The IPTV/VOD Landscape

Microsoft isn’t depending on just the Xbox 360 to dominate the market for IPTV. Microsoft’s Mediaroom software powers the IPTV offerings of many of the world’s major telcos in more than 2 million subscriber homes, including AT&T’s U-verse. Xbox 360 is the exclusive console provider of Netflix streaming content, and Microsoft is the big dog in the streaming-from-the-console space. But Sony’s PlayStation may be starting to waken from its streaming slumber.

Sony PlayStation
The PlayStation Network (PSN), with 14 million registered members, initiated its video download service in summer 2008. PSN offers 300 movies and 1,200 TV episodes—slim pickings relative to Xbox Live—on PlayStation 3 (PS3) and PlayStation Portable (PSP) consoles.

Figure 6. Just launched in summer 2008, the PlayStation Network’s video download service offers (at this writing) 300 movies and 1,200 TV episodes.

Rental prices for movies and TV shows are similar to those for the Xbox, and the PSN offers the same 14-day, 24-hour viewing window. Unlike Xbox Live, the PSN does offer movies for purchase. However, PSN enforces a stiff redownload policy. A user who deletes a downloaded movie to free up space on a hard drive, for example, would have to request a one-time courtesy redownload from Sony customer service to replace the lost movie. For digital downloads to achieve ubiquity in the marketplace, they will have to be more user-friendly than DVDs, not less. DRM may be a necessary evil, but turning purchases into rentals might not be the best way to win friends and influence customers.

VUDU
Since the launch of its walled-garden VOD network and stand-alone STB in 2007, VUDU, Inc. has delivered some of the highest-quality IPTV content available. With the introduction of its new HDX 1080p/24 fps format in October 2008, VUDU has established a new industry standard for IPTV image quality. VUDU encodes all content in variable bitrate (VBR) H.264. SD content is encoded at 2.2Mbps, non-HDX HD content at 4Mbps. Both SD and HD content plays back in 1080p (SD is upconverted).

Figure 7. Since the launch of its walled-garden VOD network and stand-alone STB in 2007, VUDU has established a new industry standard for IPTV image quality.

VUDU’s proprietary peer-to-peer (P2P) delivery system, which treats other VUDU boxes as distributed servers, uses upstream bandwidth to feed content, enabling SD and HD content to start instantly. The higher-quality HDX content is designed to be downloaded, not streamed. VBR encoding hovers around 9Mbps with spikes up to 20Mbps for action scenes. Depending on one’s connection, it can take hours for an HDX movie to download. The good news is that VUDU’s web interface allows users to initiate downloads from anywhere.

All VUDU content is pay-as-you-go, with no subscription fees or advertising. Rental prices range from $2 to $4 for SD movies and $4 to $6 for HD or HDX movies. Users can extend the rental for a second day for $1. TV shows can be purchased for $2, and movies sell for $5 to $20. VUDU’s standard BX100 STB ($300) comes with a 250GB hard drive, and HDMI, Ethernet, and audio/video cables. VUDU recently dropped the price of its box from $295 to $149, and it also offers accessories, including a wireless kit ($100) and a travel kit ($70) to take downloaded movies on the road.

VUDU boasts a wide selection of more than 10,000 movies and TV shows. Through agreements with all the major networks and studios (except Sony), movies become available for sale the same day they’re out on DVD; they become available for rental 30 days later. (Warner Bros. movies are rentable on DVD release day.) The content library is updated every week. Adult content is also available on VUDU through the Adult Video Network, and yes, VUDU does enable parental controls.

VUDU’s high-end ($1,000) XL box is designed for custom home theater installations. The box contains a whopping 1-terabyte (TB) hard drive and integrates with IR-based universal remotes (the standard STB comes with an RF remote). VUDU has licensed 1,000 custom installers for the XL, and some see custom installations as VUDU’s refuge from an expected onslaught of IPTV competitors.

Apple TV
First released in March 2007, the Apple TV STB received a major software update in 2008 that redefined the product as "a networked video iPod for your living room." Any movie or TV show in the iTunes store can be viewed on Apple TV for $3 to $4 for SD and $5 for 720p HD. TV episodes are available for purchase at $2 each. Users have 30 days after download to play back content; the familiar 24-hour viewing window applies.

Figure 8. The Apple TV STB received a major software update in 2008, which redefined the product as "a networked video iPod for your living room."

Progressive download enables fast starts for SD; HD should be good to go in a minute or three. Apple TV boxes come in 40GB ($229) and 160GB ($329) versions. The only video outs are HDMI and component video—no composite or S-video—making Apple TV pretty much an HDTV-only device.