ABC to Offer Shows via On-Demand Cable

We've long predicted that cable would rise to the occasion and begin to offer greater and greater amounts of on-demand content. Eventually, it would stand to reason that with the proper service and pricing structure, this would dramatically compete with physical media like Blu-ray. This week ABC inked a deal to provide episodes of Lost and Desperate Housewives (among other shows) for free via video-on-demand (VOD) cable systems. Walt Disney is the parent company for ABC and is planning to reap a ton of extra profits by selling ad space on the VOD content.

The challenge, of course, is what that advertising content would be worth if it can simply be fast-forwarded through and ignored. As a result, ABC is insisting that the cable VOD system disallow navigation controls during commercials. When the offerings are "free" I guess consumers will need to deal with whatever caveats to the service are negotiated.

That's pretty good news overall, but it gets a little better. The total expected commercial time per show is expected to total around 5 minutes per hour of content. That's FAR less than the typical 17 minutes US consumers are used to seeing in prime-time fare. The deal has the local affiliate getting to sell a single 30-second spot, with ABC able to sell the remaining 4:30 nationally. That's simply a great deal for both parties and continues a trend that is encouraging to say the least.

In 2005, CBS signed on with Comcast to offer previously-aired shows on demand and sold spots to national companies for sponsorship on such shows as CSI: Crime Scene Investigation. NBC jumped in during 2006 but attempted to charge $0.99 for certain shows while offering others for free. Our prediction is that if they can't make this work off of advertising, then consumers as a whole aren't going to bite. Charging for television content is a short-sighted approach that will ultimately fail in every permutation - chiefly due to the American psyche of only paying for feature film content.

Initially, the ABC deal is being cut with Cox Communications, who has about 6 million subscribers (and only half of those with digital VOD capability). Previously it had inked a deal with Comcast as well, but limited it to a few markets served by the ABC network.

What we're seeing are very tentative steps towards offering VOD services. Studios in general are very slow to move - which is why they often get caught with their pants down and suffer losses due to other, more aggressive technologies and companies. It looks like they are operating at a snail's pace once again so we'll need to see if they realize the position they are in. Add the movie studio division to the mix and you've got even slower adoption rates. The future holds some interesting technology - we just need to see which flavor becomes the dominant choice among consumers.