TelcoTV: Is Vudu carriers' biggest headache or opportunity?

“When TiVo started in 1999, the box cost $499 retail with 14 or 28 gigabytes of storage,” Lichty said. “14-gig cost $145. Now, you can get a 250-gig hard drive for $50. Those curves are allowing devices and infrastructure to be built that can allow a third party to deliver a great experience. Finally, it goes without saying, the open pipe. Vudu can deliver to anyone with a broadband connection.”

Broadband speeds are critical to a service like Vudu. Lichty said it could provide real-time DVD upscale quality streaming solution at 2.3 megabits per second. For HD, Vudu needs 4 Mb/s, and the network isn’t there yet. As such, the emergence of HDTVs as a customer requirement is both a catalyzing factor and a hurdle, he said. Vudu today announced it has the largest HD library of all its competitors, totaling 1,150 titles in either HD or HDX, its high-end HD format. Six hundred of these titles were added last month, bringing the total offering to more than 10,000 titles. HD now represents 10% of its library but more than 25% of the consumption, even with premium prices attached to the titles.

“HD is something customers are clamoring for and are quite price-insensitive about in many ways,” Lichty said. “It creates a lot of problems for people trying to deliver these services and especially for a third party, the cost of managing that.”

Lichty wrapped up his keynote telling his audience of telecom service providers that he doesn’t envy them for how the world is changing, but he does see a lot of great opportunities coming from the shift towards Internet and software-driven devices. “Those of you who can navigate that well will stand to benefit greatly in the future,” he said.