Rapid Developments
Imagine a film addict in a remote Indian town watching the latest Hollywood blockbuster from the comfort of his home. Or a Indian classical music fan watching his favourite "ustad" performing live without leaving home. That's the power of video on demand or VOD.

The media industry has been toying with VOD for years. The most famous (& most expensive) experiment was Time Warner's $100 million interactive TV service in Florida which delivered 100 channels along with online banking and a pizza order service. The service was terminated after 2 years due to technical snags and a market not yet ready.

Since then, the media industry has been witness to rapid developments. Some examples:
• Pay-per-view services on digital Cable TV
• Internet access through digital set-top boxes from Cable TV
• Personal Video Recording (PVR) technology like TiVo
• Direct-to-home (DTH) bouquets offering 100s of channels

Meanwhile globally, Internet accesibility as well as bandwidth has been increasing profusely. So much so that even small towns in "developing nations" have access to the Internet at reasonable speeds.

Couch Potato's Dream
Video-on-demand is a couch potato's dream come true! To watch a movie of his choice, a subscriber simply logs in to the website, selects "Watch movie" and chooses from a list of 100s of films with a mouse click and the movie starts playing immediately.

Before playing the movie, the subscriber may need to give his credit card details to pay up the fee for "seeing the movie". Or the amount may be added to the phone bill or ISP bill.

And even the slight loss in video quality is acceptable (in fact eminently acceptable!) because of cost & convenience factors.

Broadband is the Stage, DRM the Stage Lights
If there is one single factor which can make VOD a reality, it is Internet broadband penetration. Today, in many regions, broadband penetration via telephone lines and cable has crossed the point which is critical for VOD implementation.

All over the world, the correlation between Internet broadband penetration and VOD is clear. Be it the USA or Germany, France or Italy, Japan or Korea - VOD services have spouted wherever there is broadband penetration. And today, VOD services are about to be launched in India - because broadband Internet penetration is approaching critical levels.

Besides broadband, availability of digital content is another issue. For years, film producers, sports bodies and other content owners were reluctant to make their products available in digital form in the fear that they may be "Napsterized" like the music industry.

But the new Digital Rights Management (DRM) software promises to provide a certificate that programs distributed via the Internet are legal copies. When a movie is legally purchased, the digital file will come embedded with a digital certificate. Before playing the content file, DRM software (which is embedded into the media player) will check & verify the certificate.

Long Road
As long as VOD is being watched on a home PC, the experience will be far from ideal. For VOD to proliferate, it must be seen on TV. (Or we have to wait for PC monitors to improve drastically in quality.)

Naturally, till then, content owners will be reluctant to release the latest content on VOD. (Typical lag is 6 - 12 months.)

So VOD will have to struggle with negative ARPUs for the first 2 - 3 years. That's as much because of the capital costs of building the network as also because of the costs of getting/holding on to customers. Not to mention minimum guarantee payments to content owners!

Just imagine the possibility of downloading the latest movie on a pay-per-view basis. Or watching a live game by logging on to a VOD site. And you will agree that current problems notwithstanding, VOD services are clearly the future.