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.
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.
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.)
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 U.S. 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 U.S. 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.
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.
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.
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.