Clearing Room for HD On-Demand8/29/2008 8:00 PM Eastern
Video-on-demand has been enormously successful for cable operators. Subscribers have a growing appetite for the service, marketers appreciate its value-added differentiation and the industry welcomes the incremental revenue. While the on-demand opportunity is large, its challenges are markedly different from when the service was first introduced.
On the competitive front, satellite providers have now started to offer on-demand services in multiple resolutions (including 1080p) while new Internet-protocol TV competitors provide a fully switched, 100% on-demand product. This pressure will drive cable operators to stay in front of the curve with an aggressive and diverse on-demand library.
Subscribers' VOD quality expectations have evolved in lock step with the changing inventory at Netflix and Blockbuster. Increasingly, consumers are demanding high quality, 1080p resolution and the supplemental interactive capabilities of Blu-ray movies. Devices like TiVo and the newer digital video recorder set-tops introduced consumers to the notion that live TV can be paused and manipulated in time. New applications like Time Warner Cable's Start Over and Verizon FiOS TV's Media Manager are fundamentally changing the average subscriber's viewing behavior. Cable will need to grow a healthy HD on-demand offering to keep pace with new consumer expectations and maintain its leadership position.
The combination of increased demand for personalized programming and experiences, the explosion of content variety and the high-bandwidth requirements of HD VOD require technical innovation. At the same time, operators must carefully plan and deploy these services over existing infrastructure and find the available bandwidth to support an HD VOD expansion.
A typical cable system allocates four quadrature amplitude modulation channels of spectrum for on-demand services, enough to support 40 concurrent streams per node, using today's constant-bit-rate technology. If just one quarter of those streams were to change from standard- to high-definition, the operator would be forced to double the VOD spectrum allocation to eight 6 MHz channels. As most operators will attest, finding four available QAM channels that can be reassigned to VOD is easier said than done. Operators must implement alternative approaches to providing HD VOD — approaches that fit within reasonable cost constraints, are not prohibitively complex and can be deployed over existing networks.
Today, operators have a large variety of options for finding or creating the required bandwidth for HD VOD. The growing consumer acceptance of a set-top box, combined with a new crop of lower-cost, all-digital devices makes analog reclamation an effective yet expensive alternative. A second option is node-splitting, through which operators can move towards smaller and smaller service-group sizes. Unfortunately, this approach is for many operators simply no longer viable. In many cases, the nodes are as small as they can be made. It can also be operationally complex and expensive, driving a need for additional QAM deployments.
Although new technology solutions such as switched digital video and MPEG-4 promise some relief, these alternatives can also be costly and complex, requiring solution integration at the set- top box layer. As these solutions continue to mature, and as the costs for both headend and set-top equipment fall, each will be an important component to any long-term strategy. But it remains likely that operators will need to augment these long-term strategies with some near-term solutions.
One of the oldest and most proven technologies for bandwidth efficiency is variable-bit-rate (or VBR) video processing. VOD was first introduced as a constant-bit-rate service to more easily manage the session complexity of the new application. Switched digital video is also a constant-bit-rate service for the same reason.
Now that VOD is mature, operators are now looking at solutions that enable them to deploy variable bit rate for more optimal use of their VOD spectrum. It is anticipated that as SDV solutions mature, operators will look to VBR as a proven method to improve video quality, while more effectively managing the hybrid fiber coaxial spectrum. With great timing, new advancements in multiplexing promise to enable VBR processing for these applications.
As HDTV sales continue to grow, the home theater is changing. And consumers expectations for all types of high-quality content, particularly sports and movies, are changing right along with it.
High-definition VOD presents a unique opportunity for further differentiation and revenue expansion — but operators need to move quickly.