Top programming executives laid down the gauntlet at last month's National Show with respect to several key video-on-demand issues.
MSOs shouldn't expect TV's best advertiser-supported shows to run on VOD or subscription VOD platforms unless someone comes up with technology to prevent ad-skipping and to rate the nascent medium, programmers said.
But three VOD server providers — Concurrent Computer Corp., SeaChange International Inc. and nCUBE Corp. — claim that the software needed to satisfy both of those concerns is already largely available.
With a few more tweaks to the system, vendor executives said, cable operators can showcase technology to prevent consumers from skipping through commercials, if that's what the MSO and programmer want.
And there's plenty of real-time data available on who's viewing on-demand fare — and what they're watching — for MSOs to collect and share with content providers.
The next step would be for operators and programmers to go to Nielsen Media Research or another third party to authenticate VOD viewing, said vendors. That's a key hurdle in getting the best ad-supported content, like popular cable-network series, to VOD.
DATA IS KEY
Outlining the problem at the National Show, Discovery Communications Inc. chairman John Hendricks said that if the rating of a linear TV show were to drop from 1.0 to a 0.8 rating in a VOD world, then that's bad.
But if the programmer can make up the 0.2 difference in ratings points through VOD — or even generate a higher rating — then it can break even with advertisers, he said.
The key, said Hendricks, is to quantify and authenticate that the viewing took place on the VOD platform.
"We're providing the ability to have the system configured how the MSO likes to use this," said Concurrent vice president and chief technology officer Bob Chism. "We allow full interactive control through the ads."
Such control variations could prevent skipping completely, or allow for a slower fast-forwarding speed so consumers could still see parts of the commercial, he said.
Concurrent would prevent ad skipping by programming information into the metadata associated with the program or spot.
Analog-formatted cable programming contains cue tones, which indicate when operators should insert local advertising, for example. Those same tones could be used as marking points that would instruct the server not to skip ads in those slots, Chism said.
"There are discussions now whether that will transfer" to the digital and on-demand environment, Chism said.
Cable Television Laboratories Inc. is nearing completion of specifications and standards for digital ad insertion, which could be used for digital VOD content.
"From our perspective, it really doesn't matter, as long as we're provided [with] when the breaks are," Chism said.
SeaChange vice president of broadband James Kelso said SeaChange's system has always included the ability to limit ad skipping.
"Trick modes are enabled by our system," he said. "It allows you to turn on or off, fast forward or rewind for any asset."
SeaChange's asset-management system handles all fast-forwarding requests, said Kelso. If a subscriber attempts to fast forward through a commercial, a signal would be sent to the asset on the server to see if fast forwarding was enabled, he said. Each asset can be tagged with metadata approving or preventing skipping.
Cable programming doesn't present a problem, because cue tones have already been inserted, Kelso said. And cable's new DVS 253 standard allows for digital cue tones to be inserted into programming, Kelso said.
Broadcast fare is a different matter, he said, because there are no cue tones for local breaks. In that case, the programming could either come pre-encoded, or cue tones could be inserted in real time during live events.
For instance, Fox and Cablevision Systems Corp. have reached a deal to air the primetime drama 24
on the MSO's VOD platform. Fox could send a clean, pre-encoded copy of the show to Cablevision's SeaChange server.
"You can use a better encoder, do quality control and do commercial marketing," Kelso said.
For live news programs, like NBC's Today, operators would have to do real-time encoding to get the content on the VOD server quickly. "We would have to insert cue tones in national ad breaks in Today
for real-time encoding" if commercials can't be skipped, Kelso said.
But there are many other ways to address ad-skipping revenue models.
Some MSOs are discussing a $25 per month DVR fee that would allow consumers to skip advertisements. Under that scenario, programmers might receive some revenue from the digital recording feature.
A second idea is to charge $15 a month for a package in which consumers would agree to view a certain number of spots associated with VOD fare each month.
"You could make it dynamic, based on the subscriber and the content," Kelso said.
Another idea is to replace existing ads with spots that are more targeted to the household buying the particular VOD show. There also are discussions about placing a five-second billboard-type ad on screen during the fast-forward feature. That would allow consumers to skip through commercials, but still let the advertiser get its message out.
"That's an easy thing for us to do," the SeaChange executive said.
Consumer satisfaction is important for VOD, Kelso said. "You do not want to waste subscribers' time," he said.
Replacing ads is easy, Kelso said. "We'll provide them a comprehensive set of tools to manage the issue.
"Ad replacement is a payment mechanism," he added. "We can do a splice in the system. You can put in an ad that's much more targeted for me. It may be the same company, but a different product."
BUILDING IN THE ADS
Over time, on-demand programming will arrive with the advertising built in, Kelso said. Much of today's syndicated programs already come with pre-sold spots, and the same could be true for VOD, he said.
For nCUBE, the key issue is indexing the programs in which ads that can't be skipped are placed, said senior vice president of broadband strategy management Jay Schiller.
"We're working on, how do we index all of the breaks?" Schiller said. "For me to not allow ads in Moneyline, I need to know where all the ads are in Moneyline.
nCUBE is also working on a targeted advertising module that should be ready next year. It would allow ads to be placed before, during or after on-demand viewing, Schiller said.
With the new system, "we'll be able to handle seamless splicing on the server or within a piece of content," he said. "That will start off as promotional materials, and then repurposing local avails."
The ability to update ads is important in time-sensitive ad campaigns, such as a fast-food promotion that might run for only one weekend, or the premiere of a theatrical film.
A studio, for instance, might be pushing two movies over two weekends, and might want the ability to switch out an ad in a VOD TV program that is sitting on a server over two weeks or more, he said.
All three server vendors say they collect vast amounts of "ratings" and usage information that's handed over to the MSOs.
"We can look at an asset by set-top box, by household," including "what and when it was viewed, how trick play was used, did a consumer fast forward or rewind," said Schiller.
nCUBE's business-management system allows operators to share any usage information they wish to directly with content providers. Using the Internet and a virtual-private network, content providers can get instantaneous access to that information if operators approve.
"Another option is to send out data over an application program interface using XML [extensible markup language]," Schiller said. "We can export a file to the content provider."
"The ratings side will be easier," SeaChange's Kelso said. "It will be a Personal People Meter to everyone who watches VOD."
SeaChange collects detailed data, including who watches which on-demand shows, as well as data on genre, program provider, stream utilization by node, time of day, day of week and busy errors.
That ratings-type information would need to be certified by a third party, perhaps Nielsen, Kelso said. Historically, Nielsen certifies that ads run on TV shows and generates ratings information.
In an on-demand world, a server or other asset-management system can generate "ratings" or actual usage. "Ad verification in the first place is the rating, essentially," Kelso said.
Concurrent's Chism said his company provides 30 different types of reports on system usage.
"We do data mining," Chism said. "All information is processed and collected."
The information is stored locally, and it's up to the MSO to decide how much it wants to share with content providers, he said.
"It's stored in the business-management system," he said. "There is a big database off of the VOD-enabled subscribers and all of the assets."