DirecTV takes on video-on-demand

Constrained by the technical limitations of its satellite television service, DirecTV has watched from the sidelines as cable operators and phone companies' high-end TV services have rolled out increasingly popular video-on-demand features.

The company is now preparing to launch its own VOD service this spring, according to a report in The Wall Street Journal.

Called DirecTV On Demand, the service, now offered in beta, is designed to deliver VOD content to customers in two ways: via automatic transmission of selected movie titles, which will be stored on subscribers' digital video recorders and then ordered up for viewing whenever the subscriber wants; and via Internet downloads of additional content, including TV shows, streamed to the subscriber's set-top box.

DirecTV also can track customer activity on its Internet-connected set-top boxes, the Journal report noted, and use the data to help it sell targeted ads.

DirecTV is expected to offer about 3,000 shows and movies, most of which will be delivered over the Net; the company will use the automatic transmission for exceptionally popular programs and movies. Comcast, meanwhile, says it offers about 10,000 pieces of VOD content, much of it for free; movies are available for about $5.

Whether DirecTV On Demand will measure up to alternatives offered by cable and Verizon Communications' Fios service is up for debate. Pricing will certainly be a factor, but so will the timeliness of DirecTV's VOD deliveries. If customers who order a movie or TV program for Net-based delivery to the set-top box have to wait too long for the content to download--and video does eat up a lot of bandwidth--they might be disinclined to use that option. Fios, a fiber-optic-to-the-home system, can deliver large video files in seconds.

Satellite television providers can't stand still, in any case, because cable and phone companies continue to ramp up their TV offerings.

DirecTV itself has been getting flack from subscribers unhappy with the company's drift away from the TiVo digital video recorders it once endorsed and its push toward sales of its own DVR, the HR21-700, which, some users say isn't as versatile as its TiVo counterpart.

Note, though, that use of DirecTV On Demand in beta (and, presumably, in the service's fully launched form) requires a DirecTV-brand high-definition DVR receiver--the HR20 or the HR21--and, of course, some form of broadband Internet service (minimum 750Kbps connection speed), which, of course, is available only through a cable provider or phone carrier. So you want DirecTV On Demand? Buy DirecTV's DVR receiver, and pay your cable/phone broadband bill.

In this environment, DirecTV has to do whatever it can to avoid losing market share.