Overview 1
Catalyst 1
Summary 1
Key Messages 2
VOD is unlikely to remain a competitive differentiator for service providers in the long term 2
Tech vendors can do more to help their clients secure revenues through various streams 2
Pay per view VOD's future will be enhanced by capturing share from the store-based rental market 2
Pressure on bandwidth has created the trend for hybrid VOD architecture 2
The growing popularity of VOD and HD content puts pressure on quality of service, particularly for IPTV 2
VOD is a great differentiator, but not a golden goose 3
The key to VOD's future success is pushing content to consumers, and vice-versa 3
Table of Contents 4
Table of figures 5
Table of tables 5
Market Opportunity 6
Introduction to VOD 6
VOD is unlikely to remain a competitive differentiator for service providers in the long term 6
VOD competes with a huge number of entertainment types for consumer spend 7
VOD was born from fierce competition and the need to differentiate 7
Differentiation is typically short lived in the broadcast market 8
Bi-directional distribution platforms provide the opportunity for longer term differentiation with VOD 8
Satellite operators are responding by seeking to integrate TV and home computing ... 8
... although quality of service will be an issue 9
In the meantime, cable and IPTV VOD operators are maximizing their differentiation by adding content 9
Tech vendors can do more to help their clients secure subscription, pay per view and advertising revenues 9
Subscription revenues are not greatly threatened but vendors can do more to help reduce customer churn 10
VOD subscription revenues will be relatively protected in times of falling discretionary spend 10
Vendors need to help service operators reduce customer churn by maximizing customer satisfaction 10
HD content provides a useful boost to revenues 11
The battle for ad spend is currently being lost to the internet 12
Forecasters predict declining TV ad spend, but a relatively healthy internet market 12
The internet is winning more ad spend by offering better returns 12
Vendors must work with their clients to develop more sophisticated ad insertion technologies for VOD 13
Pay per view VOD's future will be enhanced by capturing share from the store-based rental market 13
Although struggling DVD rental stores are kept afloat by movie studios and are moving online 13
Online DVD rental stores are hurting the store-based rental model 14
Some day and date releases have been secured for VOD, but not enough 15
An increase in the success of online rental may be to the advantage of VOD 15
Operators can acquire early release dates of movie content by demonstrating the ability to cross-sell 16
Datamonitor predicts strong growth in the investment in technology underpinning VOD 16
The growth in HD content does not impact technology growth as much as some believe 16
Growth of technology is driven by increasing numbers of digital cable and IPTV subscribers in the US and Western Europe ... 17
... although opportunities are limited by the number of potential clients 17
The market for technology in VOD is set to show dramatic growth 19
Customer Impact 21
Pressure on bandwidth has created the trend for hybrid VOD architecture 22
The 'all content everywhere' model is dead 22
Ubiquitous asset modeling tools determine where assets should be stored to manage bandwidth demand... 22
... modeling optimum technologies is less common 22
VOD and HD content puts significant pressure on quality of service, particularly for IPTV 23
Quality of network is the single biggest contributor to poor quality of service 23
Technology vendors help to improve IPTV quality of service 23
VOD is a great differentiator but not a golden goose 24
VOD is not as powerful a revenue generator as some technology vendors believe 24
The key to VOD's future success is pushing content to consumers, and vice-versa 24
Personal preferences drive the right viewer to the right content 24
Enriched metadata will drive the right content to the right viewer 25
Using technology to facilitate ease of purchase will increase service providers' revenue streams 25
There may be a future opportunity to use recommendation engine data to segment audiences and drive ad revenues 25
Go To Market 26
Understand your client's particular pain points 26
Focus on scalability issues in three years' time 26
Vendors must demonstrate how their products can improve return on VOD investment 26
Show the client how you can improve quality of service 26
APPENDIX 27
Definitions 27
Methodology 27
Further reading 27
Ask the analyst 27
Datamonitor consulting 28
Disclaimer 28
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