VoD on Many Devices, Targeted Ads Closer to Cable Reality
Targeted ads and the ability to watch video on demand using a wide array of devices for cable subscribers (CD March 24 p12) is nearer to reality as operators settle on non- proprietary standards and vendors work together on new products, executives told us. Interactive TV for the sake of keeping cable subscribers has partly been supplanted by using addressable advertising to underwrite the costs of providing increasing amounts of VoD content for free, they said. Analysts and executives expect targeted ads, and especially the Canoe venture of six operators, to be a focus of the NCTA show Wednesday through Friday in Washington.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Many cable shows over the past decade have focused on interactive technology. This may finally be the time when dynamic ad insertion trials lead to widespread commercial deployments and subscribers increasingly can watch VoD on TVs, PCs and wireless devices, executives and analysts said. The Enhanced Television Binary Interchange Format specification and the SCTE 130 standard are among those Canoe is relying on (CD March 31 p9). Having those in place will buttress the rollout of software that inserts ads that open, close and appear in the middle of VoD programming and are selected when the content is ordered by a subscriber, said executives.
“The technology is there” for cable operators to insert ads on the fly, said Jim Owens, Motorola senior product marketing manager of on-demand video. “If you can actually put ads into the content, that actually allows you to offer more content for free” because the spots will underwrite the cost of the content, he said. “The next step is really figuring out the business models and changing the process of selling and trafficking these ads.” Owens predicted more addressable ad insertion pilots in this year’s first half and the start of deployments in the second half.
Concurrent Computer, changing to focus on cross-platform VoD, sees targeted ads as part of the future of the company and cable industry, its executives said. “The future success of video is going to be much more driven by the applications that access that video and monetize it” and through advanced advertising applications, said Chief Marketing Officer David King. Besides inserting “bumper” spots throughout on-demand programming, ads can appear when cable subscribers pause a show, request information on a program or participate in a show by voting on something, said James Brickmeier, vice president of converged video solutions. Although there’s “a lot of interest in monetizing video,” many applications haven’t “been launched because of the challenge of generating revenue” from them hasn’t been tackled, he said.
Consumers want to see videos on their sets, computers and wireless devices using similar interfaces and sometimes watch the same title across all three platforms, said executives including Alan Hoff, SeaChange vice president of product marketing. But the cable industry is taking things slowly as it gathers “lessons that have been learned from the 10-plus years of VoD,” he said. “As the industry talks about convergence, which it seems has been forever,” Hoff said, “the consumer already has converged.” There’s a “collective taking of the breath” in the industry to “gradually build up” operations so they don’t need to use expensive set-top boxes, a SeaChange spokesman said. The EBIF specification being used by Canoe can operate on a cheap box, he added.
Larger cable operators didn’t quickly embrace cross- platform and insertable ad products from some vendors, including SeaChange, said Hoff. They had “very established, mature relationships” with “armies of sales people” selling local ad inserts and they'd already spent millions of dollars on the business, he added. “They don’t have time to think big thoughts about changing those methodologies or processes.” The ability to buy the various products needed from multiple vendors may encourage spending, Hoff said. Consumers are “expecting the television to become more Web- like, more customized,” he said. A SeaChange product lets cable subscribers select VoD titles online and then watch them on TV, and some people are doing that, Hoff said.
The recession, and its impact on cable, may spur the industry to adopt addressable advertising after years of delay, said Wall Street analysts. Having sufficient capacity and infrastructure in place for interactive advertising may mean significant rollouts will soon occur, said Miller Tabak’s David Joyce. “Cable companies need to continue to keep trying to get their payback on their infrastructure expenditures” and interactive ads are a way to do that, he said. “The plant is in place and now a whole TV ecosystem could be ready to make this happen.” It’s a “tragedy of lost opportunity” that “so little progress” has been made by the cable industry on addressable ads, “two years away from reality for, oh, about ten years,” wrote Sanford Bernstein’s Craig Moffett Friday. It’s likely to be a “central theme” at the NCTA show, he predicted.
Privacy remains a potential hurdle to getting cable subscribers to be comfortable with the ads, said analysts and executives. “The privacy issue has to be considered in tandem” with developing ad insertion capability, said Joyce. “Some people can become kind of freaked out about giving out information about themselves,” said SeaChange’s Hoff. “But they are accustomed to giving out that information on the Web.”