Free VOD is where it’s at. According to Comcast, 70% of the nearly half a billion video streams that subscribers watch on demand comes from the free section of its VOD library. And, leaving subscription fees aside, Comcast thinks that content should be bringing in cash. So get ready for more ads with Comcast VOD, and, quite likely, with every other cable operator.
At a Broadcasting & Cable and Multichannel News event yesterday, several cable and programmer folks got together to talk about “advanced” advertising. The term covers everything from interactive ads, to dynamic ad insertion, to cross-platform campaigns, but there was significant focus yesterday on VOD commercials. That’s because a cableco consortium known as Canoe recently ditched efforts to create a national platform for selling interactive ads, and instead decided to spend all of its resources on video on demand. (Canoe laid off 80% of its staff in the process too. Ouch.) With all of the flexibility on the web, the cable industry has been fighting to catch up in the advertising revenue game. Operators have all this premium, time-shiftable content, and yet with little ability rotate new ads in an out of on-demand programming, they’ve felt hamstrung. In 2012, they’re finally ready to do whatever it takes to change that.
In the near term, Comcast is going to ramp up its dynamic VOD ad sales this year, starting with dynamic pre-roll and post-roll ads, but adding in mid-roll spots very soon. On the positive side, that means not having to watch the same commercials in VOD shows over and over and over again. On the negative side (for consumers), it also means advertisers are going to find on-demand programming a lot more attractive, which means Comcast is going to start selling more ad space to bring in more revenue.
Interestingly, the new Comcast Streampix service may not get hit as hard with commercials, at least in the near future. Executive Marcien Jenckes was asked yesterday about ad insertion rights for Streampix, and he responded that although Comcast is working with each of the participating studios to determine ad rights online, the bulk of user consumption comes with TV shows that have aired recently. Jenckes may change his tune if and when the Streampix back catalog starts proving popular, but for now he seems to think that Comcast will keep its ad focus primarily on VOD.
Over the next few years, expect everyone to increase ad loads, both through traditional VOD and on the web. Licensing fees are cutting into video margins, and cable operators want to boost their revenues. There is new money to be made in advertising.