Putting the V in VOD

Networks, studios willing to seed trials in hopes of reaping revenue later

Broadcast networks and studios may be willing to support cable operators' video-on-demand efforts by supplying programming at no cost, but only until the service gets going.

Last week, Fox agreed to license 24
and FX original drama The Shield
to Cablevision for a free-VOD trial. The series will be available immediately after episodes run on the networks. In exchange, Cablevision will bombard its 3 million subscribers with promos for them. The deal runs through the summer, with an option to renew.

"We're not sure this is the right model," said News Corp. President and COO Peter Chernin at the NCTA convention last week. "The right model may involve some pay."

Because Shield
and 24
are co-produced by Fox Television Studios, which distributes them domestically, navigating rights is easier. And it's a small play: Cablevision offers VOD in only about 25,000 homes.

Operators have been pining for programming to distribute over their digital systems. But programmers and studios have fretted over giving away content.

"Giving it away for free is very dangerous," Walt Disney President Robert Iger said last week. "Maybe early on to whet people's appetites, but, to make this work, we have to get people to pay for it." Even so, he's willing to make ABC content available.

NBC and Comcast recently unveiled plans to deliver the NBC Nightly News, Dateline, Today
and local news from NBC O&O WCAU-TV Philadelphia on demand. The network is considering free trials with other cable operators.

"This is an ideal way to learn about people's habits. We ultimately may want to charge," said an NBC spokesperson. Down the line, NBC could offer The Tonight Show With Jay Leno
for a VOD play.

VOD is the so-called "third bucket" of cable revenue, complementing video and data for operators and license fees and advertising for programmers. Operators also hope VOD will help stem digital churn.

VOD services, though, haven't been widely tested. What subscribers will buy and how much they'll pay is anyone's guess.

The Fox-Cablevision test may help break the logjam that has stalled VOD.

Turner Broadcasting Chairman Jamie Kellner said he could see Cartoon Network fare, CNN's Crossfire
and short windows to TNT and TBS movie libraries offered on demand. But, if commercials aren't being watched, he added, "it should go into some pay or subscription model."

Network execs worry about eroding ad rates if consumers skip by commercials with VOD's VCR functionality.

"We need ways to replace ad revenue," said Discovery Communications Chairman John Hendricks. Discovery recently unveiled a free VOD and subscription VOD service. On the free service, Discovery will offer advertisers space for long-form infomercials.