The On-Demand Revolution - this time it's for real...

Two years ago it seemed like video on-demand had been in eternal test mode but we're now in the midst of an on-demand revolution, which is going to be bigger than everyone expected and will be driven by the high-speed economics of the web.

New technology has always made an impact on content distribution, from the launch of VCRs and cable TV to the current introduction of VOD. In some cases it has allowed illegal distribution to grow but in general it has opened up new opportunities for content providers and has grown the overall revenue pie.

There has never been a time before when so many new distribution technologies have come to market. There's VOD, PVRs, Media Centres, Portable Media Players, IPTV, Digital Cinema, High Definition Television, Games Consoles and High Definition DVD.

What we are seeing worldwide is a mega-trend where consumers want access to content on their terms. This means on-demand, on whatever device they like and wherever they want it. What's more they want to interact with the content, edit it and share it with their friends. Content providers can try and stop this with digital rights management (DRM) software but sometimes unauthorised use of their content is not so bad.

Take the "Seven Minute Sopranos" clip recently posted on YouTube. The video takes 77 hours of The Sopranos and condenses the story into seven minutes. It's been viewed on-demand by hundreds of thousands of people. When HBO discovered it had been created at home by one of their employees they didn't fire them and it remains to be seen whether they get promoted to a top marketing job by the network.

A revolution in content distribution is happening as providers are increasingly ready to make their rights available to the ever expanding number of services running over open internet like Joost, YouTube, Jalipo, Zatoo, Babelgum, Vuze, Google Video, BitTorrent, CinemaNow. What's more, the revolution is being led by the biggest video content providers like the Hollywood studios and other global players like MTV and the major music labels.

A couple of years ago suggesting this kind of distribution   - often using peer-to-peer technology, where files are effectively shared between various users' PCs - would get you thrown off the studio lot. But now the studios are ready to listen and do business. Looking at the damage caused to the music industry by its early lack of dynamism and reluctance to embrace new business models and technologies, it's clear that studio execs are determined not to make the same mistakes.

VOD, of course, is already big news for traditional TV platforms. Millions of cable subscribers in the US have VOD and in Europe the number major launches on cable and by new IPTV platforms is growing by the month. It may well be that these platforms prove to be the biggest outlet for on-demand despite the current enthusiasm for web services.

A sign of the industry's willingness to embrace the on-demand model is the shrinking of the gap between the DVD release and on-demand availability. The gap, which was originally as much as six months, is closing with some studios moving to 45 days worldwide. In the US, the studios and Comcast are experimenting with 'day and date' releases. But there are risks in this approach. The windowing system has been carefully constructed to maximize revenue and it is this that pays for the multi-million dollar titles.

All this activity has the potential to significantly upset the content value chain. For pay and free TV broadcasters, on-demand is both an opportunity and threat. A free TV broadcaster now has to battle to secure on-demand rights to satisfy their viewers and to protect themselves against new entrants with new business models. And we have seen how fast new entrants with internet dynamics can move.

What will the media landscape look like in five years time? No one really knows but as the internet converges with TV there could be dramatic changes. A few years ago no one had heard of MySpace and YouTube and new players could well emerge. However, the established broadcasters and content companies can profit from on-demand if they embrace it and produce compelling, well marketed consumer-centric services.