The surge in video on demand (VOD) deals among major American TV networks is raising concerns among some broadcasters and advertisers over the impact of new viewing technologies, which are altering consumer habits and biting into ratings figures.
CBS made a deal with cable provider Comcast Corp. in November to offer four hit shows via video on demand (VOD), which will be available on the evening following the show’s broadcast on the network. Each episode will cost $0.99 and can be viewed at any time over a 24 hour period. Comcast claims its On Demand service, which has a library of over 3,800 programs, experienced over one billion views in 2005.
For its part, NBC Universal signed an agreement with News Corp.’s satellite TV provider DirecTV to make programs available commercial free. The deals followed an agreement between ABC, owned by the Walt Disney Company, and Apple Computer Inc. in October, where shows such as “Desperate Housewives” and “Lost” can be seen on an Apple video iPod for $1.99 an episode.
The deals could signal a major shift among US networks and advertisers who for years had based their programming schedules and ad rates around the traditional evening prime time viewing hours. Analysts say the move had been prompted by internet downloads of and new technologies such as Digital Video Recorders (DVRs), which have allowed viewers to save and watch their favorite shows minus the commercials.
Some see the new VOD deals as more of a bid to maintain control over content than generate revenue. Others suggest that VOD and DVRs will help the networks by decreasing the number of viewers needed to turn a profit. With the average TV episode costing $1.5 million and the internet downloads priced between $0.99 and $2, only a few million viewers would be required to keep a show on air. Last October viewers spent more than $30 million to download the film Serenity. Furthermore, advertising revenue could be generated through advertising placements within shows. DVR users were estimated to hit 4.5 million in the US in 2005