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VOD and the 12-Foot Bridge

25 Jan, 2005 By: Holly J. Wagner

Well, the VOD markers went up this week, but I'm not sure it means much yet.

First, Netflix CEO Reed Hastings told analysts on the company's fourth-quarter/full-year 2004 financial call that Netflix will offer downloads this year — a plan previously delayed to deal with competitive pressure from Blockbuster Online and the possibility that Amazon.com will start renting DVDs in the United States soon.

Blockbuster CEO John Antioco told the Los Angeles Times the same day that Blockbuster could be offering IP VOD within the year. Then Napster CEO Chris Gorog said Napster might start offering movies and games along with its now-legal music downloads. Of course, studio-backed Movielink and Blockbuster/Lions Gate-backed CinemaNow already offer that, but adoption has been slow so far.

The demand will increase when home networking is easier and more content is available; Hastings admitted that he expects little consumer interest at first. Lower prices for downloads could also help this along — even a relative new release on Movielink is past the DVD window, so the $4.99 electronic rental price for hot titles could put some folks off. On the other hand, CinemaNow offers subscriptions for $9.95 a month or $49.95 a year, which trumps its a la carte pricing as well as DVD subscription fees.

The technology to delivery VOD is in place on cable systems and via Internet providers. It used to be folks worried about the “last mile” and getting broadband wired out from the relay station to homes.

Now the challenge is more like the “last 12 feet” from the computer to the TV. Once they bridge that gap, VOD will be here to stay.

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