April 15, 2024

On-Demand Viewing Poses a Test for Broadcasters

On cable video-on-demand, network television entertainment had significant growth in the first half of 2010, with a 35 percent increase in transactions over 2009, according to a report by Rentrak OnDemand Essentials, an audience measurement company. There is an “exponential growth in free V.O.D., like the consumer is discovering it for the first time,” said Bill Livek, the chief executive of Rentrak.

But with such rapid evolution there are no industry standards about which programs should be available and when. For instance, on Time Warner Cable in New York, ABC’s shows only recently became available on demand after the network completed its renewal negotiations.

Yet the network’s hit series “Modern Family” is not available on demand there even though it is available online the next day. (“Modern Family” is not on video-on-demand because ABC did not negotiate for those rights with the producing studio, 20th Century Television.)

Meanwhile, to watch TNT’s “Men of a Certain Age” on the computer, viewers had to wait a week or pay on iTunes to watch. NBC’s “The Office” is available on demand, but viewers cannot fast-forward through commercials. By contrast, CBS’s “Hawaii Five-0” does not even have commercials outside a few promotions for other CBS shows, which viewers can fast-forward through.

Coleman Breland, chief operating officer of Turner Network sales, said the inconsistency rested in part with concerns that shows could become over-saturated and diminish traditional ad dollars, syndication rights and, to a lesser extent, DVD sales.

“Everything is in a state of transition,” Mr. Breland said, pointing out that no one was worrying about putting series on tablets like iPads two years ago and now millions of consumers are looking for content on them. (The process is so fluid that certain networks, like NBC and FX, would not let executives speak on the record.) “We have to figure this out — the studios, the networks and the operators.” Zander Lurie, CBS’s senior vice president of senior development, acknowledges that CBS is treading cautiously.

“Our business model is that we don’t do stupid deals,” he said. “We don’t want to snub our nose at consumer trends, but we don’t need to lead them there. We have the luxury of waiting for markets to gain critical mass.”

Brad Adgate, senior vice president of research for Horizon Media, said that networks would become more aggressive in negotiating those rights as viewership grew. He also said networks were not yet pushing video-on-demand ad sales as much as they could in part because they still wanted viewers to rely on traditional television watching.

“Advertisers would like to be on there — with less clutter you’re more likely to see and memorize an ad then if it’s in a three-minute commercial break,” he said.

“It’s a missed opportunity,” said Mike Hess, executive vice president for research, insights and marketing science at Carat, a media marketing and research agency. “There’s more engagement with on-demand, people are more involved with the program.”

Mr. Livek, of Rentrak, said this “underdeveloped medium” was especially ripe because viewers were “very tolerant” of their fast-forward being blocked. “If they’re getting something free, they’ll accept it,” he said.

There are premium ad dollars to be made on online viewers, Mr. Lurie said. But online programming has created friction between the networks and the cable operators who balk at the idea of networks giving consumers something for free when cable operators are paying to acquire the same content (and charging consumers for it).

Some networks, like TNT, delay the online availability of shows to “respect the existing viewing model and not destroy the core business,” Mr. Breland said. More significantly, cable operators like Comcast and Time Warner have begun “authentication” projects, where subscribers can watch online after demonstrating they are cable subscribers.

“That’s what we are evolving toward,” Mr. Breland said. “You pay once for access to multiple devices.”

Other options could also be in the offing, Mr. Adgate said, such as the ability to pay for a full season of a show on video on demand for less then a DVD price. (Most shows have only a handful of back episodes available on video-on-demand and online.)

While networks, operators and studios sort out the balancing act and devise the best business models, they must constantly update their plans, Mr. Hess concludes. “Things are fluid and changing all the time,” he said.

Article source: http://feeds.nytimes.com/click.phdo?i=a7cacc3abdeef848141dd60919ef6d7a

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