Time Warner Plans to Add VOD Without Commercial-Skipping

Time Warner Cable’s launch could allay concerns voiced Tues. by programming and ad executives, who said they fear new cable products, including VOD and digital video recorders (DVR), could hurt their businesses. “It does make a lot of sense,” Warren Schlicting, Comcast’s Vp-new business strategy, told us. “Time Warner is clearly in the lead on that.” Comcast plans an “early stage trial” within the next year of inserting targeted ads. The company has announced plans for an ad insertion program in Philadelphia, where it has hq (CD July 26). The trial would expand those plans. Schlicting declined to comment on where the trials would occur or say if Comcast would follow Time Warner’s VOD approach.

VOD, often available at no extra charge to digital customers, doesn’t come with a demonstrated revenue model for advertisers. “You've got to show me a return on investment,” Scott Ferris, senior Vp Atlas On Demand, said on the CTAM panel. Digital programming can be “harder to plan and buy” for advertisers, he said. Ferris pointed to Google’s approach of linking Internet search results to sponsored links as a way to bridge the gap between free and commercial content. “You can’t use traditional ads in this world,” said Tom Ascheim, exec. Vp-Nick Digital TV. If “we're allowing people to skip advertisements… shame on us.” Traditional TV ads don’t work in an on-demand world, NBC Universal and 20th Century Fox Film executives said. “We'd love to be further along,” said Ron Lamprecht, NBC Universal Vp-new media. “All the ways to get to the consumer are positive for us,” he said, adding that the company is “somewhat agnostic” on which platform is used: “There are some further questions with VOD to be worked out.” Jamie McCabe, senior Vp-worldwide pay-per- view (PPV) at 20th Century, said: “There’s definitely a business there -- whether there’s a big business I'm not sure.” Comcast and Time Warner said they'll work to answer those concerns and questions. “We're open minded to things that are truly exclusive and unique,” Benya said. “We're willing to make those investments if there’s good consideration for us.” Time Warner Cable is conducting VOD research, and plans a “deep dive” for data this summer, he said. Cable distributors and programmers agree that collaboration will yield the best results for both industries. Ascheim, speaking toward the end of the panel, said that “when we're together, we make a business model where we both prosper.” VOD holds vast potential, said at least one programmer. New England Patriots Vice Chmn. Jonathan Kraft said there’s an “awesome opportunity” in VOD during an interview after his CTAM keynote speech. He used the word “awesome” several times in describing VOD’s prospects for his team and the National Football League. “This is very much a better model,” Kraft said, adding that the NFL is spending some $100 million on a VOD-related initiative. The Patriots have a deal with Comcast to make their programming available on the cable operator’s digital tier as a VOD offering, Kraft said: “We can use the cable industry to reach them [fans] 24/7.” Some content will be exclusive in the deal with Comcast, which may show football films as a PPV product, according to Kraft. The team hopes to launch the product in September, when the season starts, said Kraft.

The cable industry needs to stress consumer benefits of services like VOD to “tell our story,” NCTA CEO Kyle McSlarrow told a CTAM gathering. Operators must show both customers and regulators that cable is the only terrestrial provider of video, phone and broadband service as the industry faces state and federal legislative battles, he said. McSlarrow’s comments largely reinforced his previous remarks on franchise bills backed by Bells, including SBC and Verizon.

Programmers and operators need “complementary messages” in their public policy approaches, McSlarrow told a press briefing. One possibility is an ad campaign, but “we haven’t made decisions yet,” he said. He hinted there may not be a single approach: “There may not be a media campaign, there may be several.”