Vudu Caters to Channel with IPTV Products, Strategies

Vudu is the first IPTV venture that cares about the custom channel.

"What I'm hearing is that we're the most exciting thing at the show," said marketing VP Patrick Cosson during the Electronic House Expo in March.

Even forgetting the custom angle, Vudu has several things going for it -- from the deals it has secured with the studios to its novel video-distribution platform that enables users to begin watching content almost immediately.

Vudu requires an IPTV box at the users' premises. Movies, TV and other video content (no audio yet) can be purchased for about $19.99 or rented for about $2.99 (more for HD content and new titles; less for vintage movies and TV shows).

Content up to 1080p begins streaming almost instantly after your order a title.

Vudu's Distributed Technology

Most IPTV services have content stored in a single, central server, far far away from the consumer.

Being so far away, movies must make several hops across the network to get to any particular household. That takes time, so the streams are buffered until there's enough local content to begin a stutter-free showing.

Vudu, on the other hand, uses a distributed platform -- sort of a mesh-networking platform. A little bit of the most popular movies are stored in Vudu IPTV boxes around the country.

If you want to watch a movie, it comes to you from bits and pieces via your neighbors' Vudu boxes.

"We're on the edge of the network so we're quicker and more efficient," Cosson says, adding that Vudu is always "changing what we push to the edge of the network," based on the demand for content at any given time.

The solution is "more complicated" than typical peer-to-peer networks (a la BitTorrent), and less expensive than content distribution networks (CDNs, popularized by Akamai) that get you "almost to the edge of a network," Cosson says.

Vudu's network is closed, and content is pulled sequentially from any number of sources, including other Vudu boxes and the company's own servers.

The real secret is in the quality-of-service (QoS) software developed by Vudu. "Every box is talking to every other box and negotiating bits and pieces of content," Cosson says.

He explains that Vudu uses about 20 to 30 boxes to recreate the content, "so the demand on each box is quite low."

The distributed architecture is extremely efficient because it reduces the need for Vudu to maintain costly central servers.

"There are enough boxes out there for us to see efficiency on our network, so it lowers our cost of distribution," Cosson says. Apple, on the other hand, distributes content "all from a central server, so it is very costly for them."

Then again, you have to wait about 15 minutes to get your movie from Apple TV, and that's just for 720p content, Cosson explains. Other services can take hours to download HD content.

Cosson thinks that Vudu is the only company that can deliver 1080p content in real time.

Available Content

Today, Vudu offers more than 6,000 titles.

"We have the most content. I'm sure because of the way that we count," Cosson insists. He says that other companies may claim larger rosters but that they may double-count, for example if a title is available to rent and purchase.

He asserts that Amazon's Unbox, for example, counts movies that are currently unavailable to rent because of the "HBO hole." (Some HBO movies come in and out of circulation because of tired old HBO rules.)

And Apple TV is "still floundering," Cosson claims. "Their studio relationships permit just rentals, not buying." Plus, the service offers only 720p content.

Channel Strategies

Vudu's biggest play is in the mass market. It has to be, or else the company couldn't seal deals with the studios.

Its key product is the $295 Vudu box, sold online and through Best Buy, Magnolia and other retailers

Recently the company added the higher end, channel-only Vudu XL, a 1TB box that retails for about $1,000 (with a healthy margin for integrators).

"We believe there a channel at the high end that needs its own set of products," Cosson says.

He should know. Formerly, he worked at Slim Devices (purchased by Logitech), which produced the popular SqueezeBox music distribution device for the mass market. At Slim Devices, Cosson's team worked on the much-higher-end, channel-only answer to SqueezeBox, the Transporter.

"This [Vudu XL] is our Transporter," he says.

In addition to its larger hard drive (1 TB can hold about 500 movies in standard def), the Vudu XL has more integration options than its lower-end counterpart.

While IR is now supported on both platforms (via an RF-to-IR dongle), two-way IP communications is only available on the XL.

At EHX, Vudu announced that Control4, Crestron and NetStreams have integrated the XL's IP protocols into their controllers. (Logitech, Philips, UEI and URC have incorporated Vudu's IR codes.)

The two-way integration sets Vudu apart from its competitors, particularly Apple. "IP control is important for this category," Cosson says. "It's something that Apple won't do."

Channel Response

Vudu has established a rep network for the channel -- the same folks that are representing typical custom-oriented lines.

Vudu couldn't be happier with the response it has received so far from the channel. Cosson says the channel "needs an answer to Apple TV."

He relates tales from dealers whose customers ask for Apple TV, "so now they're able to give them another solution."

Still, it's a whole new paradigm for home systems integrators who shudder at the notion of less-than-perfect digital delivery.

Then again, Cosson points out, dealers have learned to thrive on digital audio distribution, so video streaming should be an easy enough leap.

Functions for the Future?

There are many things that the Vudu box cannot do. For example, all content must come from Vudu's service.

You cannot transfer your own movies to the box. At least, "not right now," Cosson says. "We're adding new features every month. We have a very long road map."

Also, "not at this time" is support for multiroom distribution, networking with PCs, and integrating with network attached storage devices.

I have a funny feeling we'll see these features in the future.

And of course, Vudu's content library (like its competitors') is still being built, and there are a lot of popular titles (like the Godfather) that you won't find there.

Still, Cosson says, "People have so much pent-up energy for digital distribution….If the attitude is that this will supplement my experience, then it will be very successful."