May 15, 2009 – In what could be the harbinger of things to come in the evolving over-the-top arena, Web content distributor Vudu has signed a deal with home gateway supplier Entone that will facilitate delivery of video-on-demand service to IPTV providers' customers.
Until now Vudu has relied on selling its $299 BX100 set-top as the means by which its VOD customer can access what is widely regarded as one of the highest quality Web-to-TV services in the market. As previously reported (December, p. 23) Vudu has been looking for ways to affiliate with service providers to expand its relatively small consumer base. The Entone deal is the first publicly announced result of that effort, though it does not entail a direct tie-in with any specific service providers.
Instead, according to Steve McKay, CEO of Entone, the new partnership allows IPTV providers who use the Entone Hydra gateway to strike independent revenue-sharing deals with Vudu to provide subscribers access to content without having to purchase the BX100. "Instead of investing in a new VOD infrastructure, our IPTV customers will be able to provide a superior VOD service using the gateway they already have in place," McKay said.
Once the new option becomes available this summer, existing Hydra customers will be able to support the Vudu service by downloading the proprietary Vudu player and distribution software. Subscribers will be able to access the Vudu VOD menu from their IPTV electronic guides by clicking on the Vudu icon with their remotes.
Vudu claims to have the largest library of HD movies in the market, with about 1,500 titles. The warehouse includes over 5,000 HD options overall, including TV programs, along with over 15,000 options in SD format. Vudu uses a combination of techniques, including advanced compression processes applied to MPEG-4 AVC, progressive download and its own peer-to-peer distribution technology, to deliver TV-quality HD signals over the Internet to TV sets and even boasts a very-high quality HDX version of some films that surpass typical network-delivered HD from cable and telcos.
According to Edward Lichty, executive vice president for strategy and corporate development at Vudu, the progressive download HD content, most of which is offered on a rental basis, though some if available to own, shows up on the screen within two seconds of ordering content, assuming the user has broadband access at four megabits per second or higher. The HDX content, in the 1080p format, does not use progressive download and is only available for purchase at this point with a download time of "several hours," according to Lichty.
"IPTV is becoming an option for consumers, and we want consumers to get access to Vudu through the devices they already have in their home," Lichty says. "Entone's integration with Vudu is a great consumer experience."
McKay notes that, along with offering Vudu VOD as a complement to IPTV, Entone later this year will provide telcos that don't offer IPTV the option to include the service with other over-the-top offerings, which will be supported by Entone's new SelecTV service. As reported in April (p. 12), the initial iteration of SelecTV, delivered via the Entone Janus gateway, will allow these telcos to add on-demand video content as a TV offering to customers who rely on old analog cable or over-the-air reception for broadcast service.
Both the Hydra and Janus gateways are designed to support distribution of service to multiple TVs in the home without the use of additional set-tops, and both accommodate whole-home DVR as a modular option. The costlier Hydra can be shared by up to six television sets in the home and supports distribution of up to three simultaneous video streams in either HD or SD mode. The Janus supports simultaneous decoding and distribution of one HD and one SD stream.
McKay, noting the Vudu deal is not exclusive to either party, describes the development as "groundbreaking in terms of offering a new model for operators," and adds, "It won't be the last of its kind." In fact, he says, Entone is in negotiations with other over-the-top suppliers and anticipates more announcements will be made in the months ahead.
The new model allows over-the-top suppliers and service providers to move away from the antagonistic stances that have put SPs in a defensive position and made it difficult for the Web entities to build market bases. "It's a win, win, win development," McKay says.
"It's a win for operators because they gain access to the largest collection of online VOD content in the market without having to build a VOD infrastructure," he continues. "It's a win for Vudu because they can expand the reach of their video library by not being tethered to one device. And it's a win for consumers, who can now get this type of converged Web and IPTV service without having to spend hundreds of dollars on different devices."
Entone's customer base presently serves over 200,000 households, McKay says. Vudu presently serves "less than 100,000" customers, according to Lichty.