ABSTRACT
This chapter lays out the basic economic and technological assumptions underlying cable operators' attempts to use their digital platforms to deliver "on-demand" video services. It uses simulation analysis and sensitivity analysis to identify the factors most likely to determine the economic viability of video on demand. Simulation analysis and sensitivity analysis are used to identify the factors most likely to determine whether video on demand (VOD) is economically viable. More recently, the costs of commercially deploying VOD have declined, and cable operators have spent "more than 50 billion dollars upgrading their networks" and deploying digital cable to approximately 16 million subscribers. In addition to VOD, cable entrepreneurs hope to develop significant additional on demand revenue streams. Video servers, the main component of the VOD system, store and manage VOD content as well as deliver the content via the downstream network to the digital set-top box.
