Recently, I was reading a piece from MediaPost by Lydia Loizides, a friend of the Consortium's. Lydia was talking about video-on-demand and some of the problems inherent with the current deployment of VOD, particularly the myriad ways in which VOD advertising has been capitalized on so little.
She points out all the ways in which VOD needs to be revolutionized as a business and calls on the advertisers to be the one to make this happen, since they will drive the VOD business model as it matures. Lydia, who is VP of the new media division at Paradigm, writes, "I have been following VoD technology for close to ten years now, and I can honestly say that while the advances we have made in deployment should be applauded, the lack of technological enhancements that have been developed and adopted in order to grow this into a true revenue-generating business should be admonished."
This ties into a variety of things we have written here in the past at the Consortium about VOD and other technologies: see, for instance, posts about misconceptions of the rate of technological change and the use of technology.
In our interview with Bruce Leichtman from back in June, he said that the industry was struck on online video yet often ignored the many VOD channels, which often get massive comparative views to services like iTunes. Bruce, who will be here on the panel on audience measurement as part of Futures of Entertainment 2, said, "This is obviously a media market that continues to evolve. Comcast had something like 1.8 billion sessions last year, averaging 25 minutes per session, for VOD. These aren't just people watching a second of something on-demand and then moving on."
I know from talking with many folks in the media industries that a lot of folks are concentrating on monetizing online video without giving much thought to the VOD market, even if it is a booming segment. Many people talk about VOD as if it were just the last choice, the place people go when they don't have anything on their DVR or don't know how to use online video. With as many views as these services have, though, that's a little misleading. Something must be driving people there.
Lydia points out, very rightly, the importance of title placement for VOD services, and the ways in which the trees that you have to go through to find content can be quite misleading. We haven't quite found a way to optimize VOD technology yet, even though all the tools are in place. Is Lydia right? Will it take advertisers coming in and taking a stand to make VOD services worthwhile? I guess we will have to wait and see.
The other option VOD can go, and these two are not mutually exclusive, is the subscription route. This includes the premium channel VOD options, the ones that Leichtman talked about as the "killer-app of on-demand which is not talked about as often" but is "the stickiest part of on-demand service and the most valued." These include the channels one gets as a subscriber of premium channels and the ones you pay for outright, such as Howard Stern on-demand and the WWE 24/7 On Demand service I've written about in the past, which seems to have turned into quite a viable property of its own.
How will channels like WWE 24/7 which brand and make use of the content archives continue to take advantage, alongside the vast majority of on-demand content which still seems to need direction developed? Comcast has showed a continuing interest in developing on-demand, for instance, and media companies have been slow to figure out how to embrace the technology. Will advertisers answer Lydia's call to action?