Scanty Offerings Hurting VOD Usage

Jun 5, 2006  •  Post A Comment

Usage and interest in video-on-demand services appears to have dipped in the past year as consumers ran up against a sparse menu of content choices, according to a study being released this week by VOD research firm Marquest Media & Entertainment Research.

The firm in April conducted its third annual VOD study and found usage in homes with digital cable had declined from 88 percent in 2005 to 65 percent this year.

The number of people trying VOD last year may also have declined, with about 44 percent of consumers who used the service employing it at least once a week. Last year’s figure was 53 percent, a decrease that is within the margin of error for the study, said Marquest President Paul Rule.

While variations in viewership are typical in the early stages of new technology, the decline can be attributed to less interest and the product not meeting consumer expectations.

“VOD sounds great in concept, but that can be tempered when you are expecting the Library of Congress and arrive to find a small bookcase with a few shelves of books,” Mr. Rule said.

The study didn’t probe for specific reasons for the drop-off. Data from the past few years indicates that consumers consider limited selections the chief drawback of VOD, he said.

“It may be that most operators are having difficulty keeping up with viewers’ desires for more and more menu choices,” Mr. Rule said.

Broadcast and cable networks have dabbled in offering prime-time content on-demand, though they have yet to deploy significant amounts of such high-profile offerings on VOD. That should change over time as the advertising business model crystallizes for broadcasters and they begin to offer more content, said Eric Cooney, CEO of Tandberg Television, a VOD software and services firm which is currently deploying its VOD ad insertion technology with Comcast.

“VOD as a business opportunity is relatively new,” Mr. Cooney said.

The Marquest study found that the top five networks that consumers are most interested in viewing on-demand are HBO, ABC, Discovery Channel, NBC and Showtime.