[Satellite News 04-09-09] DirecTV already has seen better than expected take-up of its video-on-demand (VOD) services launched in spring 2008, DirecTV CTO Rômulo Pontual told Satellite News. “We are seeing high levels of consumer satisfaction. We also have a number of improvements coming,” he said.
    The U.S. satellite pay-TV operator, which has about 18 million subscribers, has the most advanced VOD strategy of any operator, according to Pontual, who boasted the company’s efforts in implementing MPEG-4 and resolving issues inherent in new broadcasting technology as well as its exploration of enhancements to the system’s disk storage.     “The customers who take on-demand services are satisfied. This is clearly indicated by lower churn when compared to customers who don’t have it. We are pleased with the service and the underlying technology,” he said.
    The lower churn rate is an indicator that DirecTV’s on-demand services are successfully promoting additional spending from its customers, illustrated by a buy rate on its a la carte menu that is higher than the buy rate of titles from its linear channels, said Pontual. “This increase to buy rates was anticipated, because the user has more opportunities to purchase the title and have better navigation experience,” he said.
    Satellite providers in the VOD market are providing formidable challenges to the previously dominant cable players of the sector, said Jesper Knutsson, vice president and general manager of sales for NDS Americas. Because competition in the market is heating up, telecoms are now placing a great emphasis on VOD services. “The cable VOD market is growing and is becoming significant. The IPTV VOD market is growing but still small. IP VOD is in its infancy for satellite operators. Most offer near VOD and push VOD,” he sad.
    DirecTV is operating a hybrid system, using both satellite and IP technologies, and customers with an HD PVR unit are able to access the new services. Pontual said that compared to cable providers, DirecTV’s large broadcast pipe, which reaches all 50 U.S. states, allows it to efficiently deliver content to multiple consumers and, when combined with local storage, creates significant value for the company. “DirecTV’s video on demand is a hybrid system that benefits from broadcast and Internet delivery. The push system is like a predictor of what the customer will want to watch. You could call it a ‘network cache,’ where the two-way broadband connectivity serves the niche requests. Our solution may have the same name as a cable solution, but relies on very different technology strategy.”
    Tom Pratt, president of Connect to Content, said hybrid systems are a valuable asset for satellite VOD providers. “Deploying IP-enabled boxes (for satellite pay-TV operators) and VOD increases competitive advantage and reduces any perception of cable/telco advantage,” he said.
    Pontual said DirecTV is trying to stay a step ahead of its competitors with technology. “We are developing new hardware technology to assist our installers. Our goal is to make it simple for them to offer a professional and reliable installation in a cost-effective manner. That will combine with the introduction of multi room DVRs. VOD is ready. We are now putting in place other technology pieces to make the experience even better.”