Direct TV Set to Battle in the On-Demand Market

Direct TV will officially launch their "on-demand" service in the second quarter, so it should be out by the end of this month. How will the product compare with the true video-on-demand (VOD) products provided by cable TV companies like Comcast?

A window to look through is the beta testing that has been going on with Direct TV "On-Demand." Ongoing testing by users has been happening since August 2007, and reviews have been split fairly even on the service. Some customer's have found the video-on-demand service to be a great enhancement, while others have disappointed in the service so far.

The original on-demand service that is available from cable operators like Comcast and Time Warner offer the customer the flexibility to pick their remote control and watch shows at their convenience. In some ways on-demand is like a TiVo or a digital video recorder, the end user has control on when they want to view the program.

The difference with on-demand however, is that the cable company holds the programming for you rather than the customer recording it on their own device. A centralized group of servers holds the programming for cable customers to access via a programming menu. Cable companies have thus made the claim that they have more high-definition programming.

That claim is debatable, as they are measuring their HD by the number of programs available, not the number of channels. For example, Comcast's Project Infinity HD rollout promises 1000 HD choices by the end of 2008. Cable companies have thus promoted this instead of the actual number of HD channels they have. While Direct TV currently has the lead with 95 national HD channels, cable companies have between 20-60 channels depending on the company and region.

So how will Direct TV compete in the on-demand arena? The company has put into play two different delivery methods in order to reach their customers with this service.

The first method uses the end-users DVR and their high-speed internet connection. The customer connects to their broadband provider, generally cable or DSL. The customers download speed must be faster than 750 kbps, and should be higher to really use the service effectively. Content is downloaded to the DVR, and then the programming can be accessed from there.

The primary obstacle here is that it is not really true Video-On-Demand. If a Direct TV customer wants to watch an an on-demand program, he has wait for some of the content to download to the DVR before being able to start watching. Some beta testers have reported download times for an entire movie to be between one and four hours based on the customer's connection speed.

The second method Direct TV has formulated involves sending movies and other content directly to the customers DVR. The content would then be stored for subscribers where they can access it at a later time.

This method certainly solves the download issues previously referenced, but brings up the issue of how much pushed content will customers accept on their DVR?
While DVR's generally have capacity to hold around 50 hours of HD or 350 hours of standard definition content, that is nowhere near the thousands of hours of programming available via cable.

Transmitting the content to the DVR will use up the capacity, and customers are will be very protective of their DVR space. Most Direct TV customers would rather use the space for content they have decided to record, not what Direct TV wants them to watch.
So will Direct TV succeed in matching cable TV's on-demand offerings? Certainly time will give us a better answer. Having to wait to receive what is considered an on-demand content will not make most Direct TV customers happy.