It’s time to turn back to video after last week’s all-wireless coverage, and a post over on NewTeeVee raises an interesting video question. Content providers and CE manufacturers are racing to pair up and offer on-demand services on retail devices (TVs, game consoles, etc.). Chris Albrecht wonders: With so many on-demand services available, how will consumers choose?
If you take content selection out of the equation, assuming most everything will ultimately be available everywhere, and you factor out video quality, assuming HD video will be roughly comparable between services, then what’s left?
There are a few ready answers. First, there’s price. Consumers will flock to the lowest-cost offering unless they get some additional value from their on-demand provider. Second, there’s ease. Consumers don’t want to have to work to get the video they want. Third, there’s the combination of cost and ease that drives overall usage. By this I mean that consumers will use an on-demand service more often if it’s cheap and easy, which will in turn increase perceived value among a larger community, attract more customers, and drive profit for the provider.
These three factors suggest a couple of conclusions to me. There’s probably room for one, or maybe two low-cost providers in the video-on-demand space. After that, VOD companies need to bring something else to the table – likely some type of product or service bundle. Since subscription service seems to work better than per-title purchasing, it’s probably a subscription service bundle. Also, providers need to fit within existing consumer habits, i.e. make on-demand content easy to find, easy to watch, and easy to pay for. In other words, they have to make content available right on the TV, and preferably a TV the consumer already has.
To sum up, a successful VOD offering over the next couple of years will probably come as part of a service bundle and be available directly on your TV. Sound familiar?
Cable and telco video operators are the incumbents here. And while that doesn’t mean they will be the only players, it does mean that they have an advantage going forward. VOD is a natural add-on for existing TV operators. If they can build up their content (through traditional VOD channels and online), I believe they will dominate over many of the Internet-only video service providers around today.