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VOD: What Works and What Doesn’t

On Demand Summit Broadcasting and Cable Multichannel News logoWhile some of yesterday’s On Demand Summit was focused on the technical aspects of video on demand, much of it centered on business models and how VOD is being executed today. At times the mood was upbeat, with panelists citing statistics on VOD’s significant growth in recent years and its revenue potential. At other times, the mood was less rosy, with executives from cable operators and cable networks hashing out the ways on-demand video must improve to keep the TV platform competitive. Here’s a quick look at how the industry believes VOD has been successful, and where it needs improvement.

What Works

The good news is that VOD content libraries keep growing, and with more content comes more viewers. There were several statistics thrown around to support this including:

  • Time Warner Cable currently has an estimated 10,000 VOD titles, and ingests roughly 30,000 programs for its Start Over service every month.
  • VOD movie rental transactions have gone up dramatically. According to one executive, FOX alone has half a dozen on-demand movies that beat the one-million-rentals mark every few months.
  • Comcast is currently doing more than three million on-demand views per month, and has had roughly 12 billion on-demand views to date.

There has also been some nice innovation in the types of content available on-demand, including sports clips in support of events like the Olympics and March Madness, day-and-date movie releases, and the offering of full seasons of TV programs to get more viewers caught up and engaged in a series.

Of course, VOD also has a huge advantage over video on the Web simply because it delivers content on the one screen consumers most want to watch it – the TV.

What Doesn’t Work

In the category of “needs improvement”, there was clear frustration among the attendees of yesterday’s summit around several issues. Leaving aside the need to improve infrastructure (see yesterday’s post), everyone wants better navigation, more standardization, and a proven revenue model. On the navigation front, there are simple fixes like categorizing content more logically in on-demand menus – something which Rogers Cable’s David Purdy referenced as a factor in driving viewership up 133% – and there are more difficult solutions like integrating the linear and VOD interfaces.

With regard to standardization, one of the main concerns is adding detail and consistancy to metadata. Without standards it’s a lot harder to tag content with the right permissions, make content searchable, and create cross-platform packages that leverage the different distribution networks operators have at their fingertips.

Finally, there’s the issue of money. Call it monetization, call it revenue generation; everyone wants to be sure they can make money with VOD before they invest too much time and capital supporting it. There are reasons to be skeptical of how much VOD can deliver (including past history), but fortunately the positive signs are starting to stack up. On-demand movie purchases are increasing, several programmers are successfully using VOD to drive viewers to their linear offerings, and the holy grail of dynamic ad insertion appears to be right around the corner. None of these are guarantees of future success, but they are signs that things are moving in the right direction.

And where the money flows, so goes the industry.

7 Responses

  1. [...] heard a number of individual operators talk about increases in on-demand video views, but last week Rentrak put out a snapshot report of VOD growth across the industry. According to [...]

  2. [...] while VOD is growing in popularity, the numbers don’t yet represent significant financial success, at least in terms of new revenue. The impact on customer retention may be a different story, [...]

  3. [...] and the goal is to be able to track content distribution more easily, and to start solving the massive metadata mess that exists [...]

  4. [...] it’s still in live broadcast (say 15 minutes into the program), so this may very well be a VOD extension. But how should we really define these types of services now? We’re treading ever closer into [...]

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