Video-on-demand (VOD) should be much more than better pay-per-view. That was Time Warner President/COO Jeff Bewkes' rallying cry at the NCTA's National Show in Atlanta, where he urged the cable industry to focus less on transactional VOD and to make all networkk programming available for free on-demand within the next year.
“[Paying per view] is fine, but it's not the way you maximize usage,” Bewkes said. “It's not really what viewers want. We should take all the networks, a day or a week from every network, and put them on VOD for free with ad support … That's where the consumption will be.”
The potential for VOD technology to deliver more-targeted advertising was a hot topic among cable operators, programmers and technology vendors at NCTA. Cable operators have seen VOD largely as a way to slow digital churn and differentiate themselves from their satellite competitors. But with traditional ad-supported, linear television under attack from digital video recorders (DVRs) that allow viewers to time-shift their viewing and skip ads—not to mention new Web strategies, like Disney-ABC's plan to stream hit shows for free online—VOD is raising its game.
Half of Time Warner's digital subscribers use VOD an average of 30 times a month, says Time Warner Executive VP of Product Management Peter Stern, and transactional VOD revenues have grown at double-digit rates.
But Time Warner is also looking to use VOD technology to enhance traditional “appointment television” with StartOver, a service that lets customers record shows in progress and watch them from the beginning, with one caveat: They can't skip the ads.
Time Warner has also explored VOD advertising, using “telescoping” technology in local ads to insert on-screen banners directing viewers to VOD-delivered, ad-sponsored content with the push of a button. Movie Trailers On Demand, co-sponsored by P&G and American Express, lets viewers jump to movie trailers—and, in the next 12-18 months, buy tickets through their remotes.
Programmers, too, are working with advertisers on VOD plans. Mag Rack, an instructional VOD network owned by Cablevision's Rainbow Entertainment, has signed a deal with Unilever's Axe Unlimited men's-grooming brand to sponsor gaming-focused programming.
“You'll see a lot of smart advertisers in the year ahead” embrace VOD advertising, says Gregg Hill, president, network sales, for Rainbow.
Technology vendor Tandberg was at the show demonstrating AdPoint, its on-demand advertising system. Already in use by Comcast, AdPoint supports VOD ad placement, including long-form delivery, highly targeted advertising and interactive applications that let viewers “dig deep” into content.
“Each set-top box can get a different ad,” says Braxton Jarrett, Tandberg senior VP of marketing and business development.
And Jarrett is hopeful that the main hurdle for VOD advertising, inadequate reporting on viewership, will soon be cleared: “Most of the technology around reporting is solved or about to be solved.”
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