VOD licensees take cautious approach to launching new on-demand services

Technological considerations will be the main factor determining when newly licensed video-on-demand services hit the market. The CRTC thought the time was right when it awarded five VOD licences in 1997 (CCR, July 16/97). None of those services has yet launched. The four licensees from this most recent round aren’t expecting to arrive in homes next year, but they insist the wait won’t be as long as before. One of the new licensees, Corus Entertainment Inc, is waiting for more news from U.S. trials before it proceeds. "Because of the technology, we are not planning to roll out the VOD channel in the short term. That’s a medium- to long-term target. We’re going to focus on the Category 1 and Category 2 licences...," says Corus’ director of corporate communications Kerry Morgan. When the CRTC issued licences for new Category 1 and 2 digital specialty channels late last year, it also greenlighted licences for four VOD and two pay-per-view services. National VOD licences were awarded to Corus and Rogers Cable Inc, and regional licences were granted to Videon CableSystems Inc for the Prairie provinces and Ontario, and Cogeco Cable Canada Inc for it systems in Quebec and Ontario. The five VOD services licensed in 1997 were the partners of Canal Indigo, the partners of Viewer’s Choice Canada, a partnership of Alliance Communications Corp (now Alliance Atlantis Communications) and Shaw Communications, Allarcom Pay Television Ltd (now owned by CanWest Global Communications Corp) and Electronic Digital Delivery Inc (now owned by Corus Entertainment Inc). Michael Lee, VP and GM of interactive services at Rogers Cable, says his company didn’t apply in the 1997 competition because VOD wasn’t technically feasible. "I think we are now approaching a technical maturity and feasibility of VOD," he told CCR. "The quality of our network is higher (than in 1997), and VOD server vendors have had time to try the new technology in test environments." Lee wouldn’t disclose his company’s timeline for deployment. In its most recent licensing decision – PN 2000-172 – the CRTC says its 1997 policy assumed "VOD services would compete with one another for distribution." This time around, it notes that "each of the four VOD licensees in the current round is either integrated with or affiliated to a distributor." Lee agrees that licensing distributor-integrated or distributor-affiliated VOD services may facilitate their launch. "If you look at the VOD business and the amount of capital that is actually required to deploy VOD to a large audience, you really have to count your Ps and Qs and make sure that you do things properly to make it a profitable business," he says. "I think with distributors involved, it makes the business case a little simpler, and hopefully that will mean customers will be able to get the VOD service earlier." The VOD licensees say negotiations are progressing cautiously with Hollywood studios for film products, because VOD is still an unknown commodity in the mass market. Once deals are struck, Lee anticipates they will be similar to PPV agreements. Feature films and adult entertainment are expected to be the main drivers of VOD, as they have been on PPV. Some licensees say they may try other offerings, such as educational shows. "Kids (programming) is a great category, such as being able to get Barney on Demand, or BOD as we call it. It is something that definitely has a market. But to say that we are going to spend a lot of time focusing on the fringes probably will not be accurate," states Lee. Licensees can offer programs individually or in packages, as long as the total period during which the packaged programming may be viewed doesn’t exceed one week. The Canadian Association of Broadcasters lobbied for the restriction to keep VOD services from looking too much like specialty channels. But the CAB failed to convince the commission that VOD services should be prevented from carrying certain content categories.

VOD licensees take cautious approach to launching new on-demand services

Broadcast | January 17, 2001

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