N2 Broadband's VOD-related products--which include technologies for "pitching" and "catching" VOD content, and for asset management and back-office management--are widely deployed in the headends of US cable MSO's. [itvt]'s Tracy Swedlow recently spoke to N2 Broadband's president and CEO, Reggie Bradford, about how the skills he acquired while working as chief marketing officer at WebMD have proven useful at N2 Broadband, about his belief that "local-content-on-demand" will play an important role in the future of VOD, about the company's R&D priorities, about whether it is planning to expand into international markets, and more.

[itvt]: Could you tell us a little about your background and about how you ended up at N2 Broadband? What experience did you gain from your past career that has helped you in running this company?

Bradford: I joined N2 Broadband in April of 2001. Prior to N2, I was the chief marketing officer at a company called WebMD--a technology company that had exhibited substantial growth in the late 90's--and I was, in fact, one of the original employees of that company. When I left WebMD, I was looking for other opportunities in the Atlanta area, and a friend who was from the cable industry introduced me to N2. I was looking at N2 with a group of investors who eventually led the Series A investment in the company. Soon after, I joined N2 Broadband as president, and was subsequently asked by the board and founders to take on the additional role of CEO. Prior to WebMD, I spent about 8 years with Miller Brewing Company in a variety of management positions, across operations, finance, business development, marketing, and sales. Why my experience, I think, has been beneficial to N2 is that, while the economy of the late '90's was very different from the economy of the early 2000's, the process of growing a small company is pretty much the same: you have to focus on listening to the customer, understanding the challenges in the marketplace, creating a sense of urgency with the employee base and building momentum with them. You have to have a vision that makes them feel part of something really special. And, of course, you have to closely watch the trends of the industry and keep trying to stay ahead of the curve, to be on the cutting edge. So I think that a lot of the skills that I developed over the last several years, particularly through my experience at WebMD--a company that grew from 40 employees to probably 4000 in a couple of years--has been beneficial here.

[itvt]: Could you talk a little about what N2 Broadband's original goals were, where the company is today, and in which direction you want to move the company? What objectives would you like to accomplish?

Bradford: I think one of the reasons I was attracted to the company was the technical expertise and capabilities the founders had. A lot of the core group of founders were engineers who have been in cable 15-20 years. And they've developed some solid relationships with the cable industry and have a track record of building things that the customers were interested in using. I think the original vision that we continue to pursue is of helping the cable industry realize the growth potential that's there, by creating standards-based infrastructure that enables products to scale. Our goal is to help the industry introduce new applications and other innovations into the marketplace more quickly, cut down on the cost of integration, and leverage new technologies--whether we're talking about new storage or server combinations, or about taking advantage of the cost curves on hardware commoditization that you're starting to see in other industries.

[itvt]: Last December, you unveiled a product called Xport [allows local cable operators to encode, package and play local programming content through existing VOD systems]. How is that product coming along?

Bradford: Xport is going extremely well. As you know, we've been working on asset distribution and asset management technologies for several of the major operators for the past 3 years. From a content standpoint, the first thing the operators wanted to roll out was movies-on-demand. Then they started rolling out subscription VOD; and now you're starting to see free-on-demand. We think there will soon be another VOD tier: local-content-on-demand. I think cable operators will want to take advantage of this, in light of their local presence in the marketplace. We've been able to leverage a lot of the knowledge and learning that we had accumulated with our distribution and asset management products to develop Xport. The product enables headends to quickly encode and deliver into the existing VOD system content such as local sports and news, and also educational content. We're launching the product commercially, as we speak.

[itvt]: Can you say to which cable operators?

Bradford: I can't. But I can say that it's in 3 systems right now.

[itvt]: What are your top priorities right now? Launching Xport? Do you have any other products in the works that you can talk about?

Bradford: Well, obviously, we're continuing to expand deployments of our existing products, the asset distribution and management products. We have around 300 deployments of those to date. We're continuing to refine those products to make sure there's as much automation as possible between the content provider and the operator. But Xport is definitely a product we're very focused on. We've also got several other initiatives that we'll be launching this year, that are more headend-based infrastructure products and solutions.

[itvt]: What are some of the challenges you face when trying to introduce automation software into a cable operator's system, especially if that operator hasn't offered VOD before?

Bradford: I think one of the biggest challenges is that VOD is really, from an operational standpoint, a new business. At a lot of the cable networks, everything was delivered via broadcast, so you've now got a paradigm shift in the operational process, in terms of the way content is received and automated and managed. So we've had to work hard to develop the processes around that. I think the other challenge we face is that everybody is capital-constrained right now, and looking to generate positive cash flows. So we need to make sure, as an industry, and especially from a vendor standpoint, that all the products we develop deliver a fast return on investment.

[itvt]: What kinds of things are cable operators telling you that they want to be able to do with on-demand technologies? More than just transactional VOD and SVOD?

Bradford: I think it's a case of crawl before you can walk. The first focus is to get a transactional service--movies-on-demand--operating and start to market that service. I think in addition to that, most operators are interested in rolling out subscription VOD services, and that the next tier after that is free-on-demand content. I think the ultimate goal is to get consumers used to interacting with the television. The operators are just starting to market VOD: you're now seeing multiple campaigns--for example from Comcast in Philadelphia and Time Warner in New York--that are attempting to build consumer awareness of VOD and thereby to drive some substantial adoption.

[itvt]: Are operators asking for new software that will allow them to add new features to their VOD offerings?

Bradford: I think you have 2 different markets right now. You've got the markets where VOD, SVOD and free-on-demand, or FOD, are up and running. I think in those markets, you'll start to see some additional features and functionalities, new user interfaces, that type of thing. But there are also many markets that haven't deployed VOD yet. I think in 2003 you'll start to see operators get more aggressive about deploying VOD in some of the additional markets where they haven't deployed it yet.

[itvt]: Are cable operators inquiring about whether your software will help them if they want to network their networks--for example, if a viewer wants to send something through the headend to another viewer? Is anyone thinking that far ahead?

Bradford: We're not seeing too much of that right now. I think it's still early; I think we're in the first inning of all the capabilities that these networks are going to be able to avail themselves of. I think if the business models for what you're suggesting can be put together, and the challenges around DRM and all those types of things can be solved, cable would enjoy an advantage since, because it's a protected network, it offers an extra level of security. But I think it's too early to say right now.

[itvt]: What sort of R&D are you conducting right now? How far ahead are you thinking?

Bradford: We're pretty focused on R&D that's going to benefit the industry immediately. We don't have a tremendous amount of R&D going on for technologies that we think the industry is going to need in, say, 3 to 5 years. We try to listen to the customers and find out what their needs are for the next 6 to 12 months.

[itvt]: So what are the operators telling you that their needs will be for the next 6 to 12 months?

Bradford: Basically the stuff we've been working on: getting VOD up and running, making sure the business model works, making sure that it scales, making sure that it's as automated as possible.

[itvt]: Obviously US cable operators are very focused on deploying VOD right now, but presumably after they've deployed it, they'll start to be more interested in deploying interactive content. Does N2 Broadband eventually plan to develop products for triggering and managing interactive content--for delivering software, games, and other types of applications?

Bradford: I think there's a tremendous amount of opportunities with the core platform, once it gets deployed. That's the beautiful thing here. All the other services--interactive gaming and other applications--will get layered on top. I believe, for example, that direct response will be a huge piece of the ITV pie. Operators aren't really playing in that space right now, but I think that there are billions of dollars to be made once you start to have a one-to-one relationship with consumers and households. Meanwhile, though, I think the operators' primary focus is going to be on getting consumers to enjoy the VOD experience, and making sure that the interfaces are easy for the consumer to use. Then I think you'll start to see other services layered on top of VOD, as the deployments pick up steam.

[itvt]: With your Xport product, cable operators will be able to offer local VOD content to their subscribers. If the product is successful, do you think we'll see a trend towards more of the programming available to consumers being independently produced, local-interest content? Do you think the product will lead to cable operators doing more deals with independent local producers?

Bradford: I think you will see more and more that people with innovative programming ideas will be able to get their content deployed in a local headend. But I do think that brands are still going to matter, and that high-profile programmers will still be able to attract most of the eyeballs.

[itvt]: Do you have any way of telling whether the VOD offerings on your deployed systems are gaining in popularity with the subscribers, or are the numbers now starting to stabilize or drop off?

Bradford: Everything I've read and everything I've heard seems to show that there's no longer any question about whether VOD is going to work. There are compelling statistics demonstrating the successful uptake of VOD. And now that there are marketing campaigns behind it, I think it's only going to continue to ramp. Especially as more content becomes available, and as windows start to become closer to the windows for home video.

[itvt]: Obviously one area of infrastructure that seems to be growing right now is the infrastructure for home networking. Do you have any plans to develop products in that space?

Bradford: I think we've already got plenty on our plate from a backoffice infrastructure standpoint. There are great companies out there that have home-networking expertise and competency. Once the operators get behind all these great home networking products that the vendor industry is bringing, I think the home networking infrastructure will be easy: there won't be a ton of tweaking that has to be done.

[itvt]: Speaking of backoffice infrastructure, do you have any plans to develop backend management software for tcommerce?

Bradford: We've got billing connections with all the major companies, application providers and servers. Once the platforms are in place, you'll start to see some products that enable integration around billing, that allow you to automate subscription services through the television set-top, that type of thing. And I think, eventually, you may get into tcommerce. But our vision's always been that video will drive the industry, not tcommerce, walled gardens, email and those types of things. People like TV as an entertainment experience, and I think things that increase its entertainment value are going to be more successful in the short term.

[itvt]: Are you considering entering the European and UK markets?

Bradford: Right now, we're just focused on North America. We're a small company and we have limited resources. We've had people who have approached us about taking some of our products international through partnerships, and certainly we would consider expansion in that way. And I think, as VOD takes off in the US, other parts of the world will naturally want to offer it as well. So I do expect that we will look at expanding internationally at some point.

[itvt]: In conclusion, could you summarize for us the benefits you feel your company offers to cable operators?

Bradford: I think our company is very focused on the infrastructure in the headend. That's our knowledge base, that's our core competency, and that's our focus. I think we've got pretty substantial technical expertise, and a workforce of talented individuals.

[itvt]: And could you tell us what you think the top priority of the cable and VOD industries should be right now, to ensure that VOD remains successful?

Bradford: I believe that one of the most important ways that the industry can ensure its success, from a standpoint of cost-reduction, innovation, and speed of deployment, is to embrace standards. Just as the cable industry has embraced standards with the DOCSIS modem. This will really give VOD a leg up in the marketplace.

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