Tom Umstead

Putting Ads On VOD Menu
March 11, 2008

For Cablevision Systems subscribers, last week’s introduction of free video on demand from Scripps Networks’ Food Network and HGTV looked better than a plate of Paula Dean’s southern fried chicken.

But one ingredient in the recipe could leave a bitter aftertaste with some viewers: All Food and HGTV on-demand programs include helpings of ads.

Food Network on-demand shows, from such series as Good Eats, feature four 15- to 30-second network promo spots in each episode — four more than Cable­vision viewers are used to experiencing during the mostly subscription-based on-demand fare from networks ranging from HBO to Disney Channel.

Still, the exposure to ads may quickly become the norm rather than the exception.

VOD services are now in nearly 30 million households. The Big Four broadcast networks, as well as established cable services such as USA Network and TNT are offering top-line shows on demand. So, it’s almost inevitable that programmers would look to generate revenue from what was a virtually commercial-free technology only a few years ago.

While only 10% of all on-demand content on cable systems is ad-supported today, 40% of all streams will contain ads by 2012, according to media research firm Park Associates data.

In the most aggressive move yet to insert commercials into on-demand content, broadcaster ABC, through its affiliates, will offer series such as Grey’s Anatomy to cable operators as a VOD program — with a dose of ads sprinkled between surgeries.

 Unlike most ad-supported VOD fare from services such as Food Network, consumers accessing Ugly Betty episodes on demand will be prohibited from fast-forwarding through the hourlong show’s two to five minute inventory of commercials.

According to ABC, viewers are willing to watch on-demand episodes of Desperate Housewives with commercials. Results from a fall beta test of its commercial-based on-demand product in Cox Communications’ Orange County, Calif., system showed that 93% of viewers accepted ad-supported VOD as a tradeoff for free access to top shows.

ABC’s “My Primetime On Demand” offering even cut into consumers’ digital video recorder usage: 20% of consumers within Cox’s beta test said they tuned to My Primetime On Demand rather than the recorded programming.

But not everyone is convinced that ABC’s ad-supported model should be part of the on-demand menu. Recent blogs for technology-based Web sites All Things D and Techdirt.com toasted ABC's strategy of offering commericals within on demand content. 
 

Understandably, programmers have to find new ways of generating ad revenue through all distribution platforms, but there’s something intrinsically unnatural about interrupting on-demand content with commercials — especially commercials that you can only avoid if you take a bathroom break.

For many people, VOD represents a welcome respite from the scheduling trappings of traditional television. The freedom to watch, fast-forward, rewind, pause and stop content at any time empowers viewers who seek to quickly catch up with missed episodes of their favorite shows, or try new programming without the annoy­ance of commercial fare.

Now that old media is beginning to impose some of its viewing restrictions on the VOD world, the intrusion of ads seems to make the technology less on demand and more demanding on viewers’ time and patience.

Time will tell whether cable operators and programmers are asking subscribers to bite off more than they can chew by forcing ads on demand down their throats.  

Posted by Tom Umstead on March 11, 2008 | Comments (2)