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UK leads Europe in VoD

Consumer choice a-go-go

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With the most developed digital and pay TV market in Europe, it is hardly surprising that the UK also ranks as the most diverse and developed market for on-demand services. The UK is home to examples of every form of on-demand delivery, from standard cable near-video-on-demand services, through satellite Personal Video Recorders (PVRs), to full-blown IP-enabled DSL television platforms offering true video-on-demand over the telephone line.

If reported plans by British Telecom go ahead on schedule, the UK will soon also add a hybrid digital terrestrial plus DSL system to the list in the form of BT Freeview Plus. Europe’s earliest cable true VoD services are also set to launch in the UK, with both the country’s cable operators gearing up to launch VoD services in partnership with On Demand management during 2005.

Furious activity in the broadband internet space will almost certainly see the major ISPs coming on-line with some form of full length streaming on-demand content within the next year to 18 months. The UK on-demand market is nothing if not crowded—and competitive.

Sky Box Office

Sky Box Office was launched alongside Sky’s full blown digital service in October 1998. Sky Box Office began as a 50-channel service offering movies, sports and events on a near-VoD basis. The service had actually been operational since December 1997 as a smaller analogue nVoD service on four satellite transponders. It was expanded to 60 channels by 1999 and by 2001 the service had grown to 62 channels, providing start times every 15 minutes for the biggest blockbusters.

Seven channels are now dedicated to 18+ adult PPV services, a number of others used for pay-per-night adult content. Sky currently shows about 200 different movies a year on the Sky Box Office pay-per-view channels. It also shows occasional events, concerts and sporting contests, particularly title-fight boxing. Live Premier League soccer is also broadcast on a pay-per-view basis. Sky fills the Sky Box Office service with content from movie output deals with all of the Hollywood majors, a number of US independents and European majors.

Sky Box Office is an impulse nVoD service with movies ordered over a telephone line back-channel via an internal modem in the Sky set-top box. The vast majority (an estimated 95 per cent) of Sky homes have their backchannel connected.

Sky+

Sky+ was a pre-emptive strike by satellite operator BSkyB to provide a true VoD experience to the UK consumer despite the platform’s lack of a broadband back-channel. Sky+ was launched in 2001 as a hard-disc equipped set-top with a 40Gb capacity. A 160Gb box will be launched for Christmas 2004. Billed as a means of creating your own TV channel, Sky+ has been the primary UK experience of ‘true’ on-demand content.

Sky initially worked with US PVR developer TiVo, but switched to its own Sky+ system before the box was launched in the UK. Sky+’s operating software is tied into the Sky Digital EPG and allows the viewer to control the TV much like a pre-recorded video (up to one hour behind live TV, unless the ‘record’ button is pressed, then potentially up to a day) and also tell the device to scour the schedules and record specific programmes, or record a whole series at the touch of a button.

Unlike the intuitive TiVo, however, Sky+ does not pre-empt a viewer’s preferences and record programmes that it thinks may suit the viewers’ tastes. Sky+ is a premium product with customers required to pay for the box as well as a monthly access fee. The access fee is waived for top tier subscribers. The standard Sky+ box currently costs £199. The new higher capacity box will cost £399 when it goes on sale.

Sky does not push content to the hard-disc but encourages users to use the PVR facilities to pause live TV and record TV content. Push content may be introduced when the large capacity box becomes widespread among Sky’s subscriber base, but Sky itself has said it expects uptake of the 160Gbyte device to be slow.

FrontRow

The FrontRow nVoD service is carried by both UK cable companies Telewest and NTL and managed and programmed by their content partner On Demand Management. This company was set up to work with a consortium of 10 cable companies that through merger and acquisition became the two remaining cable groups of today. On Demand is a private company run by its founders. Server maker Seachange also has a small equity stake in the company.

The Front Row pay-per-view service gives customers a choice of six films per day transmitted on four channels and the near video on demand service provides a choice of 30 films per day on 50 channels. On Demand is responsible for negotiating the nVoD movie rights deals with the Hollywood studios and has agreements with all of the Hollywood majors.

In terms of content deals, On Demand has output deals with all the major studios on behalf of clients operating in pay-TV, PPV. NVoD and VoD. The deals range from one to five years in length and cover all major theatrically released product as well as, in some cases, television programming and library films. The studios contracted are Universal, Sony, Fox, Paramount, Warner Bros, MGM, DreamWorks and Disney. On Demand also has a number of package deals in place with major distributors such as Pathé, Momentum, Icon, New Regency and Film Four.

Homechoice

Homechoice was commercially launched in London in September 2000 by VoD solutions firm VideoNetworks. It received a massive marketing push at launch that centred on the service’s offer of combined VoD and broadband internet at one affordable price-point. For £35 subscribers get one set-top box offering 1 Mbps broadband access, as well as over 40 channels of broadcast and on-demand TV. Channels include the main digital offerings from the BBC, ITV and Channel 4 (including E4), alongside a host of themed children’s, music and movie channels (including a channel by Disney).

The movie channels are ‘Film1st’ and ‘FilmChoice’ (as well as a dedicated Bollywood VoD movie channel), and offer 900 on demand first run and library movies for 24-hour ‘rental’. The cost of renting a new movie is £3.50 for 24 hours, whilst it costs £2.00 for an older title. To add the Bollywood channel to the service costs an extra £6 per month.

The unique aspect of the Homechoice service is that VideoNetworks provides complete end-to-end solutions itself. The server solutions, middleware and settop box are all VideoNetworks-branded (either developed internally or rebadged from thid party manufacturers).

VideoNetworks also handles most of the content acquisition and management itself. The VoD movie service is fed by multi-year output deals with six of the Hollywood studios. There are also agreements in place with the BBC and music companies for the on-demand TV and music channels.

VideoNetworks suffered difficulties in its early days, claiming it was not viable to run its business at the then current wholesale costs for DSL lines. The company scaled back operations and began to encourage customers to churn off its network resulting in a drastic drop in subscriber numbers. Homechoice was relaunched in 2004 with a new strategy to install its own equipment in local exchanges.

In mid 2004, Homechoice also agreed a deal with BSkyB for carriage of its premium movie and sports services.

Kingston Interactive Television (KIT)

Commercially launched in 1999, KIT offers digital TV and broadband Internet services over an IP-based DSL network to the city of Hull. The service has 100 per cent coverage of Hull, and uses server and solutions from nCube, which can deliver 7,000 simultaneous streams.

The digital broadcast TV runs at 3.6 Mbps, VoD services are given 2 Mbps bandwidth, whilst the audio channels have a higher 4.3 Mbps transmission rate. IP set-stop boxes are provided by Pace Micro Technology. KIT’s approach to content has been similar to that of the cable operators. It has chosen not to get involved in acquisitions directly, but instead receive open digital broadcast content through its own receivers (essentially the base Freeview channels), whilst acquiring premium channels from BSkyB and effectively acting as a local wireline reseller of Sky packages.

Since 2001, KIT has also been offering a VoD service, initially with VoD content and technology provider Yes Television, but now in conjunction with video rental giant Blockbuster. As of October 2003, Blockbuster provides movie content in the pay-per-view window as well as library movies, whilst Yes TV provides the VoD middleware solutions. The VoD service comes free with subscription to any of the packages, and it costs approximately £3.50 to ‘rent’ for 24-hours a first-run Hollywood title.

Moreover, whilst Blockbuster provides movies, BBC programmes-on-demand and music-on-demand are also available. The cost is usually around 50p per programme. KIT also offers subscription VoD in the form of five channels showing documentaries, series and children’s programming; a monthly fee gives access to all the television content on-demand.

Copyright © 2004, Screen Digest

Screen Digest the Newsletter is the international media business's leading news & market research journal. It has been published for more than 30 years and is read in over 40 countries. Subscription details here. It is published by Screen Digest, a research company which produces a rapidly growing number of major business reports on media markets.

Related stories

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Netflix, TiVo sign VoD alliance
NTL tunes in to video-on-demand
Homechoice wakes up and smells the coffee
BT trials video-on-demand
US and Europe embrace the digital home

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