With Video On Demand (VOD), the user can start the video when he wants, make pauses, go forward and back in the video. It is of course the best in video streaming and the dream for every user.
VOD is a very big consumer of resources for the server and the network. VOD is unicast, not multicast : this means that the network and server resources needed are directly proportional to the number of clients.
The design of VideoLAN's VOD solution is very simple. The idea is to do HTTP streaming, i.e. stream an MPEG video encapsulated in HTTP. The regulation of the bitrate between the client and the server is done automatically by TCP. With HTTP version 1.1, there is the possibility to seek in a file downloaded, that's what we use to seek in the video.