TV NotesViewers Start to Embrace Television on Demand
By Brian Stelter and Amy Chozick, The New York Times
- May 21, 2013
While companies weigh bids for Hulu and industry heavyweights complain that TV Everywhere isn’t going much of anywhere, another way to watch time-shifted television is quietly gaining traction: video-on-demand, or VOD.
Glittery, those three letters are not. VOD rarely gets media attention, partly because of past missteps by cable and satellite providers.
But more and more TV episodes and movies are becoming available through the on-demand systems that cable subscribers can tune in with their set-top boxes. Some shows, like Fox’s “The Following” and ABC’s “Scandal,” now gain hundreds of thousands of viewers every week because of VOD, part of a decades-long shift from television on a linear schedule to television on viewers’ own terms.
“On-demand isn’t always the shiniest new technology. But we are seeing tremendous growth,” said Matthew Strauss, who oversees digital strategy for Comcast, the nation’s largest cable company.
Some providers, Comcast among them, see VOD as a low-key savior — a way, albeit one of many, to make programming more accessible while keeping customers tethered to their cable subscriptions.
Some television networks are also big believers in the technology because it can help partially piece back together their splintered audiences and protect their advertising revenue. Fast-forwarding can be, and often is, disabled by the cable providers, giving advertisers confidence that their commercials are being seen.
This is “crucial,” said Toby Byrne, the president for advertising sales at Fox. Video-on-demand “will hopefully replace some digital video recorder viewing, where fast-forwarding is enabled,” he said.
Mr. Byrne talked up VOD at Fox’s annual upfront presentation for advertisers in New York last Monday, as did his counterpart at ABC, Geri Wang, at her network’s presentation a day later.
In an interview, Ms. Wang said cable VOD now accounts for 3 percent of the prime-time audience that ABC sells to advertisers. That’s because this TV season, for the first time, Nielsen counted VOD views of ABC’s shows the same way it counts digital video recorder playback — that is, within three days of an episode’s premiere.
To count, though, the same ads that were shown on television have to be attached to the on-demand version of the episode. So ABC does that until the fourth day, when it substitutes a different, sometimes shorter set of ads. Two-thirds of the VOD views of its shows happen after that point.
“For the viewers and for our buyers and clients, there has not been, I think, enough attention around this,” Ms. Wang said.
The VOD story is partly one of missed opportunities. Comcast, for instance, introduced on-demand capabilities a decade ago. But for years its system, and the ones promoted by other providers, was cumbersome to use and lacked a critical mass of hit shows. (HBO, which supplied a wide selection of its shows early on, was the exception.) For prime-time viewing, VOD became an afterthought in the minds of many consumers and channel owners.
But the technology caught on in other areas, like movie rentals, children’s shows and music videos. And in the last few years cable providers have made concerted efforts to lock up prime-time programming, especially from the broadcast networks; they say their on-demand libraries need to have a consistent number of episodes, preferably a season’s worth for each show, so viewers have enough trust in VOD that they skip the digital video recorder.
There are signs that this strategy is working. This television season, VOD views of ABC’s shows are up 32 percent versus the same period last season, according to the network. “If viewers objected to not having fast-forwarding capabilities, our episode starts wouldn’t be up 32 percent,” Ms. Wang said.
Over all, Mr. Strauss of Comcast said that the company’s subscribers watch 400 million hours of programming on demand each month. Its subscribers use the DVR less than the national average of 45 percent of cable subscribers nationwide who use one, a statistic the company credits to its on-demand offerings and an improving interface through which to access those offerings.
Of course, the DVR is not the only way to time-shift television; there are also streaming video Web sites like Netflix and Hulu, which pay network owners for the rights to shows. The sites are popular, but there is a case to be made, said one cable industry executive, that they will become less appealing to network owners as the owners get more ad revenue and Nielsen credit for VOD viewing.
Cable VOD has its own advantages, the biggest one being that it’s already hooked up to the main televisions in most of the country’s living rooms. Additionally, no user name, password or additional monthly bill are necessary; having to log in has been one of the biggest impediments to TV Everywhere, a term for the television industry’s four-year-old effort to provide live and on-demand programming to subscribers on a variety of devices.
In March, Comcast held what it called a “Watchathon Week,” in which subscribers could catch up on entire seasons of series like HBO’s “Game of Thrones” and Showtime’s “Dexter” through set-top boxes and other devices. The company said on-demand usage spiked 25 percent that week, compared with the same week last year.
Mr. Strauss noted that consumers have long wanted to binge on shows, and used to settle for stacks of DVDs of “Lost” or “The Sopranos.”
“The behavior has always been there, but what’s changed is that the technology has finally caught up,” he said. “This on-demand platform is a better way to facilitate the desire of customers to binge view.”
The “Watchathon” was partly an effort to educate subscribers that VOD exists. Comcast raised the cable bills of 72 percent of its subscribers in the quarter that ended March 31. The company figures that its increasing menu of VOD offerings will help customers tolerate the higher bills.
Still, some VOD interfaces are poorly promoted and difficult to navigate. Mike Angus, a senior vice president at Time Warner Cable, said customers love the personalization and ease of the DVR. The growth of on-demand “depends on how quickly the industry adopts some of the flexibility of the DVR,” he said.
Television’s future most likely involves all of the above on-demand options, not just one. Cable VOD will increasingly operate like online video does: timely ads are beginning to be placed in old episodes of TV shows, a long-held dream of the cable industry. Fox will start testing the function, called dynamic ad insertion, with Comcast this summer.
Said Mr. Byrne of Fox: “It’s another step in the progression to a broad TV Everywhere world.”http://www.nytimes.com/2013/05/21/business/media/video-on-demand-viewing-is-gaining-popularity.html?ref=media&_r=0