DirecTV (NYSE: DTV) hopes a mix of DVRs and broadband will solve its problems serving video on demand, taking a competitive edge away from cable, Verizon (NYSE: VZ) and AT&T (NYSE: T). WSJ reports that the satellite operator, now majority controlled by Liberty Media (NSDQ: LINTA), is testing DirecTV On Demand for launch in Q2. As the Journal describes it, DirecTV would automatically send certain titles to customers' DVRs to be stored for on-demand viewing. Other titles from a library of 3,000 could be ordered and streamed via a boradband connection to the DirecTV set-top. (By comparison, Comcast (NSDQ: CMCSA) has more than 10,000 VOD options and serves 275 million pieces a month.) The company says roughly half of its subs have high-speed internet access.
DirecTV says the storage would be on space not usually accessible to subscribers. The company already downloads material to DVRs every night, usually trailers, promos or ads that show up in its Showcases areafor instance, I just found a promo for live music from SwSX. If that doesn't work, I can "rediscover Charmin" as in the tissue. If I'm not happy about all this taking up space, imagine the frustration when it's time to save Top Chefand it burps because five movies I would never watch are taking up space I should be able to use.
The potential for delivery glitches via broadband also could come into play. DirecTV will allow downloads before viewing, which, as Bruce Leichtman, president of Leichtman Research Group, tells the Journal, "takes away from the impulsive nature of on-demand and loses a large purpose of the service."
Targeted ads: More important, because DirecTV would have two-way interaction instead of its usual one-way, the operator also would be able to get into the targeted ad game already being played by cable ops.
Couple of points: A lot of DirecTV usersnot sure of the percentageget their high-speed access from providers without ties to the satellite operator, which makes this broadband-intensive service a potentially fascinating case for network management/net neutrality issues.
Also, if it sounds familiar, think back to Cablevision's (NYSE: CVC) maligned effort to allow viewers to use remote servers as a DVR, still being fought over in court. The main difference: it's all stored on the user's DVR, not a remote server. Still, some of it is copied onto the DVRs by the provider without user choice, one of the issues used to rule against Cablevision in U.S. District Court last year. It also has a whiff of Moviebeam.
By Staci D. Kramer