I WANT MY V.O.D.: The Great Video On Demand Revolution Is Coming... Someday

Prediction is a dangerous business. In April 2000, a columnist for entertainment/tech/net journal Inside predicted the advent of broadband Internet service to the home and the improvement of streaming video technologies would cripple the brick-and-mortar home video market by 2002, and kill it by 2005.

Here we are, two years later. The Inside print mag is now defunct, and the home video business, led by monolithic Blockbuster Video, might not be posting record profits, but it would be fanciful to describe it as "crippled."

Still, while it has maintained a low profile of late (the economy has been in a bit of a slump lately), video on demand (VoD) is moving forward both as a technology and a marketing paradigm. It's simply doing it at a slower pace than the tech gurus predicted. However, with various forms of VoD serving as a cash cow for many adult sites, it's valuable to keep abreast of where the streaming video market is now, and where it's likely to head.

One factor that's hampered broader acceptance and adoption of VoD is the incredible market penetration of DVD. With more than 27 million DVD players in American homes, the format has been declared the fastest-growing consumer electronic device in history. All those players mean people are hungry to use them, and companies such as Blockbuster whole-heartedly stock the format for sale and rental.

Some analysts argue, though, that the most likely VoD customer - for mainstream media at least - is the same as the pay-per-view demographic, which has been proven historically to be a different market from the sale-and-rental crowd. Pay-per-view customers are less concerned with picture and sound quality than with convenience. Their main motivation is avoiding the trip to, from, and then back to the video store.

For the adult Webmaster, there are broader concerns when considering the VoD customer and why they might choose this form of delivery.

For the most part, adult video on the Web isn't a recognition-driven product, but content-driven. For example, when Dick and Jane rent Pearl Harbor at the video store, odds are good that they've chosen it because they were already aware of it (and they think it can't possibly be as bad as all their friends said, and Jane kind of likes Ben Affleck, and there are great battle scenes, blah, blah, blah). When Jane goes to bed and Dick plops down in front of the computer to wash the aftertaste of Pearl Harbor away with a little porn, he probably has only a vague notion of what he's looking for; big tits, anal sex, blondes, etc. He might have a favorite Webcam girl, but odds are he found her by chance, not because he went looking for her.

Also, there's the fact that in ordering content directly from the Web, consumers can avoid the embarrassment many people feel when renting or buying adult videos at a store. Together, these elements have combined to make adult video on the Web much more successful - financially - than its mainstream counterpart.

Many adult companies offer full-frame, high-resolution adult videos for download. Most of these use some flavor of MPEG-4 compression, requiring the viewer to first download and install a unique codec before their first viewing. Some services work very well, others not so much. All are dependent on the viewer having a solid broadband connection, and will benefit in the coming months from pending compression and broadband technologies.

However, as with most technologies that were first stretched, tested, and utilized by the adult industry, the days when Web porn can be expected to innovate new technologies for video streaming on its own are largely over. That business is now too vast and too expensive for any to wade into, save mainstream media giants and the software companies that hope to capitalize on what everyone agrees will be the technology that eventually replaces broadcast TV. As a result, adult Webmasters are now in the uncomfortable position of having to wait for the mainstream to push forward the technologies at a loss that adult can then exploit for a profit.

Any discussion of video on demand is like opening a Pandora's Box of widely variant technologies, software, and methods of delivery. Ten years ago, it would have been inconceivable to all but the very far-sighted to imagine sending an entire film across an Internet connection. But with continuing advances in video compression algorithms, high-res video files become ever-smaller. The MPEG-4 compression standard (DivX, WebStream, Intercon-nect, and a dozen other popular codecs are all based on MPEG-4) allows a 90-minute film to be compressed at near-DVD quality into a 400 megabyte file.

Compressed a bit more, and sent out using one of the slick new transport proxies that companies like Darwin and Sorenson have come up with, this file can be fed quickly and smoothly to any user whose broadband pipeline maintains a decent level of throughput.

Today, the major stumbling block to VoD is related more closely to the economics of access: There just aren't enough Internet users with the kind of broadband connections necessary to support a wide distribution system for movies over the Net. Yet.

That "yet" has provided the impetus for major studios to move forward with a variety of programs to provide real, high-resolution VoD movies over the Net.

The scheme that all the others were scrambling to beat first collapsed last summer when the joint venture between Blockbuster and Enron - yes, that Enron - fell apart due to miscommunication and the dotcom collapse. Blockbuster had approached Enron about proceeding with the deal last fall, but the former energy broker's massive collapse and subsequent bankruptcy put a stop to that.

As a result, only one of the major plans to bring VoD to the masses has come to fruition; the rest are still vaporware. Microsoft and CinemaNow, an entertainment broadband company, launched a video-on-demand service last October (www.cinemanow.com), leapfrogging efforts by AOL Time Warner and Universal/Vivendi to launch extensive online distribution of films.

Culver City, Calif.-based Intertainer is planning to offer 70,000 hours of content, including films and TV programs, through a video-on-demand subscription service in the top U.S. broadband markets, including New York, Los Angeles, Chicago, Boston, San Francisco, Seattle, and Washington, D.C.

In August, AOL Time Warner said it was forming an interactive video division, a precursor to a video-on-demand service that would meld parts of its cable and Internet businesses. Other majors in Hollywood also are planning to launch VoD services. Two groups of studios are backing different plans, with Disney and 20th Century Fox pitted against MGM, Paramount, Sony, Universal, and Warner Bros.

Second to broadband's market penetration, securing rights from the major studios has been the greatest obstacle for companies trying to make headway in the video-on-demand market. When Blockbuster and Enron unveiled their stillborn video-on-demand program last winter, it had movie rights from just a handful of companies including Artisan, Trimark, Lion's Gate, and MGM. At that time, Blockbuster was still attempting to land deals with the major movie houses that were concerned the technology would bite into the revenues they were beginning to see from DVD sales.

Most analysts agree that for video-on-demand to be successful, consumers will need to have access to at least the same breadth of movies they do at their local video stores. The Intertainer site, www.intertainer.com, offered a total of about 50 movies at the time of this writing, most with some kind of audience appeal, though the concept of sitting in front of a PC long enough to suffer through the original Ocean's 11 is a real concept - and they list it under "classics." [As this issue went to press, Intertainer had secured rights to a limited number of MGM's new releases as well as some 4,100 films in MGM's archives. - Ed.]

Intertainer's partner, CinemaNow, has a lot of crap that you might watch at 2 a.m. on a Thursday when you can't sleep. Their most popular film is Greg Araki's Doom Generation. Could it have something to do with the fact that young Rose McGowan spends half the movie naked?

Meanwhile, companies like TiVo, which makes digital video recorders, are partnering with content sites like IFILM.com to provide similar services through a different technology that requires consumers to purchase a set-top box.

Intertainer's services are delivered using Windows Media, which gives viewers all the capabilities of a VCR. Other technology for the service comes from Broadwing, which provides the tools to enhance capacity and performance. Viewers can purchase a monthly pass for $7.99, which gives them access to special features and downloads, and a cut-rate on movies, or they can purchase pay-per-view downloads for $3.99 that allow the viewer unlimited access to the movie for 24 hours.

A quick test of the service was impressive. With no perceptible buffer time, the movie (in this case the quirky Irish comedy An Everlasting Piece) began playing immediately, full-frame, with excellent audio, full-motion frame rate, and at a respectable resolution. It wasn't quite DVD quality, but it was very good.

The problem now for consumers is that many video companies want to sell movies on demand and subscription television services through their own Websites. Intertainer CEO Jonathan Taplin said in a press release that he believes people will come to his site because of the programming.

Consumers having to search for the site that licenses the movie they want to see could be the Achilles heel for VoD. Three years ago, scores of digital music services were scattered across the Internet, each hoping to develop a service people would pay money for.

By the beginning of this year, many of the biggest digital music companies had been gobbled up by the major conglomerates that are now launching subscription services with the remnants of failed dotcoms.

Vivendi/Universal snatched up MP3.com, download retailer Emusic. com, and RollingStone.com. Bertels-mann AG acquired online music retailer CDNow (which is one of the oldest etailers, and which is hanging on by its virtual fingernails), music locker service MyPlay.com (don't be surprised if you've never heard of this site), and Napster. AOL Time Warner added Internet radio company Spinner.com and media player WinAmp to its stable. Rumor has it that Microsoft is eyeing MusicMatch hungrily, with Sony slobbering over RealNetworks.

One of the more ironic twists in the digital entertainment revolution is that the new super services being developed grew out of the very business the conglomerates have fought to shut down: Napster. At its peak, the file trading company had 80 million people visiting the network to find, download, and listen to music.

Anyone could download Napster off the Internet and connect with tens of thousands of people. The goal of new subscription services is to create a similar application that allows people to find all types of media and then pay for it. Of course it's that last step that's the doozy.

Consumers can expect to see applications offering audio, video, and print bundled together for one price. Universal anticipates integrating its entire network of sites into one mega-network this year. Expect the others to follow suit. In addition, AOL Time Warner, with the help of set-top box manufacturer Scientific Atlanta, plans an aggressive rollout of various digital television services - including HBO On Demand - a service that lets consumers view VoD content via a set-top box, PVR, and HDTV - by the end of next year.

Meanwhile, DVD-R (in whatever format finally emerges as the winner from that three-way imbroglio) is on deck to become as ubiquitous in PCs by the end of next year, which will make downloading movies from the Net and burning them to DVD as easy as making your own CDs. Until plasma screen televisions (which are actually nothing more than huge, high-resolution data-grade monitors) become cheap enough to replace PC screens, that's the only way most adult Webmasters are going to get their content from the Web to the small screen.

Of course, that also raises the issue of piracy, which is a whole other Pandora's Box.