VUDU makes a play to become the VOD service of tomorrow

Video on Demand (VOD) has been a disappointment. As offered by most cable systems, video on demand should have made it easier for you to rent movies for home viewing than Blockbuster or Hollywood ever could because you never have to leave the house to get a VOD movie. But most VOD systems have failed to delight customers for reasons I won't get into right now other than to say that even if the movie selection is decent, the interface to find the movies is terrible. So most people don't use VOD.

Apple saw this opportunity and assumed its iTunes music business could easily extend into video, first with a pay-per-download model (one I first wrote about in 2007, explaining why it would not work -- I was right), and eventually with a VOD model, once the content owners could see their way to taking that plunge. But the iTunes VOD business relies on people buying Apple devices -- something millions of people do -- and people wanting to watch movies on those devices -- sadly, something far fewer people do.

This has caused me to encourage Apple to port its iTunes video service to non-Apple devices that are connected to the TV. I wrote about this a few times recently, explaining that video services need to connect to the TV to have a chance and that LG and Samsung Blu-ray players (and more recenlty, connected TVs) were doing that quite well. It would be a natural fit for iTunes to deliver content to those devices. But, alas, that's not how Apple rolls, as the Cupertino company prefers to make its money from high-margin devices.

Enter VUDU. And Amazon. And Blockbuster. These are the three VOD services that are all competing to get into the Blu-ray players and TVs selling at BestBuy today. They all have software solutions that enable porting their VOD services to a variety of devices. And to be fair, Amazon has been on TiVo boxes for several years now and a whole year ago created a streaming version of its service in order to partner with Sony to deliver VOD to the TV makers' Bravia Net-connected TVs. Blockbuster has made a few similar announcements since CES of this year.

What has me interested today is the recent spate of announcements confirming that VUDU is serious about this strategy -- remember, this is a company that two years ago announced its own expensive set top box designed to deliver extremely HD content over the Internet. The company has clearly come to understand that the future of video delivery needs to be multiplatform in nature -- see Netflix if you need proof of consumers' interest in that -- and so while VUDU continues to sell its boxes, it is also embedding its service into Blu-ray players and connected TVs. Just in the past week three such announcements were made (a Mitsubishi TV, an LG TV, and an LG Blu-ray player). 

And if you're LG, why not? LG already offers an aggressive array of content options, including Netflix (which isn't technically VOD since its catalog is relatively thin on recent releases), Pandora, YouTube, and many more over-the-top options. From LG's perspective -- and, I assume, from that of Samsung and the rest -- offering multiple, even competing services increases the likelihood that something will satisfy consumers. And assuming they get a kickback on the revenue generated, it creates almost no downside for LG. (Which leads to more speculation as to why VUDU is suddenly showing up in so many devices -- they probably are more aggressive on the rev share; even if Apple wanted to put iTunes in devices, chances are good it wouldn't be willing to offer VUDU-like terms.) 

It's in this way that VOD may finally succeed. Of course we still have to solve that ridiculous 24-hour viewing window that doesn't let my wife finish movies during which she falls asleep. By the time she's ready to pick it up where she left off, it has already expired. But that will come as content owners realize the opportunity has finally arrived (oh, and that pirated streaming sites are getting better by the day).

Have you tried OTT VOD? Whether by Connected TV, Blu-ray player, Xbox 360, or Apple TV: What do you think? Is it ready?