It’s also the stuff of high hope and grand ambition. "This is not some little add-on to make TV viewing more interesting than it was before," says Hugh Williams, executive vice president of programming at Video Networks, HomeChoice’s parent company. "Ultimately, we will replace regular TV viewing with a broadband service."

Maybe so, but Video Networks will have to demonstrate some staying power along the way. HomeChoice began technology trials in the Hull area of England in 1996. Since then the commercial rollout has been painfully slow. Video Networks staged the first commercial test in late 1999 in north London, followed by a full London launch in September 2000. Now, the service area includes some 2.4 million homes. With plans to make HomeChoice available to another eight million homes in southern England in the next few months, Video Networks aims to reach audiences nationwide by the end of 2002.

However, the speed of the rollout has depended, and will continue to depend, on the price Video Networks must pay for its digital subscriber line (DSL) connections that ride atop the British Telecom phone network. Video Networks purchases those connections from BT for a one-time $840 charge per line, plus a recurring monthly charge of $84 per line. The hefty access charges contributed to an operating loss of $109 million last year. Video Networks has raised $280 million so far, and CEO Simon Hochhauser says the company’s per-customer connection costs will fall to about $500 in capital investment and $21 in monthly access fees as competition increases, but that may take two to three years.

The distribution economics haven’t stopped Video Networks from learning some important lessons about what makes VOD click, and how broad its appeal seems to be. Nine months after launching in London, HomeChoice’s paying-subscriber base—made up of some 14,000 people—spans all demographic groups, spilling beyond the initial target market of the time-poor, cash-rich "AB" audience, many of whom had not previously subscribed to a pay TV service. Two-thirds of the service’s customers were new to subscription television when they signed on, and the normally mass audience "C1s" and "C2s" are signing up in large numbers. HomeChoice also says it’s reaching more families with children.

Last fall, Video Networks launched its largest marketing campaign so far. As part of the effort, the company sent an armored tank rolling through the streets of London, carrying "revolutionaries" who tossed leaflets and exhorted onlookers to "take control" of their television viewing. The campaign included a $9.8 million broadcast television advertising campaign. But the high cost of connecting subscribers through BT has forced Video Networks to scale back its marketing strategy — and its programming expansion.

"We are having to limit our growth to match the capability of BT to make the connections, and I also don’t want to pay that much money to sign up new subscribers," Hochhauser says. Executives say the service would have 50,000 subscribers by this point if the connection fees it pays BT were lower.

HomeChoice divides its on-demand fare into 16 themed categories, each filled with programs available on a subscription VOD basis. In addition, the service sells a la carte movies for additional per-viewing fees.

On-demand Hollywood movies are the service’s top selling point, with buy rates five to six times higher than those of the near-VOD — or, multiple-channel pay-per-view — services offered by rival pay TV companies in the U.K. But time-shifted subscription television accounts for more than half of the total fare that HomeChoice customers watch.

Time-shifting has had an unmistakable impact on viewing habits. About a third of HomeChoice subscribers watch "EastEnders," the popular British Broadcasting Corp. soap opera, via an on-demand menu that allows them to start the show whenever they choose. And in a country where the average TV viewer watches 27 hours of program per week, HomeChoice subscribers spend about nine hours, or a third of the average viewing span, summoning up time-shifted programs at their convenience.

Within those nine hours, they tune in to just over four hours of movies and just under five hours of other types of programming. HomeChoice executives predict that the total number of on-demand viewing hours will rise once they improve programming, packaging and promotion for the service.

Today, customers can create their own entertainment schedule from HomeChoice’s programming options, which include 1,200 movies, 1,300 music videos and almost 4,000 hours of general entertainment, documentaries, children’s shows and sports. The service doesn’t offer adult content yet, but executives say it probably will.

The appeal of the service, so far, goes beyond the sheer choice. "People like to be prompted," says Williams. "We did a little feature on our sports service with an attractive presenter picking her ‘top six.’ The buy rates for the chosen items increased dramatically."

HomeChoice executives recognize they must educate prospective consumers about what VOD is and how different it is from regular TV viewing—and also from pay-per-view, which is offered to eight million U.K. subscribers via News Corp.’s Sky Television DBS service, and from cable operators. As more viewers learn that the HomeChoice service lets them start, pause and fast-forward a movie whenever they choose, they are signing up for VOD in increasing numbers.

HomeChoice’s VOD customers order an average of 2.5 movies per month per home. The latest movies, such as Jersey Films’ "Erin Brockovich," are available for four months; older films, like "Pretty Woman," are available in the video vaults for up to a year. Films are marketed in a 140-page monthly guide according to groupings such as "FilmFirst" (the most current movies) and "FilmBuff" (profiles, gossip and documentaries about Hollywood stars).

HomeChoice has output deals with five major movie studios. The oldest pacts are with Disney and Warner. Sony came on board 18 months ago, MGM at the beginning of this year, and Universal in May. The holdouts: Fox and Paramount.

"I think Hollywood is very focused on this opportunity right now," Williams says. "There is a lot less resistance to licensing to VOD." He also predicts that the VOD release window will soon move closer to video rental.

Because HomeChoice’s schedule consists of program reruns and recorded fare, the way the various options are packaged is an important key to drawing viewers. For example, bundling together several music videos of artists such as Madonna or the Irish band Westlife has attracted some of HomeChoice’s highest viewing rates, right behind blockbuster movies. A recent Westlife package quadrupled the number of viewers opting for the band's videos.

HomeChoice’s television-program options are grouped by genre in packages like "SoundChoice" (the most popular offering, with an extensive music video list as well as karaoke) and LeisureChoice (lifestyle and fitness programs). After a $56 one-time sign-up fee, these TV packages cost $8.40 a month for one service, $16.80 for three, or $25.20 for all 16. Sixty percent of HomeChoice subscribers take the top option. The relative success of these packages will likely change as the service attracts more subscribers and a wider demographic base, according to Williams. All HomeChoice subscribers have access to the VOD movies, which carry varying price points.

One relative failure was the company’s experiment last year in charging $1.40 for each episode of the award-winning BBC documentary series "Walking With Dinosaurs." As Williams notes, "People will not pay for individual content unless it is very, very premium. They won’t pay unless it’s top of the tree. The definition of ‘premium’ material is difficult. There's probably less of it than we like to think."

Video Networks plans to upgrade its technology to include a broadcast capability that will let it offer traditional TV channels as part of the HomeChoice service. The broadcast capability also would allow Video Networks to offer personalized content, so that a subscriber could, for example, draw from a range of news outlets to build a personalized news service. That could happen as early as the first quarter of next year. Another item on Williams’ priority list is a premium movie channel. The company’s drawing board also includes plans for games and more of what Hochhauser calls "contextual shopping," in which television-commerce opportunities will be linked to specific programs. A promotion offering music fans a chance to win free tickets to Madonna’s London concert appearance in July drew 1,000 responses within three days from a base of 7,000 households with access to the SoundChoice subscription package.

These offerings will hit the street as soon as the service’s subscriber base justifies the expense, which executives say is at about the 50,000-customer mark.

Because HomeChoice subscribers must sign one-year contracts, the service’s churn levels won’t be apparent until the end of this year. Hochhauser expects the disconnect rate to be no more than 15 percent. The U.K. cable industry has a churn rate of just under 30 percent; BSkyB’s stands at 10 percent.

For HomeChoice, the fundamental stumbling block of its self-titled TV revolution is the heavy cost of signing up each subscriber. While Hochhauser is trying to forge deals to address this, at the moment he is still hostage to the high prices charged by BT. If HomeChoice can follow its own advice and take controlt of its high customer acquisition costs, then the HomeChoice revolution might happen after all.