Time Warner COO Jeff Bewkes addressed the CTAM Summit audience yesterday and let it be known that he thinks the future of the subscription television model is VOD. Bewkes sees VOD as meeting consumers demand for content on their terms as well as a counter to the proliferation of DVRs. In his analogy, consumers wouldn’t need a DVR if all of their desired content was available in an on demand fashion. Bewkes also addressed the issue of advertising, which presents a problem for the video industry as a whole in an on demand world. Targeted advertising is the answer he believes. “It can be targeted. It knows you want fishing gear, etc.,” Bewkes said.
Conceptually, his points make sense. It doesn’t hurt that VOD offers cable MSOs (and IPTV players) competitive advantage over DBS providers – at least for the time being. Operationally, moving everything to VOD presents huge challenges. The server storage and bandwidth demands would increase significantly. But early indications suggest that VOD may well indeed become the norm for video consumption. Perhaps the future includes a hybrid of VOD and DVR, taking the best from both worlds. VOD provides the vast library of content and DVR provides the search/navigation functions and ability to record live events for future playback. Whatever the case, video service providers will be challenged to find the right mix to meet consumer demand, while steadily offering value add services to differentiate themselves from competitors.