Strategy Paper for Overcoming DTAG Market and Technology Advantage

This paper was created for a venture capital company and subsequently used to target cable accessible markets in Germany. The paper has been parsed in this forum to separately cover Digital TV, Broadband Data, Video on Demand, Telephony, Interactive TV, Gaming and Colocation.

VIDEO ON DEMAND

Video on demand viability depends upon two things,

1. Costs entailed 2. Compelling content

Offering VOD in the German market will take a different execution strategy and cost structure than is commonly used today. In the German market, much of the content which would be offered on Pay per View, is available for free over the airwaves. Also, infrastructure would need to be financed and built to allow VOD, which is not a common service currently in most cable systems. The two VOD dependencies go hand in hand. One cannot exist without the other, and each is the solution to the other.

1. Costs – The VOD architecture uses the existing upgraded (800MHZ) system and some parts of the Broadband Data network. Hence some costs can be amortized toward those services. VOD is in use already in some cable systems, although not in Germany. Through the use of COTS cable equipment architected to provide the capabilities planned for, the use of existing VOD equipment and architectures can be acquired and implemented comparatively economically. This means the R&D costs are non-existent, design costs are minimal and equipment manufacturing costs are spread across multiple cable operators. Individual equipment or systems costs can be shared by content partners, which is covered in point 2 below.

2. Compelling content – Compelling content must be identified. Easily content should solve a demand. The non-fluent German speaking population is poorly serviced currently by cable companies. VOD presents a strong opportunity to market to these communities in their own language, offering content wanted by these communities. An example would be offering German language and citizenship video, movies from their native countries, popular shows from their cultures, etc.. The individual cost should be kept as low as possible in order to compete with video and dvd rental outlets. My suggestion for acquiring content is to partner with the German firms which want access to the millions of cable customers. Non-German firms (ethnic) content should be sourced the same way current German content is sourced.

German content providers should be sourced for content by signing short term multiyear contracts. The Content providers would market this service, and bid for the opportunity to provide content to our millions of customers. The money from the bids can be used to allay costs.