Video, any way you demand it

After I installed a Vudu set-top box in my living room, I didn't leave the apartment for an entire weekend. I was glued to the couch, perusing the cinema options and downloading new releases, grateful for a break from mind-numbing reality TV. It was the start of a beautiful new relationship, even if my social life was temporarily put on hold.

The tried-and-true method of traveling to Blockbuster to rent new releases and old favorites has become less viable as consumers are given more incentives not to leave their couches. You have your TiVo, Netflix, CinemaNow, video-on-demand (VOD), pay-per-view, Apple TV, Xbox 360, Vudu and PC downloads — just to name a few.

I know I'm not alone in my celebration of instant cinematic gratification. According to Screen Digest, the on-demand sector will generate $33 million in incremental spending this year in the U.S. and major European markets and will be worth $1.1 billion in consumer spending by 2012. Considering that the video business already has 85% penetration, according to analyst Bruce Leichtman, telcos are entering the space as a defensive move rather than as a means of generating significant revenue. As such, they are put in the position to decide the most cost-effective method of deployment and what will keep customers the happiest.

Carriers such as Qwest Communications are focused on video strategies that rely on broadband pipes to serve as the conduit for VOD offerings, mirroring AT&T's Homezone, which uses Akimbo and Movielink to deliver a catalog of movies and on-demand content to its subscribers. For the most part, cablecos are focused on traditional on-demand programming guides, often featuring less content but integrated in their TV offerings.

Over-the-STB downloading services such as Apple TV, Joost and Xbox 360 are fast becoming a popular alternative to traditional VOD services. (This is good news for telcos wanting to enter the IPTV game without investing in their own local hubs and broadband pipes.) Vudu sells its movie boxes stand-alone or through partnerships with IPTV providers such as Greenfield Communications. The box currently provides access to 5000 movies and 1000 TV shows, 100 of which are in high definition. Tony Miranz, co-founder of Vudu, said the company hopes to expand its content offering to include 10,000 feature films and 10,000 TV shows by year's end. In comparison to IPTV, Vudu — available today — has no network capex, less rollout complexity than IP VOD, and is not affected by geographic considerations.

Blockbuster may not be put out of business any time soon, but on-demand is the future for instant-gratification-hungry users. As more telcos enter the TV market and explore VOD options, stand-alone boxes should be top of mind. As a consumer, the selection and user interface make it as compelling, if not more so, than the standard fare. With 10,000 movies at your fingertips, you'd rethink your weekend plans, too. —