Editorial: A VOD model that can work for everyone

May 13, 2002  •  Post A Comment

Someone has finally come up with a strategy that will help convince the public to embrace digital technology-and it even leaves room for profit.
The strategy is to give consumers free video-on-demand, and cable operators are scrambling to roll out technology that will bring this capability to their customers. Comcast Corp, Cablevision Systems and Cox Communications already have free VOD offerings in the works, and Time Warner Cable and others aren’t far behind.
The engine driving the sudden migration to free VOD is the same engine that has driven television from its earliest days: advertising. The cable industry seems to have experienced a mass epiphany, realizing that consumers might be willing to watch a few commercials as long as they can get choice programming for free. The model has something for everyone: Cable providers gain revenue from the ads, advertisers and programmers gain a wider audience, and consumers gain familiarity with interactive television while receiving time-shifted programming for free.
Cable operators are especially attracted to the opportunity to train their customers in the ways of interactive viewing. The presumption is that viewers will develop the interactive habit, opening the door for cable providers to charge for the service down the road-something that is already part of the long-term strategy.
A plus for the cable industry is that it may have finally found a way to start cashing in on its single biggest advantage over satellite: the interactive capability that comes from having a big digital pipe feeding into viewers’ homes.
Free, advertising-supported VOD possesses the elusive combination of being both consumer-friendly and potentially profitable. It’s based on the insightful idea that viewers who are embracing the personal video recorder-a device that some fear will undermine the advertising base of the television industry-are motivated more by the time-shifting capability of such devices than by the desire to avoid commercials. Free VOD gives those viewers an easier, more user-friendly time-shifting alternative.
The challenge now is to get programmers on board. Cable providers have been scouring the marketplace in an effort to broaden the scope of their free VOD program offerings. We hope the networks and studios will have the foresight to get involved, recognizing free VOD as a chance to increase their audience and to gain a foothold in the new digital world.
If they don’t, and if cable’s free VOD initiative fails because of lack of interest by programmers, such newcomers as TiVo and the other PVR makers will inherit a lucrative chunk of the digital world, and the television establishment will have itself to blame for letting an opportunity slip away.