OnDemand: VOD Changes Primetime Economics

NEW YORK – Rentrak vice chairman and CEO Bill Livek believes the difference between video on demand and primetime linear TV is a lot like gap between cooking with a microwave and an oven – food tastes better in the oven, but “you can’t beat the speed.”

Livek, whose company makes its living measuring TV viewing habits, said at the Multichannel News B&C On Demand Summit here that consumers, in an effort to accommodate their busier lifestyles are making the trade off between watching commercials on the VOD platform for the convenience of merely clicking a button to watch their favorite shows when they want them.

 And the numbers back him up. According to Rentrak, a bout 57 million households have access to VOD, up by about 2 million in the past year. More importnatly, he said, time spent watching VOD has risen to 9.3 hours per month, a bout double the time spend just five years ago.

How viewers spend their time is a key metric, Livek added, using the Fox hit primetime show Empire as an example. Livek said that after Empire’s first five episodes, 83% of the viewing was done after day 3 of original air. Toward the tail end of the season, more than 50% of the viewership was done after day 5.

“This is how VOD is changing the economics,” Livek said. “After the third day the majority of viewership is happening; in primetime, content with the Big Five [broadcast networks], five or seven days almost half of viewership is cumed up.”

Livek argued that despite sentiment to the contrary, TV viewership is essentially unchanged. People, he said, are watching just as much or more TV, they are just watching it on different devices and at different times. It is for that reason, he added, that advertisers and networks should look more closely not just at the shows that attract the audiences they want to reach, but the specific times within those programs. According to Rentrak data, different age groups watch primetime VOD shows at different times.

“Time as a demographic does matter,” Livek said, adding that in general, 50% of viewing is occurring five days or more after original air.

Rentrak corporate president Cathy Hetzel said the measurement company is working with cable industry ad consortium Canoe and Comcast to apply age and gender information to VOD titles. That should eventually expand to other distributors.

“There is going to be a lot more talk about this in the near future,” Hetzel said.