind, according to Kishore, who describes their predicament as "trying to put the genie back in the bottle. I have yet to see any clearly defined strategy to deal with broadband and on demand from the TV stations," he says.

The major networks are rolling out on-demand content, and they realize that the audience is changing and simply wants more flexibility. The networks "need to make sure that we are where are consumers are going to view our content, says Albert Cheng, executive vice president, digital media, at Disney-ABC Television Group. "On demand helps us reach consumers that may have missed one show but would be able to jump right back into our linear broadcast the following week, so they won’t miss a beat in a story line."

CBS also is exploring VOD, making its first deal with cable provider Comcast because of tremendous market overlap, says Martin Franks, executive vice president for policy, planning, and government relations at CBS Corp. "Is it a real market or a real product? We are tired of hearing all the speculation, and we have decided to test VOD with four of our best shows," he says. "We will find out if it is a valuable product or not."

Franks believes that the advent of VOD will strengthen, not weaken, broadcast TV. "We have heard all the predictions of the demise of broadcast network TV. We see VOD as building and extending network TV, not cannibalizing it. This is not the end of network TV, not even close," he says. "One night during the recent sweeps, one of our hottest shows, NCIS, achieved a 17 share. That means that for that episode that week, 83 per cent of the available audience would have been ripe to watch it via VOD."

The driving force behind CBS’s deal with Comcast was market overlap, says Franks. Of Comcast’s 22 million homes, 12 million are in markets where CBS owns and operates TV stations. CBS remains open to doing VOD deals with the DTH operators, but "there are issues involving how much capacity is in the home, and although I am sure that DirecTV is offering an elegant solution, their box that will make VOD possible is just now coming onto the market," says Franks.

On-Demand Tools, Technologies Will Reshape TV

While there may be a tendency to inflate the role of on-demand services, and to downplay the fact that the business models and the new sources of revenue which must accompany those models are works in progress, there is no escaping the fact that providing access to compelling content is the name of the game. With the cable TV, telco TV and over-the- air-broadcast segments all eager to establish viable on-demand distribution platforms, competition and the preservation of brand identity will become increasingly difficult.

Taras Bugir, chief strategy officer, software systems, Broadcast Communications Division, Harris Corp. says the increase in on-demand content is creating a need for localized content for global markets. "Demand is increasing to satisfy the local markets. Subsequently, the satellite broadcaster is keenly aware of his responsibility to manage content effectively in order to get the right content on the right channel at the right time. Digitization empowers the broadcaster in these instances as it enables him to keep the content at his fingertips," says Bugir.

A whole range of opportunities also exist when it comes to on-demand content. "Increasingly, we are seeing content owners taking advantage of IP networks to manage and deliver content to business users. This is an important trend. As new market verticals open up, there is an increasingly large opportunity for content repurposing, all of which fits an on-demand business model," says Delay. "Increasingly, we see networking, format conversion and transcoding as key technologies to enable on-demand services across the market."

With content providers like HBO and CBS looking to tap into new sources of revenue by offering packages of on-demand services to providers, on-demand content is becoming more readily available to broadcasters, according to Francois Modarresse, vice president in charge of product management at Skystream Networks Inc. "Cable providers have already made premium channels available on-demand, and telcos are likely to follow suit once their video networks are up and running," he says. "Service providers need tools that will enable them to offer advanced video services like IPTV, high-definition TV (HDTV) and VOD over existing networks, while content providers may pursue broadcast-quality Internet VOD as a direct channel to end users."

MPEG-4 is a critical new technology for the delivery of video services, as the advanced compression overcomes bandwidth limitations and eases bottlenecks. A new generation of transcoders can easily convert industry-standard MPEG-2 into MPEG-4 in a single step, Modarresse says. "IP-based video headend platforms like Skystream’s Mediaplex-20 and iPlex are flexible enough to deliver content over any network," he says.

As for boosting the near-on-demand experience which DBS companies offer, advances in so-called push technology combined with more capable DVRs seem like a winning combination. The key is to beam VOD content during off-peak hours when more bandwidth is available, eliminating satellite’s bandwidth constraints and providing a mass-deployable VOD service. "Push technology will help satellite operators compete with cable and offer instant-access on-demand services," says Modarresse "It can preposition content on set-top boxes for instant playback. New content can be multicast to subscribers’ set-top boxes on a regular basis, enabling instant access to the latest and greatest content without the excessive cost of a two-way link."

Content Awareness And Metadata Cannot Be Overlooked

Metadata is an important factor in the world of asset distribution and management from the content provider all the way to the set-top box. Metadata is like the license plate on a car except it describes much more than who owns the car or what state it may originate from. The information provided in the metadata is the key to moving the asset to its rightful place in the large networks and ensuring it gets managed and handled in the appropriate manner, according to Bar.

"In the on-demand world there are multiple tiers of services," says Bar. "Some are more broadcast-oriented, such as push VOD via satellite, which places assets on a subscriber’s hard drive in the set-top box. Others are focused on session-based systems. The latter is definitely the trend of the future. Consumers are becoming more and more accustomed to receiving content and information when and where they see fit, which requires session-based systems," he says.

Harmonic specializes in session-based systems with products including its Network Services Gateway platform for VOD services which has been deployed in hundreds of sites to date. "Content providers are interested in metadata as a tool to bring value to their video archives. Using metadata tags, consumers could easily search current and archived content without consuming vast amounts of bandwidth, allowing satellite to serve as the pipe through which content providers are able to continue profiting from older content," says Modarresse.

Content awareness technology or the ability to instantly find TV programming through user-specified search criteria is still in the early stages of development, so many providers have yet to implement it in their on-demand strategies, according to Modarresse. "By tracking what titles have already been viewed, the automatic refreshing of content is possible, ensuring positive viewing experiences and allowing providers to more effectively tailor content for individual users," he says.

Because content awareness is driven by the popularity of the show and the network brand it is associated with, the networks are striving to help consumers find their favorite shows. This may entail the use of network branded pages and screens on the presentation of available titles. "Metadata is key, and it will require us to make sure that we have the manpower and systems in place to support the various platforms we are on with the right specifications for each," says Cheng.

Finding a cost-effective way to implement metadata tags poses a challenge, according to Modarresse. "Until the technology surrounding metadata improves, it will have no definite impact on satellite network operations," he says.

"It is very important to know which subscriber is watching which content on what device," says Bugir. "It is with this finer control, or awareness, of the content that provides the only true way to derive the value of one’s media inventory and the value of your technology.

On Demand Not A Done Deal

It is hard to get a handle on which of the emerging on demand business models will prosper because it is so early in the game. There are unproven elements galore, including how the actual distribution process will unfold, not just from the standpoint of technology but from the standpoint of distribution partners as well. "It is not just about moving content or cutting costs, but rather, ‘How do I value the content in light of new or untapped revenue opportunities that will drive future business?’" says Bugir.

For TV stations, the focus remains on content. "Their value as a distribution network is decreasing rapidly," says Kishore. "Look to broadband, partnering with the local cable operator, for on-demand content. Localized programming should be the number one priority for them." The networks need to use their local presence and production capabilities to generate more local content and then leverage cable and satellite operators, broadband, mobile carriers and even retail to deliver it to their viewers, according to Kishore. "They should also think outside of pure video or audio content – information, texts, graphics – anything they can add to their value proposition on any of these platforms should be considered," he says.

The on-demand train has left the station and is gaining speed at the same time that everyone is trying to cut costs and increase storage capacity. The satellites are in place, and eager viewers just want the change to happen – the sooner the better. Add it all up, and it seems like that the on-demand arrows are pointing up.