NBC Universal wants to strike first among broadcast networks with a comprehensive on-demand offering and is targeting September for a likely rollout.
While NBC Universal currently offers some NBC News content and Universal movies on-demand, the company had put further development of an on-demand offering on hold until its acquisition of Vivendi Universal’s U.S. entertainment assets was completed in May. Since then the newly merged content company has been doing an inventory of the content it now has and the licensing rights for video-on-demand use across its stable of networks. (The company’s networks now include USA, Sci Fi, Bravo, Trio, Bravo HD+, NBC, CNBC and MSNBC.) NBC Universal also has been doing an inventory of Olympics content and material from the movie and TV libraries of the newly combined companies.
“The biggest issue everyone faces is rights management,” said Jean-Briac Perrette, senior VP, new media development, NBC Universal Cable. “We also would like to be a first mover.”
The VOD offering would include some NBC prime-time content but initially not the franchise shows such as “Law & Order” or “The West Wing.” Any prime-time network content would be a victory for the on-demand category.
In 2003 Fox offered top series “24” on-demand in a subscription package bundled with FX’s “The Shield.” However, the network does not currently offer “24” on demand.
Top-notch content, not surprisingly, has been shown to drive the most on-demand usage. That’s one of the reasons HBO has done so well in the on-demand space-because its SVOD lineup includes the same content that drives subscriptions to the pay service: hit series.
When HBO on-demand launched on Comcast systems last fall it accounted for at least half of all VOD usage at that time. It remains the most-watched on-demand category, Comcast said. In addition, overall VOD use doubled when HBO was added.
Because of that success, Comcast has asked other programmers to begin offering more of their hit series on-demand. That’s a tall order, though, when a financial model has yet to be established for VOD services other than pay networks or movies.
“The most popular content on-demand won’t be much different than linear,” Mr. Perrette said. “People are most interested in hit shows.”
“We obviously need to find ways to work with the operators to establish a business model for this,” he said. The most likely options would be an ad-supported model or a system in which programmers are compensated by operators.
Mr. Perrette added that NBC Universal’s VOD approach is a risky proposition. “In the short term, it probably has way more downside to us, so we look at the initial phase as being a first mover, playing around in the space and being responsive to the operators,” he said.