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Video on Demand, Competitive Differentiator

With competition heating up for video services in Europe, service providers will employ Video On Demand (VOD) as a key differentiator in acquiring new subscribers, with evidence suggesting that the move from near-VOD to true VOD dramatically increases adoption rates.

VOD is fast becoming a must-have feature -- and for those operators with the technology already in place, the next step is to differentiate even further via HD VOD, along with increasing the size of the content library.

ABI Research, in a recent market study, categorizes the growth of VOD subscriber levels in the contexts of programming and functionality.

The number of concurrent VOD streams will increase markedly over the next five years, and the Asia-Pacific region is poised to experience high levels of growth -- from 1.66 million VOD streams in 2007 to almost 21 million in 2013.

In total, the global trend toward increased usage of VOD streams will multiply tenfold throughout the years 2007 to 2013, with a compound annual growth rate of nearly 45 percent.

Several companies set up their VOD offerings over the past few years with the intention of boosting future subscriber numbers. For instance, Cisco acquired Arroyo for its VOD solutions in August 2006, obtaining customers such as Comcast, Time Warner, and Charter.

Moreover, Concurrent has offered one of the most successful VOD platforms for the cable industry -- illustrated in 1Q 2008 when the company shipped 50,000 VOD streams, with customers including BrightHouse and Time Warner.

Western Europe will see the strongest surge in VOD users with the largest subscriber base and a slightly higher ARPU than North America, thereby making it the eventual leader in the market.

Video on demand has existed since the early 2000s. However, since its inception, the service has remained relatively dormant.

ABI Research believes this dormancy will break as the evolution of video consumption has prepped consumer interest for VOD services, and the arrival of IPTV operators that offered true VOD from the start has raised the bar of VOD services.

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