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U.S. TV networks tout video on-demand for catch-up viewing

By Lisa Richwine

LOS ANGELES (Reuters) - The morning after a new episode of the drama "Sleepy Hollow" airs on the Fox broadcast network, a message on the show's Facebook page encourages viewers to catch up with the show by clicking on their cable operator's video on demand service.

Fox and other networks are firing up marketing efforts to steer audiences who miss live episodes to free on-demand viewing. As the new television season gets underway, they are putting promotional spots for video on demand, or VOD, in prime time, on their web pages, and on social media.

For network executives, VOD is part of their strategy to compete in an ever-more crowded entertainment landscape, where live TV viewing is on the decline and streaming services like Netflix Inc are gaining in popularity.

VOD - which now reaches 60 percent of U.S. television homes through set-top boxes, according to a Nielsen report released last month - helps build audiences for new and returning TV series. It gives networks a shot at attracting an extra chunk of viewers to shows they did not record or had not heard about.

"To get people to remember the day and time a show airs, it's really challenging," said Michelle Garry, senior vice president of multi-platform marketing for the Fox network. "If people miss the show during its live airing, we still want to give them an opportunity to sample it."

VOD also provides a fresh revenue stream for networks. Unlike viewers using digital video recorders, those watching shows on video or demand often can't fast forward through commercials. Research firm Rentrak estimates the VOD ad market totals about $1 billion year. Total TV ad revenue reached $62.5 billion in 2012, according to media buying firm MagnaGlobal.

The VOD push coincides with the arrival of technology that allows networks to insert new commercials into shows viewed on VOD more than three days after their initial airing.

Traditionally advertisers pay when viewers watch their messages live on television or within three days on a DVR, a measurement called C3. On-demand viewing within three days counts toward that total if the same ads appear.

In the past, advertisers resisted paying for on-demand slots beyond three days because they felt their messages were stale, particularly when pitching movie openings or one-day sales. But the new technology lets networks insert fresh ads starting on day four for on-demand shows offered by some cable operators.

In the future, networks may be able to count on-demand viewing of older episodes. The industry is working on technology that would let cable operators drop the same ads from a live episode into the same show's older episodes, which would earn C3 credit from advertisers through a measurement called on-demand credit, or ODCR.

"When we get that done, that will be a big solution," NBC Broadcasting Chairman Ted Harbert said last month at a Hollywood Radio & Television Society event.

MORE SERIES ON VOD

U.S. households watched an average of 8.5 hours of programming through VOD in 2012, according to research firm Rentrak. In all, viewers watched more than 1 billion hours of VOD programming, an increase of more than 40 percent.

This season, networks are adding more series and more episodes to the on-demand menu. Typically the past five episodes of a show can be watched free. Fox also will make full seasons available on demand for competition shows "The X Factor" and "MasterChef Junior."

On the day after the "Sleepy Hollow" premiere on September 16, the episode drew the most VOD views for any single show episode in the network's history, Fox said.

Fox hopes the catch-up episodes get viewers hooked so they tune in when a show first airs, Garry said. "Hopefully, they get on board with live viewing and make it one of their must-see shows," she said.

CBS will offer 21 series on demand during the 2013-14 season, up from 13 last season. For new show "Hostages," the network is running promotions in prime time urging viewers to "catch up on the new drama 'Hostages' online or on demand."

"VOD represents an important part of catch-up viewing," CBS spokesman Chris Ender said. "We're working closely with our distribution partners to help them serve their customers, our audience, on this growing platform."

Cable operators are assisting the networks because they are also in a fight to keep customers from migrating to Netflix and other "over-the-top" competitors.

Comcast Corp staged "watchathon" weeks in March when it offered extra episodes from multiple networks on demand, to encourage viewers to use the platform. Verizon Communications Inc's FiOS service highlights VOD shows on its Twitter feed.

Research by Walt Disney Co's ABC shows VOD attracts a younger and more affluent audience than its TV audience. Fifty percent of ABC's VOD viewers are age 18 to 49, the group prized by advertisers, compared with 36 percent on television.

Advertisers are warming to the VOD environment, said Todd Gordon, head of U.S. investment at MagnaGlobal. In the early days, systems to access shows were often clunky, and advertisers could be stuck with running the same commercials for a month.

"It was always a great untapped environment, but the technological limitations made it harder for the network to monetize it," Gordon said. "Now that is going away."

(Editing by Frank McGurty)

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