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In recent years, IPTV service has been focused on and invested heavily by many service providers. Among the various IPTV service, VoD (Video on Demand) service is expected to be one of the most popular services. Currently, most of service providers are trying to provide VoD service by locating proxy nearby end-users because it is hard for a single server to cover all the requests from the entire service area. For the provider's point of view, it can help reduce the server streaming load, for the user's view point, it can reduce the video startup delay. In spite of many advantages, in server-proxy media streaming architecture, the existing cache management schemes are assuming that the server only uses unicast streaming. If the overall video request rate increases, a significant cost reduction cannot be expected in terms of the entire VoD system. In this paper, we introduce a multicast-based server-proxy on-demand media streaming architecture and propose an enhanced cache allocation algorithm so that cost reduction of proxy storage and bandwidth saving can be achieved.