Turning the tide

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Having been at the forefront of development in the video-on-demand (VOD) sector for more than a decade, SeaChange is now looking to snare new business in emerging markets. John Parnell caught up with SeaChange execs in Dubai to discuss how the Middle East fits into this strategy.

Pay TV subscribers in developed markets such as Europe and the US are embracing VOD services at an unprecedented rate, which is forcing both broadcasters and advertisers to reconsider their approach to the market.

"If there was anyone left who had any doubt that TV is changing and that personal TV, VOD and other forms of personal TV are being adopted by mass markets, then those doubts should now be dispelled," says Simon McGrath, chief marketing officer, SeaChange.

SeaChange has been heavily involved in UK operator Virgin Media's much-lauded VOD service, which is considered to be the first successful large scale deployment of its kind in the UK. Over the past 18 months the volume of VOD content accessed on the platform has quadrupled with the number of monthly VOD views rising from 10 million in January 2007, to a peak of 45 million in July 2008.

"We realise that growth in this industry is coming from markets outside the US. These clients along with Virgin Media are the company's bedrock in terms of meeting our projected numbers, but if we are going to become a growth stock and expand the company we need to be looking at the Middle East, south-east Europe, South America and Asia. Beyond 2009, we will also be looking to explore opportunities in Africa," says McGrath.

SeaChange recently completed an IPTV project with Turk Telekom in Turkey, which has prompted the company to look further afield in the region for new business.

"There is a lot of ambition, energy and a desire to implement new projects and we want to be part of that," he says. "We are now in talks with distributors in the region and are looking to recruit some permanent staff to service the area."

McGrath is also keen to highlight the differences between free to access, video library services such as YouTube and other P2P sites and the products that broadcasters can offer on a VOD platform.

"We are talking about high-quality personal TV, not on a website with grainy, poorly encoded content, but HD standard, captivating content that people are prepared to pay for, either through sensible subscription models or on a pay-per-item basis," says McGrath.

With pay TV subscriptions in the region currently languishing below sustainable levels, the pay-per-item service may be the more rational option for the Middle East market. McGrath disagrees.

"There will always be a blend of these two. If you want the most recent, top quality Hollywood content, that is going to be offered on a pay-per-view basis. Older library content would more likely be offered as a subscription VOD movie service not too dissimilar to a traditional pay TV movie service," he claims.

"New release movies would have to be offered on a pay-per-view basis as that is really the only platform for which we can acquire that type of content. For VOD, content subscription is the best way, either built in to the operator's packages or on an à la carte basis.

"I think that ad funded services only really come with scale, once you have that scale the advertisers start to get very interested. This would be dependent on the operators finding the scale," claims McGrath. "If you are looking pan-regional, then you would need to aggregate all of the eyeballs using all the different operators.

That means some collaboration via collective inventory handling and united campaign management from the advertisers across the region, which is not completely unreasonable. Going forward, perhaps not next year, advertising will play a more significant part in the revenue pie I suspect."

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