Multichannel News has a great write-up on the state of Video On Demand usage. While some of the numbers for VOD included should be taken with a grain of salt since they are based on user surveys (what people say they do often differs signficantly when you measure what they actualy do!), based on the sparse VOD usage stats I’ve seen, I think the user surveys are probably in sync in this case.
“The growth in VOD has been steady because digital cable growth is relatively steady,” said Magna Global global director of forecasting Brian Wieser. “The VOD libraries that the MSOs offer are certainly popular and they may be contributing to churn reduction, but they still don’t account for a significant amount of time spent with TV. … VOD advertising is still very difficult to buy and it doesn’t account for a significant quantity of consumption, so there are better alternatives for most large advertisers.”
[...]
Consumer-usage data is also mixed. Use of VOD continues to lag behind both live-TV and DVR viewing, according to survey data from Horowitz Associates.
“If you look at each demographic, DVR usage is 30% to 50% higher than VOD,” said Howard Horowitz, the research firm’s president. “VOD has a lot of cable business momentum driving it into consumer homes and consumers are responding, but not in an overwhelming kind of way. It is another useful, very convenient device, but not a killer app.”
VOD also comes up short compared to consumer adoption of online video. The April 2009 Magid Media Futures survey, by Frank N. Magid Associates, found that about 43% of the population is now watching online video. That’s compared to 21% of survey respondents, who used VOD “frequently or occasionally,” said Magid senior vice president Jill Rosengard Hill.
“For consumers, on-demand is not top of mind,” said Rosengard Hill. “Operators must commit more marketing inventory and dollars to build awareness of on demand if they want to see usage increase.”
I agree with Ms. Rosengard Hill, although things aren’t quite as bad as they seem if you dig a little deeper into the article:
“We have a tendency to forget that this is an evolutionary process,” said Bruce Leichtman, president and principle analyst at Leichtman Research Group.
“If we go back to 2004, the number of people using on demand on a monthly basis was only 6.5 million; but by 2008, we were talking about 23 million using it monthly. That is tremendous growth.”
That view is confirmed by a slew of data from Rentrak, which collects VOD usage data from most of the cable footprint.
Between the start of 2007 and the end of 2008 “we saw a 21% increase in the number of VOD orders and 11% increase in those using the platform,” said Sandra Kilbridge, vice president of operations at the Advanced Media and Information division of Rentrak.
Because of relatively very heavy television consumption on my part, I try not to project my own usage out to the general population. I tend to wind up utilizing On-Demand regularly and for a variety of reasons. Still, it lags my DVR usage, but that is more of a function of the VOD offering itself. Many of the programs I watch on TBS, SyFy, USA and HBO are actually available on demand, but are not available in high definition. Because the quality of video is so much better in high defintion, I wind up recording and watching a lot more shows via DVR than I would if those same shows were available in high definition on the On Demand service. Many also complain, at least in the case of Comcast’s On Demand offering that the interface is lousy. It’s true, especially when you want to binge on a particular show that the number of button presses to get from the end of one episode to the beggining of the next is exorbanant.
Not mentioned in the article will be the impact of networked DVRs on On Demand offerings. Technically speaking from the way that networked DVRs will work, there’s not really a lot of difference between them and On-Demand services. It will be interesting to see how that winds up evolving.
Lots more, including some Rentrack On Demand data at MultiChannel News
“Because the quality of video is so much better in high defintion, I wind up recording and watching a lot more shows via DVR than I would if those same shows were available in high definition on the On Demand service. Many also complain, at least in the case of Comcast’s On Demand offering that the interface is lousy. It’s true, especially when you want to binge on a particular show that the number of button presses to get from the end of one episode to the beggining of the next is exorbanant.”
Totally agree about picture quality.
Fios’ interface for VOD isn’t great, but what helps a ton is you can search for a show title and get right to it.
I just can’t see the practical use for On Demand unless you have no recording device and/or your work or school schedule is unusual. That wouldn’t seem to be a huge population. People who are computer savvy can usually find what they want or buy what they want and the quality would probably be better. Our cable company uses On Demand as a marketing tool to try to get people to upgrade to digital. I already pay almost 60 dollars for basic/expanded (just raised rates again) to watch the 10-15 cable stations of the 60 offered that I watch regularly. People who have upgraded to digital with On Demand pay 100 to 150 per month. Where is the cost effectiveness?
If we had just On Demand for a reasonable price, in other words you would completely control your viewing, maybe more people would use it, but with our digital cable you have to subscribe to the basic/expanded package plus digital tiers to get On Demand.
The problem with DirecTV OnDemand is some shows are HD but ALOT ARE NOT.
If its SD its dead to me.
Catherine, true, you do need digital cable, but once you have digital cable, you get on-demand access to whatever channels you subscribe to on-demand offerings at no additional charge.
My opinion is that for a lot of people, even picking programs to record or set up season passes on their DVRs is an obstacle, plus there are limits to the number of programs you can store on a DVR. So if not for the video quality issues I have surrounding the lack of HD availability for a lot of shows, I would likely just watch In Plain Sight, Burn Notice, True Blood, and Entourage on the on-demand service and save more room on my DVR for the nine million episodes of NCIS
Get an esata 1TB external hard drive…holds 230 hours HD….sweet.
romo, I have my own personal storage issues covered, but I’m kind of a geek!
In terms of thinking about the broad market, I try to think about what most people will do. I don’t think a significant percentage of DVR owners, even ones with DVRs that will except a USB external drive, will actually install one.
I agree that the user interface for Comcast is pretty bad. It definitely deters me from using OnDemand more often.
I use Time Warner’s OnDemand service for “Burn Notice” and “Royal Pains.” I would like to see these live, but I’m rarely home on Thursday evening. If I couldn’t fast-forward and rewind it, I probably wouldn’t use it, though.
Although I’m a heavy OnDemand user (at least for those two shows since I use it for nothing else), I have no illusions about the overall use of OnDemand that is clearly tiny. The advertising for “Burn Notice” and “Royal Pains” are either 30-second NBC promos (mostly for the upcoming Jay Leno show) or 30-second Universal film ads. No non-NBCU-family advertising at all. FYI, you can also fast-forward the promos.
Cable companies actually pay extra to offer OnDemand service to customers, but I don’t recall the pricing set-ups.
If seeing every episode of something is important to you, you can’t go wrong with DVR, but I just don’t care enough about TV to get one. If they were free, I would probably use one and record hundreds of hours that I would likely never watch.
Have to admit that most of the time, I don’t even remember Video on Demand exists. The choices of things to watch on it are way too limited.
Shelly, in the case of Comcast, I wouldn’t say the choices are limited and there is a TON of content available in standard definition. BUT, the choices available for broadcast network TV are somewhat limited, both deliberately by the networks and due to licensing rights. For example, no FOX shows are available On Demand. ABC offers some things (at least in season) like LOST and Deperate Housewives, but doesn’t offer other shows like Brothers and Sisters. I don’t think CBS offers any of the shows not produced in house (no Two and a Half Men or Big Bang Theory). I believe those are probably digital rights issues.
NBC (for the broadcast network) takes it a step further by charging for all of its on demand content, pretty much assuring nobody will watch it and then has like the first 3 episodes of Battlestar Galactica available, but also for a fee. But Burn Notice and In Plain Sight and Eureka are available On Demand for no extra charge.
It’s simple, VOD use is puny because the amount of choices are puny. Period. If they would offer choices similar to Hulu or Fancast, I’d use it constantly. Instead, I might catch up on a missed CSI episode, or watch a movie in HD, to the extent there are any, but as a regular feature it is pretty worthless. Comcast’s VOD is clunky as well. The interface is slow and cumbersome. Also, if you have to stop watching and save a show, it only saves it for 24 hours and if you lose the saved version and want to start watching again you only have a very slow fast forward to get to where you left off. The fact is, cable tv is very slow to provide innovation. Cable boxes are terribly old technology, and the inability to increase storage size on DVR’s is simply ridiculous. The entire entertainment industry seems at a loss on how to adapt to today’s technology. Very frustrating.
Time Warner has NBC programming at no additional charge. I’m guessing that Time Warner’s selections are probably more limited than a cableco that passes the additional cost to subscribers. The Time Warner NBC selections are (like most prime-time offerings) limited and most of it doesn’t interest me (e.g., the most recent four “Kings” episodes, “I’m a Celebrity, Get Me Out of Here” episodes, and “America’s Got Talent” episodes). Those offerings are so bad that it makes me wonder whether NBC might be providing those at no cost to Time Warner, but I think that the last four “The Office” episodes are also available.
I’m not a shill for Time Warner (I could complain about it all day), but it provides comprehensive about its free and other OnDemand programming at http://www.twondemand.com/. I googled and found the Comcast OnDemand offerings at http://www.comcast.net/tv/on-demand/.
I know that the cable companies have to pay extra for TV series OnDemand offerings, and few people watch them. I think in the short-term, cablecos like Time Warner will continue to provide the broadcast OnDemand programs at no additional cost to subscribers as incentive to subscribe to digital cable, but user DVR selections hosted on cableco servers will eventually replace OnDemand broadcast programming completely thanks to the Comcast ruling. That ruling will eventually make my disinterest in purchasing (or leasing from the cableco) a DVR irrelevant.
I guess satellite subscribers would continue to have a use for hardware DVRs, but I’m not sure there will be much technological incentive for expanding DVR storage for consumer hardware.
Robert Seidman says on July 13th, 2009 at 5:51 pm:
NBC (for the broadcast network) takes it a step further by charging for all of its on demand content, pretty much assuring nobody will watch it and then has like the first 3 episodes of Battlestar Galactica available, but also for a fee. But Burn Notice and In Plain Sight and Eureka are available On Demand for no extra charge.
Robert, I have Comcast but I get nowhere near that amount of program choice that you’ve mentioned. Maybe it differs from region to region?
Harold good links, thanks for the info!
Shelly, that could be the case, I am not sure but based on the links from Harold I’d guess it isn’t. It could be that the navigation menus are just so horribly crafted that you can’t find the other choices.
Based on the links from Harold above — the Comcast web page for On Demand is sadly even perhaps worse than the actual service, except it does at least offer search — it looks like Burn Notice, Royal Pains, Eureka are available On Demand everywhere. If you subscribe to a cable package that has USA Network and SciFi but can’t find those shows, my guess is it’s the menus.
If everything on demand was easy to find (on my cable, you really have to know your way around if you want to find the right channel for the right show) and in HD, I think usage would be much higher. The ONLY time I use on demand these days is if I forgot to record something (for example, I had forgotten to set Nurse Jackie to record), but then I’ll set it to record and only use on demand as a catch up device. The other problem with on demand for me (and I’m sure this isn’t a widespread problem) is that I have my computer hooked up to the TV as well, and it’s much easier to find the programs that are on demand on some website – like hulu or even nbc.com, and I’ll watch those before I’ll watch on demand since you never know (unless it’s premium) whether or not, after you go through the whole process of trying to find a show, that it’s even offered on demand.
The problem to me is the minimal HD offering (once netflix or some similar company has a set top box with streaming HD content, everything will change) and the amount of content offered, and I think the latter is the real problem that stops people from making VOD their primary source of watching. If on demand had the same library as hulu and was as easy to search, I think things might be different.
Agree with Jim for the most part. The only VoD systems I’ve used (as opposed to rejected) are those provided by websites, noteably Hulu.com and Amazon.com. I’ve looked repeatedly at the options Dish Network gives us, and they’re poorly implemented and do little to sell themselves.
Dish has three systems (four if you count “PPV” channels), the VOD “channels”, an SD service built into the DVR, and “DishOnline” which is also built into the DVR. You can’t try before you buy, so for DishOnline you have no idea if the content is even HD until you’ve downloaded it, and downloading takes tens of hours (I’m serious. I downloaded one of the few “free” programs, an episode of The Cleaner: it took twelve hours, and only after you download it do you find that it’s HD, as that’s not marked in the description anywhere.)
There’s also the problem that buying shows on cable or satellite VoD means adding to the cable bill, which makes ordering socially awkward for anyone other than the person who pays the bill.
Hulu.com is free (minus your time watching commercials.) Amazon.com offers previews of everything, giving you a chance to check the show is watchable before spending any money.
Proper descriptions, video samples, reasonable download times, and low costs. VoD could be very popular, if done right. As it is, if you don’t have a broadband connection powerful enough to do streaming, and in addition to that you don’t have an easy way to hook the computer up to the TV, then VoD is extremely unattractive.
I’ve got Directv, a 42″ flat screen (along with a 32″ flat screen) high definition tv’s. Just the other day I tried to order a “video on demand” cause I was dying to watch “Taken” but for some reason it doesn’t work. I’d love to use it but for some of us I guess it doesn’t work.
With Comcast, a combination of spotty availability of programs and the clunky menu limits my use of the the On Demand service. There’s no search function, so I have to remember which menu tree the program I’m looking for might be under. Then I have to dig around to see if the program I’m looking for is even there. 9 times out of 10, if I can locate the network my target show is on, the show I’m looking for isn’t there. What are there are the shows that I avoid if I come across them live.
If there was a search function, and broader offerings by each network, then I would use it more often. Plus some networks, like NBC, charge an additional fee for each episode of the shows it does offer. I’m already paying for cable, I’m not going to pay to rewatch broadcast content, especially when I can find it for free elsewhere.
One use for VOD that I haven’t many networks take advantange of? Using VOD to support the launch of new shows (or the re-launch of shows, for example after the writers’ strike) Put the first few episodes up On Demand after they’ve aired to hook people who haven’t had a chance to sample them. I’m not talking about 2-3 minute featurettes from E!, I’m talking about actual episodes. It seems only the premium cable channels know how to use VOD service right.
TV everywhere might well change the relationship between on-demand and the rest of these downstream options. With a good interface and a stable cloud infrastructure the 2011 version of this article will read substantially differently.