HOLLYWOOD movies are driving the on-demand business in Asia Pacific—a business that is still in its infancy. But the industry is being hamstrung by a complex array of technological and cost issues.Safeguarding content from piracy, bandwidth availability and billing issues are among the factors impeding Video-on-Demand and Subscription VOD services. "Network infrastructure capacity constraints and content protection remain the biggest obstacles for SVOD carriage," says Caroline Wong, Senior Director, Sales and Marketing, HBO Asia. "Most cable systems are in the midst of upgrading their network; however until that happens, SVOD availability will be limited." And there's a bone of contention between the Hollywood studios and some VOD operators. Microsoft's DRM encryption software is the only one approved by the US majors, and that precludes companies like Anytime from working with other operating systems and platforms such as Apple, Linux and Nintendo's Wii console, according to Peter Lorimer, Anytime's General Manager."Scale is required for this business so it's important that Anytime can reach the widest addressable market," he contends. The launch of Anytime's broadband VOD service in Singapore has been delayed while it locks in promotional plans. The firm aims to introduce ANYTIME-TV in Taiwan and Korea in late 2007 and early 2008, and other territories will follow later in 2008.However the DRM software isn't regarded as an issue by some studios."We have done a significant number of VOD/SVOD/PPV/ NVOD deals across the region," says Ross Pollack, Senior Vice President, Distribution, Asia, SPTI." While the security of our content is of paramount concern, we have not had a situation to date where we've not been able to work together with a platform or operator to bridge any technological gaps."From a content providers' perspective, Pollack sees the major challenges as content protection and piracy, plus managing windows and finding ways to "create win-win situations for all of our clients."Colin Binny, President/CEO of Amaru, Inc, which owns the M2B brand, a major provider of interactive entertainmenton- demand, education-ondemand and e-commerce streaming over broadband channels, Internet portals, and 3G devices, understands the studios' allegiance to Microsoft. "This is the system they feel most comfortable with, and are probably confident that, despite whatever attempted hacking and breaching of the Windows Media and DRM encryption software, Microsoft would always work towards maintaining and upgrading the integrity of their platforms," he says.Looking more broadly at the industry, Binny continues, "I see two clear issues ahead - one is the copyright protection of the content online, the second the ability to scale capacity at the backend as the viewers surge in the coming years. Content protection online is a major issue especially with the major studios and distributors. You need to ensure that your server farms and streaming networks provide adequate protection against hacking (both externally and from your own staff as well), have robust billing systems, and prevent downloading in various forms and spill-over to territories other than those you have acquired the copyright for. Capacity issues can affect the quality of your service and cause viewers to lose confidence in your network. You need to ensure that you have catered for redundancy, sufficient inter-connectivity with telco and ISP networks and Internet gateways, and proper load balancing and load distribution to ensure smooth streaming of the VOD content, taking into account surges in streams whenever popular movies or TV programs go online."No doubt some teething problems were inevitable as telcos such as Korea's Hanaro Telecom launched its on— demand service, HanaTV."No one could have taught us as we are one of the pioneers for this new business," says Sunkey Jo, Hanaromedia Contents Planning Team Leader. Jo lists some of the problematic issues as programming guidelines and restrictions in SVOD — "licensors are usually conservative about the volume of episodes weekly" — plus the definition of a network, and establishing which DRM product is credible. "As time goes on, we have been finding which standard or guideline we need to have to complete the industrially standardized service," he adds.SingTel executives are buoyed by customer response to the mio TV service, which debuted in August. mio TV has a triple offering: normal pay-per-view VOD; subscription VOD, branded as "on-demand channels"; and advertisementsupported free VOD."Initial buy rates have been very encouraging," says Philip Wu, Director of Content Marketing, SingTel. "As to be expected, the ad-supported free VODs have had the highest viewership, but the VODs and subscription VODs have also seen encouraging buy and takeup rates."Wu sees SVOD and VOD as targeting two very different customer segments. SVOD channels appeal to the movie buff, providing up to 28 movies each month (with up to 8 new movies every week), at $S12 ($US8) per month.Conversely, VOD channels appeal to the selective movie fan, who wants a wider selection of movies to choose from and doesn't mind paying a bit more, per movie, to get what he wants."When we began discussions with the studios on new models, such as SVOD and advertisement-supported VOD, there was initial hesitance," Wu says. "We are very pleased that some of the major studios have taken the leap to work with SingTel in trying to shape the market in this aspect. We believe that TV as a business needs to address the rise of new media (PC downloads, streaming etc), and that we are developing a service that will meet the increasingly high demands of customers in the future for nonlinear, interactive television."Anytime's Lorimer says the subscription model itself poses a challenge: "The cost and revenue models need to match. Where ANYTIME-TV is delivering 'all-you-can-eat' consumption models to subscribers, yet has variable costs based on the amount of content consumed, there is a fine line between remaining profitable and giving the market what it wants. There are also significant challenges posed for programming – a standard SV0D offering is a long way off."SPTI partnered with mio TV to create the world's first 'dayand- date' VOD service, branded SVOD channels and a new linear channel from its networks division. The 'day and date' deal allows mio TV to make major Hollywood films available on VOD to their customers on the same day as the local home video/ DVD release."This has proven to be a competitive advantage for new platforms and we've managed to apply this model to South Korea as well, where we closed the first 'day and date' deal in Korea with Hanaro Telecom for their HanaTV service," says Pollack.Amaru's M2B World is active in Singapore, Malaysia, Japan,China and Indonesia, and it plans to expand next year into Korea and Australia. Recently it consolidated all its VOD websites online into new website, WOWtv, offering three levels of service: a first tier of 20-30 free, ad-supported channels; a second tier of 15-20 channels where users pay a small annual fee to view all; and a premium service on a pay-per-view basis."Though we have not officially released any figures on the actual subscriber base, our target is to have at least 100,000 registered subscribers on this service within a year," says Binny. "Since our soft launch a month ago, we have already exceeded 10,000 registered users. This will complement our M2Btv service which is an IPTV service through the set-top box for viewing on a TV set in the living room.""We see the broadband/VOD business increasing by anything from 30% to 50% year-onyear due to the acceleration of broadband penetration rates throughout Asia and the rising and affluent middle class, many of whom are young working adults and young families. However, one key aspect of attracting this market is to have a balance of Hollywood and local content, to give VOD sites a sense of localisation with which Asian viewers can identify."HBO ON DEMAND is currently available only in Hong Kong, to HBO/MAX PAK PREMIUM subscribers on nowTV. Takeup since the February launch has been very positive and increasing steadily as the service offers flexibility and convenience and gives power to subscribers to select content they want to watch at any time of night or day, says Wong. The top Hollywood blockbusters are the most requested programs, very much in line with HBO's linear channels and the overall viewing preferences in Hong Kong.ViDeOnline Communication (Asia) Limited and Hutchison Global Communications Limited (HGC) launched the hgc. o8media.com on-demand digital media entertainment service in Hong Kong in March, offering Hollywood and Asian movies, music and music video content on a single service platform. Movies are available to rent, not buy, a service that VDO plans to add later."Our service in HK is doing quite well," says Samson Lee, VDO Country Manager, Hong Kong & Taiwan. In September, VDO joined with Chunghwa Telecom in Taiwan to launch on both IPTV and broadband platforms. VDO was due to begin a service in China in October in league with a major ISP. Lee confirms the China movie service will be rental only.HanaTV had around 600,000 subscribers at the end of Sept 2007. Hollywood movies are a basic component of its VOD business: consumers are demonstrating an appetite for current titles as well as library product. The demand for recent releases co-relates to their boxoffice performance in Korea, and The Bourne Identity was popular, feeding off the cinema release of The Bourne Ultimatum.Will on-demand services eventually impact linear movie channels? "Absolutely not, it's complementary," declares Anytime's Lorimer. "Often people don't want to choose (movies via VOD or SVOD); they just want to sit down and relax in front of the goggle box." Also, Lorimer observes that content providers will continue to make a lot of money from pay-TV services (and ever-increasing amounts in many markets), and they would not want to jeopardize that revenue stream.Pollack observes, "As the ondemand business in Asia is still nascent, we will have to see how consumers react to the different on-demand models. I don't think one model will necessarily be more popular than another model as VOD sales tends to be more focused on current titles whereas SVOD works better for library titles. Basically, the two models work hand-in-hand to cover all your subscribers' movie-watching needs."

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