CNET.com: Death of Voom: we just weren't ready

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Death of Voom: we just weren't ready
By Molly Wood, senior editor, CNET.com<O:p</O:p

Tuesday, April 12, 2005


<O:p
I confess: I helped kill Voom. When I visited the Voom booth at CES 2004, I stood, transfixed, through demos of stunning HDTV programs, networked photo sharing, and channel after channel of gorgeous HD programming. That demo won me over so much that I wanted to sign up right there and then. But I didn't. Sadly, hardly anyone else did, either.
<O:p
Voom offered a revolutionary new satellite service, serving up 39 HD channels out of the gate--21 of them exclusive to Voom--and promising networked, high-definition DVRs to come. Plus, it had a supercute logo, reminiscent of TiVo's, and it immediately engendered passionate loyalty among its subscribers. But those subscribers numbered just 40,000. The company lost $661 million in 2004 alone and ultimately sold its satellite to EchoStar for just $200 million. Despite some herculean efforts by Cablevision chairman Charles Dolan to save the company, he and the rest of the board voted last week to shut down the satellite service and halt operations on April 30. What went wrong? In a nutshell, Voom's fatal mistake was to tie its fortunes so tightly to HDTV.
<O:p
High-def and going nowhere
Voom was ahead of its time, and the mass market isn't actually doing the HDTV dance, despite all the annual buzz about "the year of HDTV." (A quick spin through Google will tell you that "the year of HDTV" happened 1998, 2000, and 2003, and predictions now include both 2005 and 2006.)

<O:p
When Rainbow Media announced that it was developing Voom, in 2003, it called the service the first "designed to meet demand of growing, underserved high-definition market." But the problem with that strategy was that, in 2004, just 10 percent of ffice:smarttags" />lace w:st="on">U.S.</ST1:place> households owned high-def TVs, putting 2003's underserved market at, most likely, a few percentage points lower. The Cable & Telecommunications Association for Marketing found that, of more than 1,000 people surveyed in 2004, 87 percent had some awareness of HDTV. However, according to the Yankee Group, quoted here, just 20 percent of <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com /><st1:country-region w:st=<ST1 /><st1:country-region w:st=<ST1:place w:st="on">U.S.</ST1:place></st1:country-region> households intended to buy high-definition televisions in the near future. Meanwhile, a 2003 study by Dove Consulting pointed out that expensive equipment, confusing programming, and uncertainty about the benefits of HDTV are the top barriers to more widespread adoption.<O:p</O:p

Before I saw Voom's fabulous CES display, I had a perfectly good home-theater setup involving surround sound, a media receiver, an aging television, and TiVo. I still have the same setup. The reason? Subscribing to Voom meant, at the time, about $700 in start-up costs, plus a new TV, and the company didn't even have its DVR yet. I'm pretty sure I'm not the only one who ran up against that wall. A new HDTV is not an investment to be undertaken lightly. They're cheaper, but they're not cheap. An entry-level HDTV costs upwards of $700, and it's all uphill from there.
<O:p
Looked and never leaped
So, Voom's big mistake was to advertise itself as a high-def television service. Right off the bat, it's scary, expensive, confusing, and a technological leap from what most consumers currently have. If, perhaps, it had marketed itself as an amazing satellite service--a friendlier alternative to the monopolistic and mostly unlikable DirecTV and Dish--with the best DVR you've ever seen, which just happens to have more HD channels than anyone out there, in case you're into that sort of thing...then, maybe. Of course, it would also have had to get that darned DVR out the door, which it never did.<O:p</O:p


But the fact is, Voom hung its fortunes on the rocky road to HDTV adoption and got bitten by the same, inalienable fact that's bitten so many analysts, FCC muckety-mucks, and television manufacturers over the past five or six years. HDTV adoption is slower than expected, and you can't force it to go any faster just by showing people some pretty, pretty pictures. In fact, with Voom gone, HDTV options are scarcer and more confusing than ever--but that's another column. So, good-bye, Voom. Thanks for the memories. Sorry I never signed up.<O:p</O:p
 
Hey cool we got linked in that article.

BTW at CES I had a nice meeting with CNET's own Brian Cooley, hes a real cool guy and he even stops in here at SatelliteGuys from time to time. :D
 
Nice to see that someone has put it so nicely Ms. Wood. Well written and to the facts.

-scott

updated. Thirty lashes to me. So sorry Ms. Molly Wood. Forgiveness please.
 
So I'm the only one here with an uncle Molly? :no

When he gets out in 7-10 years I'll have to ask if that's his real name.
 
Scott Greczkowski said:
Hey cool we got linked in that article.

BTW at CES I had a nice meeting with CNET's own Brian Cooley, hes a real cool guy and he even stops in here at SatelliteGuys from time to time. :D

did not see how satguys got linked... Where is it?
 
So, Voom's big mistake was to advertise itself as a high-def television service. Right off the bat, it's scary, expensive, confusing, and a technological leap from what most consumers currently have. If, perhaps, it had marketed itself as an amazing satellite service--a friendlier alternative to the monopolistic and mostly unlikable DirecTV and Dish--with the best DVR you've ever seen, which just happens to have more HD channels than anyone out there, in case you're into that sort of thing...then, maybe. Of course, it would also have had to get that darned DVR out the door, which it never did.

I really think she hit the nail on the head with this. If anything, Voom should have waited until the DVR was already done, and then hit the market.

Regarding HDTV sales, for anyone wanting a big screen TV, there's nothing available but HDTV. And even smaller sets are now going the HD route. But try to find a non-HD set larger than 36" and you pretty much can't. So it shouldn't be that long before it's more accepted, but of course Voom was going after a market that wasn't developed enough yet, especially in 2003.
 
That is the kicker. Had Voom launched today it would have found a much larger audience. In 2003 I still did not own an HD set. Today I have three of them although having Voom is what compelled me to buy the third.

I think that Charles Dolan's effort to save the company was based on this same realization. He recognized that they launched to soon but also realized that tomorrow will be too late, it was now or never. Unfortunately Golden Spoon Jimmy pawned his father's satellite.

The other two DBS providers are asleep at the wheel while cable is rapidly forging ahead. The perfect time to launch was right now. Three years from now Cable will likely offer what Voom has today. By that time a new sat service will have missed the window of opportunity.

The question now is, how long can E* and D* last given that they are falling even further behind?
 
Amphicar770 said:
...The question now is, how long can E* and D* last given that they are falling even further behind?
I'm not sure about D*, but E* is still picking up about 40K subs every 10 days, so I wouldn't worry about them.

As Sean (and Charlie, too) says, E* treats HD as a revenue source. When it will make them money, it will be implemented. That's how a business survives.
 
You guys fail to realize VOOM was forced to launch by the FCC. It had to start marketing service by the time it did to customers by order of the FCC.

VOOM had so many reprieves it almost lost its satellite orbital slot. Before the launch of the bird it looked like they were just sitting on the frequencies for YEARS and denying the public from benefitting from them.
 
This article was spot on. My family, friends, and coworkers are mostly working class people and none of them have hdtv or plans to get one. Although one of my friends is a graphic artist and probably has nearly $10,000 of computer and av equipment at home, his family still watches tv on a 10 year old 27" JVC. He has heard me talk about how great Voom is and has certainly seen hd on numerous trips to BB, but he is not interested because he is satisfied with what he has now. His family income is nearly $100,000 a year, so he can afford a hdtv, but does not have one.

I think that is the hd problem now-- that if people are satisfied with what they have now and are not in the market for a new tv, there is no compelling reason for them to go hd. Unlike the difference between b&w and color, which was dramatic to people, the difference between hd and sd is not as striking unless you have the two side by side in your home. People see hd displayed in stores, but it is not the same. There will be a year of hd, someday.
 
I think that year is getting much closer. Wal-mart now sells mostly HDTVs. Any of their larger sets are HD-capable, and now even some around 30", so if that's not becoming mainstream, I don't know what is.

I'm hoping that with the release of HD-DVD, it will help spur the interest for HD programming because part of the problem is that even those who own HD sets often times don't realize they're not watching HD programming when they're viewing DVDs or SD. But it looks like we're going to endure a whole other headache with HD-DVD so who knows what kind of influence it will have.

Personally, about everyone I know who's gotten a new TV within the last year or two has gotten an HDTV. People who I never would have suspected have bought them, and some have even invested in OTA antennas to receive programming. So while there are surely a lot of clueless people, it might not just be people who read web forums who have a keen interest in getting HD programming. It's just now starting to have the snowball effect that it needs to gain mass acceptance IMO.
 
Missing the point...

It's not so much how many HDTVs are being sold, rather, how many people are actually using them to view HD programming (and plan to). Just because someone owns an HD-capable TV in now way means they will actually view HD programming on it.

The biggest problem has been HDTV is now EASY to enjoy. Sure, it's easy to folks around here who are more techincally-oriented but, to the average person, it's still VERY confusing. Let's look at a list of things to buy/be concerned about to view HD programming:

1. HDTV--more expensive than an SD TV.
2. HD decoder (of some kind). What kind do I get? Which leads me to #3...
3. What service am I using? Do they offer HD programming. If so how much? If so, how much more do I need to spend per month?
4. Do I want to/need to switch services?
5.What kind of cables do I use and why? How much do they cost?
6.420p, 1080i and 720p. Nuff said...
7. Am I going to need an OTA antenna to receive locals? We're back to THAT!!??
8. I'm watching channel XYZHD, why do I still have those bars on the sides???
9. I'm watching channel XYZHD, why isn't the show in HD?
10. What do you mean this isn't TRUE HD it's upconverted???
11. Why do my sports look so much better than my movies in HD?
12. There's still a lot I want to watch, which isn't in HD.

I could go on but this is a general picture of what needs to be taken into account. Now, let's look at a non-HD setup:

1. Buy a TV. Doesn't matter if it's HD or not.
2. Plug it into the same service I'm using now. Might have to set something up on the TV but, otherwise, it's plug and play.
3. Watch my favorite shows.

It's still MUCH easier for SD than it is for HD. Until it gets easier for the average Joe it just won't be accepted (unless it's forced onto people, which hasn't been happening). I didn't even mention a dvr. What if someone has a Tivo and doesn't want to spend the extra cash for a TivoHD or they don't have DTV and their cable company doesn't offer a dvr yet? That's another problem for those people who have adopted a dvr.

So buying HDTVs is not even half of the battle. It is a big part of it but there's still a LOT left to figure out. Honestly, I don't know what the solution is but I firmly believe that's the problem.

The Rickster
 
rtt2 said:
You guys fail to realize VOOM was forced to launch by the FCC. It had to start marketing service by the time it did to customers by order of the FCC.

Good point, I think a lot of new subscribers may have missed the behind the scenes issues that drove the early going. Voom had to start broadcasting by October of 2003 or they would lose the rights to the frequencies they had reserved. This was cool for us early subscribers as Voom treated us all to 5 or 6+ months of free programming as they added channels and ramped up to speed. Although it was a fun adventure to be in on the ground floor I don't think one could ignore the fact that Voom had issues which really should have been resolved before going live (such as inconsistent installs, shaky software on the STB's, etc.).

I agree with those who think the lack of a DVR was a big issue. I just wonder what would have happened if Voom would have waited and launched a year ago with an HD DVR ready to go with whole home networking and 39 HD channels plus locals to record - in other words the original plan. Sure there were other issues and hindsight is 20-20 but they didn't do themselves any favors coming out of the gate only partially ready for prime time.

It really sucks having to take this next step to another provider as it is so obviously a step backward. It all seems unnecessary as if someone had just played the cards wrong - Voom had the winning hand yet decided to fold instead of playing it out.
 
GadgetRick said:
It's not so much how many HDTVs are being sold, rather, how many people are actually using them to view HD programming (and plan to). Just because someone owns an HD-capable TV in now way means they will actually view HD programming on it.
The Rickster

This is exactly where I was for nearly 2 years before I got Voom. I had a hdtv for viewing my dvds, specifically, I bought it for the release of the first Lord of the Rings movie. I knew about hd, but I was satisfied with what I had. With Voom I could get nearly all of the sd channels I watched as well as a lot of hd for about the same price I was paying for cable. Sd is easier than hd, but the first thing you need to enjoy hd is a hdtv.
 
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