‘Only Cable Can’ is the message US cable companies are using to lead their marketing campaigns.  It’s a powerful phrase that clearly gets across the message cable can do things other platforms – namely satellite operators – can’t. And in a market where convenience and choice are king, these kind of messages could create real problems for satellite companies across the world.

With the birth of Video on Demand (VOD), cable has upped the stakes in the race for choice and convenience. VOD gives customers the ability to watch exactly what they want and when – a service that satellite operators have been unable to match…until now.

Enter Push VOD
Push VOD has the potential to be satellite operators’ first line of defence against cable’s VOD service. Using Push VOD, satellite operators literally ‘push’ the most popular content into allocated space in their customers’ Personal Video Recorders (PVRs).  Customers can then watch it whenever they want until it is replaced with new content by the operator.

Although Push VOD is very new technology and there’s no research yet to say whether it will be popular with customers, it’s creating a lot of interest around the world. In November 2005, NBC Universal and satellite operator DIRECTV agreed a deal to offer access to top NBC programmes just hours after they air – commercial free and at a price of just 99 cents. The president of NBC Universal Cable, David Zaslav is quoted as saying “The way people are consuming content is changing”.

Push VOD has the potential to meet the changing needs Zaslav talks about head-on by offering customers a higher level of flexibility. And that could be a real threat to their competitors because – with Push VOD – satellite operators can also claim they offer content ‘on-demand’ and therefore eliminate one of cable’s unique selling points.

Happy customers
Thanks to PVR technology, satellite operators are already enjoying huge customer retention. Research and consumer feedback suggests customers are delighted with the versatility of PVRs.

In fact, recent Sky+ research, found that eight out of 10 customers stated Sky+ had improved the quality of TV programmes they watched and 91% reported they were very satisfied with the service.

So if customers are happy enough already, it raises the question, ‘what will Push VOD add to satellite operators’ business model?’ Could it be used as a defensive move against cable – helping safeguard the continued loyalty of customers who are already satisfied with their PVR service?

Managing demand
The increasing consumer demand for watching content when they want raises potential capacity issues for both cable and satellite. There is, after all, a limit to how much information can be sent to customers at any one time. For example, as demand for  VOD content increases and ‘free VOD’ offerings increase, cable operators might be tempted to use Push VOD technology to deliver popular content into local storage (the customers’ PVR) so they can free up their cables for true VOD. However, as the cable operators seem to be carefully scaling their service in line with capacity, this seems unlikely to be a genuine problem.

But for satellite, capacity issues could be a real threat. For example, for a satellite operator to start a single two-hour film every 15 minutes requires eight separate channels. On one side, satellite operators have customers demanding more flexibility. And on the other side, they are hemmed in by their own technology – physically unable to send more content over the air. But with Push VOD, they need only push some of the most popular content to the customer once to make it available whenever they want. And this means they can potentially free up huge amounts of capacity.

Targeted ads
Push VOD is such new technology that the way it will interplay with advertising is not yet clear but it could create a highly attractive proposition for advertisers. The technology, in theory, could be used to target a very well-defined demographic. If advertisers know their audience and the kind of things they are interested in, they can build a very clear idea of what products and services would appeal to them. With Push VOD they could push ‘enhanced’ and interactive adverts to their audience, tailored to their interests.
With all the challenges facing today’s advertising industry and the resulting threats to platform operators’ profits because of diminishing ad-spend – Push VOD could be a real and profitable solution.

What’s next?
The real challenges facing Push VOD are driven by what the customer wants. At the moment, customers seem content with the PVR services offered by satellite operators. But perhaps the imminent launches of VOD by the cable operators and new IPTV operators will make existing satellite customers wonder what they’re missing.

Whatever move cable or satellite operators make, it needs to be completely focused on their customers’ needs. Only with the right strategy, customer proposition and effective management of content can they hope to succeed in a marketplace that is increasingly led by the customer. And, of course, there is still the question about whether Push VOD can ever really offer customers the same level of flexibility and choice as normal VOD.

Operators would be wise to remember the golden rule. Although new technology opens many doors – content is always king.

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