ABC News executives charged with taking the organization's content to new platforms, whether it's the Internet or video-on-demand, have always maintained the need for some form of compensation for their product.
That persistence has paid off, as ABC News has landed its first major cable VOD deal. It will supply Insight Communications Corp. with 20 hours of VOD programming each month as part of Insight's new $4.99 a month SVOD news and information package launching this month.
Insight is just one of a handful of cable operators willing to pay license fees and place advertising-supported product in SVOD packages.
"Adding a first-class content partner like ABC News to our programming lineup helps us appeal to a wider audience," said Pam Halling, Insight senior vice president, marketing and programming, in a prepared statement. "As we continue to look to on-demand usage as a major driver in reducing digital churn, the addition of diverse and value-added content to that platform is increasingly important."
Bernard Gershon, senior vice president and general manager, ABC News Digital Media Group, said Insight approached ABC "with an interesting model for SVOD. We're trying to make a little bit of money and put our toe in water."
The content list includes Nightline specials, ABC News specials and interviews. The first crop of programming, which debuted May 1, included the ABC News specials "Jesus, Mary and DaVinci," "JFK: Beyond Conspiracy" and "Profile: Jessica Lynch."
Nightline contributions include its "Heart of Darkness" report on the Congo war. The celebrity interviews feature Mel Gibson, Pete Rose, Jennifer Aniston and Jayson Williams. Most programs will have a 60-day period from their first air date on broadcast TV to their VOD platform debut, Gershon said. ABC is using TVN Entertainment Corp. for content delivery to Insight.
The paid-for market for VOD programming has evolved slowly. "We are in discussions with all the major MSOs," Gershon said. "We hope over the course of the long term they will recognize the true value of our content. Some discussions haven't been terribly productive, but the business models are still evolving."
There is a movement to get ratings for VOD programming, which could produce ad sales revenue. Gershon said ABC News looks for some type of compensation, but it can come in many forms. "Compensation could be advertising, subscriber fees, a piece of a subscriber package," he said. "There could be ways to drive viewers back to network TV."
Gershon noted that while ratings could produce ad revenue eventually, today's VOD user universe is still small compared with the number of people who watch ABC News on broadcast TV.
Meanwhile, the online world is generating ad revenues. "Online has been growing relatively dramatically," Gershon said. ABCNews.com generates 7 million to 8 million unique users each month online, according to Nielsen and Media Metrix, he said.
And how big would VOD usage need to be to make it an interesting ad medium? "Any number bigger than seven digits [1 million] is going to be interesting," Gershon said. "And we do see those numbers growing.
"I'm patient, sanguine and excited about the market, long-term," Gershon added. Over the next two to five years, he believes, a variety of business models will evolve as MSOs look to retain digital customers. "The VOD model is where broadband was two years ago," he said.