VOD Closer to Reality

July 31, 2009

One more news for Microsoft this week. The launch of their VOD platform in the UK. Their PR department seems to be running their business these days, with one objective in mind: be in the news! (If nothing else, they would show up on top in Google search results!!).

Jokes aside, this is a significant move in the world of VOD. They have toyed with supporting other platforms through XBox consoles, but venturing into a platform of their own is a first.  They also have the scale to take this beyond the Computer screen into living rooms via XBox, and into portable of course. They also seem to have cracked one of the most important elements of this type of venture- a collaboration with GroupM. I am not going to comment on that deal, but having the backing of a major commercial player behind your platform is a critical factor.

The only other critical factor would be their ability to get content. iPlayer, C4OD, and iTV interactive might look at this as competition in short term, but truly they all know their content would be better off on a cross channel platform rather than being on properietary service. But it is going to take some time. Given that Kangaroo is almost dead, and Hulu might come in to the UK in October, they need to hurry up to pile up inventory of programming- both from the UK and perhaps source some from the US (which would be a tough battle given Hulu’s access to programmers at the moment).

One challenge that they world face is: How do they crack and standardise advertising effectiveness measurement on VOD? Good luck with that boys. It is a complicated area. Do not add yet another layer to it I would say trying to invent something of your own. Tap into an existing matrix.

There is a reason Hulu is considered a “game changer” in the world  of online video and streaming television. The unique alliance of NBC and News Corp creates a cable operator of sorts – and aggregates content to deliver a unique place for consumers to start watching it. In the US.

There is similar news of some UK broadcasters coming together to create a VOD platform. I am sure other markets are taking similar initiatives.

In a world when every bit of data will be streamed over IP, do we think platforms such as these would have anything unique to offer? Or would such platforms become seemless backend cable operator type operations, delivering to TV sets of the future? In answering this question, one also needs to perhaps see what it is that really makes the video over internet popular? It is its ability to transcend beyond geographies that really delivers a web 2.0 experience that is the “buzz” today.

Now in this world, what really restricts the ability of platforms like Hulu to make a difference is the way TV software rights are managed. The programs are sold territory by territory, or to cable / satellite operators who pick it up for multi-territories. Even then, the prices are aggregated on a market by market basis. Couple that with how such program rights are sold for broadcast over the internet, and you have a matrix that is too complex to even begin to crack.

There is a need to change this model of TV or even Film program rights management. If one is to combat the piracy or onslaught of free digital distribution, the arbitrage in this trade has to end. What it needs to work around is a distributors ability to stream content across the globe, without restrictions and with potential to earn revenues from wherever in the world they come from.