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Video on Demand Services Here to Stay

ABI Research Finds AOL’s In2TV a Preview of Future Content Distribution

What does the launch of AOL’s “In2TV” service say about the state of video on demand? What will its success or failure tell us about the future directions of this market?

AOL, something of a latecomer to the world of video on demand, last week launched a free VOD service specializing in reruns of classic television show episodes from the Warner catalog, along with a smattering of clips for current and new shows.

This broadband video service is browser-based, and requires Windows XP, Internet Explorer 6 and Windows Media Player 10, with Javascript, ActiveX and cookies enabled.

In2TV’s business model is surprisingly similar to traditional TV broadcasting: episodes are bracketed with video ads (at present shorter than standard television ads), and static ads adorn the Web page. Given the outstanding questions about the amount of content most users want to access on their computers as opposed to their TV sets, AOL appears to be co-marketing the service with Intel’s Viiv technology, ads for which appear on most pages of the site.

According to ABI Research’s principal broadband and multimedia research analyst Michael Arden, “The AOL model shows that VOD is moving beyond a movies-on-demand framework as users get more comfortable with the technology. Eventually, all programming will be offered in an on-demand environment, and this is a first, significant step in that direction.”

Shows can be viewed in a small window or full-screen, but even with a fast broadband connection, resolution and dynamic range do seem to suffer slightly at the full-screen setting. For those who demand more, AOL offers its free enhanced “Hi-Q” streaming format plugin, which claims to deliver DVD quality at full frame rates.

“In2TV’s content, pricing, and easy availability on the Internet makes it a good experiment in how content will be distributed in the future,” adds Arden. “The AOL offering is a preview of how Internet companies will aggregate content to become portals for video programming.”

ABI Research’s “Video-on-Demand and Personal Video Recorder Markets” study examines the growth of the VOD and PVR subscriber base across several types of operator network: CATV, DBS, DTT and ITPV. The report examines the uptake in non-operator VOD and PVR services as well as the deployment of servers to support these consumer on-demand services. It forms part of the company’s IP Video Research Service and Consumer Electronics Research Service.

Founded in 1990 and headquartered in New York, ABI Research maintains global operations supporting annual research programs, intelligence services and market reports in automotive, wireless, semiconductors, broadband, and energy. For information visit http://www.abiresearch.com, or call +1.516.624.2500.

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