VOD services provided by pay-TV operators should be generating significantly higher viewing and advertising revenue, according to research by TDG.
The failure to accomplish this is a reflection of VOD’s “inadequate advertising support and awkward programme guides that limit availability and viewing of ad-supported video-on-demand content.”
According to TDG, as a result of pay-TV operators’ lack of attention to ad-supported VOD, total VOD use is small, representing only 1% of all US TV viewing.
According to Bill Niemeyer, TDG senior analyst and author of the new report, “Operators have failed to take advantage of VOD to build subscriber satisfaction, generate ad revenues, and head off competition from over-the-top (OTT) providers like Netflix.”
Niemeyer estimates in that Q4 2011 Netflix US subscribers watched 80% more streaming video hours than were viewed in the same period on all US pay-TV VOD.
“Ad-supported VOD is a significant missed opportunity for pay-TV operators,” noted Niemeyer. “They are investing significant resources in TV Everywhere, but have ignored the fact they have a potentially viable ad- and revenue-generating on-demand platform already in place in over 50 million US homes in the form of VOD.”
TDG’s new report Making Ad-Supported VOD Work describes how operators could increase VOD viewing and ad revenue by a factor of three or more by deploying dynamic ad insertion, better measurement technologies, and improved program guides. If operators do not act, they risk falling even farther behind online and OTT video services.