Retail products on demand will drive extra IPTV revenue

We’ve all heard about Video on Demand for years, and services revenue attributable to VoD are a core part of all service providers’ business cases. But new technology from Scientific-Atlanta is allowing service providers to step beyond just the transmission of content and start creating actual retail products for sale to customers – right at the set top box.

Swerve all heard about Video on Demand for years, and services revenue attributable to VoD are a core part of all service providers’ business cases. But new technology from Scientific-Atlanta is allowing service providers to step beyond just the transmission of content and start creating actual retail products for sale to customers – right at the set top box.

At CES 2006, S-A showed off its new MCP-100 DVR with built-in DVD Recorder/Player – three devices in one: a digital set-top box, a DVR and a DVD recorder/player. The DVD recorder/player is powered by Sonic Solutions’ AuthorScript DVD engine, the same DVD creation technology used by Hollywood. The combination of the DVR with DVD Recorder/Player allows users to create personal DVDs from DVR content libraries, and then take recorded shows and watch them on the go. The MCP-100 box was designed to respect key content-protection flags, including “copy freely,” “copy once” and “copy never” tags.

But what should get service providers excited is a billing and fulfillment system that S-A has overlaid on top of this product. Called Direct to Disc, S-A’s new technology will allow a user to not only purchase and watch a video, but also to burn a portable, branded DVD disc inside the set top box – so they can watch the movie whenever they want. That’s right, a regular DVD complete with all the special languages and cool extras that you get with a DVD from Fry’s.

The service is simple and resides within the VoD engine as part of the VoD purchase process. Simply, you can watch the move for $X, or burn the DVD for $Y. The direct-to-consumer channel will boost profits for Hollywood by cutting out the middlemen in the distribution chain – the product is all digital. While unlikely to drive away the $5.99 bins at Wal-Mart anytime soon, the technology can surely satisfy the needs of a more spontaneous and immediate market audience.

The technology not only allows pre-purchase of the discs, but also the spontaneous purchase of the disc after watching the movie. Really like that version of Monsters. you just watched? Well, why not just buy the disc on the spot?

What’s really impressive is the merging of HP’s LightScribe technology with the S-A set top box. This allows you to flip an already burned DVD over in the drive, and burn a silkscreen-quality picture or label directly onto the other side — no need for a printer. Though this label can only be monochrome right now, it provides an incredibly professional finish and makes for a stylish and simple way to label DVD and CD-R media. Color is coming. At CES 2006, Verbatim announced its next-generation LightScribe CD and DVD media which will enable the discs to be produced with vibrant new jewel-toned background colors such as yellow, green and orange. Full label color is on its way as well, as well as the ability to print through the disc as well, meaning the user would not have to flip over the disc to burn the label.

S-A’s fulfillment system will even allow you to purchase the plastic box and inside paper-based extras if you’d like, and have them mailed to you. But we’re betting with today’s home technologies and some foresight by service provider planners, this can also be dealt with on the spot. DVD printing kits are common in any Office Max or Staples – these could be built into the product offering.

For instance, you could offer, on a user’s first purchase, to automatically send the user 10 plastic DVD cases for their shelf and printable cover stock. The disc could be cut with PDFs of the present cover – just put the paper into your laser printer and you’re all set. If a service provider wants to throw in label stock to cover for the lack of color printing, this too could be handled via an advanced fulfillment package.

S-A is working out details of the offering, but DRM and other DVD intellectual property issues are resolved at this point. The MCP-100 box is currently being tested in MSO labs and which could enter beta testing soon along with the Direct-to-Disc service. The technology adds a new line item on business plans that, along with adjacent disruptive technologies like eBooks, can provide decent extra revenue streams to accelerate payback on the IPTV OpEx expenditures.