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Let the VOD Measurements Begin

A number of vexing concerns have surfaced as video-on-demand rollouts grow more widespread and the cable industry places more emphasis on this nascent revenue stream.

TVN Entertainment's Jim Riley lays out a the key metadata challenge in an Op-Ed piece on page 22A
of this issue. Riley rightly surmises that cable MSOs and hardware/software vendors have to continue making innovations to make it easy for content providers to get programming to the VOD platform.

Economic models for many content providers haven't been clearly defined. The more work and expense programmers undertake to get content to VOD platforms, the less inclined they will be to provide any programming, let alone their best content.

But there are other issues that are stopping some programmers from putting their muscle behind VOD, and it's serving to stifle the category.

Let's start with the basic programmers. A handful are putting respectable amounts of content on video-on-demand platforms: some of it on a transactional basis, but most of it free. It's a strategy that's worth deploying and no doubt will meet with some success, but it still falls short of what could be.

Some reticent basic programmers want to get paid for their content. The Disney crowd is part of a children's tier at Insight Communications, where everyone gets a piece of the financial action and everyone goes home a little happier.

The Turner group is focused on ratings points and wants to see cable operators providing ratings and usage stats for VOD that Turner can take to Madison Avenue.

Both positions are eminently logical and defensible, from the programmers' point of view.

Premium suppliers face the same duality. Some MSOs are rolling out SVOD for HBO and Showtime, where everyone knows immediately their economic benefits. Others, like Comcast, want on-demand content and functionality included in standard premium pricing to reduce churn and drive penetration.

The industry appears split down the middle, with Time Warner Cable and others opting for a la carte SVOD pricing and giant Comcast holding the line on inclusionary pricing.

That leaves movies, primarily new releases, the sometimes stepchild of VOD. Sure, the studios have some piracy concerns and legacy window issues, but the highest hurdle is that Hollywood doesn't see VOD as a big revenue stream. It's a challenge that cable needs to step up to.

Here is a technology that's far superior to pay-per-view, and even better than the home-video store, yet cable and Hollywood are mired in the same arguments as the PPV standoff. Cable has to prove that VOD is worthwhile for Hollywood and it could start by releasing VOD buy-rates, even down to the individual movie level.

Heresy, you say. Hollywood would never allow it, you say. Besides, the numbers will make VOD look terrible, compared to other media.

I had largely thought the same thing, until a conversation with a major Hollywood studio executive.

The thinking goes like this. Hollywood loves numbers and gets what it needs nearly instantaneously. Monday morning, everyone knows the weekend box office. Television ratings are available on both an overnight and weekly basis. CD sales are reported on a weekly basis.

The VOD numbers are there, server vendors assure us. All it takes is for the MSO and the content provider to release numbers, or at a minimum, get that information to parties that matter (Madison Ave., senior Hollywood executives) to show the viability of VOD.

The numbers/ratings/buys would be too small, you maintain, an embarrassment. You could easily flip the argument. What does anyone have to lose? Why not start now, while the numbers are terribly small and watch them grow over time, both from more VOD rollouts and more widespread usage? Using that logic, now is the perfect time to start gathering and releasing those numbers. Give media planners and Hollywood strategists something to work with.

Sooner or later, cable will have to take the plunge. It would be far better to dive in now. Sign some agreements with content providers to release numbers, and start the VOD justification process rolling. By waiting a few more years, the bar will be that much higher and the risk of under-delivering that much greater.